What’s happening: Oil prices rose sharply this morning on news of the US jumping into the Israel-Iran conflict.
What happened: In a big escalation in the ongoing Israel-Iran conflict, President Donald Trump announced late Saturday that the US had attacked three of Iran’s nuclear sites.
Heightened concerns of global supply disruption sent oil prices 2% higher this morning.
Why it matters: Crude prices had soared last week due to the Israel-Iran war, with the WTI climbing 2.5% and Brent crude spiking around 11% to briefly touch $80 per barrel.
On Saturday, President Donald Trump said in a social media post that US bombers had attacked three sites in Iran with aim to cripple the country’s ability to produce the ingredients for nuclear weapons. The attack followed Thursday’s announcement by the White House that Trump would take two weeks to decide whether to attack Iran.
Investors had been hoping the US would refrain from jumping into the Israel-Iran conflict, as the move would be an escalation in the growing tensions in the Middle East. Trump said over the weekend that the US attacks would bring peace between Israel and Iran.
Experts predict high volatility in oil prices this week, as Iran accounts for one-third of the global oil output. Oil prices gained this morning on speculations of Iran blocking the Strait of Hormuz, through which nearly 20% of global crude oil flows.
WTI crude for August delivery jumped 2.04% to $75.35 per barrel this morning. Oil prices cooled after briefly breaching the $78 per barrel. Brent crude for August delivery climbed 1.88% to $78.46 per barrel.
What to watch: Investors will continue to monitor the next moves by the US, with Iran threatening retaliatory attacks.
Markets also await the American Petroleum Institute’s data on crude oil inventories. US crude stockpiles contracted by 10.133 million barrels in the week ending June 13, representing the highest drawdown since July 2023.
Context: The EUR/USD forex pair fell this morning as investors assessed heightened geopolitical concerns.
Details: Geopolitical concerns continued to impact overall market sentiment, with President Donald Trump announcing that the US had carried out airstrikes on three Iranian nuclear facilities over the weekend.
Meanwhile, officials of Europe and Iran are scheduled to meet in Geneva for the first high-level talks since the beginning of the war.
Data released on Friday showed that the Eurozone consumer confidence indicator fell by 0.2 to a reading of -15.3 in June, from -15.1 in May. The figure also missed market estimates of -14.5.
Strength in the US dollar weighed on the EUR/USD forex pair this morning. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained around 0.3% to 98.99.
The EUR/USD pair fell more than 0.2% to 1.1499, while the EUR/GBP forex pair slipped to 0.8565.
What to watch: Investors await the release of economic data on Eurozone’s HCOB composite PMI (1200 UAE Time), HCOB manufacturing PMI (1200 UAE Time) and HCOB services PMI (1200 UAE Time) today. The HCOB Eurozone composite PMI, which was revised higher to 50.2 in May versus the preliminary reading of 49.5, is expected to increase to 50.5 in June.
Analysts expect the HCOB Eurozone manufacturing PMI to rise to 49.7 in June, from 49.4 in May, while the services PMI is projected to expand to 50 in June, from 49.7 in the previous month.
Other Markets: US trading indices closed mixed on Friday, with the S&P 500 and Nasdaq 100 down by 0.22% and 0.43%, respectively, and the Dow Jones index up by 0.08%.
Russia unleashed one of the most intense attacks of drones on Ukraine’s capital, Kyiv, last night. The news sent the safe-haven US dollar higher in forex trading this morning.
Australia’s S&P Global Flash manufacturing PMI came in unchanged from the previous month at 51.0 in June, which exerted pressure on the AUD/USD forex pair.
Colombia’s trade deficit rose to $1.673 billion in April from $1.431 billion in the year-ago period, sending the COP/USD pair lower in forex trading this morning.
Canada’s new home prices declined 0.2% in May, exerting pressure on the CAD/USD forex pair.
Japan’s au Jibun Bank Composite PMI improved to 51.4 in June, from 50.2 in the previous month. However, the JPY/USD pair fell in forex trading this morning.
Spain’s balance of trade (1200 UAE Time), Turkey’s tourist arrivals (1200 UAE Time), UK’s S&P Global manufacturing PMI (1230 UAE Time), S&P Global services PMI (1230 UAE Time) and S&P Global composite PMI (1230 UAE Time), Germany’s 3-month Bubill auction (1330 UAE Time) and 9-Month Bubill auction (1330 UAE Time), Mexico’s economic activity (1600 UAE Time) and retail sales (1600 UAE Time), France’s 12-month BTF auction (1700 UAE Time), 3-month BTF auction (1700 UAE Time) and 6-month BTF auction (1700 UAE Time), US S&P Global composite PMI (1745 UAE Time), S&P Global manufacturing PMI (1745 UAE Time), S&P Global services PMI (1745 UAE Time), existing home sales (1800 UAE Time), 3-month Bill auction (1930 UAE Time) and 6-month Bill auction (1930 UAE Time), as well as Argentina’s GDP growth rate (2300 UAE Time).