Most Gulf markets in red amid escalating Israel-Iran conflict
June 18 (Reuters) - Most stocks markets in the Gulf fell in early trade on Wednesday with investors exercising restraint due to fighting between Iran and Israel that entered a sixth day, sparking fears of potential regional instability.
Thousands of people were fleeing Tehran and other major cities, Iranian media reported, as Iran and Israel launched new missile strikes at each other despite U.S. President Donald Trump calling for Tehran's unconditional surrender.
Saudi Arabia's benchmark index (.TASI), opens new tab dropped 0.7%, weighed down by a 0.6% fall in Al Rajhi Bank (1120.SE), opens new tab and 1% decrease in the country's biggest lender Saudi National Bank (1180.SE), opens new tab.
Among other losers, Prince Waleed bin Talal-backed airline Flynas Company (4264.SE), opens new tab plunged about 13% in debut trade.
The Saudi Exchange allows 30% fluctuation limits during the first three days of trade.
Elsewhere, oil behemoth Saudi Aramco (2222.SE), opens new tab was down 0.6%.
Oil prices - a catalyst for the Gulf's financial markets - eased in Asian trade, after a gain of 4% from the previous session, as markets weighed the chance of supply disruptions from the Iran-Israel conflict against a U.S. Federal Reserve interest rate decision that could weigh on oil demand.
Dubai's main share index (.DFMGI), opens new tab lost 0.6%, with toll operator Salik (SALIK.DU), opens new tab declining 2.1% and sharia-compliant lender Dubai Islamic Bank (DISB.DU), opens new tab retreating 1.6%.
The Qatari index (.QSI), opens new tab fell 0.1%, hit by a 1.6% fall in Commercial Bank (COMB.QA), opens new tab.
In Abu Dhabi, the index (.FTFADGI), opens new tab edged 0.1% higher.
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The Guardian
18 hours ago
- The Guardian
Outcome of Israel's war with Iran is uncertain even if US joins conflict
Israel's assault on Iran, including its nuclear and ballistic weapons programme, is unlikely to secure its long-term strategic objectives, even if Benjamin Netanyahu manages to persuade the Trump administration into joining the conflict in the coming days and weeks, experts have said. According to diplomats, military specialists and security analysts, Israel – and its prime minister – is likely to face mounting headwinds in the campaign, amid warnings that it risks dangerously destabilising the region. There is mounting scepticism over whether even the US's use of massive ground-penetrating bombs would be able to knock out Iran's Fordow nuclear facility, which is buried deep beneath a mountain, and questions have emerged about Israel's ability to sustain a long-range offensive that has exposed its cities to counterattack by ballistic missiles. Experts make the distinction between Israel's operational success in targeting key Iranian sites and individuals, and its strategic objectives which appear to have expanded to regime change in Tehran, on top of destroying its nuclear programme. 'There is a dominant trend in Israel going back to the formation of the state that has suggested to politicians that violence will deliver a solution to what are political problems,' said Toby Dodge, professor of international relations at the London School of Economics. 'My gut feeling is Iranian regime is more stable than has been suggested. And because Iran has a long history of commitment to technological modernisation and proliferation, well, that's something you can't simply remove with a bomb.' Analysts are also puzzled by an Israeli strategy that appears to have gambled on triggering a conflict in the hope of pushing a highly erratic US president in Donald Trump to join, supplying the firepower that Israel lacks in terms of massive bunker-busting bombs. Experts assess that the US would probably have to use several of these bombs, which would need to be dropped relatively close to the Fordow plant, protected by up to 90 metres of bedrock, in a complex and risky operation that is not guaranteed to succeed, and would probably draw retaliation from Iran against US bases, risking further escalation. 'Subcontracting the Fordow job would put the United States in Iran's sights,' Daniel C Kurtzer, a former US ambassador to Israel, and Steven N Simon, a veteran of the national security council, wrote in Foreign Affairs this week. 'Iran would almost certainly retaliate by killing American civilians. That, in turn, would compel the United States to reciprocate. 'Soon enough the only targets left for Washington to hit would be the Iranian regime's leaders, and the United States would again go into the regime-change business – a business in which exceedingly few Americans want to be involved any longer.' The prospect of regime change, perhaps by killing Iran's supreme leader, Ayatollah Ali Khamenei, which has been raised by Israeli officials (and reportedly vetoed by Trump) is already causing profound alarm in the region. Grand Ayatollah Ali al-Sistani, the senior Iraqi cleric, made a rare intervention, warning of the profound dangers to the region. Another sceptic is Andreas Krieg, an associate professor in the Department of Defence Studies at King's College London, who has worked widely in the Middle East and is doubtful that air power can alone can make the kind of impact being sought by Israel, both in terms of destroying Iran's nuclear knowhow or removing the clerical regime. 