Hang seng slides as US-Iran conflict weighs on Asian markets; brent crude spikes 5%, OPEC warns of supply risk

(Image credits: ANI)
Brent Crude prices spiked as much as 5% on Monday following the US airstrikes on Iran's key nuclear facilities on Sunday. The move ended days of speculation over whether the US President Donald Trump would join Israel in its confrontation with Iran.
While prices surged initially, they soon pared gains. The attacks on Fordow, Natanz and Isfahan had led to expectations of a sustained oil rally. Iran is the third-largest producer in the OPEC+ bloc and accounts for around a third of global oil output.
Last week, Brent Crude futures rose 11%, touching $80 per barrel before retreating. Prices rebounded again as Trump kept markets guessing on the US's involvement, but hopes of a ceasefire and ample supply from OPEC+ capped further gains.
Analysts noted that demand remains weak, giving little reason for oil to hold elevated levels.
OPEC+ is scheduled to meet on July 5 to discuss another output hike for August, after already increasing supplies by 4.11 million barrels per day in June and July.
Saul Kavonic, an energy analyst at MST Marquee, said, 'Much depends on how Iran responds in the coming hours and days, but this could set us on a path toward $100 oil, if Iran responds as they have previously threatened to,'
Iran claims it reserves the right to respond to the US attacks.
Local media reports its parliament has approved the closure of the Strait of Hormuz, though the final call rests with its National Security Council. The US has urged China to discourage Iran from taking that step.
T
he Strait of Hormuz is a critical oil chokepoint, more than 20 million barrels per day, or 20% of the world's oil supply, passed through it last year, according to the US Energy Information Administration.
Goldman Sachs has warned that a closure of the strait could push oil prices above $100 per barrel. However, JPMorgan views the possibility as low, saying such a move could be seen by the US as an "act of war."
Rising crude prices could hurt India's economy, particularly oil marketing companies like HPCL, BPCL, and Indian Oil, along with industries like aviation, paints, and tyres that rely heavily on oil.
Goldman Sachs' Santanu Sengupta told CNBC-TV18 that a rise in crude to $75 per barrel would hurt India's macroeconomic stability.
A $10-per-barrel increase could raise the cost burden by 30–40 basis points.
Samiran Chakraborty, chief India economist at Citi, also noted that supply chain disruptions could raise inflation risks, but said India may still be able to manage slightly higher prices due to its limited exposure to Iranian oil.
US officials said no further strikes are planned for now, but warned that any retaliation from Iran would invite an even more forceful response.
'This is the big one,' said John Kilduff of Again Capital, pointing to a possible $8-a-barrel risk premium. 'The market default on this development is higher. How high depends on Iran's response, or the realistic prospects of a meaningful response, which may not be there.'
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Time of India

11 minutes ago

• Time of India

Investors brace for oil price spike, rush to havens after US bombs Iran nuclear sites

A US attack on Iranian nuclear sites could push oil prices even higher and trigger a knee-jerk rush to safety, investors said, as they assessed how the latest escalation of tensions would ripple through the global economy. The reaction in Middle East stock markets , which trade on Sunday, suggested investors were assuming a benign outcome, even as Iran intensified its missile attacks on Israel in response to the sudden, deep US involvement in the conflict. US President Donald Trump called the attack "a spectacular military success" in a televised address to the nation and said Iran's "key nuclear enrichment facilities have been completely and totally obliterated". He said the US military could go after other targets in Iran if the country did not agree to peace. Iran said it reserves all options to defend itself, and warned of "everlasting consequences". Speaking in Istanbul, Iran's Foreign Minister Abbas Araqchi said Tehran was weighing its options for retaliation and would consider diplomacy only after carrying out its response. Investors said they expected US involvement would cause a stock market selloff and a possible bid for the dollar and other safe-haven assets when major markets reopen, but also said much uncertainty remained. "I think the markets are going to be initially alarmed, and I think oil will open higher," said Mark Spindel, chief investment officer at Potomac River Capital. "We don't have any damage assessment and that will take some time. Even though (Trump) has described this as 'done', we're engaged," Spindel said. "I think the uncertainty is going to blanket the markets, as now Americans everywhere are going to be exposed. It's going to raise uncertainty and volatility, particularly in oil," he added. One indicator of how markets will react in the coming week was the price of ether, the second-largest cryptocurrency and a gauge of retail investor sentiment. Ether was down 8.5 per cent on Sunday, taking losses since the first Israeli strikes on Iran on June 13 to 13 per cent. Most Gulf stock markets, however, seemed unconcerned by the early morning attacks, with the main indexes in Qatar, Saudi Arabia and Kuwait up slightly or flat. Israel's Tel Aviv main index was at an all-time high. Oil prices, inflation A key concern for markets centers around the potential impact of Middle East developments on oil prices and thus on inflation. Rising inflation could dampen consumer confidence and lessen the chance of near-term interest rate cuts. Saul Kavonic, a senior energy analyst at equity research firm MST Marquee in Sydney, said Iran could respond by targeting American interests in the Middle East, including Gulf oil infrastructure in places such as Iraq or harassing ship passages through the Strait of Hormuz. The Strait of Hormuz lies between Oman and Iran and is the primary export route for oil producers such as Saudi Arabia, the United Arab Emirates, Iraq and Kuwait. "Much depends on how Iran responds in the coming hours and days, but this could set us on a path towards $100 oil if Iran respond as they have previously threatened to," Kavonic said. While global benchmark Brent crude futures have risen as much as 18 per cent since June 10, hitting a near five-month high of $79.04 on Thursday, the S&P 500 has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13. Jamie Cox, managing partner at Harris Financial Group, said oil prices would likely spike before leveling off in a few days as the attacks could lead Iran to seek a peace deal with Israel and the United States. "With this demonstration of force and total annihilation of its nuclear capabilities, they've lost all of their leverage and will likely hit the escape button to a peace deal," Cox said. Economists warn that a dramatic rise in oil prices could damage a global economy already strained by Trump's tariffs. Still, any pullback in equities might be fleeting, history suggests. During past eruptions of Middle East tensions, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, stocks initially languished but soon recovered to trade higher in the months ahead. 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Business Standard

