Japan's Nikkei falls on Iran risks but weaker yen limits losses

Japan's
Nikkei share average
fell on Monday as U.S. attacks on Iranian nuclear sites fueled risk aversion, while the accompanying jump in oil prices weighed on the outlook for Japan's economy and corporate earnings.
The Nikkei declined 0.13% to 38,354.09 as of the close, with 154 of its components declining, versus 69 that rose and two that ended flat. However, that was well off the lows from early in the session, when the benchmark index slid around 1%.
The broader Topix slipped 0.36%.
"Owing to the strong sense of uncertainty in the current situation, many investors are taking a wait-and-see stance," said Yutaka Miura, senior technical analyst at
Mizuho Securities
.
Drivers of Nikkei direction, including oil and the exchange rate, "are likely to fluctuate widely in response to any developments in the Middle East".
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Japan, which imports almost all of its oil, is highly sensitive to crude prices that surged to six-month peaks on Monday as traders waited nervously to see Iran's response to the U.S.'s entry into the conflict. Japanese manufacturers are also vulnerable to energy price spikes.
At the same time, analysts pointed to the yen's decline to a nearly six-week low versus a broadly stronger U.S. dollar as providing support to shares in Japan's heavyweight exporters, whose overseas revenues gain in value when the yen weakens.
"The rise in the dollar-yen interest rate has been very clearly helpful for the Nikkei's performance," said Yunosuke Ikeda, chief macro strategist at
Nomura Securities
.
The safe-haven yen is weakening because "investors seem more focused this time on the impact of higher oil prices on Japan's trade balance," Ikeda said.
Chip stocks underperformed, with Advantest and Tokyo Electron the biggest drags in index-point terms, falling 1.23% and 1.17%, respectively.
Oil explorers were among the best-performing stocks, with the Topix mining sub-index climbing 1.49% to sit at the top of the 33 industry sub-indexes.

