Oil surges, stocks fall on Middle East fears as Israel strikes Iran
The rush from risk assets to safe havens saw equity markets across Asia tumble. (File pic)
HONG KONG : Oil prices soared more than 12% and stocks sank today after Israel launched 'preemptive' strikes on Iranian nuclear and military sites and warned of more to come, stoking fears of a full-blown war.
Investors ran for the hills on news of the attacks and a warning from Tehran that its regional foe faced a 'bitter and painful' fate, while US President Donald Trump said a 'massive conflict' in the region was possible.
While Tel Aviv said it had struck military and nuclear targets, Iran said residential buildings had been hit.
'This operation will continue for as many days as it takes to remove this threat,' Israeli Prime Minister Benjamin Netanyahu said in a video statement.
'We struck at the heart of Iran's nuclear enrichment programme. We targeted Iran's main enrichment facility at Natanz. We also struck at the heart of Iran's ballistic missile programme,' he added.
'Nuclear scientists 'working on the Iranian bomb' had also been hit,' he said.
In Tehran, supreme leader Ayatollah Ali Khamenei warned Israel would suffer severe consequences, issuing a statement that said, 'With this crime, the Zionist regime has set itself for a bitter and painful fate and it will definitely receive it'.
Israeli defence minister Israel Katz had earlier cautioned that 'a missile and drone attack against the State of Israel and its civilian population is expected in the immediate future'.
Trump previously warned that an Israeli attack could be on the cards, telling reporters at the White House, 'I don't want to say imminent, but it looks like it's something that could very well happen'.
The US leader said he believed a 'pretty good' deal on Iran's nuclear programme was 'fairly close', but that an Israeli strike on the country could wreck the chances of an agreement.
A US official said there had been no US involvement in the operation.
Still, there are worries the US could be sucked into the crisis after Iran threatened this week to target US military bases in the region if a regional conflict broke out.
Both main oil contracts, which had rallied earlier in the week on rising tensions, spiked more than 12% – hitting levels not seen since January – amid fears about supplies of the commodity.
The rush from risk assets to safe havens saw equity markets across Asia tumble and bonds rally with gold, which popped above US$3,400 an ounce. US and European equity futures were deep in the red.
'The Middle East powder keg just blew the lid off global markets,' said Stephen Innes at SPI Asset Management.
'Equity futures are plummeting. Bond yields are sinking. Gold and oil are skyrocketing,' he added.
'Brent crude futures are racing toward the mid-US$70s range, but if the Strait of Hormuz, which accounts for 20% of global oil flows, finds itself in the blast radius, you can add another US$15 to the bid.
'If Iran holds back, we get a relief bounce. But if missiles start raining down on Tel Aviv or Tehran retaliates with real teeth, we're staring down a scenario that could redefine the macro narrative for the rest of 2025,' Innes said.
Banking giant JPMorgan Chase had warned just this week that prices could top US$130 if the worst-case scenario developed.
Market sentiment had already been low after Trump sounded his trade war klaxon again by saying he would be sending letters within the next two weeks to other countries' governments to announce unilateral levies on their exports to the US.
