Asia: Market trade lower; oil prices spike after US strikes on Iran

[TOKYO] Oil prices surged and Asian markets traded lower on Monday on concerns of disruption to energy markets after US air strikes on Iran's nuclear facilities.
The dollar strengthened as traders assessed the weekend's events, with Iran threatening US bases in the Middle East as fears grow of an escalating conflict in the volatile region.
Iran is the world's ninth-biggest oil-producing country, with output of about 3.3 million barrels per day.
It exports just under half of that amount and keeps the rest for domestic consumption.
If Tehran decides to retaliate, observers say one of its options would be to seek to close the strategic Strait of Hormuz - which carries one-fifth of global oil output.
When trading opened on Monday, Brent and the main US crude contract WTI both jumped more than four per cent to hit their highest price since January.
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They pared these gains however and later in the morning Brent was up 2.1 per cent at US$75.43 per barrel and WTI was 2.1 per cent higher at US$78.64.
Economists at MUFG warned of 'high uncertainty of the outcomes and duration of this war', publishing a 'scenario analysis' of an oil price increase of US$10 per barrel.
'An oil price shock would create a real negative impact on most Asian economies' as many are big net energy importers, they wrote, reflecting the market's downbeat mood.
Tokyo's key Nikkei index was down 0.6 per cent at the break, with Hong Kong losing 0.4 per cent and Shanghai flat. Seoul fell 0.7 per cent and Sydney was 0.8 per cent lower.
'Extreme route'
The dollar's value rose against other currencies but analysts questioned to what extent this would hold out.
'If the increase proves to be just a knee-jerk reaction to what is perceived as short-lived US involvement in the Middle-East conflict, the dollar's downward path is likely to resume,' said Sebastian Boyd, markets live blog strategist at Bloomberg.
US Defence Secretary Pete Hegseth said Sunday that the strikes had 'devastated the Iranian nuclear programme', though some officials cautioned that the extent of the damage was unclear.
It comes after Israel launched a bombing campaign against Iran earlier this month.
Chris Weston at Pepperstone said Iran would be able to inflict economic damage on the world without taking the 'extreme route' of trying to close the Strait of Hormuz.
'By planting enough belief that they could disrupt this key logistical channel, maritime costs could rise to the point that it would have a significant impact on the supply of crude and gas,' he wrote.
At the same time, 'while Trump's primary focus will be on the Middle East, headlines on trade negotiations could soon start to roll in and market anxieties could feasibly build'. AFP

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Airlines weigh Middle East cancellations after US strikes in Iran

Straits Times

37 minutes ago

Straits Times

Airlines weigh Middle East cancellations after US strikes in Iran

Commercial airlines around the world on June 23 were weighing how long to suspend Middle East flights after the US struck Iran. PHOTO: EPA-EFE Follow our live coverage here. DUBAI - Commercial airlines around the world on June 23 were weighing how long to suspend Middle East flights as a conflict which has already cut off major flight routes entered a new phase after the US attacked key Iranian nuclear sites and Tehran vowed to defend itself. The usually busy airspace stretching from Iran and Iraq to the Mediterranean has been largely empty of commercial air traffic for 10 days since Israel began strikes on Iran on June 13, as airlines divert, cancel and delay flights through the region due to airspace closures and safety concerns. New cancellations of some flights by international carriers in recent days to usually resilient aviation hubs like Dubai, the world's busiest international airport, and Qatar's Doha, show how aviation industry concerns about the region have escalated. However, some international airlines were resuming services on June 23 . Leading Asian carrier Singapore Airlines, which described the situation as 'fluid', was set to resume flying to Dubai on June 23 after cancelling its June 22 flight from Singapore. Similarly, Flightradar24 departure boards show British Airways, owned by IAG, was set to resume Dubai and Doha flights on June 23 after cancelling routes to and from those airports on Sunday. Air France KLM cancelled flights to and from Dubai and Riyadh on June 22 and June 23 . With Russian and Ukrainian airspace also closed to most airlines due to years of war, the Middle East had become a more important route for flights between Europe and Asia. Amid missile and air strikes during the past 10 days, airlines have routed north via the Caspian Sea or south via Egypt and Saudi Arabia. Added to increased fuel and crew costs from these long detours and cancellations, carriers also face a potential hike in jet fuel costs as oil prices rise following the US attacks. Airspace risks Proliferating conflict zones are an increasing operational burden on airlines, as aerial attacks raise worries about accidental or deliberate shoot-downs of commercial air traffic. Location spoofing and GPS interference around political hotspots, where ground-based GPS systems broadcast incorrect positions which can send commercial airliners off course, are also a growing issue for commercial aviation. Flightradar24 told Reuters it had seen a 'dramatic increase' in jamming and spoofing in recent days over the Persian Gulf. SkAI, a Swiss company that runs a GPS disruption map, late on June 22 said it had observed more than 150 aircraft spoofed in 24 hours there. Safe Airspace, a website run by OPSGROUP, a membership-based organisation that shares flight risk information, noted on June 22 that US attacks on Iran's nuclear sites could heighten the threat to American operators in the region. This could raise additional airspace risks in Gulf states like Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, it said. In the days before the US strikes, American Airlines suspended flights to Qatar, and United Airlines did the same with flights to Dubai. They have yet to resume. While international airlines are shying away from the region, local carriers in Jordan, Lebanon and Iraq are tentatively resuming some flights after widespread cancellations. Israel is ramping up flights to help people return home, and leave. The country's Airports Authority says that so-called rescue flights to the country would expand on June 23 with 24 a day, although each flight would be limited to 50 passengers. From June 23 , Israeli airlines will start to operate outbound flights from Israel, the authority said. Israeli airline El Al on June 22 said it had received applications to leave the country from about 25,000 people in about a day. REUTERS Join ST's Telegram channel and get the latest breaking news delivered to you.

