23/06/2025

BIZ & FINANCE MONDAY | JUNE 23, 2025

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Investors brace for oil price spike after US bombs Iran

degree of caution at this time,” it said. Japan’s Foreign Ministry said on Sunday it had evacuated 21 people, including 16 Japanese nationals, from Iran overland to Azerbaijan. The ministry said it was the second such evacuation since Thursday and that it would conduct further evacuations if necessary. New Zealand’s government said yesterday it would send a Hercules military transport plane to the Middle East on standby to evacuate New Zealanders from the region. – Reuters Lilly expects experimental obesity pill results in Q3 NEW YORK: Eli Lilly said on Saturday its experimental pill orforglipron helped diabetics lose weight and lower their blood sugar, and the company aims to announce in the third quarter trial results for the drug in overweight and obese people without diabetes. Lilly expects to submit the non-diabetes Phase 3 data to global regulatory agencies by the end of the year, said Ken Custer, head of cardiometabolic health at the company. The US Food and Drug Administration typically makes new drug approval decisions 10 months after a manufacturer’s submission. Lilly said it plans to file for regulatory approvals for orforglipron as a diabetes treatment in 2026. Full results of the diabetes trial were presented at the annual meeting of the American Diabetes Association in Chicago. The Phase 3 study showed that type 2 diabetes patients taking the highest dose of daily orforglipron lost nearly 8% of their body weight over 40 weeks. That compares favourably with Novo Nordisk’s injected drug Ozempic, for which trials showed that diabetic patients on the highest dose lost roughly 6% of their body weight. Lilly’s pill, which can be taken without food or water, lowered blood sugar levels by an average of 1.3% to 1.6% across doses. The company said the most frequently reported side effects were gastrointestinal and similar to other GLP-1 drugs, including diarrhea and vomiting. Custer said Lilly’s goal in its non-diabetes trials is to achieve weight loss consistent with GLP-1 drugs that are currently available. Ozempic was shown in trials to lead to weight loss of 15% for people without diabetes over 68 weeks. He said orforglipron, which has a simpler production process than injected GLP-1 drugs such as Ozempic or Lilly’s Zepbound and does not require cold storage, could mean wider global access to weight-loss drugs. “This is the type of molecule that is going to allow us to reach the broader globe,” Custer said. – Reuters

NEW YORK: A US attack on Iranian nuclear sites on Saturday could lead to a knee-jerk reaction in global markets when they reopen, sending oil prices higher and triggering a rush to safety, investors said, as they assessed how the latest escalation of tensions would ripple through the global economy. The attack, which was announced by President Donald Trump on social media site Truth Social, deepens US involvement in the Middle East conflict. That was the question going into the weekend, when investors were mulling a host of different market scenarios. In the immediate aftermath of the announcement, they expected the US involvement was likely to cause a selloff in equities and a possible bid for the dollar and other safe-haven assets when trading begins, but also said much uncertainty about the course of the conflict remained. While Trump called the attack “successful”, few details were known. “I think the markets are going to be initially alarmed, and I think oil will open higher,” said Mark Spindel, chief investment officer at Potomac River Capital. “We don’t have any damage assessment and that will take some time. Even though he has described this as ‘done,’ we’re engaged. What comes next?” Spindel said. “I think the uncertainty is going to blanket the markets, as now Americans everywhere are going to be exposed. It’s going to raise uncertainty and volatility, particularly in oil.” Spindel, however, said there was time to digest the news before markets open and said he was making arrangements to talk to other market participants. A key concern for markets would centre around the potential impact of the developments in the Middle East on oil prices and thus on inflation. A rise in inflation could dampen o Greenback could see near-term strength from safe-haven demand

Oil storage tanks at the Enterprise Sealy Station in the US state of Texas. – AFPPIC

