Oil prices tumbled and global equities rallied Tuesday after US President Donald Trump suggested the US-Israel war against Iran could end sooner than expected, reports AFP.
Crude markets swung sharply over the past 24 hours as the conflict in the oil-rich Middle East entered its second week with no clear resolution. Investor sentiment improved, however, after Trump said the military campaign was progressing far faster than initially planned.
“I think the war is very complete, pretty much. They have no navy, no communications, they've got no air force,” Trump told CBS News in a phone interview.
“If you look, they have nothing left. There's nothing left in a military sense,” he added.
Trump said the United States was “very far” ahead of the original timeline of four to five weeks for the campaign. Speaking later at a news conference in Florida, he said the conflict would likely end soon.
“It’s going to be ended soon, and if it starts up again they'll be hit even harder,” he said. Asked whether the war could conclude within days or weeks, Trump replied: “I think soon. Very soon.”
The US president also warned that Iran would face an attack of “incalculable” scale if it attempted to block oil shipments through the Strait of Hormuz, a critical chokepoint through which about a fifth of global oil supplies pass.
Trump’s remarks followed earlier comments in which he demanded Iran’s “unconditional surrender” as the only acceptable outcome to end the war — a statement that had previously rattled markets over fears of a prolonged conflict.
Iran’s Revolutionary Guards responded by saying that Tehran — not Washington — would “determine the end of the war”.
Investors reacted swiftly to Trump’s latest comments, sending crude prices plunging around 10 percent.
The drop followed dramatic volatility on Monday, when oil prices briefly surged around 30 percent to above $119 per barrel before falling to as low as $84.
Markets had already begun recovering earlier Monday after reports that finance ministers from the Group of Seven industrialised nations were discussing the potential release of strategic oil reserves to ease supply disruptions.
Trump also said the United States would temporarily waive some Ukraine war-related sanctions on Russian oil sales to India, with White House officials reassuring G7 partners the move would be short-term.
Asian equity markets rallied strongly Tuesday. Seoul surged more than six percent and Tokyo climbed over three percent, while Hong Kong, Shanghai, Sydney, Singapore, Wellington, Taipei, Manila and Jakarta also posted gains.
The advances followed a sharp turnaround on Wall Street, where all three major indexes closed higher after reversing steep earlier losses.
Meanwhile, diplomatic efforts have focused on reopening the Strait of Hormuz, which Iran has effectively closed to most oil tankers.
French President Emmanuel Macron said Paris was working with allies on a “purely defensive” mission to restore shipping through the waterway.
Shipping experts say about 10 vessels in or near the strait have come under attack since Iran blocked the route in retaliation for US-Israeli strikes.
Global shipping giant MSC said it was halting some export shipments from the Gulf. Bahrain’s state-owned energy company Bapco joined counterparts in Qatar and Kuwait in declaring “force majeure”, warning that extraordinary circumstances could disrupt exports.
Saudi Arabia’s defence ministry also said it had intercepted a drone targeting an oil field in the kingdom’s eastern region near the UAE border.
“It has been an incredibly wild ride for traders and investors over the past 24 hours,” said Chris Weston, an analyst at Pepperstone.
“The pressure valve has clearly been released for now. However, volatility across energy markets remains exceptionally elevated.”
“While the most extreme stress has eased, markets are still pricing a significant degree of uncertainty and risk,” he added.
“The geopolitical backdrop remains fluid, and traders should expect volatility to remain a defining feature of the trading environment in the days ahead.”
Bd-pratidin English/ Jisan
