IMF chief warns of broader risks from US strikes on Iran, after oil hits five-month high
Update:
Date: 2025-06-23T06:21:15.000Z
Title: Introduction: Oil dips back from five-month high amid Iran crisis
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The oil price has hit its highest level since January, after the US bombed Iran's nuclear facilities over the weekend.
Traders are in a largely risk-off mood, as they weigh up the chances of further escalation in the Middle East, and ponder possible Iranian retaliations. But there's not a full-blown panic in the markets.
There was an early leap in the oil price when the new trading week began; crude prices surged over 4%, pushing a barrel of Brent crude to a five-month high of $81.40 per barrel.
But… it's slipped back even before traders in the City of London reached their desks, and is now up 1.7% at $78.32 per barrel.
Yesterday, Iran's parliament voted to shut down the Strait of Hormuz, though which a fifth of the world's oil is transported. If it happened, that could create a supply shock that drives up the price of energy, fuelling inflation and hurting growth.
In response, Marco Rubio, the US secretary of state, warned it would be 'economic suicide' for Iran to close the Strait, and urged China to sway Tehran on this point.
Rubio told Fox News:
'I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil.'
Holger Schmieding, chief economist at Berenberg Bank, says the Strait of Hormuz is 'the key economic risk to watch'. But, he also argues that a protracted disruption to energy flows in the Gulf region 'seems unlikely', as trying to throttle energy exports would be a high-risk strategy for Tehran.
Schmieding told clients this morning:
For more than two decades, the Iranian regime has sought to destabilise various parts of the Middle East. On its own, a big setback to Iran's apparent attempt to acquire nuclear weapons should count as a positive.
In the short run, the US 'one off' strike against three Iranian nuclear facilities raises the geopolitical risks in the region to a new level. Markets will probably shift into 'risk off' mode as they await the Iranian response. In the long run, however, a severely weakened Iranian regime could turn into a significant positive for the region.
Today: UK government to publish its industrial strategy
9am BST: Eurozone flash PMI manufacturing and services survey for June
9.30am BST: UK flash PMI manufacturing survey and services for June
2pm BST: Christine Lagarde testifies to the Committee on Economic and Monetary Affairs of the European Parliament in Brussels
2.45pm BST: US flash PMI manufacturing survey and services for June
Update:
Date: 2025-06-23T06:24:22.000Z
Title: The US dollar has risen, a little, against a basket of currencies today as investors seek out safe haven assets.
Content:
The dollar index has gained 0.3% this morning, while the pound has slipped by 0.1% to $1.3433.
Carol Kong, currency strategist at Commonwealth Bank of Australia, said the markets are in wait-and-see mode on how Iran responds, with more worries about the positive inflationary impact of the conflict than the negative economic impact.
Kong explains:
'The currency markets will be at the mercy of comments and actions from the Iranian, Israeli and U.S. governments.
The risks are clearly skewed to further upside in the safe haven currencies if the parties escalate the conflict.'
Update:
Date: 2025-06-23T06:20:05.000Z
Title: IMF's Georgieva warns of growth risks from US strikes on Iran
Content: The head of the International Monetary Fund has warned that last weekend's US strikes on Iran could hurt global growth, if the consequence ripple beyond the energy markets.
Kristalina Georgieva told Bloomberg TV this morning that the Middle East crisis added to global uncertainty, explaining:
'We are looking at this as another source of uncertainty in what has been a highly uncertain environment.'
Georgieva said the IMF was watching energy prices closely, warning that a rise in oil prices could have knock-on economic impact. She says:
'There could be secondary and tertiary impacts. Let's say there is more turbulence that goes into hitting growth prospects in large economies — then you have a trigger impact of downward revisions in prospects for global growth.'
Georgieva is also hoping that energy supply routes will not be disrupted, saying:
'Let's see how events will develop.
I pray no.'
IMF's Kristalina Georgieva warned that the US strikes on Iran could potentially have broader impacts beyond energy channels, as global uncertainty escalates https://t.co/yqdC6u3HMF
Update:
Date: 2025-06-23T06:19:44.000Z
Title: Introduction: Oil dips back from five-month high amid Iran crisis
Content: Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The oil price has hit its highest level since January, after the US bombed Iran's nuclear facilities over the weekend.
Traders are in a largely risk-off mood, as they weigh up the chances of further escalation in the Middle East, and ponder possible Iranian retaliations. But there's not a full-blown panic in the markets.
There was an early leap in the oil price when the new trading week began; crude prices surged over 4%, pushing a barrel of Brent crude to a five-month high of $81.40 per barrel.
But… it's slipped back even before traders in the City of London reached their desks, and is now up 1.7% at $78.32 per barrel.
Yesterday, Iran's parliament voted to shut down the Strait of Hormuz, though which a fifth of the world's oil is transported. If it happened, that could create a supply shock that drives up the price of energy, fuelling inflation and hurting growth.
In response, Marco Rubio, the US secretary of state, warned it would be 'economic suicide' for Iran to close the Strait, and urged China to sway Tehran on this point.
Rubio told Fox News:
'I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil.'
