Dollar and Other Safe Havens Rise as Israel Strikes Iran
The US dollar rallied alongside the safe-haven Japanese yen and Swiss franc, with currency markets abruptly reversing direction on news Israel had launched strikes on Iran.
Israel has begun carrying out strikes on Iran, two US officials told Reuters, adding that there was no US assistance or involvement in the operation. Another report suggested that explosions were heard northeast of Iran's capital Tehran.
An index that measures the dollar against six other currencies gained 0.4%, and was last at 98.07, in early Asia trading.
Against the yen, the dollar slipped 0.35% to 143 per dollar , while the Swiss franc tumbled 0.39% to 0.807 per dollar.
Risk-sensitive Asian currencies such as the Aussie dollar and the New Zealand dollar weakened 0.9% each, Reuters reported.
Earlier in the week, the dollar index hit multi-year lows as investors were not impressed by a US-China trade truce, while cooler-than-expected inflation data fuelled expectations of more aggressive interest rate cuts by the Federal Reserve.
The dollar is on track for weekly declines against the yen, the Swiss franc and the euro.
Crude prices jumped more than $4 on the news as investors priced in potential supply disruptions from the oil-rich region, while gold prices climbed 0.8% to their strongest since early May.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arab News
2 hours ago
- Arab News
Oil settles up 7% as Israel, Iran trade air strikes
HOUSTON: Oil prices jumped on Friday and settled 7 percent higher as Israel and Iran traded air strikes, feeding investor worries that the combat could widely disrupt oil exports from the Middle East. Brent crude futures settled at $74.23 a barrel, up $4.87, or 7.02%, after earlier soaring over 13% to an intraday high of $78.50, the strongest level since January 27. Brent was 12.5% higher than a week ago. US West Texas Intermediate crude finished at $72.98 a barrel, up $4.94, or 7.62%. During the session, WTI jumped over 14% to its highest since January 21 at $77.62. WTI climbed 13% to its level a week ago. Both benchmarks had their largest intraday moves since 2022 when Russia's invasion of Ukraine caused a spike in energy prices. Israel said it had targeted Iran's nuclear facilities, ballistic missile factories and military commanders on Friday at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon. Iran has promised a harsh response. Shortly after trading ended on Friday, Iranian missiles hit buildings in Tel Aviv, Israel, according to multiple media reports. Explosions were also heard in southern Israel. US President Donald Trump urged Iran to make a deal over its nuclear program to put an end to the "next already planned attacks." The National Iranian Oil Refining and Distribution Company said oil refining and storage facilities had not been damaged and continued to operate. Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), currently produces around 3.3 million barrels per day (bpd), and exports over 2 million bpd of oil and fuel. Spare capacity among OPEC and its allies, including Russia, to pump more oil to offset any disruption is roughly equivalent to Iran's output, according to analysts and OPEC watchers. The latest developments have also stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage. "Saudi Arabia, Kuwait, Iraq and Iran are wholly locked into one tiny passage for exports," said Rabobank in a note, regarding the Strait. About a fifth of the world's total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel. "Israeli action has so far avoided Iranian energy infrastructure, including Kharg Island, the terminal responsible for an estimated 90% of Iran's crude oil exports," said Ben Hoff, head of commodity research at Societe Generale. "This raises the possibility that any further escalation could follow an 'energy-for-energy' logic where an attack on one side's oil infrastructure might invite a retaliatory strike on the other's," Hoff said. Iran could pay a heavy price for blockage of the Strait of Hormuz, analysts said on Friday. "Iran's economy heavily relies on the free passage of goods and vessels through the seaway, as its oil exports are entirely sea-based. Finally, cutting off the Strait of Hormuz would be counterproductive to Iran's relationship with its sole oil customer, China, said analysts with JP Morgan. Money managers raised their net long U.S. crude futures and options positions in the week to June 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday. The speculator group raise its combined futures and options position in New York and London by 15,157 contracts to 121,911 during the period. Baker Hughes said the number of U.S. oil and natural gas rigs fell for seventh week in a row with the total count down by 35 rigs or 6% below this time last year. The oil rig count fell by three to 439 this week, its lowest since October 2021, while gas rigs slipped by one to 113. In other markets, stocks dived and there was a rush to safe havens such as gold, the U.S. dollar and Swiss franc.
