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36 minutes ago
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Oil Outlook in Flux as Analysts Revise Views After Israel Strike
(Bloomberg) -- Israel's strike on Iran has injected a fresh bout of geopolitical risk into an oil market that has been in the doldrums due to concerns about the global economy and supply increases from OPEC+. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire Brent crude jumped more than 13% following the attacks, which targeted Iran's nuclear program and military capabilities, in a major escalation in tensions between two major military powers that risks spiraling into a regional war. Fears of a glut later this year are now being replaced by calls for higher prices, at least in the short term. Much will depend on Iran's response and whether key energy assets in the Middle East or tanker traffic through the region are affected. Here's what market watchers are saying: ING If Iran's midstream and upstream assets are targeted, as much as 1.7 million barrels per day of export supply could be at risk, 'enough to push the oil market from a surplus over the second half of this year into a deficit,' Warren Patterson, head of commodities strategy at ING Groep NV, said in a note. 'This scenario could see Brent spiking to $80 a barrel, although we believe prices will likely settle around $75.' If continued escalation leads to shipping disruptions in the Strait of Hormuz, roughly 14 million barrels per day of oil supply could be at risk, with significant disruptions 'enough to push prices to $120 per barrel,' Patterson said. 'If disruptions persist towards the end of the year, we could see Brent trading to new record highs, surpassing the record high of close to $150 in 2008.' Saxo Markets 'Oil could spike toward $80 if Middle East tensions escalate and supply risks materialize, but rising OPEC+ output may cap gains and revive oversupply concerns into autumn,' said Charu Chanana, chief investment strategist at Saxo Markets Ltd. in Singapore. 'A worst-case scenario — such as a closure of the Strait of Hormuz or a disruption to Iran's 2.1 million barrels per day in exports — could have serious implications for global oil supply and inflation expectations,' she said. Rystad Energy Iran's oil output has recovered since 2019 on higher Chinese buying, with production recently as high as 4 million barrels a day, said Mukesh Sahdev, head of commodities markets - oil at Rystad Energy A/S. 'Iran's potential retaliation and blockage of the Straits of Hormuz can' pose a risk to crude supplies, he said. Still, 'given the stated US goal of negotiation, it is unlikely that the conflict will escalate into a full-blown war.' Westpac Banking 'Given that the strikes appear to have been directed more at the Iranian military general staff, including the head of the IRGC and senior nuclear scientists, and that the US was not involved, that suggests that what we saw today was more of a pre-emptive strike and less of a sustained military conflict,' said Robert Rennie, head of commodity and carbon research at Westpac Banking Corp. 'Traders will, however, be super-focused on Iran's response and how targeted it is on Israel, versus proxy attacks. Risks going into the weekend are very high, and a push above the January highs for crude is very possible.' 'However, bigger picture, we remain of the view that, as we move into the third quarter, we will see prices probing the lower end of the $60 to $65 range, with risks of prices below $60 as we move into the fourth quarter.' Phillip Nova 'Due to the worsening situation, oil investors appear to be securing more supplies before the weekend,' said Priyanka Sachdeva, senior market analyst for brokerage Phillip Nova Pte in Singapore. 'Some technical short-covering may be occurring after a significant rise of 15% in oil prices in June, which has contributed to an upward trend.' MST Marquee 'The scope of this attack is at the more severe end of the range than most anticipated for any attack,' said Saul Kavonic, an energy analyst at MST Marquee. Iranian retaliation 'could see the US and other parties in the region drawn in,' he said. 'The conflict would need to escalate to the point of Iranian retaliation on oil infrastructure in the region before oil supply is actually materially impacted. Iran could hinder up to 20 million barrels per day of oil supply via attacks on infrastructure or limiting passage through the Strait of Hormuz in an extreme scenario. There is no sign of this yet.' Oil Brokerage 'A threat of war in the Middle East is material to freight rates,' said Anoop Singh, Oil Brokerage Ltd.'s global head of shipping research. 'There isn't a deterministic path to this brewing conflict, however a short-term spike in freight rates is likely.' At least 15% of the global very-large crude carrier fleet, are in the Middle East Gulf at any given time, with about 20 of them transiting through the Straits of Hormuz each day. Qisheng Futures 'The crude oil market is projected to have around a $3 to $5 short-term upside potential' based on the market reaction after the earlier two rounds of conflict between Iran and Israel in 2024, said Gao Jian, a Shandong-based analyst at Qisheng Futures Co. Even before the strike, prices have already partially priced in the expectations of escalation. SDIC Essence Futures While macroeconomic and supply-demand factors don't support prices surging further, 'investors may consider buying low-cost call options to hedge against extreme geopolitical risks,' said Gao Mingyu, chief energy analyst at SDIC Essence Futures Co. 'Once the geopolitical situation becomes clearer, they can then position for short-selling at higher levels.' American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P.
