Oil prices climb 2%, stocks slide as traders track Israel-Iran crisis

LONDON: Oil prices jumped and stocks mostly fell Tuesday after US President Donald Trump abruptly departed G7 talks to monitor the conflict between Israel and Iran and called for Tehran residents to evacuate.

Investors’ optimism the previous day that the conflict would not spread throughout the Middle East gave way to fears of further escalation as the conflict entered its fifth day.“Middle East tensions are showing no signs of easing back, putting investors on high alert,” said Russ Mould, investment director at AJ Bell.

Trump said he was aiming for a “real end” to the conflict, not just a ceasefire after he departed the G7 summit in Canada.“Iran should have signed the ‘deal’ I told them to sign,” he said on social media, referring to nuclear talks that were taking place.

Wall Street opened lower, with a larger-than-expected 0.9 per cent drop in May US retail sales also dampening sentiment.Worries about tariffs hurting consumer spending and uncertainty over Iran “has buyers holding back their own firepower at the moment”, said Briefing[dot]com analyst Patrick O’Hare said.

European equities also struggled in afternoon trading, while Asia turned in a mixed performance: Hong Kong fell, while Shanghai was flat and Tokyo advanced.Despite mounting calls to de-escalate, neither side has backed off from the missile blitz that began Friday, when Israel targeted Iranian nuclear and military facilities.

Oil prices climbed two percent on Tuesday after swinging between gains and losses since Friday’s initial surge. But gains were tempered after the International Energy Agency said in its 2025 report that global demand would fall slightly in 2030 for the first time since the start of the Covid pandemic in 2020.

“We don’t expect high oil prices to be with us for a very long time,” said IEA executive director Fatih Birol. He added that the IEA is “monitoring the situation” and is “ready to act” in the case of a supply disruption.