Singapore, Asia-Pacific markets pare losses after US strikes on Iran; oil prices give back some gains

Business Times

an hour ago

Business Times

Singapore, Asia-Pacific markets pare losses after US strikes on Iran; oil prices give back some gains

[SINGAPORE] Asia-Pacific markets recovered some losses while oil prices gave back some gains by Monday (Jun 23) afternoon, following declines in the morning after the US launched strikes against three nuclear facilities in Iran over the weekend. Singapore's Straits Times Index (STI) was down 0.4 per cent. DBS declined 0.3 per cent to S$43.19. OCBC slid 0.1 per cent or S$0.08 to S$15.82 and UOB fell 1 per cent or S$0.34 to S$34.55. Greater China markets declined in early trade after the open. Hong Kong's Hang Seng Index was up 0.6 per cent after earlier losses, while in the mainland, the CSI 300 Index rose 0.5 per cent after marginal declines. Japan's Nikkei 225 edged down 0.1 per cent, while South Korea's Kospi was down 0.2 per cent. Australia's ASX fell around 0.3 per cent. Oil prices surged in early trade on Monday, with Brent and the main US crude contract WTI both climbing more than 4 per cent to hit their highest price since January before paring gains. Brent last jumped 2.7 per cent to US$79.06 per barrel after 9 am Singapore time and WTI was up 2.8 per cent at US$75.87. By Monday afternoon, past 2 pm Singapore time, Brent walked back some gains to trade around US$78.23 per barrel, while WTI was at US$75. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Crude prices already spiked last week after Israel attacked Iran. Brent had risen 13 per cent since the conflict began on Jun 3, while WTI had gained around 10 per cent, according to Reuters data on Monday morning. The US dollar index rose around 0.3 per cent to 99. It last strengthened slightly around 0.2 per cent to the Singapore dollar at around S$1.2899, after 2.30 pm Singapore time. On Saturday, US President Donald Trump announced strikes against three Iranian nuclear facilities, boosting Israel's efforts to destroy Iran's nuclear programme. This followed more than a week of Israeli air attacks on Iran's nuclear and military facilities and US attempts to persuade Iran to reach a deal to dismantle its nuclear programme. In response, Iran on Sunday threatened US bases in the Middle East, intensifying concern of a deepening of conflict in the region. An adviser to Iran's supreme leader Ayatollah Ali Khamenei Ali said bases used by US forces could be attacked in retaliation, given that the US 'has attacked the heart of the Islamic world and must await irreparable consequences'. He warned that countries in the region or elsewhere from which the US launched its strikes would be considered legitimate targets by Iran's armed forces.

Singapore, Asia-Pacific markets pare losses after US strikes on Iran; oil prices give back gains