logo
World markets on oil watch as Middle East tensions flare

World markets on oil watch as Middle East tensions flare

Reuters20-06-2025
LONDON, June 20(Reuters) - Brent crude oil is up around 20% so far in June, and set for its biggest monthly jump since 2020 as Israel/Iran tensions flare-up.
Although relatively contained, the rise has not gone unnoticed just three years after Russia's invasion of Ukraine triggered a surge in energy prices that ramped up global inflation and sparked aggressive interest rate hikes.
Here's a look at what rising oil means for world markets.
Oil prices have crept rather than surged higher with investors taking comfort from no noticeable interruption to oil flows.
Still, pay attention.
The premium of first-month Brent crude futures contract to that for delivery six months later this week rose to a six-month high as investors priced in an increased chance of disruptions to Middle East supply . It remained elevated on Friday.
Trading at around $77 a barrel , oil is below 2022's $139 high, but is nearing pain points.
"If oil goes into the $80-100 range and stays there, that jeopardizes the global economy," said ABN AMRO Solutions CIO Christophe Boucher. "We are just below that threshold."
Traders have an eye on shipping, often seen as a key energy bellwether.
About a fifth of the world's total oil consumption passes through the Hormuz Strait between Oman and Iran. Disruption here could push oil above $100, analysts say.
Blocked shipping routes would compound any supply shock. Though the big oil producing countries that make up OPEC+ have promised an extra 1.2 million barrels a day, none has yet been shipped or delivered, said hedge fund Svelland Capital director, Nadia Martin Wiggen.
Blocked shipping routes would mean this expected supply would not come into the international market, she said.
She's watching freight rates closely.
"So far, freight rates show that China, with the world's biggest spare refining capability, hasn't started panic buying oil on supply concerns," said Wiggen.
"Once China starts to buy, freight rates will rise, and world's energy prices will follow."
Rising oil prices raise worries because they can lift near-term inflation and hurt economic growth by squeezing consumption.
High oil prices work like a tax, say economists, especially for net energy importers such as Japan and Europe as oil is hard to substitute in the short term.
Lombard Odier's chief economist Samy Chaar said that sustained oil prices above $100 a barrel would shave 1% off global economic growth and boost inflation by 1%.
Unease rose after Israel launched its strike on Iran a week ago. An initial rally in safe-haven bonds soon evaporated as focus turned to the inflationary impact of higher oil.
The euro zone five-year, five-year forward, a closely-watched gauge of market inflation expectations, climbed to its highest level in almost a month .
"In the United States $75 oil is enough to, if it's sustained, boost our CPI forecast by about half a percent by the year end, to go from 3 to 3.5%," said RBC chief economist Frances Donald.
Turkey, India, Pakistan, Morocco and much of eastern Europe where oil is heavily imported are set to be hit hardest by the rise in crude prices. Those that supply it; Gulf countries, Nigeria, Angola, Venezuela and to some degree Brazil, Colombia and Mexico should get a boost to their coffers, analysts say.
A shift is taking place in the dollar.
In recent years the currency has risen when oil rallies, but it has had only limited support from oil's latest rise, with a weekly gain of just 0.4% .
Analysts expect the dollar's downward trend to resume, given expectations of limited Middle East risks for now and underlying bearish sentiment.
It has weakened around 9% so far this year against other major currencies, hurt by economic uncertainty and concern about the reliability of U.S. President Donald Trump's administration as a trading and diplomatic partner.
No doubt, a weaker dollar heals the sting from higher oil, which is priced in dollars.
"For oil-importing countries, the dollar's fall offers some relief, easing the impact of soaring oil prices and mitigating wider economic strain," UniCredit said.
In the absence of an oil-supply shock, world stocks are happy to stick near all-time highs.
"Investors want to look past this until there's a reason to believe this will be a much larger regional conflict," said Osman Ali, Goldman Sach's Asset Management's global co-head of Quantitative Investment Strategies.
Gulf markets sold off on the initial news, then stabilised somewhat, helped by the higher oil prices. U.S. and European energy shares, particularly oil and gas companies have outperformed (.SPNY), opens new tab, (.SXEP), opens new tab, as have defence stocks. (.SXPARO), opens new tab
Israeli stocks, (.TA125), opens new tab up 6% in a week, have been the most notable outperformer.
Stocks of oil consumers have been the worst hit, airlines stand out.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

DANIEL HANNAN: Think things are bad now? This is what Angela Rayner would do on the day she got into No 10 (and the terrifyingly plausible way it could happen)
DANIEL HANNAN: Think things are bad now? This is what Angela Rayner would do on the day she got into No 10 (and the terrifyingly plausible way it could happen)

Daily Mail​

time14 minutes ago

  • Daily Mail​

DANIEL HANNAN: Think things are bad now? This is what Angela Rayner would do on the day she got into No 10 (and the terrifyingly plausible way it could happen)

Angela Rayner narrows her eyes and grips the podium outside No 10. The moment calls for plain speaking – and plain speaking, she tells herself, is what she does best. 'All right, let's be honest. The markets are out to get us. The bankers, the investors, the money men. The pinstriped scum, absolute pile of asset-stripping Old Etonian piece of scum.'

