Oil Futures Edge Higher, Supported by Middle East Tensions
0010 GMT — Oil futures edge higher in early Asian trade, supported by Middle East tensions. Israel's military on Monday conducted airstrikes against targets in Yemen, a day after the Houthi rebel group launched a ballistic missile that struck near Israel's main airport. 'This escalation coincides with stalled U.S.-Iran nuclear negotiations,' XS.com's Samer Hasn says in an email. 'Any further escalation could threaten oil infrastructure across the region and disrupt global shipping routes on a broader scale,' the senior market analyst adds. Front-month WTI crude oil futures are 0.1% higher at $57.20/bbl; front-month Brent crude oil futures edge 0.2% higher to $60.33/bbl. (ronnie.harui@wsj.com)
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Chicago Tribune
23 minutes ago
- Chicago Tribune
Oil flip-flops and shares are mixed after the US strikes Iranian nuclear sites
BANGKOK — Global markets appeared to take the U.S. strike against nuclear targets in Iran in stride as investors watched Monday to see how Iran will react. The price of oil initially jumped more than 2%, fell and then regained about half that much. U.S. stock futures edged lower and share benchmarks in Europe and Asia also were mostly lower. The attacks on three Iranian sites raised the stakes in the war between Israel and Iran and left questions about what remains of Tehran's nuclear program. It also increased the possibility that Iran might retaliate, potentially disrupting shipping through the narrow Strait of Hormuz, a waterway through which much of the world's crude oil passes. The big unknown is what Iran will do, analysts said. The price of Brent crude oil, the international standard, was up 1.2% at $77.91 per barrel. U.S. benchmark crude climbed 1.3% to $74.79. The future for the S&P 500 was little changed, while that for the Dow Jones Industrial Average was down 0.1%. Treasury yields were steady. In Europe, Germany's DAX lost 0.5% to 23,230.54 and the CAC 40 in Paris fell 0.6% to 7,541.25. Britain's FTSE 100 shed 0.2% to 8,761.53. Overall, there was no sign of panic. 'I believe what we are thinking is or the thinking is that it is going to be a short conflict. The one big hit by the Americans will be effective and then we'll get back to sort of business as usual, in which case there is no need for an immediate, panicky type of reaction,' said Neil Newman, managing director of Atris Advisory Japan. The conflict began with an Israeli attack against Iran on June 13 that sent oil prices yo-yoing and rattled other markets. Closing off the Strait of Hormuz would be technically difficult but it could severely disrupt transit through it, sending insurance rates spiking and making shippers nervous to move without U.S. Navy escorts. As a major oil producer, Iran may be reluctant to close down the waterway, which is used to transport its own crude, mostly to China. Oil is a major revenue source for the regime. 'The situation remains highly fluid, and much hinges on whether Tehran opts for a restrained reaction or a more aggressive course of action,' Kristian Kerr, head of macro strategy at LPL Financial in Charlotte, North Carolina, said in a commentary. Speaking to Fox News on Sunday, U.S. Secretary of State Marco Rubio said disrupting traffic through the strait would be 'economic suicide' and would elicit a U.S. response. 'I would encourage the Chinese government in Beijing to call them about that because they heavily depend on the Strait of Hormuz for their oil,' Rubio said. When asked about that at a routine briefing in Beijing, Chinese Foreign Ministry spokesperson Guo Jiakun told reporters in Beijing that 'China is willing to strengthen communication with Iran and relevant parties to continue playing a constructive role in promoting de-escalation' of the conflict. 'The Persian Gulf and its adjacent waters are important international channels for cargo and energy trade. Maintaining security and stability in this region serves the common interests of the international community,' he said. Tom Kloza, chief market analyst at Turner Mason & Co said he expects Iranian leaders to refrain from drastic measures and oil futures to ease back after the initial fears blow over. Disrupting shipping would be ' a scorched earth possibility, a Sherman-burning-Atlanta move,' Kloza said. Writing in a report, Ed Yardeni, a long-time analyst, agreed that Tehran leaders would likely hold back. 'They aren't crazy,' he wrote in a note to investors Sunday. 'The price of oil should fall and stock markets around the world should climb higher.' Other experts weren't so sure. Countries are not always rational actors and Tehran could lash out for political or emotional reasons, said Andy Lipow, a Houston analyst who has covered oil markets for 45 years. 'If the Strait of Hormuz was completely shut down, oil prices would rise to $120 to $130 a barrel,' Lipow said. That would translate to about $4.50 a gallon at the pump and hurt consumers in other ways, he said. Much of East Asia depends on oil imported through the strait. Taiwan's Taiex fell 1.4% while the Kospi in South Korea slipped 0.2%. In Tokyo, the Nikkei 225 edged 0.1% lower, with gains for defense contractors, oil companies and miners helping to make up for broad losses. 'The U.S. strike on Iran certainly is very good for defense equipment,' Newman of Atris Advisory said, noting that both Japan and South Korea have sizable military manufacturing hubs. Australia's S&P/ASX fell 0.4%. Hong Kong's Hang Seng regained lost ground, climbing 0.7%, while the Shanghai Composite index picked up 0.7%. In currency dealings, the U.S. dollar rose to 147.82 Japanese yen from 146.66 yen. The euro fell to $1.1464 from $1.1473.