18 minutes ago

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Tarnished by Oct 7 attack, Netanyahu's legacy may be reshaped by Iran war

In the days after Hamas attacked Israel on Oct 7, 2023, Prime Minister Benjamin Netanyahu seemed a shellshocked shadow of himself. He looked diminished and downtrodden by the surprise assault that created a national emergency and caused his public support to plummet. Now, as Israel faces another unprecedented crisis in a war with Iran, Netanyahu appears rejuvenated. With the US lending its support against a threat he has devoted his life to confronting, Netanyahu is demonstrating a resurgent confidence that could signal a new turning point in his lengthy political career. Even as Iranian missiles pound Israeli cities, Netanyahu, 75, has the chance to salvage his sagging political fortunes and reshape a legacy punctured by Hamas' attacks, a corruption trial and a history of divisive rule. If he succeeds, it will cement his reputation within Israel as a political wizard who can rise from the ashes. Netanyahu has proven that he is a phoenix, said veteran Israeli journalist and Netanyahu biographer Mazal Mualem. Netanyahu's troubled legacy is granted a lifeline The war is far from won. Israel is still vulnerable to Iranian attacks, and whatever political boost Netanyahu gains from the latest developments could dissipate by elections scheduled for next year. He is the same polarizing leader he was yesterday. Internationally, he faces an arrest warrant for charges of war crimes in Gaza. He is widely reviled across the Arab world. And after nearly two years of regionwide conflict, many critics see him as a warmonger responsible for tens of thousands of deaths in Gaza and elsewhere in the Middle East. But domestically, where Netanyahu's eyes are always focused, his legacy has been granted a lifeline. Many Israelis are attuned to Netanyahu's campaign against Iran's nuclear programme, which they view as a major threat to their country and are therefore relieved by the direct involvement of the US military. Netanyahu is seen as a very divisive and destructive leader. He is seen as someone who talks a lot and doesn't do anything, said Aviv Bushinsky, a former Netanyahu aide. Today, Netanyahu redeemed himself, big time. In an early morning video statement after the US strike on Iran's nuclear facilities, Netanyahu could barely contain a smile as he thanked President Donald Trump. He said the intervention would change history. It's a stunning turnaround for an Israeli leader who critics and analysts largely wrote off in the days after Oct 7, when he presided over the deadliest attack in Israel's history. Many hold Netanyahu personally responsible for overseeing policies that enabled Hamas to retain power in Gaza for many years and build up a formidable arsenal. 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The war in Gaza grinds on, and Netanyahu still dreams of seeing a normalisation deal between Israel and Arab powerhouse Saudi Arabia as part of his legacy. The question remains whether Netanyahu will rebound politically from the Iran war. Polls taken last week showed that Netanyahu would still struggle to form a coalition if elections were held today. Even if he gets a bump from Sunday's US attack, it's not clear how long that might last. Bushinsky compared Netanyahu's potential political predicament to a world leader he likes to compare himself to, Winston Churchill, who, after leading the allies in triumphantly defeating the Nazis in World War II, did not get reelected in a 1945 vote in part because public priorities shifted dramatically. Bibi may be King of Israel, Bushinsky said, using a nickname for Netanyahu popular among his supporters, but even a king has his limits.

Mint

18 minutes ago

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Trump's Iran attack was ferocious. But has it actually worked?

