HONG KONG: Oil prices and equities fluctuated on Tuesday (Jun 17) as investors weighed Donald Trump’s call for Tehran residents to evacuate and hopes that the conflict between Israel and Iran does not descend into all-out war.
While the crisis in the Middle East continues to instill uncertainty on trading floors as the two foes exchange deadly missiles strikes, talk that the Islamic republic wanted to make a nuclear deal was providing some optimism.
After Friday’s surge sparked by Israel’s attacks on its regional foe, crude ticked more than 1 per cent lower on Monday as traders bet that the conflict would not spread throughout the Middle East and key oil sites were mostly left untouched.
Prices edged back up after Trump took to social media, calling for the evacuation of the Iranian capital, which is home to nearly 10 million people.
“Iran should have signed the ‘deal’ I told them to sign,” he said, referring to nuclear talks that were taking place.
“What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!”
Trump later poured cold water on remarks from French President Emmanuel Macron that he was leaving the G7 summit in Canada to discuss a possible ceasefire.
Oil prices spiked around 2 per cent on Tuesday before reversing the gains, with Schroders senior economist George Brown saying it was unlikely Iran would strangle flows of the commodity through a key supply route.
“The likelihood of Iran taking any action in the Strait of Hormuz, the often-touted disaster scenario for oil markets, appears very remote,” he wrote in a note.
“Such action would impact flows for the other Middle-East nations who are aiming to mediate the situation, while inflicting little harm on Israel.”
Traders are keeping a wary eye on developments in the crisis, with the aircraft carrier USS Nimitz leaving Southeast Asia on Monday after cancelling a Vietnam visit as the Pentagon announced it was sending “additional capabilities” to the Middle East.
Prime Minister Benjamin Netanyahu insisted Israel’s campaign was “changing the face of the Middle East”.
Trump has maintained that Washington has “nothing to do” with its ally’s campaign, but Iran’s foreign minister said on Monday that the US leader could halt the attacks with “one phone call”.
Tehran has said it would hit US sites if Washington got involved.
Meanwhile, top diplomats from Britain, France and Germany called on Iran to quickly return to the negotiating table over its nuclear programme, a French diplomatic source said.
The US president had earlier said Iran wanted to make a deal, adding “as soon as I leave here, we’re going to be doing something”.
He later left the gathering in the Rockies, telling reporters: “I have to be back as soon as I can. I wish I could stay for tomorrow, but they understand, this is big stuff”.
Tehran had signalled a desire to de-escalate and resume nuclear talks with Washington as long as the US did not join conflict, according to the Wall Street Journal.