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Hindustan Times

31 minutes ago

• Hindustan Times

Iran oil doomsday in Hormuz may be more fear than reality: Bousso

, not 55km , in paragraph 8) Iran oil doomsday in Hormuz may be more fear than reality: Bousso * US strikes on Iran spur fear of disruption to Middle East oil exports * Iran able to block the Strait of Hormuz, has tried in the past * Disruptions likely to be met by swift response from US Navy By Ron Bousso LONDON, - U.S. strikes on several Iranian nuclear sites represent a meaningful escalation of the Middle East conflict that could lead Tehran to disrupt vital exports of oil and gas from the region, sparking a surge in energy prices. But history tells us that any disruption would likely be short-lived. Investors and energy markets have been on high alert since Israel launched a wave of surprise airstrikes across Iran on June 13, fearing disruption to oil and gas flows out of the Middle East, particularly through the Strait of Hormuz, a chokepoint between Iran and Oman through which around 20% of global oil and gas demand flows. Benchmark Brent crude prices have risen by 10% to over $77 a barrel since June 13. While Israel and Iran have targeted elements of each other's energy infrastructure, there has been no significant disruption to maritime activity in the region so far. But President Donald Trump's decision to join Israel by bombing three of Iran's main nuclear sites in the early hours of Sunday could alter Tehran's calculus. Iran, left with few cards to play, could retaliate by hitting U.S. targets across the region and disrupting oil flows. While such a move would almost certainly lead to a sharp spike in global energy prices, history and current market dynamics suggest any move would likely be less damaging than investors may fear. CAN THEY DO IT? The first question to ask is whether Iran is actually capable of seriously disrupting or blocking the Strait of Hormuz. The answer is probably yes. Iran could attempt to lay mines across the Strait, which is 34 km wide at its narrowest point. The country's army or the paramilitary Islamic Revolutionary Guard Corps could also try to strike or seize vessels in the Gulf, a method they have used on several occasions in recent years. Moreover, while Hormuz has never been fully blocked, it has been disrupted several times. During the 1980s Iran-Iraq war, the two sides engaged in the so-called "Tanker Wars" in the Gulf. Iraq targeted Iranian ships, and Iran attacked commercial ships, including Saudi and Kuwaiti oil tankers and even U.S. navy ships. Following appeals from Kuwait, then-U.S. President Ronald Reagan deployed the navy between 1987 and 1988 to protect convoys of oil tankers in what was known as Operation Earnest Will. It concluded shortly after a U.S. navy ship shot down Air Iran flight 655, killing all of its 290 passengers on board. Tensions in the strait flared up again at the end of 2007 in a series of skirmishes between the Iranian and U.S. navies. This included one incident where Iranian speedboats approached U.S. warships, though no shots were fired. In April 2023, Iranian troops seized the Advantage Sweet crude tanker, which was chartered by Chevron, in the Gulf of Oman. The vessel was released more than a year later. Iranian disruption of maritime traffic through the Gulf is therefore certainly not unprecedented, but any attempt would likely be met by a rapid, forceful response from the U.S. navy, limiting the likelihood of a persistent supply shock. HISTORY LESSON Indeed, history has shown that severe disruptions to global oil supplies have tended to be short-lived. Iraq's invasion of neighbouring Kuwait in August 1990 caused the price of Brent crude to double to $40 a barrel by mid-October. Prices returned to the pre-invasion level by January 1991 when a U.S.-led coalition started Operation Desert Storm, which led to the liberation of Kuwait the following month. The start of the second Gulf war between March and May 2003 was even less impactful. A 46% rally in the lead-up to the war between November 2002 and March 2003 was quickly reversed in the days preceding the start of the U.S.-led military campaign. Similarly, Russia's invasion of Ukraine in February 2022 sparked a sharp rally in oil prices to $130 a barrel, but prices returned to their pre-invasion levels of $95 by mid-August. These relatively quick reversals of oil price spikes were largely thanks to the ample spare production capacity available at the time and the fact that the rapid oil price increase curbed demand, says Tamas Varga, an analyst at oil brokerage PVM. Global oil markets were also rocked during the 1973 Arab oil embargo and after the 1979 revolution in Iran, when strikes on the country's oilfields severely disrupted production. But those did not involve the blocking of Hormuz and were not met with a direct U.S. military response. SPARE CACITY 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. The concern today is that the vast majority of the oil from Saudi Arabia and the UAE is shipped via the Strait of Hormuz. The two Gulf powers could bypass the strait by oil pipelines, however. Saudi Arabia, the world's top oil exporter, producing around 9 million bpd, 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 pipeline has capacity of 5 million bpd and was able to temporarily expand its capacity by another 2 million bpd in 2019. 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. But this western route could be exposed to attacks from the Iran-backed Houthis in Yemen, who have severely disrupted shipping through the Suez Canal in recent years. Additionally, Iraq, Kuwait and Qatar currently have no clear alternatives to the strait. It is possible that Iran will choose not to take the dramatic step of blocking the strait in part because doing so would disrupt its own oil exports. Tehran may also consider any further escalation fruitless in light of U.S. involvement and will instead try to downplay the importance of the U.S. strikes and come back to nuclear negotiations. In the meantime, spooked energy markets, fearing further escalation, are apt to respond to the U.S. strikes with a sharp jump in crude prices. But even in a doomsday scenario where the Strait of Hormuz is blocked, history suggests markets should not expect any supply shock to be persistent. Enjoying this column? Check out Reuters Open Interest , your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis. Markets are moving faster than ever. ROI can help you keep up. Follow ROI on LinkedIn and X. This article was generated from an automated news agency feed without modifications to text.

