تابع رؤية 2030
بذكاء سياقي

The announcement from Egypt’s petroleum and mineral resources minister Karim Badawi that the country has paid all its outstanding debts to foreign oil firms is as welcome to international oil companies and their governments as it is to the country itself. Egypt has become one of the West’s prime targets in the hunt for replacement gas supplies after the loss of Russian flows following the 24 February 2022 invasion of Ukraine. Officially, it holds around 93 trillion cubic feet (Tcf) of proven natural gas reserves, but unofficially, it is believed to hold three or four times that at least. In fact, the U.S. Geological Survey estimates that the Nile Delta Basin Province alone holds up to 286 Tcf of undiscovered, technically recoverable natural gas. Its strategic weight is amplified by its sitting astride so many critical hydrocarbon transit routes, and by its longstanding political influence across the Arab world. So, the payment of the near-US$6.1 billion owed to international firms clears the way for the planned expansion of Western gas and oil developments across the country. However, as with all such global energy reservoirs, China and Russia are looking to do precisely the same thing and overtake the significant on-the-ground advantage established by the West. Looking ahead, Egypt has implemented a strict, multi-layered economic defence mechanism specifically designed to prevent another vicious cycle of foreign currency depletion and runaway debt. It was the enormous wave of development of primarily Egypt’s gas reserves that previously helped exacerbate the serious currency problem in the country that began in earnest after Russia invaded Ukraine. Not only did this dramatically increase prices for wheat in the country (one of the world’s biggest importers of the foodstuff) but it also led to the removal of billions of dollars’ worth of foreign investment from the country. That said, on 6 March 2024, Egypt was allowed by the IMF to expand its US$8 billion financial support package and further offers of financial aid were opened from the World Bank and the European Union. The key measure in this debt-defence package that will work to the advantage of foreign firms operating in Egypt is that it is drastically reducing the level of state ownership in energy projects to further limit the country’s sovereign liability if projects face delays. Another key measure likely to significantly reduce the chance of a new debt spiral precluding regular payments to international oil companies is the abandonment by the Central Bank of Egypt of the artificial pegging of the Egyptian pound. Related: Australian LNG Strike Threatens Global Gas Supply as Qatar Recovery Lags Given the very recent settlement of its energy sector debt, Egypt is likely to see a major expansion in the activity of Western firms in the very near future. British supermajor Shell is targeting Q4 this year for first gas at the Mina West field in the deepwater Northeast El Amriya concession in the Mediterranean Sea. Initial flow tests are clocking in at 45 million standard cubic feet of gas per day (mmcf/d) alongside 1,000 barrels per day (bpd) of high-value condensates, while Phase 1 of the project is engineered to inject a total of 160 mmcf/d of gas and 3,000 bpd of condensates directly into Egypt’s domestic grid. Shell is also set to further explore the Sirius exploratory well and the potentially ultra-high-reward Velox well in the North Cleopatra block within the Herodotus Basin. At the same time U.S. supermajor Chevron has launched new drilling at the giant Nargis field, with a very conservatively estimated 3.5 Tcf of natural gas reserves. The firm has also secured a 27% participating interest in the ultra-deepwater North Cleopatra offshore block that places it directly alongside operator Shell (36%), QatarEnergy (27%), and Tharwa Petroleum (10%) in a massive collaborative exploration front along some of Egypt’s primary gas assets. Moreover, Italian giant Eni has committed to an US$8 billion investment plan, including fast-track development at the newly unveiled Denise exploration well (which holds around 2 Tcf of gas) in the East Mediterranean. Meanwhile, Great Britain’s BP has pledged a US$5 billion exploration framework to fund new wells in the Mediterranean and Nile Delta, building on its historic US$12 billion investments in the West Nile Delta project. That said, China has now shifted from its previous focus in Egypt on logistics and manufacturing in the Suez Canal Economic Zone (SCZONE), to its upstream sector. State-owned supermajor China National Offshore Oil Corporation announced its first investment in Egypt’s gas and oil sector last October, targeting deepwater blocks in both the Mediterranean and the Red Sea to secure an entry point into North African upstream