Oil extends rally as escalating Israel-Iran conflict stokes supply disruption fears
TOKYO - Oil prices climbed in early Asian trade on June 16 after Israel and Iran launched fresh attacks on June 15, heightening fears that escalating battle could trigger a broader regional conflict and widely disrupt oil exports from the Middle East.
Brent crude futures were up US$1.70, or 2.3 per cent, to US$75.93 a barrel by 6.53am Singapore time, while US West Texas Intermediate crude futures gained US$1.62, or 2.2 per cent, to US$74.60. They had surged more than 5.5 per cent earlier in the morning.
Both benchmarks settled 7 per cent higher on Friday (June 13), having surged more than 13 per cent during the day, the most in three years.
The latest developments have stoked concerns about disruptions to the Strait of Hormuz, a vital shipping passage. About a fifth of the world's total oil consumption passes through the strait, or some 18 to 19 million barrels per day (bpd) of oil, condensate and fuel.
A closure of Hormuz could propel international prices to as high as US$130, JPMorgan Chase & Co. has predicted. A jump in oil would add to inflation pressures around the world.
Widely watched market metrics are pointing to panic over prompt supply risks, as well as growing fears of a protracted conflict in the Middle East. The gap between the grade's two nearest December contracts – a key indicator on long-term balances – rose by as much as US$1.29 a barrel to US$3.48.
Israel temporarily knocked out a natural gas processing facility linked to the giant South Pars field, Iran's biggest, in an attack on June 14, and targeted fuel storage tanks during strikes as part of its campaign against Tehran's nuclear programme.
While the attack was concentrated on the Islamic Republic's domestic energy system rather than exports to international markets, oil traders and analysts are preparing for more turmoil.
'Now that threshold has been crossed, there will be questions about whether Israel is going to target more Iranian energy infrastructure,' said Richard Bronze, head of geopolitics at consultant Energy Aspects. 'We appear to be in an escalatory cycle.'
Despite US sanctions, Iran remains the third-biggest producer in the Organization of the Petroleum Exporting Countries (Opes. Its allies in Yemen, the Houthi militants, have harassed ships in the region and Tehran has in the past threatened to halt the Strait of Hormuz, a critical transit point in the Persian Gulf. It has, however, never blockaded the key maritime chokepoint.
If oil supplies are disrupted, President Donald Trump will likely call on the Opec+ alliance led by Saudi Arabia to tap its considerable spare production capacity, Helima Croft, head of global commodity strategy at RBC Capital Markets, and a former CIA analyst, said in a note on June 13.
But it's unclear whether the Opec could offset a severe and prolonged outage in Iran, which pumps around 3.4 million barrels a day.
The attempt alone could put the energy infrastructure of the Saudis and the United Arab Emirates into the cross-hairs. After Riyadh backed Mr Trump's earlier crackdown on Tehran during his first term, its critical oil-processing installation at Abqaiq was blown up by the Houthis in 2019.
'Opec spare capacity could be brought online to offset a reduction in Iranian barrels,' said Clay Seigle, senior fellow at the Center for Strategic and International Studies in Washington DC. 'But it would be politically dicey for Saudi Arabia and UAE to benefit in this way at Tehran's expense.'
The fact that major oil facilities have so far been spared in the current tumult may offer markets some reassurance.
'We would probably need to see evidence of an intensifying war – with far more widespread damage and mass civilian casualties – for that expectation to change and the risk premium in crude to spike further,' said Vandana Hari, founder of Singapore-based energy consultancy Vanda Insights.
The International Energy Agency, the Paris-based watchdog set up by consuming nations, said that global oil markets are well supplied amid slowing fuel demand and recent production increases by Opec+. The agency said it's prepared to tap emergency stockpiles if necessary.
On June 15, President Trump said in a Truth Social post that the two belligerent countries should and will make a peace deal. Mr Trump had said before Israel's attacks that he was dissatisfied with rising oil prices.
Fears over the Strait of Hormuz are probably excessive too, Ms Hari added. Such an extreme step would cut off Iran's own export route and alienate its biggest customer, China.
