Oil prices surge while global shares retreat after Israel's strike on
Iran
[June 13, 2025] By
DAVID McHUGH and JIANG JUNZHE
FRANKFURT, Germany (AP) — Oil surged, stocks fell and investors sought
safety in the U.S. dollar and government bonds Friday after Israel
struck Iranian nuclear and military targets in an attack that raised the
risk of all-out war between them.
U.S. benchmark crude oil rose by $4.97, or 7.3%, to $72.91 per barrel.
Brent crude, the international standard, increased by $4.78 to $74.15
per barrel, a gain of 6.67%
Oil prices are likely to rise in the short term but the key question is
whether exports are affected, said Richard Joswick, head of near-term
oil at S&P Global Commodity Insights. “When Iran and Israel exchanged
attacks previously, prices spiked initially but fell once it became
clear that the situation was not escalating and there was no impact on
oil supply,” he wrote in an emailed analysis.
“Oil price risk premiums could rise sharply if Iran conducts broader
retaliatory attacks, especially if on targets other than in Israel,”
Joswick said.
China is the only customer for Iranian oil but could seek alternative
supplies from Middle Eastern exporters and Russia, he said.
Iran's oil trade is restricted by Western sanctions and import bans, and
Israel exports only small amounts of oil and oil products.
Futures for the S&P 500 fell 1.2% ahead of the U.S. market open while
those for the Dow Jones Industrial Average lost 1.2%. In Europe,
Germany’s DAX dropped 1.4% to 23,437.61, and the CAC 40 in Paris gave up
1% to 7,685.89. Britain’s FTSE 100 slipped 0.5% to 8,840.95.
The yield on the 10-year Treasury fell to 4.35% from 4.41% late
Wednesday and from roughly 4.80% early this year.
In currency trading early Friday, the U.S. dollar gained 0.3% against
the Japanese yen, to 143.93 yen, and 0.47% against the euro, which eased
to $1.153. The yield on U.S. 10-year Treasurys fell 0.01 percentage
point to 4.347%; bond yields and prices move in opposite directions.
Treasurys and the dollar often rise when investors fell less inclined to
take risks.
In Asia, Tokyo's Nikkei 225 fell 0.9% to 37,834.25 while the Kospi in
Seoul edged 0.9% lower to 2,894.62. Hong Kong's Hang Seng retreated 0.6%
to 23,892.56 and the Shanghai Composite Index lost 0.8% to 3,377.00.
Australia's S&P/ASX 200 drifted 0.2% lower to 8,547.40.
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Currency traders watch monitors near a screen showing the Korea
Composite Stock Price Index (KOSPI) and the foreign exchange rate
between U.S. dollar and South Korean won, right, at the foreign
exchange dealing room of the KEB Hana Bank headquarters in Seoul,
South Korea, Friday, June 13, 2025. (AP Photo/Ahn Young-joon)
“An Israeli attack on Iran poses a top ten of our global risk, but Asian
markets are expected to recover quickly as they have relatively limited
exposure to the conflict and growing ties to unaffected Saudi Arabia and
the UAE,” said Xu Tiachen of The Economist Intelligence.
On Thursday, U.S. stock indexes ticked higher following another
encouraging update on inflation across the country. The S&P 500 rose
0.4%, the Dow Jones Industrial Average added 0.2% and the Nasdaq
composite gained 0.2% to 19,662.48.
Stocks broadly got some help from easing Treasury yields in the bond
market following the latest update on inflation, taken as a signal that
the Federal Reserve will have more leeway to cut interest rates later
this year in order to give the economy a boost.
The Federal Reserve has been hesitant to lower interest rates, and it’s
been on hold this year after cutting at the end of last year, because
it’s waiting to see how much President Donald Trump’s tariffs will hurt
the economy and raise inflation.
The Fed’s next meeting on interest rates is scheduled for next week, but
the nearly unanimous expectation on Wall Street is that it will stand
pat again. Traders are betting it’s likely to begin cutting in
September, according to data from CME Group.
Trump’s on-and-off tariffs have raised worries about higher inflation
and a possible recession, which had sent the S&P 500 roughly 20% below
its record a couple months ago. But stocks have since rallied nearly all
the way back on hopes that Trump will lower his tariffs after reaching
trade deals with other countries.
—-
Jiang Junzhe reported from Hong Kong.
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