Oil prices spike, US stocks fall on Israel-Iran crisis
Oil prices have spiked amid fears that the Israel-Iran crisis could spiral into a broader conflict involving the United States.
Brent North Sea Crude and West Texas Intermediate – the two most popular oil benchmarks – rose 4.4 percent and 4.3, respectively, on Tuesday as US President Donald Trump demanded 'unconditional surrender' from Tehran.
The benchmarks stood at $76.45 and $74.84 per barrel, respectively, following the jump.
Oil prices edged up further in early trading on Wednesday, taking the gains to nearly 5 percent, before stabilising later in the day.
US stocks fell on the rising geopolitical tensions overnight, with the benchmark S&P500 and tech-heavy Nasdaq Composite declining 0.84 percent and 0.91 percent, respectively.
Israel has bombed multiple oil and gas facilities in Iran since Friday, including the South Pars gasfield, the Fajr Jam gas plant, the Shahran oil depot and the Shahr Rey oil refinery.
While there has been little disruption to global energy flows so far, the possibility of escalation – including direct US involvement in Israel's military offensive – has put markets on edge.
On Tuesday, Trump ratcheted his rhetoric against Iran, adding to fears that his administration could order a military strike against Iran's uranium enrichment facility at Fordow.
In a thinly veiled threat against Iranian Supreme Leader Ayatollah Ali Khamenei, Trump said in a Truth Social post that the US knew his location but did not want him killed 'for now'.Iran has the world's third-largest reserves of crude oil and second-largest reserves of gas, though its reach as an energy exporter has been heavily curtailed by US-led sanctions.
The country produced about 3.99 million barrels of crude oil per day in 2023, or 4 percent of global supply, according to the US Energy Information Administration.
Iran also sits on the Strait of Hormuz, which serves as a conduit for 20-30 percent of global oil shipments.
Nearly all of Iran's oil exports leave via the Kharg Island export terminal, which has so far been spared from Israeli bombing.
'In the context of seeking to destabilize Iran, Israel may choose to strike its oil exports, believing that working to finish off a hostile regime is worth the risk of alienating allies concerned with potential price escalation,' Clayton Seigle, a senior fellow at the Center for Strategic and International Studies in Washington, DC, wrote in an analysis on Monday.
'Israeli strategists are likely well aware that Iran's oil export capacity is quite vulnerable to disruption. Its offshore oil export terminal at Kharg Island accounts for nearly all of its 1.5 million barrels per day average export volume.'
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Islamabad, Pakistan – In January 2024, Pakistan and Iran fired missiles into each other's territory in a brief military escalation between the neighbours. Yet 17 months later, after Israel attacked Iran with strikes on the latter's nuclear facilities, and assassinated multiple Iranian generals and nuclear scientists, Pakistan was quick to condemn the Israeli action. Islamabad described the Israeli strikes as violations of Iran's territorial sovereignty and labelled them 'blatant provocations'. 'The international community and the United Nations bear responsibility to uphold international law, stop this aggression immediately and hold the aggressor accountable for its actions,' Pakistan's Ministry of Foreign Affairs said in a statement on June 13. As Israeli attacks on Iran, and Tehran's retaliatory strikes, enter their sixth day, the deepening conflict is sparking fears in Islamabad, say analysts, rooted in its complex ties with Tehran and the even greater unease at the prospect of the Israeli military's aerial influence extending close to the Pakistani border. The human toll from the spiralling Israel-Iran conflict is growing. Israel's attacks on Iran have already led to more than 220 deaths, with more than a thousand people injured. In retaliation, Iran has launched hundreds of missiles into Israeli territory, resulting in more than 20 deaths and extensive property damage. While Pakistan, which shares a 905km (562-mile) border with Iran via its southwestern province of Balochistan, has voiced staunch support for Tehran, it has also closed five border crossings in Balochistan from June 15. More than 500 Pakistani nationals, mainly pilgrims and students, have returned from Iran in recent days. 'On Monday, we had 45 students who were pursuing degrees in various Iranian institutions return to Pakistan. Almost 500 pilgrims also came back via the Taftan border crossing,' the assistant commissioner for Taftan, Naeem Ahmed, told Al Jazeera. Taftan is a border town neighbouring Iran, situated in the Chaghi district in Balochistan, which is famous for its hills where Pakistan conducted its nuclear tests in 1998, as well as the Reko Diq and Saindak mines known for their gold and copper deposits. At the heart of the decision to try to effectively seal the border is Pakistan's worry about security in Balochistan, which, in turn, is influenced by its ties with Iran, say experts. Pakistan and Iran have both accused each other of harbouring armed groups responsible for cross-border attacks on their territories. The most recent flare-up occurred in January 2024, when Iran launched missile strikes into Pakistan's Balochistan province, claiming to target the separatist group Jaish al-Adl. Pakistan retaliated within 24 hours, striking what it said were hideouts of Baloch separatists inside Iranian territory. The neighbours patched up after that brief escalation, and during Pakistan's brief military conflict with India in May, Iran studiously avoided taking sides. On Monday, Minister of Foreign Affairs Ishaq Dar addressed Parliament, emphasising how Pakistan had been speaking with Iran and suggesting that Islamabad was willing to play a diplomatic role to help broker an end to the military hostilities between Iran and Israel. 