'OPERATION MIDNIGHT HAMMER", as America called its strike on Iran, was a vast raid involving more than 125 military aircraft. It was the largest-ever strike by B-2 stealth bombers, and the first use in battle of the GBU-57, America's largest bunker-buster bomb. Seven bombers flew east over the Atlantic from Whiteman air-force base in Missouri on the 37-hour mission to Iran and back, helped by in-flight refuelling tankers and fighter jets to sweep the skies ahead of them. Decoy planes flew west over the Pacific to confuse anyone watching their movement. Dozens of Tomahawk cruise missiles were also fired at Iran from submarines. Iranian forces did not respond. The scope and scale of the operation would 'take the breath away" of most observers, boasted Pete Hegseth, the defence secretary. He was at pains to say that the attack was a 'precision strike" aimed solely at nuclear facilities. Iranian forces or civilians were not attacked. Nor was America seeking regime change. 'As President Trump has stated, the United States does not seek war. But let me be clear, we will act swiftly and decisively when our people, our partners or our interests are threatened," he said. Iran has 'every opportunity" to come to the table to negotiate a peace deal. But amid the self-congratulation, has the operation actually succeeded in destroying Iran's nuclear facilities? Donald Trump, who first announced the strikes on facilities in Fordow, Natanz and Isfahan on June 21st (they took place on the 22nd Iranian time), declared that the programme was 'totally obliterated". General Dan Caine, chairman of the joint chiefs of staff, was more cautious. He said the bomb-damage assessment would take time to complete. The initial assessment was that 'all three sites sustained extremely severe damage and destruction". Satellite images released by Maxar, an American firm, later on June 22nd showed a series of craters on the mountainside. The B-2s dropped 14 GBU-57s on buried uranium-enrichment sites at Natanz and especially Fordow, which Mr Trump described as the 'primary" target (the image above shows Fordow before and after the attack). The Tomahawks struck Isfahan, a complex of facilities where Iran turns uranium metal into a gaseous compound and back, makes centrifuges to enrich the gas, and may have stored much of its stock of highly enriched uranium (HEU). The International Atomic Agency (IAEA) estimates that Iran had 400kg of HEU, concentrated to 60% purity, which is a short hop to weapons-grade (usually 90%). That would be enough for ten bombs, if the material were to be enriched further. Israel had already hit Natanz and Isfahan, and destroyed much of Iran's air-defence system, clearing the way for the Americans. But the site in Fordow, buried into a mountain, was beyond the reach of Israeli bombs. 'I have been there," noted Rafael Grossi, the secretary-general of the IAEA, earlier this month. 'The most sensitive things are half a mile [around 800 metres] underground." A European source gives the figure of 500 metres. Before the strikes Western officials disagreed on whether the GBU-57, or 'massive ordnance penetrator" (MOP), alone could obliterate Fordow. Some experts thought the site could be destroyed only with nuclear weapons, or by ground forces fighting their way into the site and blowing it up. In the end America used B-2s and MOPs for the job. These can burrow through 60 metres of standard concrete, but probably less if Iran was using strengthened concrete. Repeatedly striking the same spot allows them to strike deeper. David Albright, a former IAEA inspector who now leads the Institute for Science and International Security, a think-tank in Washington, argued prior to the war that Fordow was 'more vulnerable than people realise". Israel had detailed knowledge of the building's designs, he noted, including knowledge of the tunnels: 'where they start, how they zig and zag, where the ventilation system is, the power supplies". The site had only one ventilation shaft, which is visible in its plans and in historical satellite imagery showing the site's construction. Destroying that, he argued, could put Fordow out of action for 'a few years rather than a few months". One weapons expert told The Economist that the post-strike images suggest that America might have targeted Fordow's ventilation and access tunnels. Moreover, even if America did not reach all parts of the Fordow complex, the powerful blasts might have done enough to damage or destroy the machinery inside. 'Uncontrolled vibration…is a centrifuge killer," says Richard Nephew, a former State Department official who now works at the Washington Institute for Near East Policy, another think-tank. 'That's why they're carefully balanced, heavily bolted down on the pads built for the purpose." Iran's IR6 centrifuges, which make up more than half of those installed at Fordow, are more robust than the much older IR1s, which make up the majority at Natanz, notes Mr Nephew. But even they would probably be affected badly by a blizzard of MOPs. If Iran had powered down the centrifuges, that would help. But the process of doing so can cause them to crash, says Mr Nephew, adding that it is 'pretty unlikely" Iran will have been able to turn off and disassemble the machines in the time available. Fordow was originally a secret project, revealed by Western countries in 2009. The question now is whether Iran has other intact secret facilities and a sufficient stock of HEU hidden away with which to restart the programme away from prying eyes. Iran had previously threatened to withdraw from the Nuclear Non-Proliferation Treaty. If it does so now, IAEA inspectors would have no way to observe Iran's future nuclear work. Nevertheless, Israel's spies have displayed an extraordinary ability to penetrate Iran's nuclear enterprise and security forces, and have repeatedly assassinated nuclear scientists and generals. The Iranian project has been much more extensive and dispersed than the efforts of Iraq and Syria, whose reactors Israel bombed in 1981 and 2007 respectively. 'Will this look more like Syria 2007—where a nuclear programme was decisively ended—or Iraq 1981, where nuclear ambitions were strengthened, and repeated intervention was required?" asks Nicholas Miller, a non-proliferation expert at Dartmouth College. 'Assuming the current regime stays in power in Iran, my money is on the latter."