Demand for Oil Loading Outside Persian Gulf Soars on War Risk
Middle Eastern oil that loads outside the Persian Gulf and at least one Malaysian grade are suddenly more popular with Asian buyers as the Israel-Iran conflict threatens to imperil the passage of vessels through the Strait of Hormuz.
Take Murban, which can be exported from Jebel Dhana on the Persian Gulf and, if purchased on the ICE Futures Abu Dhabi exchange, from Fujairah on the Indian Ocean-side of the strait. Trading volumes on ICE Futures shot up to 44,000 lots Friday, almost triple the average for the year prior to that, after the initial Israeli strikes. They've stayed elevated this week.
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21 minutes ago
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Erdogan vows to boost Turkey's missile production as Israel-Iran war escalates
ANKARA, Turkey (AP) — As the war between Israel and Iran escalates, Turkish President Recep Tayyip Erdogan has said he plans to strengthen the country's deterrence capabilities so that no country would dare attack it. Erdogan announced plans this week to step up Turkey's production of medium- and long-range missiles. Erdogan discussed the Iran-Israel war with German Chancellor Friedrich Merz in a telephone call on Friday. He told Merz that the Iranian nuclear issue can only be resolved through negotiations, according to Erdogan's office. Despite Turkey's tense relations with Israel, analysts and officials don't see an immediate threat of the conflict spreading into NATO-member Turkey. Still, some see the move by Erdogan as a sign that the Israel-Iran war could trigger a new arms race in the region, with countries not directly involved in the fray ramping up their military efforts to preempt future conflicts. Ahmet Kasim Han, a professor of international relations at Istanbul's Beykoz University, said that Turkey was reacting to what he described as an unraveling world order. 'The Turkish government is drifting toward what is the name of the game in the Middle East right now: an escalation of an arms race,' he said. Israel and the U.S. have set a high standard in aerial warfare, creating a technological gap that Turkey and others are eager to close, Han said. Erdogan said following a Cabinet meeting on Monday that 'we are making production plans to bring our medium- and long-range missile stockpiles to a level that ensures deterrence, in light of recent developments." 'God willing, in the not-too-distant future, we will reach a defense capacity that is so strong that no one will even dare to act tough toward us," Erdogan said. In an separate address days later, the Turkish leader highlighted Turkey's progress in its domestically developed defense industry, that includes drones, fighter jets, armored vehicles and navy vessels, but stressed that continued effort was needed to ensure full deterrence. 'Although Turkey has a very large army — the second largest in NATO — its air power, its air defense is relatively weaker,' said Ozgur Unluhisarcikli, a Turkey analyst at the German Marshall Fund think tank. The ongoing conflict has reinforced the importance of air superiority, including missiles and missile defense systems, prompting 'countries in the region, including Turkey to strengthen its air power,' he said. Since the start of the conflict, Erdogan has been scrambling to end the hostilities. He has held a flurry of phone calls with leaders, including U.S. President Donald Trump and Iranian President Masoud Pezeshkian, offering to act as a 'facilitator' for the resumption of negotiations on Iran's nuclear program. There are deep concerns in Turkey that a prolonged conflict will cause energy disruptions and lead to refugee movement from Iran, with which it shares a 560 kilometer-long (348 mile) border. Turkey relies heavily on energy imports, including from Iran, and rising oil prices due to the conflict could aggravate inflation and further strain its troubled economy. Turkey has strongly criticized Israel's actions, saying Iran has the legitimate right to defend itself against Israel's attacks, which came as nuclear negotiations were ongoing. Once close allies, Turkey and Israel have grown deeply estranged, especially after the start of the war in Gaza in 2023, with Erdogan becoming one of Israeli Prime Minister Benjamin Netanyahu's fiercest critics. Relations further deteriorated following the fall of Syrian President Bashar Assad's government, as Israel grew increasingly wary of expanding Turkish influence in Syria. Earlier this year, Turkey and Israel however, established a 'de-escalation mechanism' aimed at preventing conflict between their troops in Syria. The move came after Syria's Foreign Ministry said that Israeli jets had struck a Syrian air base that Turkey reportedly hoped to use. Israel hasn't commented on Turkey's announcement that it plans to ramp up missile production, but Israeli Foreign Minister Gideon Saar responded to Erdogan's criticisms of Israel over its attack on Iran in an X post on Wednesday. He accused Erdogan of having 'imperialist ambitions' and of having 'set a record in suppressing the freedoms and rights of his citizens, as well as his country's opposition.' Erdogan's nationalist ally, Devlet Bahceli, suggested that Turkey was a potential target for Israel, accusing the country of strategically 'encircling' Turkey with its military actions. He didn't elaborate. Analysts say, however, that such statements were for 'domestic consumption' to garner support amid growing anti-Israel sentiment in Turkey. 'I don't think that Israel has any interest in attacking Turkey, or Turkey has any interest in a conflict with Israel,' Han said. Suzan Fraser, The Associated Press Sign in to access your portfolio