'Iran's foreign minister [Abbas Araghchi] told me that if Israel does not carry out another attack, they are prepared to return to the negotiating table,' Dar said. 'We have conveyed this message to other countries, that there is still time to stop Israel and bring Iran back to talks.'. Minister of State for Interior Talal Chaudhry told Al Jazeera that other nations needed to do more to push for a ceasefire. 'We believe we are playing our role, but the world must also do its duty. Syria, Libya, Iraq – wars devastated them. It even led to the rise of ISIS [ISIL]. We hope this is not repeated,' he added. Fahd Humayun, assistant professor of political science at Tufts University and a visiting research scholar at Stanford, said that any Pakistani bid to diplomatically push for peace would be helped by the fact that the administration of President Donald Trump in the United States is also, officially at least, arguing for negotiations rather than war. But Umer Karim, a Middle East researcher at the University of Birmingham, suggested that for all the public rhetoric, Pakistan would be cautious about enmeshing itself too deeply in the conflict at a time when it is trying to rebuild bridges with the US, Israel's closest ally. 'I doubt Pakistan has the capacity or the will to mediate in this conflict, but it definitely wants it to wind down as soon as possible,' he said. Pakistan's greatest concern, according to observers, is the potential fallout in Balochistan, a resource-rich but restive province. Rich in oil, gas, coal, gold and copper, Balochistan is Pakistan's largest province by area but smallest by population, home to about 15 million people. Since 1947, Balochistan has experienced at least five rebellion movements, the latest beginning in the early 2000s. Rebel groups have demanded a greater share of local resources or outright independence, prompting decades of military crackdowns. The province also hosts the strategic Gwadar port, central to the $62bn China-Pakistan Economic Corridor (CPEC), linking western China to the Arabian Sea. Baloch nationalists accuse the state of exploiting resources while neglecting local development, heightening secessionist and separatist sentiments. Baloch secessionist groups on both sides of the border, particularly the Balochistan Liberation Army (BLA) and the Balochistan Liberation Front (BLA), have been waging a rebellion in Pakistan to seek independence. 'There is a major concern within Pakistan that in case the war escalates, members of armed groups such as BLA and BLF, many of whom live in Iran's border areas, might try and seek protection inside Pakistan by crossing the very porous boundaries shared by the two countries,' Abdul Basit, a research fellow at the S Rajaratnam School of International Studies in Singapore, told Al Jazeera. 'Thus, Pakistan had to shut down the crossing in an attempt to control the influx. It remains to be seen whether they can successfully do that, but at least this is their objective.' Since the Soviet invasion of Afghanistan in 1979, waves of Afghan refugees have sought shelter in Pakistan. The latest mass entry occurred after the Taliban took over Kabul in August 2021. At their peak, there were close to 4 million Afghans living in the country. In 2023, however, Pakistan launched a campaign to send the refugees back to Afghanistan. According to government estimates, close to a million of them have been expelled so far. Pakistan has cited rising incidents of armed violence in the country, which it blames on groups that it says find shelter in Afghanistan, as a key justification for its decision. The Taliban reject the suggestion that they allow anti-Pakistan armed groups sanctuary on Afghan territory. Basit said Pakistan would likely want to avoid any repeat of what happened with Afghan refugees. 'With such a long border [with Iran], and a history of deep connection between people of both sides, it is not out of realm of possibility that it was this factor which factored in Pakistan's decision to close the border,' he added. Baloch armed groups and the prospect of a refugee influx are not the only concerns likely worrying Pakistan, say experts. Israeli Prime Minister Benjamin Netanyahu has claimed that his air force has control over Tehran's skies. And while both Israel and Iran continue to strike each other's territory, Pakistan, which does not recognise Israel and views it as a sworn enemy, will not want Israeli influence over the Iranian airspace to grow and creep towards the Iran-Pakistan border. 'Pakistan is also averse to Israel achieving complete air superiority and control of Iranian airspace, as it would upend the current security status quo on Pakistan's western flank,' Karim, the University of Birmingham scholar, told Al Jazeera. Security analyst Ihsanullah Tipu Mehsud, based in Islamabad, noted that Pakistan has historically sided with the US in regional wars, including in Afghanistan, but may hesitate this time. A majority Sunni nation, Pakistan still boasts a significant Shia population – more than 15 percent of its population of 250 million. 'Pakistan has already dealt with sectarian issues, and openly supporting military action against [Shia-majority] Iran could spark serious blowback,' he said.
