Kalkine: Oil Prices Surge Amid Middle East Tensions as US Orders Iraq Embassy Exit

June 12, 2025 06:40 PM AEST | By Team Kalkine Media

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Kalkine: Oil Prices Surge Amid Middle East Tensions as US Orders Iraq Embassy Exit — Image source: Shutterstock

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Highlights

Oil benchmarks climb amid reports of a partial evacuation of the US embassy in Iraq

Geopolitical tensions in the Middle East raise supply disruption concerns

Gulf shipping routes flagged for caution by UK Navy

Oil prices advanced strongly following reports of a partial evacuation order by the US for its diplomatic mission in Iraq. The development, linked to rising tensions in the Middle East, triggered significant movement across the global energy market. The sharp price reaction was largely driven by concerns about supply disruptions in the region. The broader All Ordinaries index reflected upward pressure on energy-related shares, while the ASX 100 showed moderate activity in related commodity segments.

Partial US Embassy Exit Sparks Market Reaction
The United States directed the partial withdrawal of staff from its embassy in Iraq. The decision followed increasing regional instability and was perceived by market participants as a signal of escalating tensions. The energy sector quickly responded, with key oil contracts registering noticeable gains. Traders appeared to react to the increased likelihood of logistical challenges or transport delays in crude supply corridors. The US action coincided with multiple reports suggesting threats from Iran toward military installations if hostilities unfold.

Middle East Shipping Warnings Amplify Concerns
In a parallel update, the UK Navy issued alerts to commercial shipping vessels navigating the Gulf, Gulf of Oman, and Straits of Hormuz. These maritime zones are critical pathways for global oil shipments and closely border Iranian territory. The advisory called for heightened caution, citing evolving security risks. The oil market, already sensitive to any indications of regional unrest, responded to this development with further upward momentum. Energy companies operating within oil exploration, transport, and infrastructure experienced stronger session volumes on the ASX 200.

Geopolitical Statements Stir Uncertainty
Comments from former US President Donald Trump during a podcast interview added to the market’s cautious tone. His remarks reflected skepticism regarding ongoing nuclear diplomacy with Iran, further fueling apprehensions around long-term stability in the region. This contributed to broader uncertainty across commodities and energy-linked equities. On the domestic front, oil-exposed companies observed increased market interest, particularly those with offshore operations or strategic shipping investments.

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