markets. Its United Energy Group had earlier signed a memorandum of understanding to explore immediate joint investment opportunities in oil and gas production, renewable energy, and regional energy trading. Underscoring these developments as part of a broader supply chain integration, Chinese firms also launched a US$2.4 billion logistics and container terminal investment at Ain Sokhna Port. This is intended to streamline commodity and energy flows out of the SCZONE. Meanwhile, Russia views Egypt as a critical geostrategic partner to redirect its trade and establish a permanent energy gateway into Africa and the Middle East, given tightening Western sanctions on it. To this effect, state-controlled Zarubezhneft has committed to a US$14 million drilling agreement targeting the onshore North Khatatba block in the Nile Delta, while Rosneft maintains a 30% stake in the giant offshore Zohr gas field. On a broader note, Russian President Vladimir Putin has proposed a framework to transform Egypt into a centralised Russian grain and energy hub, looking to blend fuel and agricultural distributions to sidestep European shipping sanctions. The leader’s longer-term ambitions were reflected in the US$25 billion financing package agreed in 2017 to construct the Al-Dabaa nuclear power plant in Egypt. The construction phase as stalled at around 33% complete, but the first reactor is still supposedly on track to connect to the power grid in 2028, with all four units fully operational by 2030. Given how the U.S. and its allies have regarded Iran’s nuclear industry over the years, it appears unlikely that these deadlines will be met. The degree to which both Western and Eastern powers want to expand their footprints in Egypt reflects more than just the country’s gas and oil reserves. For a start, it is also the only country in the Eastern Mediterranean gas hotspot region with operational liquefied natural gas (LNG) export capacity and is consequently ideally placed to become the top regional export hub for the gas. Equally important is Egypt’s command of one of the world’s great maritime bottlenecks -- the Suez Canal -- a route that historically has carried roughly a tenth of global oil and LNG shipments. The country also controls the Suez–Mediterranean Pipeline, linking the Ain Sokhna terminal on the Gulf of Suez to the export hub at Sidi Kerir on the Mediterranean coast. This line provides a critical workaround for moving Gulf crude to the Mediterranean without relying on the canal itself. The strategic value of the Suez system is heightened further by the fact that it is among the few major energy transit points not under China’s direct influence. Specifically, Beijing already has considerable control over the Strait of Hormuz through the all-encompassing ‘Iran-China 25-Year Comprehensive Cooperation Agreement’, as fully analysed in my latest book on the new global oil market order. The same deal also gives China a hold over the Bab al-Mandab Strait, through which commodities are shipped upwards through the Red Sea towards the Suez Canal before moving into the Mediterranean and then westwards. This was achieved as it lies between Yemen (the Houthis having long been supported by Iran) and Djibouti (over which China has also established a stranglehold through debts connected to its multi-generational Belt and Road Initiative’ power-grab project). Finally, Egypt has long been viewed as a political heavyweight in the Arab world — in many respects rivalling, and at times surpassing, Saudi Arabia’s influence. Cairo was a central force behind the rise of Pan?Arabism after the two World Wars, the movement that argued that Arab strength lay in shared political, cultural, and economic identity, with its most prominent advocate being Egypt’s own Gamal Abdel Nasser, who led the country from 1954 to 1970. The era produced several defining expressions of this ideology: the union between Egypt and Syria as the United Arab Republic from 1958 to 1961; the creation of OPEC in 1960; repeated confrontations with Israel; and ultimately the 1973–74 oil embargo — all explored in detail in my latest book. For both the West and the East, Egypt is still ultimately about far more than gas and oil. It is a contest for the only state in the region that combines major reserves, LNG export capacity, control of critical sea lanes, and a legacy of political leadership across the Arab world. By Simon Watkins for Oilprice.com More Top Reads From Oilprice.com

