Oil prices jump more than 2% after U.S. strikes on Iran raise fears of supply disruption
Helima Croft, RBC Capital Markets global head of commodity strategy, joins CNBC's 'Special Report' to discuss the latest moves in the oil and energy markets following Washington's surprise attack against Iranian nuclear sites.
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CNBC
an hour ago
- CNBC
Why global markets are brushing off U.S. strikes on Iran
The U.S. joining the war between Israel and Iran might seem like a geopolitical flashpoint that would send markets tumbling. Instead, investors are largely shrugging off the escalation, with many strategists believing the conflict to be contained — and even bullish for some risk assets. As of 1 p.m. Singapore time, the MSCI World index, which tracks over a thousand large and mid-cap companies from 23 developed markets, declined only 0.12%. Safe havens are also trading mixed, with the Japanese yen weakening 0.64% against the dollar, while spot gold prices slipped 0.23% to $3,360 per ounce. The dollar index, which measures the U.S. dollar against a basket of currencies, rose 0.35%. In general, the market reactions after the U.S. strikes have been less aggressive, especially relative to just over a week ago when Israel launched airstrikes against Iran. "The markets view the attack on Iran as a relief with the nuclear threat now gone for the region," said Dan Ives, managing director at Wedbush, adding that he sees minimal risks of the Iran-Israel conflict spreading to the rest of the region and consequently more "isolated." While the gravity of the latest developments should not be dismissed, they are not seen as a systemic risk to global markets, other industry experts echoed. On Saturday, U.S. President Donald Trump said that the United States had attacked Iranian nuclear sites. Traders are now keeping a close eye on any potential countermeasures from Iran following the U.S. strikes on its nuclear facilities. Iran's foreign minister warned that his country reserved "all options" to defend its sovereignty. According to Iranian state media, the country's parliament has also approved closing the Strait of Hormuz, a pivotal waterway for global oil trade, with about 20 million barrels of oil and oil products traversing through it each day. "It all depends on how Iran responds," said Peter Boockvar, chief investment officer at Bleakley Financial Group. "If they accept the end of their military nuclear desires… then this could be the end of the conflict and markets will be fine," he told CNBC. Boockvar is not of the view that Iran will carry out the disruption of global oil supplies. The worst-case scenario for markets would occur if Iran were to close the Strait, which is unlikely, said Marko Papic, chief strategist at GeoMacro Strategy. "If they do, oil prices go north of $100, fear and panic take over, stocks go down ~10% minimum, and investors rush to safe havens," he said. However, markets are subdued now given the "limited tools" that Tehran has at its disposal to retaliate, Papic added. The idea of shutting down the Hormuz waterway has been a recurring rhetoric from Iran, but it has never been acted upon, with experts highlighting that it is improbable. In 2018, Iran warned it could block the Strait of Hormuz after the U.S. pulled out of the nuclear deal and reinstated sanctions. Similar threats were made earlier in 2011 and 2012, when senior Iranian officials — including then-Vice President Mohammad-Reza Rahimi — said the waterway could be closed if Western nations imposed more sanctions on Iran's oil exports due to its nuclear activities. "Tehran understands that, if they were to close the Strait, the retaliation from the U.S. would be swift, punitive, and brutal," Papic added. In a similar vein, Yardeni Research founder Ed Yardeni said the latest events have not shaken his conviction in the U.S. bull market."Geopolitically, we think that Trump has just reestablished America's military deterrence capabilities, thus increasing the credibility of his 'peace through strength' mantra," he said, adding that he is targeting 6,500 for the S&P 500 by the end of 2025. While predicting geopolitical developments in the Middle East is a "treacherous exercise," Yardeni believes that the region is in for a "radical transformation" now that Iranian nuclear facilities have been destroyed.