The 'take it or leave it' deal spurred fears he would reimpose the eye-watering tolls announced on April 2 that tanked markets before he announced a 90-day pause.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Star
23 minutes ago
- The Star
Trump says Nippon-US Steel deal has resolvable national security risk
The logos of Nippon Steel Corp. are didplayed at the company headquarters in Tokyo, Japan March 18, 2019. Picture taken March 18, 2019. REUTERS/Yuka Obayashi (Reuters) -U.S. President Donald Trump said on Friday that concerns over national security risks posed by Nippon Steel's $14.9 billion bid for U.S. Steel can be resolved if the companies fulfill certain conditions that his administration has laid out, paving the way for the deal's approval. Shares of U.S. Steel rose 3.5% on the news in after-the-bell trading as investors bet the deal was close to done. Trump, in an executive order, said conditions for resolving the national security concerns would be laid out in an agreement, without providing details. "I additionally find that the threatened impairment to the national security of the United States arising as a result of the Proposed Transaction can be adequately mitigated if the conditions set forth in section 3 of this order are met," Trump said in the order, which was released by the White House. The companies thanked Trump in a press release, saying the agreement includes $11 billion in new investments to be made by 2028 and governance commitments including a golden share to be issued to the U.S. government. They did not detail how much control the golden share would give the U.S. Shares of U.S. Steel had dipped earlier on Friday after a Nippon Steel executive told the Japanese Nikkei newspaper that its planned takeover of U.S. Steel required "a degree of management freedom" to go ahead after Trump earlier had said the U.S. would be in control with a golden share. The bid, first announced by Nippon Steel in December 2023, has faced opposition from the start. Both Democratic former President Joe Biden and Trump, a Republican, asserted last year that U.S. Steel should remain U.S.-owned, as they sought to woo voters ahead of the presidential election in Pennsylvania, where the company is headquartered. Biden in January, shortly before leaving office, blocked the deal on national security grounds, prompting lawsuits by the companies, which argued the national security review they received was biased. The Biden White House disputed the charge. The steel companies saw a new opportunity in the Trump administration, which began on January 20 and opened a fresh 45-day national security review into the proposed merger in April. But Trump's public comments, ranging from welcoming a simple "investment" in U.S. Steel by the Japanese firm to floating a minority stake for Nippon Steel, spurred confusion. At a rally in Pennsylvania on May 30, Trump lauded an agreement between the companies and said Nippon Steel would make a "great partner" for U.S. Steel. But he later told reporters the deal still lacked his final approval, leaving unresolved whether he would allow Nippon Steel to take ownership. Nippon Steel and the Trump administration asked a U.S. appeals court on June 5 for an eight-day extension of a pause in litigation to give them more time to reach a deal for the Japanese firm. The pause expires Friday, but could be extended. June 18 is the expiration date of the current acquisition contract between Nippon Steel and U.S. Steel, but the firms could agree to postpone that date. (Reporting by Alexandra Alper in Washington, David Gaffen in New York and Nathan Gomes in Bengaluru; Editing by Anil D'Silva and Leslie Adler)
Malay Mail
24 minutes ago
- Malay Mail
Sources: White House orders review of SpaceX's US$22b in federal contracts after Trump-Musk clash
WASHINGTON, June 14 — The White House earlier this month directed the Defence Department and Nasa to gather details on billions of dollars in SpaceX contracts following the public blowout between President Donald Trump and billionaire Elon Musk, four people familiar with the order told Reuters. Sparking an ongoing review, the administration ordered the agencies to scrutinise Musk's contracts to ready possible retaliation against the businessman and his companies, these people said. As Reuters reported on Thursday, Pentagon officials are simultaneously considering whether to reduce the role that SpaceX, Musk's space and satellite company, may win in an ambitious new US missile defence system. Reuters couldn't determine whether the White House intends to cancel any of the approximately US$22 billion (RM93 billion) in federal contracts SpaceX now has. But the review shows the administration is following through on a threat by Trump during his spat with Musk last week to possibly terminate business and subsidies for Musk ventures. 'We'll take a look at everything,' the president said, speaking to reporters aboard Air Force One on June 6. In an email to Reuters, a White House spokesperson didn't answer questions about Musk's business, saying the 'Trump administration is committed to a rigorous review process for all bids and contracts.' In a separate statement, a spokesperson at Nasa said the agency 'will continue to work with our industry partners to ensure the president's objectives in space are met.' Neither SpaceX nor officials at the Defence Department responded to requests for comment. The people familiar with the order said the contract scrutiny is intended to give the administration the ability to move fast if Trump decides to act against Musk, who until recently was a senior advisor to the president and the head of the cost-cutting Department of Government Efficiency, or DOGE. The review is 'for political ammunition,' one of the people said. Whether the US government could legally, or practically, cancel existing contracts is unclear. But the possibility underscores concerns among governance experts that politics and personal pique could improperly influence matters affecting government coffers, national security and the public interest. 