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44 minutes ago
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Dollar's Haven Status Faces a Key Test After Israel Strikes
(Bloomberg) -- The dollar's reputation as a crisis haven is being put to the test after the US currency staged only a limited rally in response to an Israeli attack on Iran that stoked fears of a wider conflict in the Middle East. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire In a departure from historic norms, the dollar initially slipped after Israel carried out strikes against Iran's nuclear program sites. The greenback later mounted a tepid rally, but a Bloomberg gauge of its value remains near a three-year low. The US's position as the world's largest oil producer likely helped spark the mild recovery on a day when crude futures soared as much as 13%. The dollar has come under pressure in recent months as President Donald Trump pushed ahead with his trade war and the outlook for the US economy dimmed. The popular 'sell America' trade that has hammered a range of US assets from stocks to Treasuries has weighed heavily on the currency. 'The dollar should be trading much higher based on overnight events, but the tendency clearly is to always see the glass half-empty,' said Francesco Pesole, FX strategist at ING. 'It's another testament to the loss in value of the dollar's safe haven status,' he said. Israel's attack marks a major escalation in the standoff over Tehran's atomic program. Iranian and US negotiators were set to hold a sixth round of talks in Oman on Sunday, but Trump said this week he's less confident about the chances of a deal. The US was 'not involved' in Israel's strikes, Secretary of State Marco Rubio said, warning Iran against targeting the country's interests or personnel in retaliation. Analysts said the dollar should benefit from the sharp increase in oil prices. Yet the prospect of further escalation between Israel and Iran, and the threat of a wider conflict in the region, could raise more questions about the currency's status as a haven. Bloomberg's dollar index has dropped about 8% this year as Trump's efforts to overhaul global trade chipped away at investor confidence in the potential growth of the US economy. Proposed tax legislation is expected to add trillions of dollars to the federal deficit over a decade, while America's role in security and political alliances are also being called into question. 'The 'safe haven' label — for assets like the dollar and yen — rests on three pillars: economic stability, liquidity and credibility,' said Hebe Chen, an analyst at Vantage Markets in Melbourne. 'This year's dollar weakness is exposing cracks across all three.' The dollar gauge traded 0.4% higher on Friday, trimming gains after climbing as much as 0.5% in earlier trade. Both the yen and the Swiss franc, which typically gain during bouts of risk aversion, reversed initial gains to trade lower versus the US currency. Gold, which rose to a record in April, advanced as much as 1.7%, and Treasuries edged higher. Citigroup FX strategists led by Daniel Tobon said the dollar's limited gains against the franc and yen are a signal that traditional market dynamics remain intact. 'Should volatility continue to spike and risk asset remain under pressure, we expect G10 FX can see an extension of these traditional relationships,' Tobon wrote in a research note. What Bloomberg Strategists Say... 'It won't so much be about haven flows, but just about the fact that the US is the world's largest oil producer. Given that the greenback had only just hit a fresh multi-year low, downside stops got cleaned out and the short-term market will get caught offside by a bounce, which means it may become a self-sustaining climb higher.' Mark Cudmore, Markets Live strategist Before the attack, Wall Street banks were reinforcing their calls that the dollar would weaken further. Paul Tudor Jones, the founder of macro hedge fund Tudor Investment Corp., said the US currency may be 10% lower a year from now as he expects to see short-term interest rates cut 'dramatically' in the next year. Wall Street Sees Deeper Rout as Dollar Nears 2023 Low For now, the debate over the dollar's haven status continues. Shoki Omori, chief desk strategist at Mizuho Securities Co. in Tokyo, said there has been an increase in clients querying and debating the dollar's role in their portfolios. 'Depending on how the Trump administration communicates its stance on the attacks — for instance, by signaling future involvement — there are risks Treasuries and the dollar may face further selloffs,' said Omori. (Adds analyst comment, details, updates prices, recasts first paragraph.) American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P.
