Oil surges 10% since start of Israel-Iran war: 'The wild card is the United States'

Commodity

Middle East Situation

Summary:

Oil has jumped 10% since the Israel-Iran conflict began, driven by fears of U.S. involvement and potential Iranian destabilization. Analysts warn of lasting price spikes if regional tensions escalate further.

Oil is up roughly 10% since the outbreak of the Israel-Iran conflict, with Wall Street warning of further upside risk if Iran — a major oil producer — is destabilized.

On Thursday, oil fluctuated as the markets watched closely to see if President Trump would pull the US into conflict with Israel and Iran.

West Texas Intermediate futures (CL=F) traded at $75.49 per barrel and Brent crude (BZ=F), the international benchmark settled at $76.22, following a slight uptick the day before.

On Wednesday, West Texas Intermediate futures was little changed to settle at $75.14 per barrel, following a bigger than expected decrease of US oil inventories. Brent crude settled at $76.70 per barrel.

Oil prices have been in a seesaw pattern over the past several sessions as traders grapple with the impact of the war in the Middle East, and social media posts from President Trump suggesting the possibility of a US involvement in the conflict in order to target Iran's nuclear program and leadership.

"The question really becomes how much wider does this [conflict] get, and the wild card is the United States right now," Daniel Dicker, founder of the Energy Word, a newsletter about oil and gas markets, told Yahoo Finance.

JPMorgan analysts note that while oil shocks from geopolitical conflicts are often short-lived, more enduring price risks could stem from regime changes in oil-producing nations, which can lead to major shifts in policy and production.

"Since 1979, eight notable regime changes have occurred in oil-producing nations, with prices spiking by 76% from onset to peak and averaging a 30% increase, leaving lasting effects," JPMorgan's Natasha Kaneva and her team wrote in a Wednesday note.

"If history serves as a guide, further destabilization of Iran could lead to significantly higher oil prices sustained over extended periods," she added.

Iran, the fourth-largest producer in the OPEC+ alliance, has not seen any visible supply impacts from the fighting so far. OPEC had increased production quotas in the months leading up to Israel's strike.

Analysts say if the conflict remains contained and no major oil infrastructure is hit, the recent price spike could ease. However, if Iran were to close the Strait of Hormuz — a key chokepoint for global oil flows — Wall Street expects oil could surge into triple-digit territory. That outcome remains unlikely, JPMorgan analysts said, "primarily because it would be considered an act of war," given that the US maintains a strong naval presence in the region.

Meanwhile, tanker rates in the Middle East have surged as much as 50% since the start of the conflict, according to TORM, one of the world's largest product tanker operators.

Source: finance.yahoo

Risk Warnings and Disclaimers

You understand and acknowledge that there is a high degree of risk involved in trading. Following any strategies or investment methods may lead to potential losses. The content on the site is provided by our contributors and analysts for information purposes only. You are solely responsible for determining whether any trading assets, securities, strategy, or any other product is suitable for investing based on your own investment objectives and financial situation.

Add to Favorites

Adam

Economic

The Swiss National Bank on Thursday cut interest rates by a further 25 basis points to 0% — adding to concerns over a potential return to negative rates.

The reduction was widely expected by markets ahead of the decision, after traders priced in an around 81% chance of a quarter-point cut and around a 19% chance of a bigger 50-basis-point cut.

“Inflationary pressure has decreased compared to the previous quarter. With today’s easing of monetary policy, the SNB is countering the lower inflationary pressure,” the central bank said in a statement.

“The SNB will continue to monitor the situation closely and adjust its monetary policy if necessary, to ensure that inflation remains within the range consistent with price stability over the medium term,” it added.

While other nations continue to battle inflation, Switzerland faces deflation, with consumer prices falling by an annual 0.1% in May.

Low levels of inflation are not unusual for Switzerland — the country has seen several periods of deflation in the 2010s and 2020s. The strength of the country’s currency, the Swiss franc, is a major contributor to this trend.

“As a safe-haven currency, the Swiss franc tends to appreciate when there is stress on world markets,” said Charlotte de Montpellier, a senior economist covering France and Switzerland at ING.

“This systematically pushes down the price of imported products. Switzerland is a small, open economy, and imports account for a large proportion of CPI [consumer price index] inflation,” Montpellier told CNBC ahead of the central bank’s announcement.

