Oil prices tumble as markets shrug off Iranian rebuttal to US
Traders work on the floor of the New York Stock Exchange (NYSE) at the in New York City. Crude oil prices slid more than 7 percent on Monday. (Photo by TIMOTHY A. CLARY / AFP)
NEW YORK, United States – Crude oil prices slid more than seven percent Monday while Wall Street stocks advanced after markets shrugged off Iran’s rebuttal to the US weekend attack on Iranian nuclear facilities.
Iran announced it had launched missiles at a major US base in Qatar, with explosions ringing out in Doha and projectiles seen streaking overhead.
But Qatar described the situation as stable, while energy analysts said oilfield assets were not affected.
READ: PUV drivers set to get fuel subsidy as oil prices surge
“This is a face-saving measure by the Iranians and hopefully the diplomatic off-ramp will be taken,” said John Kilduff of Again Capital, who described the Iranian action as “somewhat measured” and apart from population centers.
The Iran-Israel clash has focused worry on the Strait of Hormuz, a strategic waterway for seaborne oil that has long been used by Iran as a geopolitical bargaining chip.
But Kilduff said, “it’s pretty clear that this is not going to turn into — right away at least — any kind of impact on oil flows in the region, particularly the Strait of Hormuz.”
US benchmark West Texas Intermediate slid 7.2 percent to $68.51 a barrel, below its level ahead of the current Iran-Israel clash.
Iran’s response “signified that Iran isn’t going to have the fire power to escalate this in an adverse way,” said Briefing.com analyst Patrick O’Hare.
“The response is relatively weak,” he said.
While US stocks tripped into negative territory around the time of the Qatar attack, major indices quickly recovered.
The S&P 500 finished up by one percent.
Earlier, sentiment on the Paris and Frankfurt stock markets was hit by a closely watched survey that showed eurozone business activity was almost stagnant again in June.
London’s stock exchange was lower with shares in airlines, including EasyJet and British Airways-owner IAG, suffering losses on fears of rising energy costs and disruptions in travel to the Middle East.
In Asia, Tokyo was lower while Hong Kong and Shanghai gained.
The dollar gave up gains against the euro and pound after Federal Reserve Governor Michelle Bowman official said she would support cutting interest rates at next month’s meeting if inflation holds steady.
The market currently expects the Fed to resume cutting interest rates in September.
Bowman’s comments come on the heels of similar remarks from Fed governor Christopher Waller. They are likely to spur questions this week when Fed Chair Jerome Powell sits for two days of congressional testimony.
