International Oil Prices Surge Amid Trump’s Statements on Iran

The futures of American stock indices (DowJones, S&P, Nasdaq) declined, while oil prices increased following President Donald Trump’s call for the evacuation of Tehran. Trump’s comments contradicted previous optimism that tensions between Israel and Iran would not escalate into a broader conflict, according to Bloomberg. Gold also saw an increase after Trump’s social media post during the G7 summit in Alberta. It was unclear what Trump referred to, but earlier he mentioned that Iran wanted to negotiate a deal. The U.S. president cut short his G-7 visit and returned to Washington, as per the White House. Asian stock indices showed mixed movements with Japanese and South Korean shares gaining, while Hong Kong and Chinese stocks fell. Risk-on sentiment returned to Wall Street on June 16, pushing the S&P 500 up by about 1%, recovering above 6,000 units. Analysts noted that markets generally remained resilient amid Middle East headlines, understanding that past incidents were limited and brief. Treasury yields of longer duration continued to lag despite a $13 billion sale of 20-year bonds, which performed better than last month’s disappointing auction. The dollar rose against most G10 currencies. Trump stated that Iran wished to discuss de-escalation with Israel, even as both sides exchanged fire for the fourth consecutive day. He avoided discussing further military involvement. The outbreak of hostilities disrupted the momentum driving the S&P 500 near record levels. Initially cautious, market sentiment improved as investors assumed attacks wouldn’t draw in more parties. West Texas Intermediate crude oil briefly dipped below $70 on Monday but rebounded to nearly $73 on Tuesday. Middle Eastern producers transport about one-fifth of global daily production through the narrow waterway, and prices could soar if Tehran disrupts shipments. Morgan Stanley economists noted that while oil prices surged due to supply concerns, the impact on Asia should be manageable given lower oil burdens and moderate inflation. However, sustained prices above $85 per barrel with a strong U.S. dollar could delay interest rate cuts. Investors will monitor the G-7 gathering in Canada, where Trump and Japanese Prime Minister Sigeru Isiba failed to agree on trade. Japan edges closer to a possible recession amid U.S. tariff pain. Meanwhile, UK Prime Minister Keir Starmer agreed with Trump on previously disclosed trade terms to reduce U.S. tariffs on key British exports and raise quotas for certain American agricultural products. The Bank of Japan is expected to maintain rates at its two-day meeting concluding Tuesday, focusing on its bond-buying reduction plan almost a year after starting to shrink its balance sheet. Wall Street awaits the Federal Reserve’s decision Wednesday, with policymakers signaling prolonged interest rate maintenance. Investors look to Chair Jerome Powell for hints on potential moves and timing.