Mint

an hour ago

• Mint

Indias basmati rice shipments to Iran stuck at ports amid Middle East conflict

New Delhi, Jun 23 (PTI) Around 1,00,000 tonnes of basmati rice destined for Iran are stranded at Indian ports due to the ongoing Israel-Iran conflict, the All India Rice Exporters Association said on Monday. Association president Satish Goyal said around 1,00,000 tonnes of basmati rice meant for Iran is currently stuck at Indian ports, with Iran accounting for 18-20 per cent of India's total basmati rice exports. The shipments are primarily held up at Kandla and Mundra ports in Gujarat, with neither vessels nor insurance available for Iran-bound cargo due to the Middle East conflict, Goyal told PTI. International conflicts are typically not covered under standard shipping insurance policies, leaving exporters unable to dispatch their consignments, he added. The delay in shipments and uncertainty around payments could cause severe financial stress, he said, adding that basmati rice prices in the domestic market have already dropped by ₹ 4-5 per kg. The association is in touch with agri-export promotion body APEDA on the issue. A meeting with Union Commerce and Industry Minister Piyush Goyal is scheduled for June 30 to discuss the crisis, he added. Iran is India's second-largest basmati rice market after Saudi Arabia. India exported around 1 million tonnes of the aromatic grain to Iran during the 2024-25 fiscal year, which ended in March. India exported approximately 6 million tonnes of basmati rice during 2024-25, with demand primarily driven by the Middle East and West Asian markets. Other major buyers include Iraq, the United Arab Emirates and the United States. The Israel-Iran conflict has escalated significantly in recent weeks, with both sides exchanging heavy strikes and the US becoming directly involved in the hostilities. The shipping disruption adds to challenges facing Indian rice exporters, who have previously dealt with payment delays and currency issues in the Iranian market due to international sanctions.

Business Standard

an hour ago

• Business Standard

US asks China to dissuade Iran from closing Strait of Hormuz oil route

US Secretary of State Marco Rubio has urged China to intervene and dissuade Iran from shutting down the Strait of Hormuz, one of the world's most critical oil shipping routes. His request followed Iranian state media reports that the country's parliament had approved a proposal to close the Strait, although the final decision rests with Iran's Supreme National Security Council. The move comes days after the United States struck three of Iran's nuclear facilities, escalating tensions in West Asia and raising fears of a broader regional conflict. Rubio: Strait closure would be 'economic suicide' for Iran Speaking to Fox News on Sunday, June 22, Rubio said he had encouraged China to speak directly with Iranian authorities, noting that Beijing's economic interests were deeply tied to uninterrupted shipping through the Strait. 'If Iran closes the Strait, it would be economic suicide for them,' Rubio said, adding that while the US has response options, other nations—particularly energy importers—would suffer more. China, the largest importer of Iranian oil, imported over 1.8 million barrels per day from Iran last month, according to data from ship-tracking firm Vortexa. Strait of Hormuz: Global oil lifeline Roughly 20 per cent of the world's oil supply transits through the Strait of Hormuz. It serves as the main conduit for energy exports from key producers from West Asia, including Saudi Arabia, the UAE, and Iraq. Any disruption could cause severe market volatility and spike global fuel prices. Besides China, several major Asian economies—such as India, Japan, and South Korea—are heavily dependent on oil shipped through this strategic waterway. Oil prices surge after US-Iran escalation Oil prices spiked in the wake of the US strike on Iran 's nuclear facilities. On Monday morning, Brent crude futures rose by $1.52, or 1.97 per cent, to $78.53 per barrel—the highest level in five months. Market watchers say tensions in the Strait could push prices higher still, especially if Iran carries through on its threat. Indian exporters brace for freight shock Exporters and logistics firms in India are preparing for renewed shipping disruptions through the Gulf. Dushyant Mulani, chairman of the Federation of Freight Forwarders' Associations in India, said that freight rates had begun to rise and the situation remained volatile. He noted that with the United States targeting key Iranian nuclear facilities, retaliation was anticipated and tensions were likely to remain elevated. According to him, this would impact oil prices and shipping costs, with war risk premiums already being applied to shipments.