Oil Rises After Trump Calls for Tehran Evacuation
Oil jumped after U.S. President Donald Trump called for Tehran to be evacuated before paring gains, with markets nervous about an escalation in the conflict with Israel that could disrupt crude supplies. Brent for August settlement was 0.4% higher at $73.49 a barrel as of 9:51 a.m. Singapore time.
WTI for July delivery rose 0.4% to $72.05 a barrel.
Brent rose as much as 2.2% before easing to trade above $73 a barrel, while West Texas Intermediate neared $72, after futures settled lower on Monday on signs Iran was seeking de-escalation. However, Israel has continued its attacks, which began on Friday targeting a nuclear site.
So far, Iran’s crude export infrastructure has been spared and there is no sign that Tehran is seeking to escalate hostilities by disrupting flows through the Strait of Hormuz. Middle Eastern producers send about a fifth of the world’s daily output through the narrow waterway.
“The market is nervous but has not yet priced in the worst-case scenario for supply disruptions,” said Vandana Hari, founder of Vanda Insights in Singapore. “There could be bigger attacks in the future, but it doesn’t seem to have changed the market’s calculation of supply risks.” The impact has been largely confined to shipping since the conflict began on Friday. Navigation signals in Hormuz and the Persian Gulf have been experiencing increasing disruptions that are affecting position reporting, according to the Royal Navy, and some shipowners are reluctant to accept bookings in the region, citing safety concerns.
Tanker rates have also jumped. Oil prices remain much higher than before the attacks began, prompting record volumes of producer hedging and futures and options trading. Morgan Stanley has raised its price forecasts, citing the heightened risks from the conflict.
Trump will abruptly walk out of a Group of Seven leaders summit in Canada, hours after calling for evacuations. White House Press Secretary Karoline Leavitt said the president was leaving for Washington “so he can take care of a lot of important things,” and in a follow-up post on X said the departure was because of “what’s happening in the Middle East.”
Israel says it has taken over large swaths of Iranian airspace and severely damaged key facilities used in its missile and nuclear programs since the strikes on Friday, raising fears of a wider conflict in a region that produces about a third of the world’s crude oil.
Source: Bloomberg
