Oil prices climb as Trump calls on Iran to surrender

Oil prices continued to rise on Wednesday morning as the Iran-Israel air war entered its sixth day and US president Donald Trump called for Iran’s “unconditional surrender”.

Brent crude futures rose 0.3 percent to $76.68 per barrel by 03:20 GMT. US West Texas Intermediate crude futures gained 0.4 percent to $75.10 per barrel.

The US military is deploying more fighter aircraft to the region to bolster its forces, Reuters reported quoting three officials.

Supply concerns weigh on the market with possible disruption in the Strait of Hormuz, which transports a fifth of the world’s oil.

Iran is Opec’s third-largest producer, pumping 3.3 million barrels per day (bpd) of crude oil.

Global ratings agency Fitch estimates risk premium in oil prices to stay within the $5 to $10 range. It expects the “fighting to remain contained between Israel and Iran, and not persist for more than a few weeks”. 

The US Federal Reserve will hold its policy discussions for the second day on Wednesday. However, the market views the benchmark overnight interest rate to remain in the 4.25-4.50 percent range.

“The situation in the Middle East could become a catalyst for the Fed to sound more dovish, as it did following the October 7, 2023, Hamas attack,” Tony Sycamore, market analyst with IG told Reuters.  

Dubai’s main stock market index fell 0.6 percent on Tuesday, declining for a fourth session in five since hitting a 17-year closing high on June 10. Despite this, the benchmark is up 35 percent over the past 12 months to be among the best performers globally.

Abu Dhabi’s index dipped 0.5 percent, extending its losses since last Wednesday’s five-month high to 2.7 percent.

Saudi Arabia’s stock exchange fell 1.4 percent to close at 10,714 points as energy stocks slid. It is its second decline in the three sessions since Israel targeted Iran’s energy assets, to take its losses over this period to 1 percent as Monday’s rebound proved short-lived.

The GCC stock markets are yet to open for trading on Wednesday.

• Shipping on a knife-edge as missiles pound Iran and Israel
• Egypt increases gas supply to Jordan as Israeli supplies falter
• Investors hold firm despite stock market declines

Japan’s Nikkei hit a four-month high on Wednesday morning, thanks to a weaker yen. The Nikkei rose 0.6 percent to 38,766 points as of 02:26 GMT, after reaching 38,786, its highest level since February 21.

Maki Sawada, an equities strategist at Nomura Securities, said told Reuters the market is cautious about developments in the Middle East, and will be sensitive to any headlines.

In the US, S&P 500 fell 0.3 percent while Dow Jones slipped 0.2 percent. Nasdaq declined 0.4 percent on weakness in the tech and consumer discretionary sectors.

Gold prices remained steady as spot gold hit $3,386.59 an ounce, as of 00:52 GMT. However, spot silver fell 0.3 percent to $37.14 per ounce.