Oil prices soar and Asian markets sink as Trump joins Israel's war on Iran
Oil prices surged to a five-month high and Asian share markets tumbled as global trading resumed for the first time since the US joined Israel in striking Iranian nuclear facilities, jolting investors and raising fears of wider regional instability.
Investors were waiting to see how Iran would respond after Tehran vowed that the American attack would have 'everlasting consequences ' and declared that it was keeping all options open.
The attack targeted three Iranian nuclear facilities early on Sunday morning.
Global crude oil benchmark Brent jumped 2 per cent after rallying as much as 5.7 per cent when the market opened on Monday. The price reached $81.40 per barrel, the highest in five months, before giving up some of the gains.
Asian markets reacted cautiously. There was no widespread panic in financial markets as analysts expressed concern about further escalation, which could fuel inflation and affect central bank decisions on interest rates.
Japan 's benchmark Nikkei 225 plunged 0.56 per cent, South Korea 's stock index Kospi lost 1.05 per cent and Taiwan 's Taiex fell 1.5 per cent.
These countries rely heavily on oil imported through the Strait of Hormuz, a key oil trade route which Iran could shut down in retaliation for the US attack.
Hong Kong's Hang Seng Index fell 0.14 per cent while mainland China's CSI 300 index dropped 0.4 per cent. The Australian S&P/ASX 200 came down 0.76 per cent.
In India, the benchmark Nifty index 50 dropped 0.8 per cent while the Bombay Stock Exchange Sensex fell 0.8 per cent.
The US stock futures also tumbled in response to the strikes. S&P 500 futures fell by 0.4 per cent, and Nasdaq futures was down by 0.6 per cent.
The US dollar, however, climbed 0.3 per cent.
Iran, one of the largest crude producers on the planet, has threatened to shut down the Strait of Hormuz in a move widely seen to hurt the West. A fifth of the world's oil passes through the narrow waters that Iran shares with Oman and the UAE.
The Iranian parliament has voted to close the strait and the decision now rests with the Supreme National Security Council, a body led by an appointee of supreme leader Ayatollah Ali Khamenei.
Any disruption to supply could significantly impact the global economy, driving up crude prices and dealing a heavy blow to major importers such as China, India, and Japan.
'The situation remains highly fluid and much hinges on whether Tehran opts for a restrained reaction or a more aggressive course of action,' Kristian Kerr, head of macro strategy at LPL Financial in Charlotte, North Carolina, said in a commentary.
The US directly joined Israel 's war on Iran by conducting attacks against at least three nuclear facilities early on Sunday morning. Israel had kicked off the conflict on 13 June, launching a series of overnight strikes on nuclear facilities, missile capabilities and air defences.
The Israeli attacks have killed nearly 400 people and wounded 3,056, according to the Iranian health ministry.
Iran has responded by launching a wave of missile and drone attacks on Israel, inflicting damage to military and civilian infrastructure.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
15 minutes ago
- Reuters
Hague NATO summit aims to focus on Trump's spending goal but Iran looms large
THE HAGUE, June 23 (Reuters) - The NATO alliance has crafted a summit in The Hague this week to shore itself up by satisfying U.S. President Donald Trump with a big new defence spending goal - but it now risks being dominated by the repercussions of his military strikes on Iran. The two-day gathering is also intended to signal to Russian President Vladimir Putin that NATO is united, despite Trump's previous criticism of the alliance, and determined to expand and upgrade its defences to deter any attack from Moscow. The summit and its final statement are meant to be short and focused on heeding Trump's call to spend 5% of GDP on defence - a big jump from the current 2% goal. It is to be achieved by investing more in both militaries and other security-related spending. Spanish Prime Minister Pedro Sanchez, however, upset NATO Secretary General Mark Rutte's preparations on Sunday as he declared Madrid did not need to meet the new spending target even as Spain approved the summit statement. Ukrainian President Volodymyr Zelenskiy has had to settle for a seat at the pre-summit dinner on Tuesday evening - rather than a formal session with the leaders when they meet on Wednesday - due to his volatile relationship with Trump. The U.S. bombing of Iranian nuclear sites at the weekend makes the summit much less predictable than Rutte - a former prime minister of the Netherlands hosting the gathering in his home city - and other NATO member countries would like. Much will depend on the precise situation in the Middle East when the summit takes place - such as whether Iran has retaliated against the U.S. - and whether other NATO leaders address the strikes with Trump or in comments to reporters. If the meeting does not go to plan, NATO risks appearing weak and divided, just as European members confront what they see as their biggest threat since the end of the Cold War - Russia - while bracing for possible U.S. troop cuts on the continent. Under the new defence spending plan, countries would spend 3.5% of GDP on "core defence" - essentially, weapons and troops - and a further 1.5% on security-related investments such as adapting roads, ports and bridges for use by military vehicles, protecting pipelines and deterring cyber-attacks. Such an increase - to be phased in over 10 years - would mean hundreds of billions of dollars more spending on defence. Last year, alliance members collectively spent about 2.6% of NATO GDP on core defence, amounting to about $1.3 trillion, according to NATO estimates. The lion's share came from the United States, which spent almost $818 billion. Washington has insisted it is time for Europeans to take on more of the financial and military burden of defending their continent. European leaders say they have got that message but want an orderly and gradual transition, fearful that any gaps in their defences could be exploited by Putin. They are particularly keen to stress their spending commitment as Trump has previously threatened not to protect allies that do not spend enough on defence. A prepared text summit statement agreed by NATO governments and seen by Reuters says: "We reaffirm our ironclad commitment to collective defence as enshrined in Article 5 of the Washington Treaty - that an attack on one is an attack on all." As part of their efforts to keep Trump onside, NATO officials have shunted difficult topics to the sidelines of the summit or kept them off the agenda altogether. While many European nations see Russia as an ever-growing threat, Trump has expressed a desire for better economic relations with Moscow - a prospect that Europeans think would help Russia to strengthen its military and threaten them more. Similarly, many Europeans are deeply wary of Trump's moves to lessen Russia's diplomatic isolation as part of his efforts to secure a deal to end the war in Ukraine. The brief summit statement will include just one reference to Russia as a threat to Euro-Atlantic security and another to allies' commitment to supporting Ukraine, diplomats say.