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an hour ago
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Israel disregards Trump with major attack on Iran nuclear sites
(Bloomberg) — President Donald Trump had repeatedly urged Israel not to strike Iran's nuclear sites. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire It didn't work. Israeli leader Benjamin Netanyahu appeared to have defied Trump with his decision to go ahead with an attack on Iran's nuclear program that US and allied officials had feared. Early signs suggest he went even further, targeting Iran's ballistic-missile sites, nuclear scientists and military leaders. That strikes came just hours after Trump had suggested to reporters that an attack wasn't imminent and the US still believed in the prospects for a diplomatic solution that Netanyahu has long thought impossible. 'I'd much prefer an agreement, as long as I think there is an agreement, I don't want them going in, because I think it would blow it,' he said. 'Might help it, actually, but it also could blow it.' Netanyahu's decision will inflame tensions in the region and means Iranian retaliation is almost inevitable. It deepens foreign-policy crises that Trump's had to wrestle with since returning to the White House and raises big questions about Trump's ability to influence an ally like Netanyahu, not to mention the leaders of adversarial nations such as Russia or China. Soon after the attack occurred, Secretary of State Marco Rubio put out a statement saying the US hadn't been involved in Israel's operation, while warning Iran not to retaliate against American interests or personnel. 'Israel advised us that they believe this action was necessary for its self-defense,' Rubio said. Trump was not surprised by the attack and was aware of the plans before they were carried out, Fox News reported citing a phone interview with Trump, adding that the president and Netanyahu have spoken several times in recent days. 'Iran cannot have a nuclear bomb and we are hoping to get back to the negotiating table. We will see,' Trump said, according to Fox. 'There are several people in leadership that will not be coming back.' Trump ran on a promise to end what he said were failed military adventures in the Middle East, and his top advisers including Vice President JD Vance and Secretary State Marco Rubio, once more of a traditional Iran hawk, have said the era of US wars in the region is over. Trump in recent weeks had resumed talks with Tehran on curtailing the Islamic Republic's nuclear enrichment program, which both the US and Israel said must end but Iran had insisted was its right. Yet Netanyahu's attack also raises the possibility that, however much the US distances from Israel's strikes, Trump may find himself sucked into an escalating conflict in the Middle East. Iran vowed it would deliver a 'harsh blow' to both Israel and the US in response to the strikes. US military personnel 'will undoubtedly answer the call if Iran miscalculates and responds by attacking American interests,' Senate Foreign Relations Committee Chairman Jim Risch said in a statement urging Iran to come to a nuclear deal with the US quickly. 'Netanyahu's war has overtaken President Trump's declaration' that the US is committed to a diplomatic resolution, Justin Logan, director of defense and foreign policy at the Cato Institute, said in a note. 'Netanyahu has chosen to present Trump with a fait accompli and dare him to oppose it.' Trump has little room for further instability globally. The administration's tariff war against foes and allies alike has set off a wave of uncertainty that risks tipping the US and the global economy toward recession. Oil prices surged in Asia trading after the strike, fueling risk of the kind of inflation spike Trump has accused his predecessor, Joe Biden, of helping fuel. Still, the US has been a staunch supporter of Israel since its creation in 1948 and has provided crucial military support, from the 1973 Yom Kippur War through its campaign to defend against Iran's missile and drone attacks last year. Even amid widespread criticism of Netanyahu's offensive in Gaza against Hamas, the US hasn't stopped providing the country with military and financial support. Matt Kroenig, senior director of the Scowcroft Center for Strategy and Security at the Atlantic Council in Washington, said Israel has the capability to do the attack alone. Even so, he said, it would be a surprise if the US hadn't given at least tacit support. 'I doubt Israel would have done this without a wink and a nod from the Trump administration,' he said. —With assistance from Steven T. Dennis and Aradhana Aravindan. American Mid: Hampton Inn's Good-Enough Formula for World Domination The Spying Scandal Rocking the World of HR Software New Grads Join Worst Entry-Level Job Market in Years US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P. By subscribing, you are agreeing to Yahoo's Terms and Privacy Policy Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