“Although the price shock inevitably dampens consumer spending because of the hit to real incomes, the scale of the rise in inflation and concerns about the potential for second-round inflation effects likely ruin any chance of rate cuts in the US this year,” Oxford said in the note, which was published before the US strikes. In comments after the announcement on Saturday, Jamie Cox, managing partner at Harris Financial Group, agreed oil prices would likely spike on the initial news. But Cox said he expected prices to likely level in a few days as the attacks could lead Iran to seek a peace deal with Israel and the United States. “With this demonstration of force and total annihilation of its nuclear capabilities, they’ve lost all of their leverage and will likely hit the escape button to a peace deal,” Cox said. Economists warn that a dramatic rise in oil prices could damage a global economy already strained by Trump’s tariffs. Still, any pullback in equities might be fleeting, history suggests. During past prominent instances

consumer confidence and lessen the chance of near-term interest rate cuts. “This adds a complicated new layer of risk that we’ll have to consider and pay attention to,” said Jack Ablin, chief investment officer of Cresset Capital. “This is definitely going to have an impact on energy prices and potentially on inflation as well.” While global benchmark Brent crude futures have risen as much as 18% since June 10, hitting a near five-month high of US$79.04 on Thursday, the S&P 500 has been little changed, following an initial drop when Israel launched its attacks on Iran on June 13. Before the US attack on Saturday, analysts at Oxford Economics modelled three scenarios, including a de-escalation of the conflict, a complete shutdown in Iranian oil production and a closure of the Strait of Hormuz, “each with increasingly large impacts on global oil prices”. In the most severe case, global oil prices jump to around US$130 per barrel, driving US inflation near 6% by the end of this year, Oxford said in the note.

the affected countries, though there have been some evacuation flights from neighbouring nations and some bringing stranded Israelis home. In the days before the US strikes on Iran, American Airlines suspended flights to Qatar, and United Airlines did the same with flights to Dubai. Safe Airspace said it was possible airspace risks could now extend to countries including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. “We continue to advise a high of Middle East tensions coming to a boil, including the 2003 Iraq invasion and the 2019 attacks on Saudi oil facilities, stocks initially languished but soon recovered to trade higher in the months ahead. On average, the S&P 500 slipped 0.3% in the three weeks following the start of conflict, but was 2.3% higher on average two months following the conflict, according to data from Wedbush Securities and CapIQ Pro. An escalation in the conflict could have mixed implications for the US dollar, which has tumbled this year amid worries over diminished American exceptionalism. In the event of US direct engagement in the Iran-Israel war, the dollar could initially benefit from a safety bid, analysts said. “Do we see a flight to safety? That would signal yields going lower and the dollar getting stronger,” said Steve Sosnick, chief market strategist at IBKR in Greenwich, Connecticut. “It’s hard to imagine stocks not reacting negatively and the question is how much. It will depend on Iranian reaction and whether oil prices spike.” – Reuters

Airlines keep avoiding Middle East airspace NEW YORK: Airlines continued to avoid large parts of the Middle East yesterday after American strikes on Iranian nuclear sites, according to flight tracking website FlightRadar24, with traffic already skirting airspace in the region due to recent missile exchanges. Its website showed airlines were not flying in the airspace over Iran, Iraq, Syria and Israel. They have chosen other routings such as north via the Caspian Sea or south via Egypt and Saudi Arabia, even if it results in higher fuel and crew costs and longer flight times. organisation that shares flight risk information, said yesterday that the US attacks on Iran may increase risks to American operators in the region. “While there have been no specific threats made against civil aviation, Iran has previously warned it would retaliate by attacking US military interests in the Middle East – either directly or via proxies such as Hezbollah,” Safe Airspace said.

Missile and drone barrages in an expanding number of conflict zones globally represent a high risk to airline traffic. Safe Airspace, a website run by OPSGROUP, a membership-based

“Following US attacks on Iranian nuclear facilities, commercial traffic in the region is operating as it has since new airspace restrictions were put into place last week,” FlightRadar24 said on social media platform X.

Since Israel launched strikes on Iran on June 13, carriers have suspended flights to destinations in