'Iran has never actually blocked the channel despite many threats to do so down the years and I don't expect it will do so now,' she said. BLOOMBERG, REUTERS
Join ST's Telegram channel and get the latest breaking news delivered to you.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNA
an hour ago
- CNA
Oil falls as Iran affirms commitment to nuclear treaty
NEW DELHI :Oil futures fell on Friday after Iran reaffirmed its commitment to nuclear non-proliferation and amid expectations that major producers are set to agree to raise their output this weekend. Brent crude futures were down 22 cents, or 0.32 per cent, to $68.58 a barrel by 0445 GMT, while U.S. West Texas Intermediate crude fell 12 cents, or 0.18 per cent, to $66.88. Trade was thinned by the U.S. Independence Day holiday. U.S. news website Axios reported on Thursday that the U.S. was planning to meet with Iran next week to restart nuclear talk, while Iran Foreign Minister Abbas Araqchi said Tehran remains committed to the nuclear Non-Proliferation Treaty. "Thursday's news that the U.S. is preparing to resume nuclear talks with Iran, and Araqchi's clarification that cooperation with the U.N. atomic agency has not been halted considerably eases the threat of a fresh outbreak of hostilities," said Vandana Hari, founder of oil market analysis provider Vanda Insights. Araqchi's comments came a day after Tehran enacted a law suspending cooperation with the U.N. nuclear watchdog, the International Atomic Energy Agency. "But the price correction may have to wait till Monday, when the U.S. reopens from a long weekend and takes in Sunday's OPEC+ decision, which is likely to be another 411,000 barrels per day target hike in August," Hari said. OPEC+, the world's largest group of oil producers, is set to announce an increase of 411,000 bpd in production for August as it looks to regain market share, four delegates from the group told Reuters. Meanwhile, uncertainty over U.S. tariff policies was renewed as the end of a 90-day pause on higher levy rates approaches. Washington will start sending letters to countries on Friday specifying what tariff rates they will face on goods sent to the United States, a clear shift from earlier pledges to strike scores of individual trade deals. President Donald Trump told reporters before departing for Iowa on Thursday that the letters would be sent to 10 countries at a time, laying out tariff rates of 20 per cent to 30 per cent. Trump's 90-day pause on higher U.S. tariffs ends on July 9, and several large trading partners have yet to clinch trade deals, including the European Union and Japan. The U.S. imposed sanctions on Thursday against a network that smuggles Iranian oil disguised as Iraqi oil and on a Hezbollah-controlled financial institution, the Treasury Department said. Saudi Arabian Defense Minister Prince Khalid bin Salman met with President Trump and other officials at the White House, however, to discuss de-escalation efforts with Iran, media reports said. Trump also said on Thursday that he would meet with representatives of Iran "if necessary".
Singapore Law Watch
an hour ago
- Singapore Law Watch
Granddaughter of Hin Leong founder O.K. Lim fails to keep 3 insurance policies from creditors' reach
Granddaughter of Hin Leong founder O.K. Lim fails to keep 3 insurance policies from creditors' reach Source: Straits Times Article Date: 04 Jul 2025 Author: Grace Leong Court finds lack of evidence that her father intended to create trust before bankruptcy. The daughter of bankrupt former Hin Leong Trading director Lim Chee Meng failed in a bid to shield three AIA Singapore insurance policies worth over half a million dollars from being part of Mr Lim's bankruptcy estate. Ms Michelle Lim Yan Yi, the granddaughter of Hin Leong founder Lim Oon Kuin, sought a High Court declaration that the three policies, worth over $521,000, should be ring-fenced from creditors' reach because they were held on trust for her benefit by her father, who was declared bankrupt in December 2024. The three policies are part of a set of eight insurance policies with AIA that Mr Lim Chee Meng had taken out when Ms Lim was a minor, under which he was the policy owner and she was the named insured. But High Court Judicial Commissioner Mohamed Faizal found there was a lack of evidence of an intention on Mr Lim's part, prior to his bankruptcy, to create a trust over the three policies for the sole benefit of his daughter. He found that the documentary evidence relied on by Ms Lim was 'either self-interested representations' or 'mere assertions'. One document she relied on was an October 2021 letter from Mr Lim to ring-fence the eight policies from other assets that were subjected to a freezing order in a US$3.5 billion (S$4.45 billion) civil suit. Another document adduced was an AIA letter dated October 2021 signed by a purported personal wealth manager, who asserted that 'the eight policies belong to (Ms Lim), and are being held by Mr Lim Chee Meng on trust for (Ms Lim)'. Ms Lim contended that the AIA letter would not have been issued unless her father had clearly conveyed his intention to create a trust. But the judicial commissioner found 'the letter was bare and bereft of details and merely asserted, without more, that the eight policies were held on trust'. Other documents Ms Lim relied on included an e-mail dated March 10, 2025, from Mr Lim to the trustees and part of his affidavit filed in 2024 for his bankruptcy proceedings, in which he asserted that he held the eight policies on trust for Ms Lim. But the judicial commissioner pointed out that most of the documents she relied on as evidence were written by or on behalf of her father after his bankruptcy proceedings started. 