Oil prices extended their gains while global stocks traded unevenly as tensions over Iran intensified, with the Strait of Hormuz remaining closed and Washington maintaining its counter-blockade of Iranian ports.
A graphic illustration of barrels of crude oil
Oil prices extended gains Tuesday amid fears of a fresh bout of military exchanges between the United States and Iran following a flare-up at the weekend and Donald Trump’s warning that he will hit the country “hard”.
The latest strikes between the foes have further stoked worries about inflation that has put pressure on central banks to hike interest rates, which has in turn jolted equity markets.
After six months of war, the conflict remains at an impasse, with Tehran keeping the strategic Strait of Hormuz closed and Washington continuing a counter-blockade of Iranian ports.
The United States carried out strikes on an Iranian island in the waterway on Sunday, with Tehran quickly retaliating by attacking US military targets in the Middle East.
Smoke rises following an Israeli controlled-explosion on the village of Kfartibnit as seen from Nabatieh in southern Lebanon on July 29, 2026.(Photo by Ammar Ammar / AFP) /
The exchange raised fears of a return to major hostilities, with the US president vowing to respond.
“We’re going to hit them hard,” Trump said, according to a Fox News reporter who spoke to him briefly. “There will be a response.”
US officials said it hit rocket launchers on the island of Larak to prevent Tehran from planting mines in the strait, while Iran targeted US forces in Jordan and the United Arab Emirates.
The exchange of fire came after weeks of relative calm, with the Trump administration recently pivoting to “economic warfare”.
US Treasury Secretary Scott Bessent said: “We are going to continue exerting pressure, and we’ve had very good discussions here already.”
He told reporters at a G20 meeting in North Carolina that a turning point in the pressure campaign could come “within weeks or months”.
A man rides a bicycle past a billboard featuring a portrait of Iran’s slain supreme leader Ali Khamenei ahead of his funeral in Tehran on July 3, 2026. (Photo by ATTA KENARE / AFP)
Both main crude contracts rose Tuesday, extending the previous day’s jump of more than two percent.
“The calibrated nature of the initial actions suggests neither side is actively seeking a return to sustained conflict, but stalled talks and the strategic importance of keeping the Strait open leave the situation vulnerable to further escalation,” said National Australia Bank’s Rodrigo Catril.
Trump will be meeting oil refining executives on Tuesday in a bid to tame soaring US domestic gas prices that have been a political headache for his Republican Party heading into November’s midterm elections.
Stocks mostly fell, with traders now awaiting the release of key data this month ahead of the Federal Reserve’s policy meeting on September 16.
Tokyo, Hong Kong, Shanghai, Sydney, Singapore and Wellington were all down, though Seoul, Taipei, Manila, Mumbai, Bangkok and Jakarta rose.
London slipped as it reopened after a long weekend, while Frankfurt was also down. Paris edged up.
The jobs and consumer price index reports could play a major role in whether the bank hikes rates, with bets on an increase surging after boss Kevin Warsh’s hawkish speech on Friday.
Expectations for elevated inflation and rising borrowing costs pushed the yield on 10-year US Treasuries to their highest level since January 2025.
That has bled into Asia, with 10-year Japanese government bond yields touching a 30-year high of three percent.
The yen weakened against the dollar even after US Treasury Secretary Scott Bessent told CNBC he expected Japan to act to support the unit, which has lost half the gains made in a historic joint intervention after it hit a 40-year low.
The comments were taken as a hint to the Bank of Japan to tighten monetary policy when it meets this month.
In company news, fast-fashion giant Shein fell 10 percent on its long-awaited Hong Kong trading debut, having raised US$1.7 billion in a high-profile initial public offering. It later pared the losses to sit around four percent lower.
And shares in MediaTek soared nearly 10 percent after US tech giant Nvidia announced it has injected US$3.5 billion into the Taiwanese chipmaker.
The Korean won/USD exchange rate in a foreign exchange dealing room at the Hana Bank headquarters in Seoul on April 8, 2026.(Photo by Jung Yeon-je / AFP)
Key Figures At Around 0715 GMT
West Texas Intermediate: UP 0.8 per cent at $86.48 per barrel
Brent North Sea Crude: UP 0.7 per cent at $91.16 per barrel
Tokyo – Nikkei 225: DOWN 0.2 per cent at 66,215.34 (close)
Hong Kong – Hang Seng Index: DOWN 0.8 per cent at 25,366.66
Shanghai – Composite: DOWN 0.2 per cent at 3,979.89 (close)
London – FTSE 100: DOWN 0.2 per cent at 10,806.88
Dollar/yen: UP at 159.97 yen from 159.77 yen on Monday
Euro/dollar: DOWN at $1.1600 from $1.1618
Pound/dollar: DOWN at $1.3540 from $1.3550
Euro/pound: DOWN at 85.69 pence from 85.74 pence
New York – Dow: DOWN 0.7 per cent at 53,185.90 (close)
AFP