Yahoo
an hour ago
- Yahoo
US asks China to stop Iran from closing Strait of Hormuz
US Secretary of State Marco Rubio has called on China to prevent Iran from closing the Strait of Hormuz, one of the world's most important shipping routes. His comments came after Iran's state-run Press TV reported that their parliament had approved a plan to close the Strait but added that the final decision lies with the Supreme National Security Council. Any disruption to the supply of oil would have profound consequences for the global economy. China in particular is the world's largest buyer of Iranian oil and has a close relationship with Tehran. Oil prices have surged following the US' attack, with the price of the benchmark Brent crude reaching its highest level in five months. "I encourage the Chinese government in Beijing to call them (Iran) about that, because they heavily depend on the Straits of Hormuz for their oil," Marco Rubio had said in an interview with Fox News on Sunday. "If they [close the Straits]... it will be economic suicide for them. And we retain options to deal with that, but other countries should be looking at that as well. It would hurt other countries' economies a lot worse than ours." Around 20% of the world's oil passes through the Strait of Hormuz, with major oil and gas producers in the Middle East using the waterway to transport energy from the region. Any attempt to disrupt operations in the Strait could could send global oil prices skyrocketing. They jumped to their highest since January, with the price of Brent crude reaching $78.89 a barrel as of 23:22 GMT Sunday. "The US is now positioned with an overwhelming defence posture in the region to be prepared for any Iran counter attacks. But the risk for oil prices is the situation could escalate severely further," said Saul Kavonic, Head of Energy Research at MST Financial. The cost of crude oil affects everything from how much it costs to fill up your car to the price of food at the supermarket. China in particular buys more oil from Iran than any other nation - with its oil imports from Iran surpassing 1.8 million barrels per day last month, according to data by ship tracking firm Vortexa. Energy analyst Vandana Hari has said Iran has "little to gain and too much to lose" from closing the Strait. "Iran risks turning its oil and gas producing neighbours in the Gulf into enemies and invoking the ire of its key market China by disrupting traffic in the Strait", Hari told BBC News. The US joined the conflict between Iran and Israel over the weekend, with President Donald Trump saying Washington had "obliterated" Tehran's key nuclear sites. However, it's not clear how much damage the strikes inflicted, with the UN's nuclear watchdog saying it was unable to assess the damage at the heavily fortified Fordo underground nuclear site. Iran has said there was only minor damage to Fordo. Trump also warned Iran that they would face "far worse" future attacks if they did not abandon their nuclear programme. On Monday, Beijing said the US' attack had damaged Washington's credibility and called for an immediate ceasefire. China's UN Ambassador Fu Cong said all parties should restrain "the impulse of force... and adding fuel to the fire", according to a state-run CCTV report. In an editorial, Beijing's state newspaper Global Times also said US involvement in Iran "had further complicated and destabilized the Middle East situation" and that it was pushing the conflict to an "uncontrollable state".
Yahoo
an hour ago
- Yahoo
Strait of Hormuz becomes flash point in US-Iran conflict
The Iranian Parliament on Sunday approved a measure to close the Strait of Hormuz after the United States bombed three nuclear sites in Iran. The strait, located between Iran and Oman, remains a critical oil choke point, and closing it could have serious implications for both the global and U.S. economy. Secretary of State Marco Rubio, in several Sunday interviews, warned against shutting down the strait, calling the move 'suicidal' for the regime. Rubio also called on China — Iran's most crucial oil customer — to encourage the country against shutting it down. 'I encourage the Chinese government in Beijing to call them about that, because they heavily depend on the Straits of Hormuz for their oil,' Rubio said on Fox News's 'Sunday Morning Futures with Maria Bartiromo.' Live updates: US bombs cause 'severe damage' in Iran; UN chief calls action 'perilous' Iran's Supreme National Security Council will ultimately decide on the move. The threat to block the narrow waterway comes in response to U.S. strikes on three nuclear sites in Natanz, Isfahan and Fordow, the last of which is located inside a mountain. The Trump administration has argued the strikes, dubbed Operation Midnight Hammer, were a monumental success. But it is unclear how much the sites were damaged or how much the attack set back Iran's nuclear program. The Strait of Hormuz's width and depth allow it to handle the world's largest crude oil tankers, and very few alternatives exist if it is closed, according to the U.S. Energy Information Administration (EIA). Approximately 20 million barrels, or 20 percent of global consumption, flowed through the strait in 2024. More than 80 percent of the crude oil and natural gas that passed through the Strait of Hormuz in 2024 was destined for Asian markets, with China, India, Japan and South Korea being the top recipients. These countries would likely be the most affected by any closure. But the U.S. market would also feel some impact if the strait were disrupted. The U.S. has been buying less oil from the Persian Gulf — importing about 532,000 barrels per day in 2024, according to the EIA. Still, consumers are businesses are still likely to see increased prices, given that oil is traded globally. And it could take months for U.S. oil companies to drill more to compensate for those increased prices, The New York Times reports. Oil prices in the past month increased due to the escalating Israel-Iran conflict, and these are estimated to climb further if Iran blocks the strait. Experts have said they estimate oil prices could increase from $73 per barrel up to $120 per barrel if tankers are blocked. 'If we see any throttling back of the Strait of Hormuz, we'll see a massive increase in the price of oil, and that will impact everything in the U.S.,' Ramanan Krishnamoorti, a professor of petroleum engineering at the University of Houston, told ABC News this month. Iran has previously seized or interfered with tankers during heightened political tensions, according to the Times. While Iran's Supreme National Security Council has yet to make a decision, some experts are skeptical that the country will actually close down the Strait of Hormuz. Experts say the move would likely lead to a near-immediate response from the U.S., and it would be self-defeating to Iran's own market. Copyright 2025 Nexstar Media, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