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4 hours ago
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Escalation Is Key Fear for Markets After Strike, Analysts Say
(Bloomberg) -- The key question for markets following Israel's strike on Iran is how much worse things will get, say strategists. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire Israel has launched airstrikes against Iran's nuclear program and military targets. Defense Minister Israel Katz called the move 'preemptive,' while Israel's Prime Minister Benjamin Netanyahu said the strikes would last until the threat is removed. The tension weighed on markets: Oil surged, Asian stocks and global equity futures fell, and the dollar reversed earlier losses as traders sought familiar havens. Here's what market watchers from Sydney to Paris are saying: Nicolas Forest, chief investment officer at Candriam in Brussels 'The attack on Iran is a classic risk-off factor that leads to a decline in stocks and a flight to quality. The sharp rise in oil prices, if it continues, could negatively impact growth and inflation, reinforcing the potential risk of stagflation already present with the tariff war. The oil price rally is clearly not in the interest of the Trump administration' Kim Forrest, a US-based chief investment officer at Bokeh Capital Partners 'It seems like Israel has taken it upon itself to destroy the nuclear bomb building capabilities of Iran and that's not what we've seen in the past. It's unclear what will happen throughout the night... We'll see if cooler heads can prevail' 'This is very serious. It's surprising the market isn't down more. Do I expect things to get lower in the coming hours? Heck yeah, I expect it to be lower by the time I wake up but it'll also depend on who's talking and what's happening' Alexandre Baradez, chief market analyst at IG in Paris 'This is likely to put the current rally on European and US indexes on hold. The stock market was getting expensive so this will encourage investors, particularly retail, to take some profits now' Alexandre Hezez, chief investment officer at Group Richelieu in Paris 'This goes against what central banks were expecting for oil prices and could potentially change their scenario by heating up inflation and slowing growth' Matt Maley, a US-based chief market strategist at Miller Tabak + Co. 'The comments about doing whatever it takes, Netanyahu saying this is just the beginning and the references to self defense — they are preparing for a serious retaliation. The last time Iran retaliated nothing got through but nobody knows what will happen next' 'My question is what happens with the Strait of Hormuz? Iran can shut that down and that's 13 million barrels of oil everyday not to mention natural gas and they have the ability to shut that down. Will they want to do that or limit what can go through? I don't know' 'The assumption that this will be a quick affair is a risky one... If this turns into something lengthy and the Strait of Hormuz gets impacted oil can go above $100 very quickly and that puts pressure on global growth. I don't want to overstate it because we simply don't know if things will get worse or not. The real risks are very high right now' Michael O'Rourke, chief market strategist at JonesTrading in the US 'I'm really just trying to get the best grip I can on the situation and obviously it's fluid — but there should be more risk involved to the markets than the strikes last year' 'The market has had a tremendous rally without much of a correction so that places the market in a more vulnerable place. It's one of those situations where we've had an escalation and the question is: what does Iran do as a response? Do they have a harder strike back? That's the looming question in my mind. During the course of this rally markets have been relatively complacent so that's a key risk with where we are today' 'There's now a very likely outcome that there's a retaliatory event over the weekend and that will keep people on the sideline and a little tentative' Billy Leung, investment strategist in Sydney at Global X ETFs 'It's a sharp reversal from last night's bullishness, when tech optimism, soft inflation, and light positioning had the market leaning risk-on — a direct Israeli strike on Iran cuts through that narrative instantly' 'This mirrors past flashpoints like the Soleimani strike in 2020, tanker attacks in 2019, where we saw the same initial reaction: oil bid, Treasuries and Swiss franc stronger' 'The key now is whether this stays contained — history shows markets often fade the shock if escalation is limited' Wei Liang Chang, a Singapore-based macro strategist at DBS Group Holdings Ltd. 