Oil Stays Volatile as Markets Weigh U.S. Attacks on Iran

By Ronnie Harui and Sherry Qin

Oil prices had a volatile start to the week in Asia, rising before paring gains as markets watch to see how Iran will respond to U.S. attacks on three of its nuclear sites over the weekend.

Oil rose nearly 3% in the morning on news of the weekend strikes by the U.S. on three Iranian sites that represent the core of the country's nuclear infrastructure. President Trump said on Truth Social that "monumental damage" was done.

By midday, oil had pared gains, as analysts assessed the likelihood of a disruption to the Strait of Hormuz, a key energy shipping lane. Front-month WTI crude oil futures were last up 1.4% at $74.88 a barrel, while front-month Brent was also 1.4% higher at $78.07 a barrel.

The steady of prices signals that much of the "war premium" has been priced in, Phillip Nova's Priyanka Sachdeva said in a research note. For oil to keep marching higher, damage to supplies needs to be evident given that OPEC+ still holds a lot of spare capacity, she added.

Though seen as a drastic option, the most powerful tool Iran has to shock the global economy and hurt the U.S. is to close traffic on the strait, said Danske Bank chief analyst Minna Kuusisto. Doing so would drop world oil supplies by more than 18 million barrels a day--almost 20%--she said.

"For LNG, there is no alternative route, and hence, the impact would be similarly severe for the global gas market," the analyst said.

Asian equities started broadly lower amid risk-off sentiment, but pared some losses at midday. Japan's Nikkei Stock Average was down 0.2%, South Korea's Kospi was 0.4% lower, and Hong Kong's Hang Seng Index was 0.1% higher.

Defense and energy stocks rose broadly across the region.

Korean oil refiners SK Innovation and S-Oil surged as much as 9.0% and 6.7%, respectively. China's state-owned oil giants, Cnooc and Sinopec, were up 0.9% and 0.25%, respectively.

Chinese aviation and defense manufacturer AVIC Airborne Systems rose 1.25% and Korean ammunition maker Poongsan Corp. was up 7.5%.

U.S. stock-index futures were also lower, with the eMini Nasdaq 100 slipping 0.3%, the eMini S&P 500 losing 0.3%, and the eMini Dow falling 0.4%.

The dollar strengthened against most G-10 and Asian currencies amid potential safe-haven demand.

Spot gold edged 0.25% lower to $3,358.76 per troy ounce, giving up earlier gains in another reflection of fluctuating sentiment.

The reaction to the weekend's Middle East developments has been a relatively contained, said Pepperstone senior research strategist Michael Brown.

The moves, "very knee-jerk in nature," speak to the market's tendency to over-react to geopolitical news, he wrote in a note. "I wouldn't be at all surprised if, by Friday afternoon, crude ends the week in the red, and stocks end in the green, albeit with plenty of sabre rattling taking place in the interim."

Write to Ronnie Harui at [e-mail] and Sherry Qin at [e-mail]

(END) Dow Jones Newswires

06-23-25 0125ET