By Maryam Usman Nagado
Oil prices and equities fluctuated Tuesday as investors weighed Donald Trump called for Tehran residents to evacuate and hopes that the conflict between Israel and Iran does not descend into all-out war.
While the crisis in the Middle East continues to instill uncertainty on trading floors as the two foes exchange deadly missile strikes, talk that the Islamic republic wanted to make a nuclear deal was providing some optimism.
After Friday’s surge sparked by Israel’s attacks on its regional foe, crude ticked more than one percent lower Monday as traders bet that the conflict would not spread throughout the Middle East and key oil sites were mostly left untouched.
Prices edged back up after Trump took to social media calling for the evacuation of the Iranian capital, which is home to nearly 10 million people.
Oil prices spiked around two percent Tuesday before reversing the gains, with Schroders senior economist George Brown saying it was unlikely Iran would strangle flows of the commodity through a key supply route.
“The likelihood of Iran taking any action in the Strait of Hormuz, the often-touted disaster scenario for oil markets, appears very remote,” he wrote in a note.
“Such action would impact flows for the other Middle-East nations who are aiming to mediate the situation, while inflicting little harm on Israel.”Trump has maintained that Washington has “nothing to do” with its ally’s campaign, but Iran’s foreign minister said Monday the US leader could halt the attacks with “one phone call”.
Tehran has said it would hit US sites if Washington got involved.