Yahoo
an hour ago
- Yahoo
Oil prices jump after US attacks Iran nuclear sites
Oil prices have jumped to the highest level for nearly six months on fears over supply concerns after the US joined Israel in attacking Iran's nuclear facilities. Brent crude surged to more than 78 US dollars (£58.06) a barrel before paring back a little to stand 77.6 dollars (£57.76) higher in early morning trading on Monday. The cost of oil has risen sharply since the recent Israel strikes on Iran's nuclear sites, with the US launching an aerial bombing on three facilities in Iran over the weekend, with investors worried over counter attack moves by Iran. Iran can block oil being shipped through the all-important Strait of Hormuz, which analysts feared could send crude prices rocketing. But the FTSE 100 Index in London was spared losses on Monday, thanks to gains from oil giants BP and Shell on the back of the crude price rise, with the two stocks up 1.1% and 0.8% respectively. The wider FTSE 100 largely held steady, up 2.9 points at 8777.6. Panmure Liberum experts estimated that Brent crude could peak at 100 dollars (£74.43) a barrel due to severe disruption of the crucial waterway route. Soaring oil prices, if the Strait of Hormuz is closed, could spark a 'major' spike in inflation while seeing growth stall, which could have a severe knock-on effect on global stock markets, according to Joachim Klement at Panmure Liberum. Closing the Strait of Hormuz could disrupt about a fifth of global oil and a fifth of global gas shipments, according to Panmure. Mr Klement said it could be worse than the oil and gas shock seen in 2022 after Russia's invasion of Ukraine and the subsequent sanctions against Russian oil and gas exports. Mr Klement said: 'If the Straits of Hormuz is shut, we expect a major stagflationary shock similar to 2022. 'In this case, a 10% to 20% correction seems likely and we could see a new bear market if the trade war escalates again in early July.' But he said if the Strait of Hormuz is disrupted but not closed, 'the inflation shock will be significant, but not enough to derail markets and the economies of the US, the UK and Eurozone for too long'. 'In this scenario, we expect an initial correction of stock markets of 5% to 10%. 'Whether this correction lasts longer and becomes deeper depends very much on how the trade war unfolds in the next couple of weeks.' Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
Goldman Sachs warns of oil price surge on Strait of Hormuz risks
(Reuters) -Goldman Sachs (GS) flagged risks to global energy supply amid concerns over a potential disruption in the Strait of Hormuz that would lead to significant spikes in oil and natural gas prices, the bank said in a note dated Sunday. The bank estimated Brent crude (BZ=F) could briefly peak at $110 per barrel if oil flows through the critical waterway were halved for a month and remained down by 10% for the following 11 months. Prices would then moderate, with Brent averaging around $95 per barrel in the fourth quarter of 2025, it said in a note. Oil prices jumped on Monday to their highest since January after Washington joined Israel over the weekend in attacking Iran's nuclear facilities. Goldman highlighted that prediction markets, despite limited liquidity, now reflect a 52% probability of Iran closing the Strait of Hormuz in 2025, citing data from Polymarket. Additionally, it noted that a drop in Iranian supply by 1.75 million barrels per day could push Brent to a peak of around $90 per barrel. In one scenario, the bank said a 1.75 million barrels per day (bpd) drop in Iranian oil supply for six months, followed by gradual recovery, could push Brent crude to peak at $90 per barrel before falling to the $60s by 2026. In the second sub-scenario, where Iranian production remains persistently lower, Brent could still peak at $90 but stabilize between $70-80 in 2026 due to reduced inventories and global spare capacity, Goldman Sachs said. "While the events in the Middle East remain fluid, we think that the economic incentives, including for the U.S. and China, to try to prevent a sustained and very large disruption of the Strait of Hormuz would be strong," Goldman Sachs said. Iran's Supreme National Security Council must make the final decision on whether to close the Strait of Hormuz following U.S. bombing raids, Iran's Press TV said on Sunday, after parliament was reported to have backed the measure. Goldman Sachs also projected European natural gas markets, including the TTF benchmark, to price in a higher probability of disruption, with TTF potentially rising closer to 74 euros per megawatt-hour ($25/MMBtu). However, the bank noted that U.S. natural gas prices would face limited impacts due to structural factors such as strong export capacity and minimal domestic LNG import needs. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