Yahoo
29 minutes ago
- Yahoo
European stock markets opened higher despite escalating Israel-Iran conflict
Israel's attack on Iranian nuclear and military targets caused the price of oil to surge more than 7% on Friday since Tehran is one of the world's major producers of oil, despite sanctions by Western countries limiting its sales. A wider war could slow the flow of Iranian oil to its customers and keep prices of crude and gasoline higher for everyone worldwide. But early Monday, those concerns appeared to abate slightly. Oil prices were still volatile on the fourth day of the Israeli-Iran crisis, before giving back a bit of their gains. On Monday morning, the US benchmark crude oil was traded at $73.71 per barrel. Brent crude, the international standard, cost $74 per barrel, down from Friday but still 7% higher than the price before the missile fire started. Military strikes between Israel and Iran are fuelling concerns that oil exports from the Middle East could be significantly disrupted. However, there is currently no indication that the oil flow is impacted, and concerns are running high. Meanwhile, major oil companies are being rewarded on the stock market: BP and Shell both gained more than 1% in the Monday morning trade in Europe. Related Oil prices surge, Europe's markets open lower on Israel Iran strikes What's at stake for Europe if the Strait of Hormuz is blocked? 'Gains in oil majors and defence contractors have helped to push the FTSE 100 onto a positive footing in early trade,' said Susannah Streeter, head of money and markets at Hargreaves Lansdown financial services company. Shares in the FTSE 100's top banks were also rising on inflation fears that could result in higher key interest rates. Standard Chartered rose nearly 3%, Barclays and Natwest were up by more than 1% by 11 am CEST. Also strengthening the banking sector's gains in London, Metro Bank shares soared by more than 14% following speculation that investment firm Pollen Street Capital would take over the lender, Sky News first reported over the weekend. Investors in London also gained confidence after data for May showed a 6.1% year-on-year jump in retail sales in China, the world's second biggest economy. However, it was coupled with lower-than-expected growth in industrial output, which still rose 5.8% from the previous year. After 11 am in Europe, Britain's FTSE 100 inched up 0.3% to 8,876.26. Germany's DAX gained 0.2% to 23,572.39 and the CAC 40 in Paris edged 0.6% higher to 7,728.66. The futures for the S&P 500 and the Dow Jones Industrial Average were up 0.5%. During Asian trading, Tokyo's Nikkei 225 added 1.3% to 38,311.33, while the Kospi in Seoul gained 1.8% to 2,946.66. Hong Kong's Hang Seng surged 0.7% to 24,060.99 and the Shanghai Composite Index added 0.4% to 3,388.73. The price of gold has climbed as it remains a safe haven asset. An ounce of gold added 1.4% on Friday, but gave back some of its gains on Monday morning, and was traded at around $3,437 an ounce. Prices for US Treasury bonds are also on the rise when investors are feeling nervous, but Treasury prices fell Friday, which in turn pushed up their yields, in part because of worries that a spike in oil prices could drive inflation higher. Inflation in the US has remained relatively tame recently, and it's near the Federal Reserve's target of 2%. However, concerns remain high that it could accelerate due to President Donald Trump's tariffs. A better-than-expected report Friday on sentiment among US consumers also helped drive yields higher. The preliminary report from the University of Michigan stated that sentiment improved for the first time in six months after Trump put many of his tariffs on pause, while US consumers' expectations for future inflation eased. In currency trading early Monday, the US dollar gained to 144.18 Japanese yen from 144.03 yen. The euro rose to $1.1582 from $1.1533. The Middle East conflict is set to be the focus of the G7 meeting of leaders of wealthy nations in Canada this week. There are also hopes that Trump will sign more trade deals, which keeps trade optimism a bit higher. 'It's a big week in terms of decisions on interest rates and the direction of monetary policy," Streeter said. "The Federal Reserve is expected to keep rates on hold this week but comments from chair Jerome Powell will be closely watched for future direction of policy.' Meanwhile, there is a monetary policy meeting of the Bank of England this week, where 'policymakers are expected to press pause on rate cuts,' Streeter explained, citing the potential impact of higher energy costs. Meanwhile, the UK government's infrastructure plans are going to be revealed in more detail this week. 'The 10-year strategy, worth £725 billion (€850.8 bn), is the backbone of the Starmer administration's plan to kickstart growth,' Streeter said. Sign in to access your portfolio
Yahoo
29 minutes ago
- Yahoo
Israel-Iran crisis: How vital is the Strait of Hormuz for oil market?