'There's an irony here that Musk's contracts could be under the same type of subjective political scrutiny that he and his DOGE team have put on thousands of other contracts,' said Scott Amey, a contracting expert and general counsel at the Project on Government Oversight, a watchdog group based in Washington. 'Any decision shouldn't be based on the egos of two men but on the best interests of the public and national security.' Musk's SpaceX in recent years has become a crucial partner of the US government in much of its aerospace and defence work — launching satellites and other space cargo and potentially managing a crucial element of the 'Golden Dome' missile shield planned by Trump. Although Musk in recent days has sought to walk back some of his critiques of the president — such as calling for Trump's impeachment last week and linking him to a convicted sex offender — his outbursts nonetheless highlighted the government's reliance on SpaceX. Before reversing course, Musk threatened to decommission the company's Dragon spacecraft. The spacecraft, as part of a roughly US$5 billion contract with Nasa, is the only US vessel currently capable of carrying astronauts to and from the International Space Station. SpaceX is also building a network of hundreds of spy satellites under a classified contract with the National Reconnaissance Office, a US intelligence agency. The contract was a pivotal transaction for SpaceX, deepening its ties with US defence and intelligence services. — Reuters
The Sun
28 minutes ago
- The Sun
Israel attack on Iran tests Trump promise not to be dragged into war
WASHINGTON: For President Donald Trump, few goals on the world stage have been more explicit -- he will not drag the United States into another "forever war." Yet Israel's massive strikes on Iran will test that promise as never before, potentially setting up a showdown with his base as Trump decides how much support the United States will offer. Trump had publicly called for Israel not to strike as he sought a negotiated solution, and his roving envoy Steve Witkoff had been scheduled to meet Iranian officials for the sixth time Sunday. Trump, who hours earlier warned that an attack would cause "massive conflict," afterward praised Israeli strikes as "excellent." He boasted that Israel had "the best and most lethal military equipment anywhere in the world" thanks to the United States -- and was planning more strikes unless Iran agrees on a deal. Secretary of State Marco Rubio insisted that the United States was not involved in the strikes and warned Iran not to retaliate against the thousands of US troops stationed in nearby Arab countries. A US official, however, confirmed that the United States was helping Israel shoot down retaliatory missiles fired Friday by Iran. "The US has calculated that it can help Israel and that the Iranians will obviously be aware of this, but at the end of the day, at least at the public level, the US stays out," said Alex Vatanka, founding director of the Iran program at the Middle East Institute in Washington. The hope is that "the Iranians will do a quick cost/benefit analysis and decide it is not worth the fight," Vatanka said. He said Iranian leaders are for now focused on staying alive, but could decide either to swallow a tough deal -- or to internationalize the conflict further by causing chaos in the oil-rich Gulf, potentially sending oil prices soaring and pressuring Trump. 'America First' impulse Most key lawmakers of Trump's Republican Party quickly rallied behind Israel, whose prime minister, Benjamin Netanyahu, is a hero for many on the US right and has long called Iran an existential threat. But Trump's populist "America First" base has been skeptical. Tucker Carlson, the prominent media commentator who counseled Trump against a US strike on Iran in the first term, has called fears of Tehran building a nuclear bomb overblown, saying neither Iran nor Ukraine warrants US military resources. Carlson wrote on X after the Israeli strike that there was a divide in Trump's orbit between "those who casually encourage violence, and those who seek to prevent it -- between warmongers and peacemakers." Trump has brought outspoken non-interventionists directly into his administration. In an unusually political video this week, Trump's director of national intelligence, Tulsi Gabbard, warned after a visit to Hiroshima that "warmongers" were putting the world at risk of nuclear catastrophe. In a speech in Riyadh last month, Trump denounced decades of US interventionism in the Middle East and said, "My greatest hope is to be a peacemaker and to be a unifier. I don't like war." How far to back Israel? Daniel Shapiro, who served as US ambassador to Israel under former president Barack Obama, said it had been certain the United States would back Israel's defense against Iranian retaliation. But Trump will face a harder decision on "whether to use the United States' unique capabilities to destroy Tehran's underground nuclear facilities and prevent an Iranian nuclear weapon," said Shapiro, now at the Atlantic Council. "The decision will split his advisers and political base, amid accusations, and perhaps his own misgivings, that Netanyahu is attempting to drag him into war." Lawmakers of the rival Democratic Party widely revile Netanyahu, including over Israel's bloody offensive in Gaza. "This attack by Netanyahu is pure sabotage," said Democratic Representative Joaquin Castro. "What does 'America First' even mean if Trump allows Netanyahu to drag the country into a war Americans don't want?" he wrote on social media. Sina Toossi, a senior fellow at the progressive Center for International Policy, said that China -- identified by Trump as the top threat -- could seize the moment, perhaps by moving on Taiwan, as it sees the United States as even more distracted. "Even without direct involvement, Washington now faces the prospect of indefinite resupply, intelligence and diplomatic backing for Israel, just as the war in Ukraine intensifies and global crises multiply," Toossi said. "Wars are easy to ignite, but once unleashed, they tend to spiral beyond control, and rarely end on the terms of those who start them."