Holger Schmieding, chief economist at Berenberg Bank, says the Strait of Hormuz is 'the key economic risk to watch'. But, he also argues that a protracted disruption to energy flows in the Gulf region 'seems unlikely', as trying to throttle energy exports would be a high-risk strategy for Tehran.
Schmieding told clients this morning:
For more than two decades, the Iranian regime has sought to destabilise various parts of the Middle East. On its own, a big setback to Iran's apparent attempt to acquire nuclear weapons should count as a positive.
In the short run, the US 'one off' strike against three Iranian nuclear facilities raises the geopolitical risks in the region to a new level. Markets will probably shift into 'risk off' mode as they await the Iranian response. In the long run, however, a severely weakened Iranian regime could turn into a significant positive for the region.
Today: UK government to publish its industrial strategy
9am BST: Eurozone flash PMI manufacturing and services survey for June
9.30am BST: UK flash PMI manufacturing survey and services for June
2pm BST: Christine Lagarde testifies to the Committee on Economic and Monetary Affairs of the European Parliament in Brussels
2.45pm BST: US flash PMI manufacturing survey and services for June
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Daily Mail
37 minutes ago
- Daily Mail
Oil prices surge as Iran maintains global shipping route threat
Oil prices have surged as Iran maintains its threat to close its global shipping route after Donald Trump blew up the country's nuclear bases. 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. 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.
Reuters
an hour ago
- Reuters
Morning Bid: Oil keeps calm, MidEast conflict carries on
LONDON, June 23 (Reuters) - What matters in U.S. and global markets today I'm excited to announce that I'm now part of Reuters Open Interest (ROI), opens new tab, an essential new source for data-driven, expert commentary on market and economic trends. You can find ROI on the Reuters website, opens new tab, and you can follow us on LinkedIn, opens new tab and X., opens new tab In this latest round of Middle East violence, the oil price has been remarkable as much for what it hasn't done as for what it has. Oil prices initially rose this morning following the U.S. strike on Iran over the weekend, but crude has since given back all these gains. I'll discuss this and the rest of the market news below, and then in today's column, I ask why markets are remaining surprisingly calm despite mounting U.S. debt concerns. Today's Market Minute * Iran said on Monday that the U.S. attack on its nuclear sites expanded the range of legitimate targets for its armed forces and called U.S. President Donald Trump a "gambler" for joining Israel's military campaign against the Islamic Republic. * The U.S. bombing injected fresh uncertainty into the outlook for inflation and economic activity at the start of a week chock full of new economic data and central banker commentary, including two days of Congressional testimony from Federal Reserve Chair Jerome Powell. * Utilities in the developed world are stressing over how to keep up with demand from data centres and artificial intelligence searches. But globally, keeping people cool is likely to be a much bigger drain on electricity grids and a more pressing power sector challenge. Read the latest from ROI global energy transition columnist Gavin Maguire. * The escalation of the Middle East conflict could lead Tehran to disrupt vital exports of oil and gas from the region, sparking a surge in energy prices. But as ROI energy columnist Ron Bousso says, history tells us that any disruption would likely be short-lived. * Several recent global developments have sparked some of the highest levels of uncertainty in decades. ROI outside contributor Joachim Klement claims equity investors seeking clarity should be careful what they wish for. Oil keeps calm, MidEast conflict carries on With global stock and bond markets using crude as a lodestar for how they react to the Iran crisis, the remarkably quick reverse and decline in U.S. oil prices on Monday have seen U.S. and European equities rally following the weekend events. Wall Street futures were up about 0.25% ahead of Monday's bell. European (.STOXXE), opens new tab and Chinese (.CSI300), opens new tab, (.HSI), opens new tab were higher too, with Japan's Nikkei (.N225), opens new tab bucking the trend even as the yen weakened. Mostly due to the yen slide, the dollar index (.DXY), opens new tab was firmer. U.S. President Donald Trump said he had "obliterated" Iran's main nuclear sites in strikes over the weekend, joining an Israeli assault in an escalation of conflict in the Middle East as Tehran vowed to defend itself. Trump then openly hinted at 'regime change' in his social media posts on Sunday. U.S. crude prices initially jumped above $78 per barrel to their highest since January, but quickly fell back below Friday's close to trade below $74 - more than $6 below the high for this year and down 11% on levels seen a year ago. Brent prices are down on the day too. While the escalating conflict surrounding Iran has turned unpredictable, it happens in a market where global space oil production capacity is running in excess of 4 million barrels a day - an oversupply expected to persist through the end of next year at least. What's more, outsize bets on the direction for oil linked to the outcome of the Iran war are frustrated by numerous binary outcomes - including both the survival of the Tehran government and even possible mining of the Straits of Hormuz. While the latter could stymie shipping in the region for a bit, it's not clear how long it could be enforced. With global demand set to ebb later this year, due in part due to the growth-dampening effects of U.S. trade tariffs, and U.S. production set to increase, speculative oil price punts are very risky. With oil prices still largely under wraps, the fallout for