Oil prices resumed their push higher Tuesday as several countries pushed back against Donald Trump’s demand that they help secure the key Strait of Hormuz, while Iran continued to target crude-producing neighbours.
The advances pared some of the previous day’s sharp losses that came after the head of the International Energy Agency (IEA) said more stockpiles could be tapped if needed.
Still, equities extended Monday’s gains as tech firms rallied after Nvidia said it expected to make at least $1 trillion in revenue through the end of 2027.
Investors are also awaiting a slew of central bank decisions this week that analysts say could see a resumption of interest rate hikes aimed at offsetting a possible spike in inflation caused by the surge in crude prices.
Trump has called for allies in Europe and elsewhere to help reopen the Strait of Hormuz, which Iran has effectively closed, saying at the weekend that securing the waterway “should have always been a team effort, and now it will be”.
But on Monday there was only a lukewarm response, with German Chancellor Friedrich Merz saying the war started by US-Israeli strikes on Iran was “not a matter for NATO”, while Britain, Spain, Poland, Greece and Sweden all distanced themselves from the calls.
Australia and Japan also opted not to join.
The US president told The Financial Times on Sunday that it would be “very bad for the future of NATO” if the allies refused to help, and said Monday that he had asked to delay a summit with Chinese leader Xi Jinping by a “month or so” over the issue.
With the crisis showing no sign of ending soon, both main crude contracts rose more than two percent to sit around $100.
They had dropped Monday after IEA boss Fatih Birol flagged that member countries could unlock more oil from strategic stocks “if needed”, after already agreeing last week to a record release of 400 million barrels.
Attacks on Middle Eastern oil facilities continued, with drones hitting major oil fields in the United Arab Emirates and Iraq on Monday, while Israel said it had launched a “wide-scale wave of strikes” in Tehran as well as attacks on Hezbollah in the Lebanese capital Beirut.
And a drone and rocket attack targeted the US embassy in Baghdad early Tuesday, a security official said.
Equities continued to defy the spike in crude, with markets across Asia rising, helped by the remarks from Nvidia, which allowed investors some relief from events in the Middle East.
Seoul, which had rocketed around 50 percent between the start of the year and the start of the war, led gains thanks to advances in chip giants Samsung and SK hynix.
Tokyo, Hong Kong, Shanghai, Sydney, Singapore, Taipei and Manila were also well up.
That came after all three main indexes on Wall Street ended comfortably higher.
However, Pepperstone’s Chris Weston said: “Conviction behind a sustained rally in risk assets remains relatively low, although it is important to stay open-minded to the possibility that momentum could build.”
While the IEA comments and news of the tanker were welcomed, he warned that “it is difficult to view these developments as a definitive de-escalation or a true circuit breaker for the energy risk premium”.
