Oil prices rallied on Tuesday after U.S. President Donald Trump urged Tehran residents to evacuate, igniting fresh concerns of an all-out war as Israel and Iran continued their exchange of missile strikes.
Initial hopes for containment of the deadly conflict had contributed to modest gains in most equity markets, while President Trump’s earlier assertion that Iran sought a nuclear deal had also provided a degree of optimism. Following Friday’s surge, triggered by Israeli attacks on its regional adversary, crude prices had dipped more than one percent on Monday, as traders speculated the conflict would not spread across the Middle East and key oil facilities remained largely unaffected.
However, prices rebounded after Trump utilized social media to call for the evacuation of the Iranian capital, a city home to nearly 10 million people. “Iran should have signed the ‘deal’ I told them to sign,” he stated, referencing ongoing nuclear negotiations. “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!”
Oil prices spiked by approximately two percent on Tuesday before paring some gains. Nevertheless, Trump’s comments maintained investor anxiety amidst warnings that an escalation of the crisis could trigger another significant surge in commodity prices.
Concurrently, the aircraft carrier USS Nimitz departed Southeast Asia on Monday after canceling a planned visit to Vietnam, with the Pentagon announcing the deployment of “additional capabilities” to the Middle East.
Prime Minister Benjamin Netanyahu reiterated that Israel’s campaign was “changing the face of the Middle East.” While President Trump has maintained that Washington has “nothing to do” with its ally’s campaign, Iran’s foreign minister stated on Monday that the U.S. leader could halt the attacks with “one phone call.”
Traders had exhibited a slightly more optimistic outlook after President Trump, attending the G7 summit in Canada, indicated Iran’s desire for a deal, stating, “as soon as I leave here, we’re going to be doing something.” He later departed 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.”
According to the Wall Street Journal, Tehran had reportedly signaled a willingness to de-escalate and resume nuclear talks with Washington, given the United States’ non-participation in the current conflict.
Asian stock markets largely saw gains, with Tokyo, Sydney, Seoul, Singapore, and Taipei leading the increases, though Shanghai and Hong Kong experienced struggles. Rodrigo Catril at National Australia Bank observed, “Risk assets are enjoying a positive start to the new week amid signs the Israel-Iran war remains limited to the two countries without signs of a possible escalation into a wider conflict.” He added, “Iran is reportedly seeking de-escalation talks, but Israel is not showing signs of slowing down.”
These gains followed a positive lead from Wall Street, where traders are closely monitoring the G7 summit. World leaders at the summit pushed back against Trump’s trade policies, arguing they posed a risk to global economic stability. Leaders from Britain, Canada, Italy, Japan, Germany, and France urged President Trump to reconsider his plans to impose even steeper tariffs on countries globally next month.
Also under consideration are central bank decisions scheduled for this week, with the Bank of Japan expected to announce its latest decision on interest rates later in the day. Officials are widely anticipated to keep interest rates steady but may adjust their bond purchase policy.
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