'There could be a knee-jerk reaction in markets, as Middle East geopolitical risks return to to the fore' 'Markets will assess the impact of the strike and watch for risks of an escalation' 'Risky assets could see a pare back, while safe havens such the yen and US Treasuries could be bid' Matthew Haupt, portfolio manager in Sydney at Wilson Asset Management 'Seeing classical risk off moves with bonds and gold bid, along with a spike in oil. Quite often these moves are faded after the initial shocks. What we are watching now for is the speed and scale of the response from Tehran, that will shape the duration of the current moves' Charu Chanana, chief investment strategist in Singapore at Saxo Markets 'Whether this risk-off tone sticks now depends on the next 24-48 hours. If Tehran's response is limited and energy flows remain uninterrupted, experience suggests the premium can bleed out fairly quickly. But any sign of retaliation or supply disruption would keep volatility elevated and push oil and safe-haven assets higher.' Rodrigo Catril, a Sydney-based strategist at National Australia Bank 'One theme to watch is whether the dollar's safe haven attributes are being diluted by the US administration's trade policy (tariffs), fiscal profligacy and its challenge to the rule of law. Evidence to date suggests that is the case' 'Israel's unilateral move, if confirmed, also highlights how the world order is potentially changing' 'The US is seemingly stepping away from a leading geopolitical role, opening the door for others to pursue their own agenda' 'The concern here would be that Israel is just one and others could follow in the belief that the US won't be there to stop them' 'Geopolitics is becoming a more disruptive force for markets, adding another layer of uncertainty. Safe havens will go bid but the dollar may not' --With assistance from Marcus Wong, John Cheng, Bailey Lipschultz, Winnie Hsu and Ruth Carson. (Adds further analyst comments.) American Mid: Hampton Inn's Good-Enough Formula for World Domination New Grads Join Worst Entry-Level Job Market in Years The Spying Scandal Rocking the World of HR Software US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P.
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5 hours ago
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Oil Curve Shift Shows Fears of Protracted Mideast Conflict
(Bloomberg) -- The oil futures curve is strengthening on concerns that Israel's latest strike on Iran could have severe and long-lasting repercussions. Shuttered NY College Has Alumni Fighting Over Its Future Trump's Military Parade Has Washington Bracing for Tanks and Weaponry NYC Renters Brace for Price Hikes After Broker-Fee Ban Do World's Fairs Still Matter? NY Long Island Rail Service Resumes After Grand Central Fire Front-month Brent prices have spiked by as much as 13%, but there's also movement for contracts further out with timespreads rallying. The so-called smile or hockey stick pattern that's characterized the shape of the futures curve for months — featuring a contango structure and signaling loose balances in the long term — has now all but disappeared. The widely watched spread between the two nearest December contracts for Brent, a favorite marker for traders pricing in oil's long-term prospects, was around $2.30 a barrel in backwardation late morning in Singapore, with the shorter-dated contract at a premium over the later one. It's flipped sharply from the contango it's been in over the last two months. Other timespreads are also rallying, with Brent's prompt spread, the gap between the two nearest months, rising to as wide as $4 a barrel to reach the highest since 2022 on an intraday basis. The three-month and six-month spreads are all also stronger. That's been accompanied by volumes that are a lot higher than usual in the Asian session. Meanwhile, oil options are also at their most bullish in years, although that could change as the Asia session gives way to London and New York trading hours. A gauge of implied volatility was also higher. 'In a scenario where we see continued escalation, there's the potential for disruptions to shipping through the Strait of Hormuz,' which is an extreme case but could leave the roughly 14 million barrels a day of oil that flows through it at risk, said Warren Patterson, head of commodities strategy at ING Groep NV in Singapore. 'A significant disruption to these flows would be enough to push prices to $120 a barrel.' Brent futures were last trading near $75 a barrel. (Updates with chart) American Mid: Hampton Inn's Good-Enough Formula for World Domination New Grads Join Worst Entry-Level Job Market in Years The Spying Scandal Rocking the World of HR Software US Tariffs Threaten to Derail Vietnam's Historic Industrial Boom As Companies Abandon Climate Pledges, Is There a Silver Lining? ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