Asharq Al-Awsat
7 hours ago
- Asharq Al-Awsat
Iran's Energy Sector: A Long History of Sanctions and Instability
Israel launched airstrikes on Iran Friday, targeting nuclear facilities, ballistic missile factories, and senior military commanders. The operation, which Israeli officials warned could be 'prolonged,' is intended to prevent Tehran from developing nuclear weapons. Iran's National Oil Refining and Distribution Company confirmed that its oil refining and storage facilities were not damaged in the attacks. Similarly, the Abadan Oil Refining Company announced it was operating at full capacity with no service disruptions. Iran is the third-largest oil producer in OPEC, pumping approximately 3.3 million barrels per day, about 3% of global output. Sanctions and OPEC Role Iran's oil production peaked in the 1970s, reaching a record 6 million barrels per day in 1974, more than 10% of global supply at the time, according to OPEC data. The first US sanctions were imposed on Tehran in 1979, and Iran has since remained under recurring waves of American and European restrictions. In 2018, President Donald Trump withdrew from the nuclear deal and reimposed strict sanctions, sending Iran's oil exports plummeting—sometimes to near zero. Under President Joe Biden, however, exports began to climb again. Analysts say enforcement has been less aggressive, and Iran has increasingly succeeded in evading restrictions. It's also important to note that Iran is exempt from OPEC's production quotas. In recent months, Iranian oil exports have surged to around 1.8 million barrels per day—the highest since 2018, fueled by strong demand from China. Beijing does not recognize unilateral sanctions against its trade partners. Private Chinese refineries remain the main buyers of Iranian crude, despite some being targeted by recent US Treasury sanctions. So far, these measures have had limited impact on the flow of Iranian oil to China. Iran continues to skirt sanctions using tactics like ship-to-ship transfers and by concealing tanker locations. Production and Infrastructure Energy consultancy FGE reports that Iran refines around 2.6 million barrels per day of crude and condensates, while exporting an equivalent amount that includes crude, condensates, and refined products. Iran also produces 34 billion cubic feet of natural gas daily - about 7% of global production - all of which is consumed domestically. Most of Iran's oil and gas infrastructure is concentrated in the southwest: oil fields in Khuzestan, gas in Bushehr, and condensates from the massive South Pars field. About 90% of crude exports pass through Kharg Island. While OPEC members theoretically have the capacity to offset a drop in Iranian supply, many are already operating near their limits, placing pressure on the group's spare production capacity.
Asharq Al-Awsat
9 hours ago
- Asharq Al-Awsat
Ships Warned to Avoid Red Sea, Log Hormuz Voyages after Israel Hits Iran
Merchant shipping is continuing to pass through the Strait of Hormuz despite Israel's attacks on Iran on Friday, the multinational, US-led Combined Maritime Force said, although some shipowners were looking to avoid the region. Iran has in the past threatened to close the critical Strait of Hormuz to traffic in retaliation for Western pressure. Any closure of the Strait could restrict trade and impact global oil prices. "The Strait of Hormuz remains open and commercial traffic continues to flow uninterrupted," the Combined Maritime Force said in advisory, adding that events over the past day had increased the likelihood of regional conflict to "significant". Greece and Britain have advised their merchant shipping fleets to avoid sailing through the Gulf of Aden and to log all voyages through the Strait of Hormuz following Israel's attacks on Iran, documents seen by Reuters showed. "We have reports that more ship owners are now exercising extra caution and are opting to stay away from the Red Sea' and the Arabian Gulf, said Jakob Larsen, chief safety & security officer with shipping association BIMCO. If the United States is perceived to be involved in any attacks, "the risk of escalation increases significantly", Larsen said. "Such an escalation could include missile attacks on ships or laying of sea mines in the Strait (of Hormuz)." Israel said it had targeted nuclear facilities, ballistic missile factories and military commanders during the start of a prolonged operation to prevent Tehran from building an atomic weapon. Iran denies having any such plan. "Hormuz is a critical waterway, without alternative, for tanker trades and any impediment or threat to free movement of shipping would have a significant effect upon the world's economy," tanker shipping association INTERTANKO said. Greek ship owners were urged to send details of their vessels sailing through the Strait of Hormuz to Greece's maritime ministry, according to one of the documents issued by Greece's shipping association, which was sent on Friday. Greek owners control the world's biggest tanker fleet. "Due to developments in the Middle East and the escalation of military actions in the wider region, the (Greek) Ministry of Shipping ... urgently calls on shipping companies to send ... the details of Greek-owned ships that are sailing in the maritime area of the Strait of Hormuz," the document said. All UK-flagged vessels, which include the Gibraltar, Bermuda and Isle of Man 'red ensign' registries, were advised to avoid sailing through the southern Red Sea and the Gulf of Aden, a separate document issued by the UK's transport ministry said. If sailing through those areas, vessels must adhere to their highest level of security measures and limit the number of crew on deck during voyages, said the advisory, seen by Reuters. The European Union's naval mission in the Red Sea, Aspides, is continuing operations as normal but is monitoring developments in the region, an Aspides official told Reuters.