Oil exports from the U.S. and its ‘Americas’ sphere of influence continue to be the prime beneficiary from the drop in crude output leaving the Middle East. Industry figures showed dirty tanker shipments from the Americas hit an all-time high of 14.5 million barrels per day (bpd) in May, up from 13.8 million bpd in April, and a 40% increase from May 2025. Meanwhile, transits through the key Strait of Hormuz global oil route dropped 89% from February to May, with total ship movements dropping from over 3,700 to around 400. “The pattern is likely to continue even when the Strait [of Hormuz] opens up again, as it’ll take months for Middle East volumes to recover to their former levels [before the U.S./Israel-Iran conflict], and some key sites will take several years to do so,” a senior source who works closely with the European Union’s (E.U.) energy security complex exclusively told OilPrice.com last week. “Meanwhile, the U.S. has ramped up its own [oil] production to record levels and is helping countries in the Americas -- Venezuela, Argentina, and Brazil, mainly -- to do the same,” he added. “It marks a long-term shift in the centre of the world’s global oil and gas gravity,” he underlined. This is precisely what U.S. President Donald Trump wanted to do from his first day in his first term as president, given his extreme dislike of OPEC’s use of its cartel powers over the years against the core interests of Washington and its allies, as analysed in full in my latest book on the new global oil market order. This was first notably seen in the 1973 Oil Crisis in which Saudi Arabia rallied fellow OPEC members into imposing an oil embargo on the U.S. and its allies following their support for Israel in the Yom Kippur War. By the end of the embargo in March 1974, the price of oil had risen from around US$3 per barrel to nearly US$11 per barrel, which stoked the fire of a global economic slowdown, especially felt in the West. Then-Saudi Minister of Oil and Mineral Reserves, Sheikh Ahmed Zaki Yamani, highlighted that this marked a fundamental shift in the world balance of power between the developing nations that produced oil and the developed industrial nations that consumed it. However, with the rise of U.S. shale oil production from around 2010, and OPEC’s attempt to destroy the nascent sector through an Oil Price War from 2014-2016 failing catastrophically, Trump has wanted to critically undermine the cartel’s ability to damage U.S. and allied interests ever since. Indeed, in the subsequent 2020 Oil Price War involving OPEC and started by Saudi Arabia for the same reason as in 2014, Trump expedited progress of the ‘No Oil Producing and Exporting Cartels Act’ (NOPEC), which would open the way for sovereign governments to be sued for predatory pricing and failure to comply with the U.S.’s antitrust laws. It could also break up Saudi Arabian oil supergiant Aramco -- the mainstay of the Kingdom’s existing economic and political systems -- into constituent parts, effectively destroying it. Related: European Gas Prices Tumble 6% On US-Iran Peace Deal Instead, as delineated in the U.S.’s ‘2025 National Security Strategy’, Trump wants the world’s geopolitical system split into three geographical spheres, dominated by a major power in each. China would hold the primary role in Asia, while Russia would either dominate or significantly influence Europe, depending on how any future conflict between European NATO members and Moscow unfolds. But, at the top, the U.S. would maintain overall dominance and exert direct influence across the Americas (North and South America). Naturally, as energy underpins the economies -- and thus politics -- of every country in the world, shifting the centre of dominance in global energy supplies to the Americas is a core part of that aim. The U.S. is playing its part toward that, pumping oil at record highs, around a baseline of 13.6 million bpd, with plans for more down the line. Of the other major oil-producing countries in the Americas, Venezuela is top of Washington’s development agenda, followed by Argentina and then Brazil. Following the landmark removal from power of Nicolás Maduro on 3 January by the U.S., Secretary of State Marco Rubio outlined a three-phase plan for the South American oil giant that involved stabilising the country and averting economic collapse, recovering the economy and oil sector, and encouraging an eventual political transition. These efforts have already seen a positive trajectory in oil production, with Venezuelan state oil company Petróleos de Venezuela, S.A. (PDVSA) and its foreign partners averaging 1.155 million bpd of crude production in May, compared to 1.130 million bpd in April and 940,0000 b/d in January. In April, executive vice president Jovanny Martinez, said that the country expects to produce 1.37 million bpd by the end of 2026. There is plenty of scope to do so, as Venezuela still holds the world’s largest proven crude reserves -- roughly 303 billion barrels, or about 17% of the global total -- and of its 14 supergiant oil fields, 11 retain more than half of their original reserves. Most of this is extra-heavy crude oil from the Orinoco Belt that requires