Iran vowed on Tuesday that not one litre of oil would be exported from the Gulf while its war with the United States and Israel continues, in a stark rebuke to President Donald Trump’s boast that the conflict was all but over.
Trump’s argument that the war would be “ended soon” helped reverse Monday’s spike in oil prices, which have shot up since Iranian attacks on shipping closed the Strait of Hormuz in response to the US-Israeli strikes that killed its supreme leader.
The price increase also followed strikes on oil depots in Iran and after attacks on oil infrastructure in Saudi Arabia and Bahrain.
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After Trump’s comments, European gas prices opened 15% lower, and Asian stock markets recovered from Monday’s slump and their European counterparts opened higher. But concern remains high.
Qatar, which has suspended LNG exports and sent European energy prices sky-high, said Iranian attacks on its civilian infrastructure were continuing, and the Israeli military announced a new wave of attacks on Tehran.
“There would be catastrophic consequences for the world’s oil markets the longer the disruption goes on, and the more drastic the consequences for the global economy,” Saudi oil giant Aramco’s president and CEO Amin H Nasser told journalists. “It’s absolutely critical that shipping resumes in the Strait of Hormuz.”
Egypt increased the cost of fuels by up to 3% and Pakistan said it would provide naval escorts to commercial shipping. France has dispatched warships to the region.
Iran’s Revolutionary Guards Corps mocked Trump’s bid to lessen the economic impact of the war, warning: “The Iranian armed forces… will not allow the export of a single litre of oil from the region to the hostile side and its partners until further notice.”
“It is we who will determine the end of the war,” the IRGC, seen as close to Iran’s new supreme leader Ayatollah Mojtaba Khamenei said, in a statement carried by Iranian media.
Stocks rally, Brent crude down 7%
Asian equities rallied and oil prices sank on Tuesday in a wild day of swings that came after President Donald Trump signalled that the US-Israel war on Iran could end sooner than thought.
The Paris and London stock markets gained around 2%, as European gas prices sank 15%, helping ease concerns over a renewed surge for global inflation.
International oil benchmark, Brent North Sea crude, plunged more than 7% to around $92 a barrel, a day after nearing $120.
“This downward swing in oil helped US stocks stage an impressive comeback on Monday to trade in positive territory – a trend which continued in Asia and is now being repeated in Europe,” AJ Bell investment director Russ Mould said.
Kospi rises 5%, Nikkei up 2.9%
All Asian markets were up, with Seoul rising more than 5% and Tokyo ending with a gain of 2.9%.
There were also advances in Hong Kong, Shanghai, Sydney, Singapore, Bangkok, Mumbai, Taipei, Manila and Jakarta.
“This is still a fluid market, and if the headlines deteriorate, or the war escalates, then we could see prices reverse once again,” said Kathleen Brooks, research director at trading group XTB.
As the crisis in the crude-rich Middle East entered its second week, Trump said the campaign was far ahead of his initial timeline of around a month.
“It’s going to be ended soon, and if it starts up again, they’ll be hit even harder,” he told a news conference in Florida on Monday.
Iran responded by vowing to block Gulf oil exports and asserting that they, not the US, would “determine the end of the war”.
‘Lack of certainty’
Still, Trump’s remarks helped reverse the previous day’s spike in oil prices, which had surged since Iranian attacks on shipping closed the strategic Strait of Hormuz in response to the US-Israeli strikes that killed its supreme leader.
The surge also followed strikes on an oil depot in Iran and attacks on oil infrastructure in Saudi Arabia and Bahrain.
“The market is in highly speculative mode thanks to the absence of any certainty about what the next few days, let alone [what] weeks will look like,” said Mould.
“In these circumstances… Trump’s comments about the Iran war ending soon have been seized upon,” he added.
The US president also said he would temporarily waive some oil-related sanctions, after acknowledging talks with Russian counterpart Vladimir Putin.
Investors’ attention focused on the Strait of Hormuz, through which nearly 20% of the world’s oil usually transits from the Gulf to world markets.
About 10 vessels in or near the strait have come under attack since Iran all but blocked the strait in retaliation for the US-Israeli strikes, according to shipping experts.
President Emmanuel Macron has said France and its allies are working on a “purely defensive” mission to reopen the strait, aiming to escort ships “after the end of the hottest phase of the conflict”.
Key figures at around 1110 GMT
Brent North Sea Crude: DOWN 7.1% at $91.83 per barrel
West Texas Intermediate: DOWN 6.4% at $88.67 per barrel
Seoul – Kospi: UP 5.4% at 5,532.59 (close)
Tokyo – Nikkei 225: UP 2.9% at 54,248.39 (close)
Hong Kong – Hang Seng Index: UP 2.2% at 25,959.90 (close)
Shanghai – Composite: UP 0.7% at 4,123.14 (close)
Dollar/yen: DOWN at 157.74 yen from 157.85 yen.
Agence France-Presse with additional editing by Jim Pollard
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