Amid high levels of global economic uncertainty, the franc has continuously strengthened in recent months and is widely expected to continue on this path, suggesting ongoing challenges for the SNB.

As the strength of the franc has been the primary driver of Switzerland’s low inflation, the SNB is now taking steps to constrain the currency’s rally by keeping rates “systematically lower than elsewhere,” Montpellier said.

After the interest rate decision, the franc

strengthened, with the U.S. dollar last trading flat against the Swiss currency.

Negative rates?

Adrian Prettejohn, Europe economist at Capital Economics, told CNBC ahead of Thursday’s interest rate decision that he expects rates to be cut to -0.25% this year, but noted that the SNB could go even lower.

“There are risks that the SNB will go further in the future if inflationary pressures don’t start to increase, and the lowest the policy rate could go is -0.75%, the rate it reached in the 2010s,” he told CNBC.

Prettejohn said interest cuts weigh on currencies, making borrowing cheaper and encouraging investment.

However, there are also some concerns and risks attached to negative rates, including for savers, who could see any profit on their savings wiped out, and for banks, which will rake in lower returns on their loans.

ING’s de Montpellier noted that eventually, negative rates might “distort financial markets, compress bank margins, and raise concerns about long-term financial stability.”

Source: cnbc

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Warren Takunda

Economic

Global shares retreated Thursday as worries persisted about conflict in the Middle East.

On the seventh day of a conflict that began with a surprise wave of Israeli airstrikes targeting military sites, senior officers and nuclear scientists, Iranian state media reported that Iran’s foreign minister planned to meet with his European counterparts in Geneva.

Meanwhile, Israel carried out strikes on Iran’s Arak heavy water reactor, in its latest attack on Iran’s sprawling nuclear program.

The escalating warfare has shaken financial markets.

France’s CAC 40 slipped 0.8% in early trading to 7,593.06. In Germany, the DAX fell 0.9% to 23,141.82. Britain’s FTSE 100 lost 0.5% to 8,797.24. The futures for the S&P 500 and the Dow Jones Industrial Average were 0.4% lower.

The Federal Reserve opted Wednesday to keep its key interest rate unchanged, while its policymakers signaled they still expect to cut rates twice this year. They project that President Donald Trump’s higher import duties will fuel inflation. They also expect growth to slow and unemployment to edge higher.

The Bank of England likewise was expected to keep its key interest rate unchanged at 4.25% at its meeting Thursday, after cutting it twice this year.

Switzerland’s central bank cut its target interest rate by a quarter of a percentage point to zero on Thursday, saying that inflationary pressures have eased. It is among many central banks opting to go ahead and ease the cost of borrowing as uncertainty over Trump’s tariffs and geopolitical crises threaten global growth.

In Asian trading, Japan’s benchmark Nikkei 225 shed 1.0% to finish at 38,488.34. Shares in Japan’s Nippon Steel Corp. jumped 2.3% after it announced that its acquisition of U.S. Steel, which met U.S. government opposition for more than a year, was finally completed.

Hong Kong’s Hang Seng dropped 2.0% to 23,237.74 on heavy selling of tech-related shares, while the Shanghai Composite lost 0.8% to 3,362.11.

Australia’s S&P/ASX 200 was little changed at 8,523.70 and in South Korea, the Kospi rose 0.2% to 2,977.74.

U.S. financial markets will be closed Thursday for the Juneteenth holiday.

So far, U.S. inflation has remained relatively tame, and it’s near the Fed’s target of 2%. But economists have been warning it may take months to feel the effects of tariffs. And inflation has been feeling upward pressure recently from a spurt in oil prices because of Israel’s fighting with Iran.

Fed officials are waiting to see how big Trump’s tariffs will ultimately be, what they will affect and whether they will drive a one-time increase to inflation or something more dangerous. There is also still deep uncertainty about how much tariffs will grind down on the economy’s growth.

“Because the economy is still solid, we can take the time to actually see what’s going to happen,” said Fed Chair Jerome Powell.

“We’ll make smarter and better decisions if we just wait a couple months or however long it takes to get a sense of really what is going to be the passthrough of inflation and what are going to be the effects on spending and hiring and all those things,” he said.

A report released Wednesday said fewer workers applied for unemployment benefits last week, possibly indicating fewer layoffs. But another said homebuilders broke ground on fewer homes last month than economists expected. That suggests higher mortgage rates may be casting a chill on the industry.