'It's not the holy grail. We'd learned the lesson that air power alone doesn't work. And then we learned in Iraq and Afghanistan that even massive numbers of boots on ground doesn't work,' he said. 'What we're seeing is not a strategic approach but one that is operational using air power, and the operational approach is starting the consume the strategic one which is about the political endgame. 'The best Israel can best can hope for is something like the campaign against Hezbollah, which has probably delivered a short-lived success, in that it was very successful in degrading Hezbollah's network. 'Iran is very similar in that its defence strategy is built around a decentralised mosaic. Decapitation doesn't work against that kind of network. You can take out key nodes, but the best [Israel] can hope for in killing Khamenei would be to trigger the succession crisis which in any case had been anticipated.' And if Netanyahu has miscalculated, it is in an area where he has long claimed expertise: in reading and playing US politics. With American support for US intervention polling dismally, and the issue threatening to split Trump's Maga movement, Israel may find itself on the wrong side of a toxic argument that has far more salience for Trump than helping Netanyahu. Failing a US intervention to support Israel's campaign, Israel is likely to face growing challenges amid indications it is running low on some missile interceptors. Crew fatigue for the long-range sorties, aircraft maintenance cycles and the exhaustion of prepared target lists are all likely to militate against Israel's ability to maintain a prolonged conflict at the current high level of intensity. Any drop-off will be used by Tehran to suggest to Iranians that it has weathered the worst of the storm. There is a third possibility. Writing in his book Waging Modern War, in the aftermath of the Nato air campaign in Kosovo in 1999 – seen as one of the more successful uses of air power – the organisation's former supreme allied commander Wesley Clark, described the campaign as having one objective – to force the Serbs to the negotiating table. With contacts now re-established with Iranian negotiators, including talks in Geneva on Friday with European countries, Trump himself has suggested there is more time for diplomacy to run. Even if Iran is forced to a nuclear deal, Israel may find it comes with heavy hidden costs, not least the potential for survival of a clerical regime with every reason to be even more hostile to Israel and Israelis, and the limitations of Israeli military power, perhaps, exposed. 'If Khamenei has the sense to step back, if America doesn't come in,' says Dodge, 'then Israel has stuck its finger in a hornets' nest.'
Reuters
18 hours ago
- Reuters
Head of Russia's Rosneft says OPEC+ could speed up oil output hikes by a year
ST PETERSBURG, Russia, June 21 (Reuters) - OPEC+ group of leading global oil producers could bring forward its output hikes by around a year from the initial plan, Igor Sechin, head of Russia's largest oil producer Rosneft ( opens new tab, said on Saturday. He also said that the decision by the OPEC+ to speed up output increase now looked far-sighted and justified in the light of the confrontation between Israel and Iran. The Organization of the Petroleum Exporting Countries and its allies, led by Russia, shocked oil markets in April by agreeing a bigger-than-expected output hike for May despite weak prices and slowing demand. OPEC+ has since decided to continue with more than planned hikes. "The announced increase in production since May of this year is three times higher than the alliance's initial plan. In addition, the entire increase in OPEC+ production could be shifted a year ahead of plan," he said without elaborating. "The decision taken by OPEC leaders to forcefully increase production looks very far-sighted today and, from the market's point of view, justified, taking into account the interests of consumers in light of the uncertainty regarding the scale of the Iran-Israel conflict," he added. OPEC+ crude output represents about 41% of global oil production. The group's main objective is to regulate the supply of oil to the global market. Having spent years curbing production, eight OPEC+ countries made a modest output increase in April before tripling it for May, June and now July. Besides the 2.2 million bpd cut that the eight members started to unwind in April, OPEC+ has two other layers of cuts that are expected to remain in place until the end of 2026. Oil prices had initially fallen in response to the OPEC+ decision to increase oil production, but the outbreak of an aerial war between Israel and Iran has so far been the main factor behind their return to around $75 per barrel, levels unseen since the start of the year. Speaking at the St. Petersburg International Economic Forum, Sechin, a long-standing ally of Russian President Vladimir Putin, also said there will be no oil glut long-term despite the production rise due to low stockpile levels, though rising usage of electric vehicles in China might hit oil demand. Putin said on Friday he shared OPEC's assessment that demand for oil will remain high. He also said that oil prices had not risen significantly due to the conflict between Iran and Israel, and that there was no need for OPEC+ to intervene in oil markets. Sechin also said Rosneft had already budgeted the oil price of $45 per barrel for this year, the level the European Union eyes as the new price cap on Russian oil imports, which is now set at $60. ($1 = 0.8679 euros)