'By that time, it would have been apparent that Hin Leong's collapse could have extremely far-reaching financial consequences for all concerned, not least Mr Lim who was a director.' The judicial commissioner noted: 'It was at this point that Mr Lim started to insist that the eight policies were in fact not owned by him and should be deemed to be held on trust.' He pointed out: 'The courts should be wary of such belated attempts by bankrupts to shield assets from creditors by retrospectively asserting the existence of trust arrangements without contemporaneous evidence.' Mr Lim, along with his father and sister Lim Huey Ching, was declared bankrupt in December 2024, following a settlement of two lawsuits brought by Hin Leong's liquidators and HSBC against the Lim family. Their bankruptcy estates are being managed by trustees Leow Quek Shiong and Seah Roh Lin of BDO Singapore, who have taken the position that the three insurance policies vest in Mr Lim's bankruptcy estate. The trustees had asked Mr Lim and Ms Michelle Lim whether a third party would pay the bankruptcy estate the surrender value of the three policies, which was worth over $521,000 as at Jan 16. If no third party would pay for them, the trustees would then terminate the policies and use the proceeds to pay his creditors. But Mr Lim and his daughter did not agree to this arrangement. Ms Lim claimed that her father intended to hold these policies on trust for her until she turned 21 years old, after which he would transfer the policies to her name. But the trustees contend that while the policy documents do identify Ms Lim as the insured, they do not name her as a beneficiary. The trustees also pointed out that Mr Lim's actions were 'inconsistent with any intention to create a trust for Ms Lim since he did not take the necessary steps to vest the three policies in her name when she turned 21', despite having the opportunity to do so. The trustees noted that AIA had written to Mr Lim on June 13, 2024, to indicate that its records showed he wished to remain the policies' owner when Ms Lim turned 21, but they were writing to him just in case he wished to change the state of affairs. The judicial commissioner noted that Mr Lim 'chose to ignore the (AIA) letters altogether'. Further, he also did not file any affidavit to support his daughter's case. 'While I accept that the absence of direct evidence from Mr Lim is not determinative, such absence necessarily raises obvious and legitimate questions about the credibility and completeness of (Ms Lim's) claim,' the judicial commissioner noted. Source: The Straits Times © SPH Media Limited. Permission required for reproduction. Print
Business Times
an hour ago
- Business Times
Time to raise bets on Malaysia semiconductor stocks on expected ‘market-friendly' trade deal: UOBKH
[SINGAPORE] Malaysian stocks could score near-term wins as the US' 'softening stance' on tariffs is expected to bring about market-friendly trade deals between the two countries, said UOB Kay Hian (UOBKH). In a Wednesday (Jul 2) report, the brokerage said it was time to raise bets on Malaysia with the expectations of favourable trade deals with the US. 'In anticipation of market-friendly US trade deals being struck and Malaysia retaining its onshoring destination status, our July 2025 picks raise the bet on semiconductor-related stocks, while still maintaining our emphasis on domestic infrastructure plays,' said UOB analysts. Maybank on Jul 1 also predicted that Malaysia could shine in the next phase of global trade, with US tariffs on the country likely to stay at a lower band relative to other nations. UOB's top picks for July 2025 included engineering solutions provider Coraza, pharmaceutical company Duopharma Biotech, property player Eco World Development, Gamuda, Hume Cement Industries, semiconductor services provider IJM and digital services provider MY EG Services – all of which were assigned a 'buy' rating. Semiconductor-related stocks to succeed in short-run A 'softening stance' on the US' tariff demands should culminate in market-friendly US-Malaysia trade deals, UOBKH analysts said. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up 'This expectation, together with strong anecdotal evidence of Malaysian electrical and electronics companies significantly clinching orders and order enquiries since the US' 90-day tariff pause in April, should trigger further near-term upside especially for semiconductor-related stocks,' UOBKH analysts said. These semiconductor-related players should get near-term wins before potential profit taking and ahead of forex-related challenges in the upcoming quarterly results season in June and July, they added. One new addition to the brokerage's list of top picks, semiconductor-related laggard Coraza, logged consistent year-on-year revenue improvements across the past four quarters, said UOBKH analyst Desmond Chong. He highlighted the company's 'solid' order momentum, as its current outstanding orderbook is at RM80 million (S$24.1 million) – 10 per cent above the previous quarter's quantum, with the bulk of orders coming from the semiconductor industry. The company is investing in higher and more sophisticated equipment to cater to the needs of its customers, Chong said. Upgrades for a newly acquired plant opposite its existing Nibong Tebal plant are on track, while another new factory adjacent to the plant is set to become operational in the fourth quarter of 2025. The timeline given for Coraza was six to nine months with a target price of RM0.66. Inari, a company involved in semiconductor assembly, is another new addition to UOBKH's top picks. The brokerage lifted its target price upwards to RM2.36 from RM1.90, and assigned it a six to nine-month timeline. While the group's share price dropped 34 per cent in the year to date, Chong noted that its radio frequency segment sustained a 'relatively healthy' utilisation rate of 65 to 70 per cent. Inari is poised to commercialise on new product pipelines in upcoming quarters, with its 2025 growth to be driven largely by its flagship radio frequency business. The group has also made recent forays into advanced packaging platforms such as flip-chip chip-scale packages and flip-chip ball grid arrays, Chong said. 'These technologies offer ultra-high performance, high memory bandwidth, and heterogeneous integration capabilities to cater to the increasing demand for cutting-edge semiconductor solutions in artificial intelligence, server, networking, smart devices and industrial applications,' he added.
