Oil markets and global investors were once again rattled on Tuesday, June 17, 2025, after former US President Donald Trump issued a stark warning urging residents of Tehran to evacuate immediately, amplifying fears of a full-scale war between Israel and Iran. The conflict, which has been simmering since early June, took a more serious turn after Trump’s social media post stoked concerns over a broader Middle East escalation.

Following Trump's remarks, crude oil prices saw an upward spike of around two percent, although some of those gains were later pared. The market reaction reflects the fragility of the global oil supply chain, which is highly sensitive to geopolitical instability in the oil-rich region.

Trump’s Explosive Message Ignites Market Tension

In a bold and alarming statement, Trump declared:

"Iran should have signed the 'deal' I told them to sign. What a shame, and waste of human life. Simply stated, IRAN CAN NOT HAVE A NUCLEAR WEAPON. I said it over and over again! Everyone should immediately evacuate Tehran!"

The post was widely circulated and interpreted as a strong indication that Trump sees no diplomatic resolution unless Iran capitulates on the nuclear front. His remarks came shortly after Israel launched a missile strike on Iranian state-run television, targeting a live broadcast, in one of the most symbolic attacks since the conflict began.

This level of rhetoric and direct targeting has heightened fears that the Israel-Iran battle could evolve into a broader regional conflict, especially if Iran retaliates in a way that affects key oil production or transport hubs, such as the Strait of Hormuz.

Crude Oil: A Volatile Ride

Oil prices had briefly dipped on Monday (June 16) after traders became hopeful that the Israel-Iran fighting would remain localized and avoid harming key energy infrastructure. However, Tuesday's renewed volatility reflects market uncertainty.

"Risk assets are enjoying a positive start to the new week amid signs the Israel-Iran war remains limited to the two countries," said Rodrigo Catril of the National Australia Bank.

Despite these words of cautious optimism, Catril also noted:

"Iran is reportedly seeking de-escalation talks, but Israel is not showing signs of slowing down."

This contradiction — of diplomatic signals from Iran and escalatory actions by Israel — has left the energy markets jittery.

Military Movements: USS Nimitz Repositioned

The Pentagon’s decision to divert the aircraft carrier USS Nimitz from Southeast Asia and cancel a planned Vietnam port call has only added to the perception of a rapidly intensifying crisis. The US Department of Defense has confirmed the deployment of “additional capabilities” to the Middle East, although it reiterated that Washington has not joined Israel’s offensive.

Iran’s Foreign Minister made headlines on Monday by stating that the US president could halt the attacks with a single phone call, putting the diplomatic burden squarely on Trump despite his insistence that America is not involved militarily.

This delicate positioning indicates how the conflict, while technically between two regional rivals, implicates global superpowers, especially given the nuclear dimension and its impact on oil prices.

Global Equities Respond Positively — For Now

Interestingly, despite the geopolitical tension, most stock markets in Asia and Wall Street saw gains, driven by investor sentiment that the war would remain contained.

Markets in Tokyo, Seoul, Singapore, Sydney, and Taipei all registered modest upticks, while Shanghai and Hong Kong lagged due to domestic economic concerns and investor caution.

"The markets are pricing in hope over fear at the moment. The moment there’s any sign that the conflict expands — say if it involves Saudi Arabia, Iraq, or UAE — we’ll see panic," commented a senior market strategist at Nomura.

At the same time, Wall Street traders took some heart from Trump’s earlier comments at the G7 Summit in Canada, where he hinted that Iran might be ready for a nuclear deal.

"As soon as I leave here, we're going to be doing something," Trump said, leaving the G7 a day early to return to Washington, calling the situation "big stuff."

This signal that backchannel diplomacy might be alive, even amid military escalations, gave a temporary boost to risk assets.

Nuclear Deal Back on the Table?

Amid the violence, Iran has reportedly expressed willingness to resume nuclear talks with the United States. According to a Wall Street Journal report, Tehran signalled de-escalation and noted that the US had not militarily intervened, which may have opened a window for diplomacy.

Observers see this as an opportunity to cool tensions, provided Trump is willing to engage — something that remains unclear, given his public statements have mostly focused on condemnation and ultimatums.

The Iran nuclear deal, or the JCPOA, had collapsed after Trump’s administration withdrew from the agreement during his first presidency. Resuming talks now, amid live conflict, would require a significant shift in approach by both sides.

G7 Pushes Back on Trump’s Trade Stance

As Trump departed the G7 Summit early to deal with the Israel-Iran crisis, leaders from Britain, France, Germany, Italy, Canada, and Japan issued a collective statement urging Trump to reconsider his global tariff strategy.

They cautioned that his proposed escalation of tariffs next month could destabilise global trade at a time when geopolitical risk is already weighing on energy and financial markets.

"A simultaneous trade war and oil shock would be deeply damaging to the global economy," said Christine Lagarde, President of the European Central Bank, in a side statement at the summit.

Central Banks in Focus This Week

Aside from geopolitical developments, investors are also watching central bank decisions, especially the Bank of Japan (BoJ), which is due to announce its latest policy stance. The BoJ is expected to keep interest rates steady but may adjust its bond purchasing strategy in light of persistent inflation concerns and yen volatility.

Markets will also look for signals from the US Federal Reserve and the European Central Bank later in the week.

The current oil price volatility could become a key factor in central bank decision-making, especially if inflationary pressures return due to rising fuel costs.

Conclusion: Oil and Uncertainty

As the situation in the Middle East continues to evolve, with missile strikes, nuclear threats, and global diplomacy hanging in the balance, investors remain highly cautious. The short-term gain in stocks reflects hope that the conflict will not spill over into a wider regional war, but that optimism is fragile.

The movement of key US military assets, statements from both Israeli and Iranian leaders, and Trump’s unpredictable messaging have all combined to make this one of the most volatile weeks for oil prices in 2025 so far.

With Trump’s dramatic return to the global stage, escalating tensions in Tehran, and a possible reopening of nuclear talks, the world is once again watching the Middle East with bated breath — and the markets are pricing in every word.

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