Reuters
a day ago
- Reuters
TRADING DAY On weekend war-watch again
ORLANDO, Florida, June 20 (Reuters) - - TRADING DAY Making sense of the forces driving global markets By Jamie McGeever, Markets Columnist I'd love to hear from you, so please reach out to me with comments at opens new tab. You can also follow me at @ReutersJamie and @ Cautious optimism around a possible de-escalation in the week-long war between Israel and Iran helped foster a relatively positive tone across world markets on Friday, lifting most stock markets and sealing oil's biggest decline in over a month. You'll note a high degree of equivocation there. President Donald Trump taking up to two weeks to decide on America's involvement offers no immediate clarity, even if he is open to direct talks, and negotiations between Iran's foreign minister and his European counterparts in Geneva are at the early stage. However, Wall Street didn't feel much of the earlier optimism on Friday. Tehran insists it will not talk directly to Washington about a new nuclear deal until Israel ceases its attacks. The bombing and retaliatory strikes continue. It's a fluid and fragile situation, but compared to a week ago when the conflict started, it's perhaps less bleak, which explains why many markets have regained their footing. It's worth remembering that Wall Street and world stocks earlier this week were a whisker away from their record highs. Developments in the war and on the diplomatic field over the weekend will go a long way to setting the tone for markets on Monday. And investors will continue to digest what was, in many ways, a pretty monumental week for central banks. To recap, the Federal Reserve took a hawkish turn in its projected interest rate path even though Chair Jerome Powell signaled policymakers are flying blind, while the Bank of Japan took a dovish turn in its balance sheet reduction plans. The Swiss National Bank cut rates to zero and admitted, albeit reluctantly, that rates could go negative, Norway's central bank delivered a surprise rate cut, and Brazil's central bank defied expectations by raising rates to the highest since 2006 and signaling it could tighten policy further. A raft of Fed officials are on the stump next week, and investors will be looking through the blizzard of headlines to see how the consensus stacks up against the new, less dovish 'dot plots'. Top of the bill will be Powell's semi-annual testimony to Congress on Tuesday and Wednesday. Fed Governor Christopher Waller told CNBC on Friday that a rate cut should be on the table next month because inflation is tame and unlikely to be boosted on a lasting basis by import tariffs. But Richmond Fed President Thomas Barkin told Reuters in an interview there's no rush to cut rates because tariffs could indeed fuel inflation. What's more, the economy and labor market are holding up well right now. It's gone pretty quiet on the trade front, an indication that the Trump administration is finding it harder than it imagined to secure the dozens of trade deals it promised - Trump himself has said that China and Japan are "tough" in their negotiations. China is not blinking, and why should it? As CIBC economists point out, China holds all the cards when it comes to global rare earths and pharmaceuticals supply, the U.S. is a much smaller market for its exports than it used to be, and Beijing has a wider array of retaliatory tools at its disposal than it did in 2018. Last but not least, "the tolerance to pain in autocratic China is notably higher than in the (still) democratic US," they note. The next few weeks will be pivotal for markets as investors eye the half-year point, the July 9 expiry of Trump's pause on 'reciprocal' tariffs, and Trump's two-week window to decide on the level of U.S. involvement in the Iran-Israel war. This Week's Key Market Moves Chart of the Week Two charts again, and they are related. The first is from Goldman Sachs and shows wage pressures in the developed G10 countries noticeably cooling (admittedly from elevated levels). This helps explain the second, from economist Phil Suttle, which shows developed and emerging market interest rate paths are diverging sharply - interest rates are coming down in DM, not so in EM. How long will that divergence last? Here are some of the best things I read this week: What could move markets on Monday? 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. Trading Day is also sent by email every weekday morning. Think your friend or colleague should know about us? Forward this newsletter to them. They can also sign up here.