The Guardian
20 minutes ago
- The Guardian
Airlines are changing plans as conflict escalates in the Middle East. How will it affect Australian passengers?
Passengers are facing delays, scheduling changes and even cancellations as airlines recalibrate their plans to avoid a large chunk of Middle Eastern airspace. Since Israel launched missiles at Iran on 13 June, airlines have been taking alternative routes in order to stay away from parts of the region including Iran, Iraq, Syria, Israel and parts of Jordan. The conflict is escalating as many Australians prepare for trips to Europe during the northern hemisphere summer. If you're one of them, how will the airline disruptions affect you? It all depends on the airline you plan to fly with, and which route your flight is taking from Australia to Europe. Aviation expert Prof Rico Merkert says airlines that stop over in the Middle East, such as Qatar, Emirates and Etihad, are likely to be affected. 'For sure there will be quite a bit of delays and possibly the odd cancellation,' Merkert, deputy director of the University of Sydney's Institute of Transport and Logistics Studies, says. 'Getting to the Middle East is probably still OK but once you get there it might be a bit hectic … with the potential for detours and delays. 'And, obviously, flying to Iran at the moment is not possible.' For example, Emirates typically flies from its home airport in Dubai into continental Europe using Iranian airspace, Merkert says, 'so they'll need to detour'. 'It's not just Iranian airspace, it's also Iraq, Syria and part of Jordan as well,' he says. 'Essentially, everything that's between Israel and Iran, because they do keep sending missiles to each other.' Emirates was contacted for comment, but did not respond by deadline. Qantas, which operates flights to London direct from Perth or via Singapore from Australia's east coast, has indicated it is monitoring the situation and says it will alter its flight paths if necessary but has not made changes yet. As Merkert points out in one example, a passenger on the daily QF1 flight from Sydney to London via Singapore would avoid Middle Eastern airspace, as those flights go over central Asia. However, the national carrier only flies from Australia to London. If you book with Qantas and want to go elsewhere in Europe, you're likely to be flying with Emirates, its international partner. Virgin only recently launched international flights, after entering into a codesharing agreement with Qatar, similar to the one between Qantas and Emirates. Qatar is headquartered in Doha, not far from Emirates' base in Dubai. As well as a partial ownership stake for Qatar, the alliance includes a so-called wet lease deal, whereby the Gulf carrier provides planes and crew to the Australian airline to operate weekly services to Doha under the Virgin brand. Virgin on Monday indicated its wet-leased service to Doha remained unaffected but has not ruled out scheduling changes. On Monday, a Qatar Airways spokesperson said the 'evolving situation in the region' would 'require some schedule changes'. The airline did not elaborate on what those changes involved but advised passengers to check its website for the latest information. 'We are continuously monitoring and assessing the situation, and reacting in real-time to ensure we operate under the safest conditions possible at all times,' the spokesperson said. 'We have some of the best people in the business working behind the scenes to keep our network strong and secure, and to ensure we remain the airline you can trust and rely on.' Etihad, another Gulf carrier, has suspended all flights between its base in Abu Dhabi and Tel Aviv until 15 July. 'This remains a highly dynamic situation, and further changes or disruption, including sudden airspace closures or operational impact, may occur at short notice,' a spokesperson said on Monday. 'Etihad continues to monitor developments closely in coordination with the relevant authorities and is taking all necessary precautions.' Merkert says he expects Turkish Airlines flights to face similar problems, as the carrier typically uses Iranian airspace. The airline, which flies from Sydney to Istanbul and then onwards into Europe – with a stopover in Malaysia – has plans to further expand into the Australian market. The carrier did not respond before deadline to a request for comment. Guardian Australia contacted more than a dozen airlines on Monday asking them what their plans were. Singapore Airlines had cancelled eight flights between Dubai and Singapore, 'following a security assessment of the geopolitical situation in the Middle East'. Thai Airways, which flies from Australia to Europe via Bangkok, said its services were not affected by the conflict. British Airways indicated its flights to Australia were operating as scheduled. While airlines have assured passengers they are making plans to avoid Iranian airspace and other danger zones, Merkert says there are options for people who would prefer not to fly over the Middle East at the moment, pointing to airlines that fly to Europe via Asia without stopping over in a Gulf country. 'My daughter is currently en route to Europe,' he says. 'But she flew with Singapore Airlines and so she flew via Singapore and from there to Frankfurt. That's a route that takes you about an hour north of Iran.' Merkert says another option could be flying to Europe via Japan. 'The problem at the moment though is the Ukrainian airspace is blocked too,' he says. 'It's probably safer, but it also takes additional time.'