more technical expertise to handle than lighter grades but is cheaper to lift and often more profitable to process. With those bottlenecks being addressed, it could again produce millions of barrels per day of cheap-to-lift crude, even if downstream handling remained costly. In fact, as recently as 2008, Venezuela was producing around 3 million bpd of crude oil. One level down in Trump’s list of energy development priorities is Argentina, with Washington having provided a US$20 billion lifeline to the country in October 2025. This was explicitly intended to support President Javier Milei’s pro-market reforms and stabilise the economy for foreign investment. The ‘Reciprocal Trade and Investment Agreement’, which fast-tracks U.S. investment in strategic sectors, including energy and critical minerals, was then signed on 4 February this year. Against this backdrop, several U.S. companies are increasing their oil and gas investment there, particularly in the Vaca Muerta shale formation, which is now being referred to as another Permian Basin due to its scale. Continental Resources recently purchased non-operating interests in four blocks in the Vaca Muerta basin to accelerate expansion, while Chevron is leaning toward making Vaca Muerta a core asset in its global portfolio. Meanwhile, Baker Hughes secured a major order in early 2026 to supply gas compression units for the San Matias Pipeline, supporting gas transport from Vaca Muerta. Overall, Argentina is on track to reach 1 million bpd of oil this year, up 26% from 2025. That said, Brazil is now producing a record-breaking 4 million bpd and over of crude oil, and including natural gas, total hydrocarbon output has hit a new record of 5.3 million barrels of oil equivalent per day (boe/d). Industry forecasts are that it may well become one of the world’s top five oil producers by 2030, supported by extensive investment plans from Petrobras and foreign oil companies. These include supermajors from the U.S., focusing now on high-impact exploration and deepwater production rather than the maturing fields. Last October, for example, ExxonMobil achieved its first-ever upstream production in Brazil at the Bacalhau field, which has a capacity of 220,000 bpd. Chevron was awarded new offshore blocks alongside Petrobras and ExxonMobil last June, and Baker Hughes and Halliburton supply equipment and engineering for Petrobras’s US$109 billion five-year investment plan. Washington is cognisant not just of Brazil’s further massive oil and gas potential but also of its geopolitical importance as one of the original ‘BRIC’ (Brazil, Russia, India, China) emerging-market powerhouses, and its geographical position in the U.S.’s ‘backyard’. With China weakened economically from where it was before Covid, and Russia near economic and military collapse as the war in Ukraine drags into its fifth year, Washington may never have a better opportunity to put Trump’s new world order into place. The Americas hemisphere already accounts for 32% of global crude production and is growing every year, with new supply from the U.S. Permian Basin, offshore Guyana, Argentine shale, and increased flows from Brazil and Venezuela. U.S. Assistant Secretary of State for Economic, Energy, and Business Affairs, Caleb Orr, highlighted recently that Ecuador and El Salvador are also among the governments Washington works with “hand in glove” on security. He added that security is the “table stakes” for any productive economic relationship and the foundation of the broad-based change in the Americas. The sentiments have been underlined by National Energy Dominance Council executive director Jarrod Agen, who recently said: “The Western Hemisphere is now the leading driver of energy in the world; we are the centre of the energy world from Alaska down to Venezuela, and what we want is the crude product coming out of Alaska, coming out of Venezuela, coming into U.S. refineries, getting refined, and then exporting to the world.” By Simon Watkins for Oilprice.com

After more than 100 days of the greatest recorded disruption to the world’s energy supplies, the global oil and gas markets have breathed a sigh of relief. Hours after Donald Trump confirmed that a US-Iran peace deal would lead to the reopening of the strait of Hormuz for tankers carrying millions of barrels of oil and gas, the price of Brent crude tumbled to lows of $82 a barrel. Wholesale gas prices fell about 6%. The international oil benchmark remains well above the $69 a barrel average recorded last year but the slump from $126 a barrel at the peak of the crisis could mean that the global economy avoids the worst-case consequences predicted in the early days of the US war on Iran. The 11th-hour deal has emerged weeks before the oil market was forecast to enter a “red zone” in which soaring summer demand during the travel season was expected to collide with fast-depleting crude stockpiles. 