Oil climbs after fresh US strikes on Iran over helicopter attack

[SINGAPORE] Oil rebounded after the US military launched strikes against Iran following the downing of an American helicopter, posing a new threat to a fragile ceasefire that’s been tested by recent attacks in the Middle East.

West Texas Intermediate rose as much as 1.9 per cent to US$89.91 a barrel after closing 3.4 per cent lower on Tuesday (Jun 9). Brent settled above US$91.

The “self-defence strikes” on Iran were conducted under US President Donald Trump’s direction in response to the downing of an Apache helicopter, US Central Command said.

Trump earlier blamed Iran for attacking the helicopter, which he said was patrolling over the Strait of Hormuz, and vowed a response. Iran’s armed forces are on full alert to respond to his threat, an Iranian lawmaker told the country’s semi-official Mehr News Agency in an interview.

The fresh US strikes imperil the stability of a shaky ceasefire in the region and negotiations for a more lasting accord between the warring parties. Trump has repeatedly said that peace talks are on track, after a flare-up earlier in the week saw Israel and Iran exchange attacks.

The latest round of hostilities risks prolonging the near-total closure of the critical Strait of Hormuz, which is subject to a double blockade by the US and Iran.

The war, which started in late February, has choked off supplies of crude, fuels and natural gas, and raised concerns about an inflation crisis.

Asia stocks set to fall

Meanwhile, stocks in Asia were poised for declines after a volatile session on Wall Street, where investors weighed developments in the Iran conflict and looked ahead to data that may show US inflation accelerated in May.

Equity-index futures for Japan, Hong Kong and South Korea all pointed lower. US stock futures edged down after the S&P 500 swung sharply on Tuesday, erasing most of a 2.3 per cent slump before ending modestly down. The Nasdaq 100 fell 1.1 per cent as investors continued rotating out of the technology shares that have driven much of this year’s rally.

SEE ALSO

Oil falls as investors await clarity after Iran-Israel halt attacks

The bout of volatility in technology shares is testing a market that has been driven to record highs by optimism around growth and artificial intelligence. With robust US jobs data casting doubt on policy easing, traders are now looking to Wednesday’s inflation report for clues on whether the Federal Reserve may keep interest rates higher for longer.

“Exuberance has been building for months, pushing stocks to one record after the next, so anything perceived to be negative for equities – from higher inflation to even the potential for rate hikes – will knock the market off its footing after a historic run,” said John Cunnison, chief investment officer at Baker Boyer Bank.

The retreat in technology shares coincided with a broadening rally across the rest of the market, as nine of the S&P 500’s 11 sectors advanced. Defensive corners led the gains, with real estate climbing 2.1 per cent, health care rising 1.3 per cent and utilities adding 1.1 per cent. Tech and energy were the lone decliners. BLOOMBERG