In other dealings early Thursday, benchmark U.S. crude rose 13 cents to $73.63. Brent crude, the international standard, advanced 7 cents to $76.77 a barrel.

Oil prices have been yo-yoing as fears rise and ebb that the conflict between Israel and Iran could disrupt the global flow of crude. Iran is a major producer of oil and also sits on the narrow Strait of Hormuz, through which much of the world’s crude passes.

In currency trading, the U.S. dollar rose to 145.46 Japanese yen from 145.13 yen. The euro cost $1.1476, down from $1.1484.

Source: AP

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Forex

Central Bank

The weekly open had seen the US Dollar retreat but one ongoing theme is of an overdone US Dollar selling – With war headlines coming out by the minute, the Dollar Index has failed to break new lows and is making its way to the 99.00 pivot zone.This nice chart offered by Bank of America in their latest Global Funds Manager Survey shows how positioning is changing – Reminder that it’s more an opinion from the Funds Managers than numbers, as global exposure to USD assets is still massive.

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_1

North American Equity Indices Snapshot

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_2

North American Indices have held strong and are up since last Monday with the Nasdaq leading, closely followed by the S&P 500.

Anxious market sentiment doesn’t always transfer to negative index performance.

One potential headwind is a potential entry from the US in the Iran-Israel conflict that seems to be closer from materializing.

US Dollar Mid-Week Performance vs Majors

The Greenback has held strongly against the GBP and risk-off currencies lagging the most on the week – Another proof of market anxiety not materializing in proper demand for Safe-Haven Assets.

The Dollar has however lagged against the Aussie and the Kiwi for a third straight week as prospects for US-China trade deals enhances the outlook for both exporting nations.

Dollar Index 4H Chart

The DXY is currently close to the 99.00 psychological level, and fully corrected from the FOMC Rate Decision downward move.

Canadian Dollar Mid-Week Performance vs Majors

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_5

The Loonie has held a decent performance throughout the beginning of the week, only lagging against the Australian Dollar and the USD which is getting backed from the geopolitical developments.

Bank of Canada Governor Tiff Macklem spoke yesterday about a better outlook on the US Trade conflicts and how important it is to the economy – this hasn’t moved the CAD too much.

Intraday Technical Levels for the USD/CAD

US Dollar Finds a Bottom as Fed Funds Stay Unchanged_6

USD/CAD is breaking out of the descending channel formed throughout the latter part of May which brought the currency to fresh lows for the year.

Prices are supported by the 4H 50-period moving average and the move up looks like it has the potential to retest the 1.38 Resistance Zone that coincides with the 4H MA 200 (currently standing at 1.3789).

In the meantime, buyers are eyeing the 1.3740 Immediate Resistance zone.

The seller would be looking to re-enter the channel, a move that can only be done by re-crossing the MA 50 standing at 1.3650.

US and Canada Economic Calendar for the Rest of the Week

The rest of the week will focus mostly on Canadian data, with the highest-tier data being the Canadian Retail Sales, coming up on Friday with +0.5% m/m expected.

Source: investing

Risk Warnings and Disclaimers

Add to Favorites

Michelle

Economic

Cryptocurrency

U.S. House Plans Merger for Crypto Bills by August

The U.S. House of Representatives is working to combine the CLARITY and GENIUS bills, aiming to pass them before August 2025.

The merger could set a precedent for stablecoin regulation, impacting the financial market and boosting institutional adoption.

The CLARITY and GENIUS bills represent significant legislative moves to clarify the regulatory landscape for stablecoins. Spearheaded by Senator Bill Hagerty, the GENIUS Act gains support from bipartisan legislators, including Senators Kirsten Gillibrand and Cynthia Lummis. The U.S. House plans to merge these with its CLARITY Act to advance regulatory certainty for digital currencies.

The intended legislation addresses stablecoin backing requirements with liquid assets. If successful, it can enhance institutional confidence and adoption rates. The total stablecoin market has already grown by 55% reaching $251 billion, underscoring the market's robust expansion.

This regulatory effort is central to stabilizing the U.S. crypto environment, potentially driving stablecoin issuance by major corporations such as Walmart and Amazon. Such moves might impact both the regulatory frameworks and financial markets.