U.S. Treasuries is similarly limited. With one eye on Federal Reserve chief Jerome Powell's semi-annual Congressional testimony on Tuesday and series of debt auctions during the week, 10-year yields remained stuck in recent ranges about 4.4%. Trump on Friday again floated the idea of firing Powell. "I don't know why the Board doesn't override (Powell)," Trump wrote in a lengthy post on Truth Social criticizing Fed policy. "Maybe, just maybe, I'll have to change my mind about firing him? But regardless, his Term ends shortly." San Francisco Fed President Mary Daly said on Sunday that U.S. central bank should consider giving less forward guidance about its monetary policy intentions, particularly in uncertain times. "Words have power, which is a great tool. But words can be harder to reverse than the interest rate," she said. The economic data calendar homes in on June business surveys, with the flash versions of U.S. soundings from S&P Global due out later in the day. Overall euro zone business activity expanded only modestly in June, with a small improvement in the dominant services industry offsetting more downbeat manufacturing. The services PMI nudged up to sit right on the break-even 50 mark up from May's final reading of 49.7. Optimism among services firms increased and the business expectations index bounced to a four-month high of 57.9 from 56.2. European Central Bank boss Christine Lagarde testifies at the European Parliament later in the day. Economic surprise indexes, capturing how incoming economic readings are above or below expectations overall, show a sharp divergence between Europe and the United States - with the euro zone index at its most positive since May and the U.S. equivalent at its most negative in nine months. Elsewhere, Bitcoin was sharply lower over the weekend, while gold prices also fell back early on Monday. Chart of the day Relatively quick reversals of oil price spikes were largely thanks to the ample spare production capacity - and also due to the fact that any rapid oil price increase curbs demand in turn. The current global oil market certainly has spare capacity. OPEC+, an alliance of producing nations, today holds around 5.7 million barrels per day in excess capacity, of which Saudi Arabia and the United Arab Emirates hold 4.2 million bpd. Although there are concerns about closing of the key Straits of Hormuz waterway, the two Gulf powers could bypass it by oil pipelines. Saudi produces around 9 million bpd and has a crude pipeline that runs from the Abqaiq oilfield on the Gulf coast in the east to the Red Sea port city of Yanbu in the west. The UAE, which produced 3.3 million bpd of crude oil in April, has a 1.5 million bpd pipeline linking its onshore oilfields to the Fujairah oil terminal that is east of the Strait of Hormuz. Today's events to watch * Flash U.S. June business surveys from S&PGlobal (0945EDT) May existing home sales (1000EDT) * Federal Reserve Board Governor Christopher Waller, Fed Board Governor Adriana Kugler, Fed Vice Chair for Supervision Michelle Bowman, and Chicago Fed President Austan Goolsbee all speak. European Central Bank President Christine Lagarde speaks to European Parliament (0800EDT) * EU-Canada summit takes place in Brussels * U.S. Treasury sells $58 billion of 3-year notes Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, opens new tab, is committed to integrity, independence, and freedom from bias. Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here.
Reuters
an hour ago
- Reuters
Tankers U-turn, zig-zag, pause around Strait of Hormuz
SINGAPORE, June 23 (Reuters) - At least two supertankers made U-turns at the Strait of Hormuz following U.S. military strikes on Iran, shiptracking data shows, as more than a week of violence in the region prompts vessels to speed, pause, or alter their journeys. Washington's decision to join Israel's attacks on Iran has stoked fears that Iran could retaliate by closing the strait between Iran and Oman through which around 20% of global oil and gas demand flows. That has spurred forecasts of oil surging to $100 a barrel. Disruption is already evident, with tankers avoiding spending more time than needed in the strait, industry sources said. Singapore-based Sentosa Shipbrokers said that over the past week, empty tankers entering the Gulf are down 32% while loaded tanker departures are down 27% from early May levels. The Coswisdom Lake, a very large crude carrier (VLCC), reached the strait on Sunday before making a U-turn and heading south, Kpler and LSEG data showed. On Monday it turned back again, resuming its journey towards the port of Zirku in the United Arab Emirates. The South Loyalty, also a VLCC, made a similar U-turn and remained outside the strait on Monday, LSEG data showed. It was scheduled to load crude from Iraq's Basra terminal, according to Kpler data and two shipping sources. The Coswisdom Lake was scheduled to load crude at Zirku for delivery to China. It was chartered by Unipec, a trading arm of China's state-run Sinopec ( opens new tab, LSEG and Kpler data showed. Sinopec did not immediately respond to a request for comment. Shipowners will try to minimise time that vessels spend inside the Strait of Hormuz due to the conflict, KY Lin, spokesperson at Taiwan's Formosa Petrochemical Corp. "Vessels will only enter the region when it is nearer to their loading time," he said on Monday. Japanese shipping firms Nippon Yusen (9101.T), opens new tab and Mitsui O.S.K. Lines (9104.T), opens new tab said on Monday they continue to transit the strait but have instructed their vessels to minimise time spent in the Gulf. Several oil traders and analysts told Reuters that they had been warned to expect possible shipping delays as vessels wait for their turn outside the area. Iran's parliament on Sunday approved a measure to close the strait, Iran's Press TV reported, but any such move would require approval from the Supreme National Security Council. Iran has threatened to close the strait in the past but has never done so.
