Key insights
- Geopolitical tensions in the Middle East are escalating following reported Israeli air strikes and potential Iranian retaliation. Trump's request to postpone a meeting with Xi Jinping and his demand for China to secure the Strait of Hormuz add to uncertainty. Shipping disruptions and rising oil prices could negatively impact US equities due to increased energy costs and potential supply chain issues.
Investing.com - Israel has said that Iranian security chief, Ali Larijani, is believed to have been killed in air strikes on Monday, the Wall Street Journal has reported, citing people familiar with the matter.
The WSJ added that Iranian state media would publish a statement from Larijani soon.
Other media reports also said Gholamreza Soleimani, the commander of Iran’s Basij paramilitary unit, which played a role in suppressing anti-government protests earlier this year, had been killed as well. There was no confirmation yet from Iranian officials or state-backed media.
Elsewhere, U.S. President Donald Trump has asked that a planned meeting with Chinese counterpart Xi Jinping next month be postponed, just days after he threatened such a postponement should Beijing not use its influence with Iran to help reopen a vital shipping lane.
Over the weekend, Trump called on China to send its navy to secure the Strait of Hormuz, a major waterway south of Iran through which roughly a fifth of the world’s oil supply flows.
Yet China, which buys oil from Iran, appears to have little incentive to heed Trump’s demand. Tehran has allowed Chinese tankers to traverse the strait, even as it has warned of attacks on any vessel carrying goods that may benefit the U.S. or its allies.
Shipping traffic through the passageway has come to a virtual standstill, with container companies wary of risks to the safety of crews and struggling to find insurance for the crossings.
Early on Tuesday, a projectile hit a tanker anchored close to a port in the United Arab Emirates, the New York Times reported. Citing the United Kingdom Maritime Trade Operations Center, the paper said the ship, which was near the port of Fujairah at the southern end of the strait, had only minor damage.
Officials in the UAE also said that a drone had been the cause of a fire at a key oil industry hub.
Oil prices were higher on Tuesday. Brent crude futures, the global benchmark, was last up by 2.6% at $102.80 a barrel, while U.S. West Texas Intermediate crude futures gained 3.0% to $95.32 a barrel.
The prospect of a prolonged conflict in Iran has fueled worries over an energy shock that could drive up inflationary pressures around the world, forcing some central banks to once again consider interest rate hikes. On Tuesday, the Reserve Bank of Australia hiked rates to a 10-year high, flagging "material" inflation risks from the Iran conflict.
With investors still uncertain over the trajectory of the fighting in the Middle East, European stocks rose in early trading and Asian markets notched a tentative recovery, while U.S. futures pointed lower.
(This is a developing story. Please check back later for updates.)