"With the GENIUS Act, we’re bringing clarity to a sector that’s been clouded by uncertainty and proving that bipartisan, principled leadership can still deliver real results for the American people. This did not happen by accident. It happened because we led – across the aisle and with purpose. I’m especially grateful to Senator Hagerty for his leadership, as well as the hard work of many of my colleagues to get this across the finish line." — Tim Scott, Chairman, Senate Banking Committee

Potential outcomes include increased value locked (TVL) in stablecoin pools and fresh staking flows from institutional sources. Although Bitcoin and Ethereum remain unaffected, their surrounding ecosystems could benefit from clearer rules and greater liquidity. The merger of the CLARITY and GENIUS bills reflects evolving U.S. policy intent to foster a more stable financial digital economy.

Source: CryptoSlate

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Economic

The Bank of England kept its main interest rate at the two-year low of 4.25% on Thursday as fears grow that the conflict between Israel and Iran will escalate.

The decision by the bank’s nine-member Monetary Policy Committee was widely anticipated. Six of the members voted to keep rates unchanged while three backed a quarter-point reduction.

With U.K. inflation at 3.4% — the bank’s target rate is 2% — policymakers were mindful of how the conflict in the Middle East will impact on oil prices, which have risen sharply in recent days to over $75 a barrel.

The prevailing view at the bank was that inflation would remain high over the coming months but start to head back towards next year. The uptick in oil prices has the potential to scupper that expectation.

“The world is highly unpredictable," bank governor Andrew Bailey said.

Uncertainty over the level of tariffs U.S. President Donald Trump will impose around the world is also clouding the outlook for prices around the world. Though the U.K. looks like it will be spared a raft of tariffs, the backdrop for the global economy remains highly uncertain.

The tariff issue is at the forefront of concerns at the U.S. Federal Reserve, which on Wednesday kept its key rate unchanged, to the chagrin of Trump, who has been urging the central bank to join others, such as the Bank of England and European Central Bank, and cut borrowing costs.

Since its first quarter-point rate cut last August from the 16-year high of 5.25%, the Bank of England has played it steady, reducing interest rates every three months. That would mean the next reduction is in August.

source : finance.yahoo

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

Add to Favorites

Adam

Stocks

Middle East Situation

Equities fell as growing speculation that the US will directly support Israel in its war against Iran fueled geopolitical uncertainty and concerns about the inflationary impact of higher crude prices.

Listen to the Stock Movers podcast on Apple, Spotify or anywhere you listen.

Europe’s Stoxx 600 index retreated 0.4%, setting the gauge on course for a third day of losses. Asian shares dropped more than 1%. S&P 500 futures also fell on a day when cash trading in US stocks and Treasuries is closed for a holiday.

Brent crude rose above $77 a barrel, extending gains in a week where market reaction to the conflict in the Middle East has been most concentrated in oil. The dollar also edged higher against a basket of currencies.

Traders’ sentiment turned more cautious after Bloomberg reported that senior US officials are preparing for a possible strike on Iran in the coming days. Markets were already on edge after the Federal Reserve downgraded its estimates for growth this year and projected higher inflation.

“If the US does strike, you’re going to see a big knee-jerk reaction,” said Neil Wilson, investor strategist at Saxo UK. “No one will be wanting to make big long bets.”

Trump has for days publicly mused about calling for a strike on Iran. He told reporters at the White House Wednesday that he prefers to make the “final decision one second before it’s due” because the situation in the Middle East is fluid.

The odds for the US to become involved are “quite high at this moment in time,” said Anna Rosenberg, head of geopolitics at Amundi Investment Institute.

“For the US, this is a moment to take out a big geopolitical headache, which is Iran potentially developing a nuclear weapon,” Rosenberg told Bloomberg TV. “Having said that, acting comes with a lot of consequences too. Trump will have to make a really difficult decision.”

Among a flurry of monetary policy decisions across Europe, the Bank of England kept its benchmark rate on hold at 4.25%. While the decision was in line with expectations, more committee members than economists had anticipated voted for a cut. The pound fell.

Earlier, the Swiss National Bank cut its interest rate to zero as policymakers sought to deter investors from pushing up the franc, which has gained almost 10% against the dollar so far this year.

Norway’s central bank surprised with its first post-pandemic reduction of borrowing costs, with officials signaling inflation has been sufficiently tamed to ease constriction even more this year. The krone slid.

On Wednesday, the Fed voted unanimously to hold its benchmark rate. Chair Jerome Powell noted that increases in tariffs are likely to boost prices and added that the effects on inflation could be more persistent. While the median expectation for two rate cuts in 2025 didn’t change, a number of officials lowered their projections.