10:03 Will US-Iran peace deal hold? - The Latest But even as the market exhales after weeks of unprecedented disruption, uncertainty remains: a return to pre-crisis normality is months away and relies on the cooperation of the Iranian regime with the White House. In the US, where Trump faces midterm elections later this year, soaring road fuel prices through the summer driving season represented a real political risk to the Trump administration. “Trump has to sell this at home as a victory,” said Bjarne Schieldrop, the chief commodities analyst at SEB. When the deal is finalised, US consumers can expect “lower gasoline price and maybe US Republicans survive the midterm elections”, he said. For Iran, a gradual reopening “is tactically preferable”, too, according to Schieldrop, in preventing global governments from restocking their crude stores too quickly and allowing Tehran to maintain its political leverage through its negotiations with the US. The US and Iran are due to sign the “great deal” on Friday, according to Trump, before the strait is reopened “for purposes of mine removal”, a process which could take up to seven weeks during the 60-day negotiation period over the terms of Iran’s nuclear phaseout. Despite the sharp fall in global oil and gas markets in response, prices may now remain between $80 and $90 a barrel over the rest of the year as buyers race to refill the heavily depleted emergency crude stockpiles. Market observers believe it could be late July before minesweepers can assure mainstream shipping companies, and their insurers, that the trade route that once carried a fifth of the world’s oil and gas is clear to play a role in the Gulf’s long journey back to pre-crisis exports. About a quarter of mainstream oil tankers that were in the Gulf at the onset of the crisis have managed to leave the Middle East over the past three months, according to recent data from the shipping intelligence company Lloyd’s List, meaning more than 160 vessels have been stranded in the Middle East Gulf for more than 100 days. “Even if ships now have safe passage, tankers are in the wrong place, oil production and refining facilities need to get up to full capacity, and questions over the cost and availability of insurance for ships traversing the strait will remain,” according to Neil Shearing, the chief economist at Capital Economics. About 80% of crude flows could resume by the end of the third quarter, Shearing said, but exports of gas could take longer because of the damage from Iranian drone strikes on Qatar’s gas processing facilities during the conflict in a blow to countries, including the UK, which are exposed to the economic impact of global gas prices. Fertiliser is likely to be at the back of the queue, added Alexis Ellender, a dry bulk analyst at the shipping intelligence company Kpler. “Fertiliser is not as high a priority,” Ellender told Bloomberg. “When it comes to moving ships through the strait of Hormuz, it’s going to be oil tankers and [liquefied natural gas] carriers that are top of the list once we get towards a more normal flow of traffic.” View image in fullscreen Donald Trump faces midterm elections this year. Photograph: Saul Loeb/AFP/Getty Images The strikes forced QatarEnergy, the world’s largest producer of liquefied natural gas, to halt production, effectively erasing 20% of the world’s LNG at a stroke. The extensive damage to its Ras Laffan complex could mean that it takes years before it is operating at full capacity, spelling higher prices as buyers vie to secure cargoes from a smaller pool of gas producers. Oil exports from the Gulf could take until next year to reach pre-crisis levels, according to analysts at Rystad Energy, because of the challenge of restarting ageing oilfields in Iraq and Kuwait that were shut within weeks of the strait closure as regional storage facilities were filled to the brim. “Full pre-conflict traffic volume is realistically a 2027 story, and only if the agreement holds without incident and production recovers at pace,” said David Jorbenaze, the global oil market leader at Independent Commodity Intelligence Services (ICIS). The lag between Trump’s victory clarion call and a full market recovery means that at least some economic pain will continue. Shearing said: “Even if the deal reopens the strait immediately, it will not prevent inflation from rising a bit further in the near term, nor will it avoid some economic damage.” Still, he predicts even a slightly rosier outlook could mean that rather than face a recession, the global economy will face a period of weaker than previously expected growth in the third quarter, before global GDP growth recovers to its pre-conflict pace of just over 3% in late 2026 and into 2027.