Iconic Premier League stadium in turmoil after failing to land naming rights deal TWO YEARS after it was promised
Iconic Premier League stadium in turmoil after failing to land naming rights deal TWO YEARS after it was promised

The Sun

time2 hours ago

  • The Sun

Iconic Premier League stadium in turmoil after failing to land naming rights deal TWO YEARS after it was promised

WEST HAM UNITED's London Stadium is facing major financial difficulties. Officials admit the elusive naming rights may not materialise until 2028 - two years after it was promised. 3 3 3 Despite repeated assurances from stadium bosses that a deal was imminent, the venue's owners have been unable to secure a sponsor to help cover the mounting losses. The situation has grown so dire that the London Legacy Development Corporation (LLDC) — which owned the stadium until March — has warned of 'significant risk' in securing a deal in the near future. The Times is reporting that the crisis was outlined in a draft of the LLDC's annual report. The report reveals a worrying financial picture for the iconic stadium. In March, ownership of the venue was transferred to the Greater London Authority (GLA). The report also raised eyebrows over the generous payouts received by former LLDC chief executive, Lyn Garner. Garner was awarded a £228,000 severance package on top of her £304,000 salary after stepping down from the LLDC post. She was quickly appointed chairwoman of the London Stadium's new board, despite her new role being part-time and non-executive. A GLA spokesman defended the move, stating her 'wealth of skills and experience' made her a valuable appointment. Five other senior LLDC executives were also given payouts ranging from £91,000 to £151,000 following the restructuring. Meanwhile, the long-promised naming rights deal remains elusive. Will 'hothead' Kudus fit in at Tottenham after controversial West Ham exit? | Transfers Exposed In early 2023, Garner was confident that an agreement would be reached before the end of the year, but that hope never materialised. Any deal must be approved by West Ham, who share in any income above £4million per year from such agreements. Further complicating matters, West Ham and stadium owners are embroiled in a dispute over costs for staging Women's Super League (WSL) matches. Under the terms of their 2013 concession agreement, the stadium's owners are responsible for expenses like stewarding, security, and electricity, which can add up to around £100,000 per Premier League match. West Ham has offered to cover some of these costs for WSL games, but the offer has yet to be accepted by the London Stadium.

Major update on fake reviews crackdown as industry regulator warns half of companies not complying with the law
Major update on fake reviews crackdown as industry regulator warns half of companies not complying with the law

The Sun

time3 hours ago

  • The Sun

Major update on fake reviews crackdown as industry regulator warns half of companies not complying with the law

MILLIONS of shoppers will be better protected from sneaky fees and fake reviews after a major investigation from the industry watchdog. In April new guidance to crack down on hidden booking fees, admin costs and fake reviews was introduced by the Competition and Markets Authority (CMA). 1 As part of the rules companies had to include all mandatory fees in the total headline price of an item, rather than feeding them through at different stages of the booking process, which is known as 'drip pricing'. They also needed to crack down on glowing fake reviews of products and services. The investigation is important as around 90% of shoppers base what products they buy on online reviews, with £217billion spent in the online retail sector in 2023. A three month adjustment period was introduced to give businesses the chance to understand the new rules and make any necessary changes. This period ended earlier this month and the CMA has now completed a review of the websites of more than 100 businesses. It checked to see if businesses had published policies on their websites to stop fake reviews or explained to customers what their policy on fake reviews is. For example, they need to explain if they pay customers or give them discounts to write a positive review. They should outline if they ban fake reviews or make it clear to customers if they allow them by labelling them. The investigation found that more than half of these businesses could be failing to comply with the CMA's guidance. Some of the companies had no policy in place to ban fake reviews, and the CMA also could not find a policy setting out their approach to the reviews. Others had policies in place but they were not clear, incomplete or difficult to understand. Rocio Concha, Which? director of policy and advocacy, said: "Fake reviews can trick consumers into buying products and services that are duds, while taking business away from honest firms playing by the rules, so it's very concerning to see so many firms still failing to comply with regulatory guidance." She added that the regulator needs to do more to prevent fake reviews. She said: 'Based on this investigation, the regulator must get tougher with firms, using these new powers to send a clear message that these types of consumer rip-offs won't be tolerated." How to save money shopping online Consumer reporter Sam Walker reveals a few ways you can save money on your next online shop. Use cashback websites - use cashback websites like TopCashback and Quidco where you can get free cash on top of any qualifying purchases. Compare prices - make sure you compare prices to ensure you're getting the best deal. You can use websites like Trolley, Price Spy or Price Runner. Factor in delivery costs - plenty of retailers charge you for delivery, even standard delivery, so make sure you read the small print before putting an order in. Some will waive any delivery charges if you spend over a certain amount. The CMA is writing to the 54 firms that failed to meet its guidance to explain that they must have measures in place to prevent fake reviews from appearing on their websites. They also need to have policies that are clear and easily accessible. The companies will also need to review their guidance to see if any changes to their approach and policies are needed. Any company that is sent a letter from the CMA will need to respond and explain what changes, if any, they have made or are making in order to comply with the law. .

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store