Daily Mail
an hour ago
- Daily Mail
Supertankers U-turn in Strait of Hormuz as fear grips shipping industry after Iran threatens to shut down major route in wake of US airstrikes, pushing up oil prices
Two huge supertankers U-turned in the Strait of Hormuz yesterday amid fears Iran could disrupt the global oil trade by closing the passage in response to U.S. strikes. The Coswisdom Lake and South Loyalty, each capable of transporting about two million barrels of crude, entered the passage on Sunday before abruptly changing course and leaving, according to Bloomberg. It was unclear what caused the two empty ships to head south, away from the mouth of the Persian Gulf. Analysts have been closely monitoring the strait since the U.S. bombed three nuclear facilities in Iran earlier on Sunday. Iran's parliament was reported to have backed a move to close the strait late on Sunday, threatening around a fifth of all global oil movements. Iranian state television reported that the legislature had come to an agreement, but Supreme leader Ayatollah Khamenei would have to make the final decision, it said. The closure of the strait, a chokepoint between Iran and Oman, would threaten petroleum shipments from Persian Gulf countries, likely spiking prices. Oil prices jumped more than four percent early Monday, and Dutch and British wholesale gas prices rose today as markets braced for Iran's response. Analysts have warned that a decision to close the Strait would meaningfully impact global oil flows and be tantamount to a declaration of war. 'A move to close Hormuz would be an effective declaration of war against the Gulf states and the U.S.,' Eurasia senior analyst Gregory Brew told Axios. But whether Iran has the resource and will to suffocate its adversaries is unclear. 'Iran in its weakened state is unlikely to seek escalation of that kind at this time,' he added. 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'. Iran's armed forces nonetheless threatened on Monday to inflict 'serious, unpredictable consequences' on the U.S. in retaliation for its strikes on nuclear sites. 'This hostile act... will widen the scope of legitimate targets of the armed forces of the Islamic Republic of Iran and pave the way for the extension of war in the region,' said armed forces spokesman Ebrahim Zolfaghari on state television. Ali Akbar Velayati, an adviser to Iran's supreme leader Ayatollah Ali Khamenei, said bases used by US forces 'in the region or elsewhere' could be attacked. The US State Department issued a 'worldwide caution' for Americans on Sunday. China today warned against 'the spillover of war', urging the international community to do more to prevent the fighting from impacting the world's economy, noting the global importance of the Gulf maritime trade routes off the Iranian coast. The leaders of Britain, France and Germany have called on Iran 'not to take any further action that could destabilise the region'. At a UN Security Council emergency meeting Sunday, Secretary-General Antonio Guterres warned against 'descending into a rathole of retaliation after retaliation'. Asian markets traded lower today amid concerns of disruption to energy markets after the US air strikes 'obliterated' Iran's nuclear facilities on Saturday night. 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 3.3million 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 close the strategic Strait of Hormuz - which carries 20 per cent of global oil output. Brent crude futures were up $1.52 or 1.97 per cent to $78.53 a barrel as of 6am UK time. US West Texas Intermediate crude advanced $1.51 or 2.04 per cent to $75.35. Both contracts jumped by more than 3 per cent earlier in the session to $81.40 and $78.40, respectively, touching five-month highs before giving up some gains. 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 $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. 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 Defense Secretary Pete Hegseth said on Sunday that the strikes had 'devastated the Iranian nuclear programme', though some officials cautioned that the extent of the damage was unclear.