The flare-up of tensions between Israel and Iran has reignited concerns over the security of the Strait of Hormuz, a vital artery for the global energy market. This narrow stretch of water, just 29 nautical miles wide at its tightest point, funnels nearly a third of the world's seaborne oil and a fifth of global LNG. The U.S. Energy Information Administration (EIA) calls it the "world's most important oil chokepoint," underlining the strategic importance of the passage that links the Persian Gulf with the Gulf of Oman and the Arabian Sea. Investors and analysts are weighing the implications of a potential disruption in this narrow but critical waterway. What happens if the Strait of Hormuz is suddenly sealed off? Following Israeli attacks on Iran, Iranian officials have raised the spectre of closing the Strait—triggering a sharp surge in crude prices. According to the International Energy Agency (IEA), around 20 million barrels per day (mb/d) of crude oil and refined products passed through the Strait of Hormuz in 2023, representing nearly 30% of total global oil trade. Most of this volume—around 70%—was bound for Asia, with China, India and Japan among the largest recipients. While alternative pipeline infrastructure exists, it is limited. The IEA estimates that only 4.2 mb/d of crude oil can be rerouted via overland routes, such as Saudi Arabia's East-West pipeline to the Red Sea and the UAE's Abu Dhabi Crude Oil Pipeline to Fujairah. This capacity represents barely one quarter of the typical daily volume transiting the Strait. 'Any prolonged crisis in the Strait of Hormuz would not only disrupt shipments from key Gulf producers—Saudi Arabia, the UAE, Kuwait, Iraq and Qatar—but also make inaccessible the majority of the world's spare production capacity, which is concentrated in the Persian Gulf,' the IEA warned in a report. Related Israel kills IRGC intelligence chief and deputy, Iranian state media says Netanyahu says Israel has not ruled out killing Iran's Ayatollah Ali Khamenei Iran seeks international mediation amid conflict with Israel, Trump promises peace Era of nuclear disarmament 'coming to an end', SIPRI warns LNG markets are even more exposed to potential disruptions. All LNG exports from Qatar—the world's second-largest LNG exporter—and the UAE must pass through the Strait. The IEA reports that 90 billion cubic metres (bcm) of LNG transited the Strait in the first ten months of 2023, equal to 20% of global LNG trade. With no viable alternative routes for LNG exports from Qatar or the UAE, any maritime closure would severely tighten global supply. Around 80% of these LNG volumes are destined for Asia, while Europe receives roughly 20%, meaning disruptions would exacerbate competition between regions, especially in a tight market. 'The sheer volume of oil passing through the Strait and the scarcity of alternative routes means even brief disruptions would have significant consequences for the global market,' the IEA stated. While a full closure remains a low-probability scenario, analysts agree that the threat alone is enough to inject volatility into energy markets. Crude oil prices surged by 13% last week amid escalating tensions between Israel and Iran. Although prices have since eased slightly after reports confirmed that Iranian energy infrastructure remained untouched by Israeli strikes, the risk of further escalation—and potential disruption to global energy flows—remains elevated. In response, Wall Street analysts have been quick to assess the possible fallout from any interruption of oil and gas shipments through the Persian Gulf, particularly the Strait of Hormuz. Goldman Sachs warned that an extreme risk scenario involving a prolonged closure of the Strait could push prices well above $100 per barrel. The investment bank estimates that Iran currently produces around 3.6 million barrels per day (mb/d) of crude oil and 0.8 mb/d of condensates, with total seaborne exports averaging 2.1 mb/d so far this year—most of it heading to China. T ING's head of commodities strategy, Warren Patterson, indicates that the market has begun pricing in a substantially higher geopolitical risk premium in light of recent developments. Patterson stated that any disruption to Iranian oil flows would be enough to eliminate the expected oil surplus for the fourth quarter of 2025, likely pushing Brent crude prices toward $80 per barrel. Yet, the analyst warns that a more severe scenario—such as a disruption of shipping through the Strait of Hormuz—could be far more consequential. 'Almost a third of global seaborne oil passes through this chokepoint,' he noted. 'A significant disruption to these flows could drive prices up to $120 per barrel, particularly because most of OPEC's spare capacity is located in the Persian Gulf and would be inaccessible under such conditions.' "This escalation also has ramifications for the European gas market," he added. The Strait of Hormuz is more than just a shipping lane—it's a lifeline for global energy. With no easy detours for oil or LNG flows, its vulnerability puts markets on edge every time tensions flare in this region. A full closure of the Strait may still seem a remote event, but the mere threat is enough to rattle markets and keep oil prices elevated. As Iranian and Israeli forces continue to exchange strikes, the risk of miscalculation looms large. In a region where diplomacy is fragile and stakes are high, one wrong move could turn a regional conflict into a global energy crisis. 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