It would be hard to find a human on Earth unaffected by the US-Israel war against Iran. Several thousand have been killed. Millions are paying more each day in steeper food prices or at the petrol pump, and as inflation eats away at the value of their earnings. For many, the final bill has not yet come, but it will eventually. They will pay for the long-term damage caused by the biggest threat of all to the global economy: uncertainty. Uncertainty is hard to measure, but one way is to look at geopolitical risk, which stalls investment and employment. The US Federal Reserve economists Dario Caldara and Matteo Iacoviello have created an index that tracks reports of global tension. It shows the Iran war has been more destabilising than the Covid-19 pandemic, but on a par with either the invasion of Ukraine in 2022 or that of Iraq in 2003. So how does the world tally the cost of this war? Some costs are easier to calculate than others, such as bills for surface-to-air missiles that cost hundreds of thousands of dollars each. Others are harder to quantify, including the damage caused to Iranian and Lebanese hospitals and power networks. Much cannot be valued at all – the lives lost, including the 120 primary schoolchildren in Iran killed on the first day of the war. Then there are hypothetical costs. A senior UN aid official framed the conflict in terms of opportunity cost, noting that the $2bn (£1.5bn) a day spent on military operations could otherwise cover lifesaving aid for roughly 87 million people. And what about the beneficiaries of this war, the oil companies and the shareholders of arms manufacturers? Here are some ways the impact of the war has been assessed: Lives lost The vast majority of the killings have targeted Iranian and Lebanese people. In Iran, US and Israel bombings have killed more than 3,300 people and injured more than ten times that number, according to Iranian authorities. Twenty schools have been destroyed, and 240 health and medical facilities have been damaged. Water pipes have been blown up and cultural sites damaged, including five world heritage sites and 54 museums. View image in fullscreen Among the lives lost were 120 primary schoolchildren killed on the first day of the war in Iran. Photograph: Abbas Zakeri/Mehr News/WANA/Reuters Israel opened a second front of the war when it invaded its northern neighbour, Lebanon, where it is fighting against the Iran-allied militant group Hezbollah. That war within a war has now become the most deadly part of the broader conflict – Israeli attacks have killed more than 3,700 people, according to Lebanese authorities, including women, children and medics. The widespread Israeli bombing of civilian areas has displaced more than 1 million Lebanese people – roughly a fifth of the country’s population. More than 100 people have been killed in Iraq, where Iran-allied groups operate, and in Israel, about 50 people have been killed. Since the start of the Iran war on 28 February, at least 15 US military personnel have died, and American bases across the region have been significant damaged. Gulf countries, including the United Arab Emirates, Qatar, Kuwait, Bahrain and Oman, faced Iranian drone and missile attacks, which have killed civilians and damaged hotels, airports, and critical oil and gas infrastructure. Israeli forces have not halted the killing of Palestinians during the conflict, including dozens in Gaza and the West Bank, adding to the more than 70,000 killed in Palestine since the Gaza war began in 2023. Stunted global economic growth For years, Israel had pushed the US to bomb Iran, but no administration in Washington agreed, seeing it as counterproductive and fearing the political, security and economic chaos that is now playing out. The conflict has not achieved regime change or ended Iran’s nuclear ambitions, but instead left governments and businesses scrambling in the fallout. A peace deal has been announced but the terms, or how it will be implemented, remain unclear. View image in fullscreen Iran’s supreme leader Ayatollah Ali Khamenei may have been killed but the war has not achieved regime change. Photograph: Atta Kenare/AFP/Getty Images In its World Economic Outlook published in April, the International Monetary Fund said the global economy was already on edge after “higher trade barriers and elevated uncertainty last year”, alluding to Donald Trump’s tariff war. The IMF and the World Bank have marked down their forecasts for the global economy, showing how the Iran war has stalled growth. Economists at the investment bank Goldman Sachs estimate that US economic growth will be 0.5 percentage points lower as a result of the war. Even if the war ends swiftly, the US will take years to pay it off. Not even the White House denies that the war will be a massive cost, but ithas attempted to play down its probable price tag. One estimate in May came from a senior Pentagon official, who said the conflict had cost $29bn by then. Justin Wolfers, a professor of economics and public policy at the University of Michigan, wrote in the New York Times that when accounting for the full macroeconomic fallout, a typical US household would probably have to pay thousands – or even tens of thousands – of dollars for the war. Severe business shocks have started to emerge. The world’s largest carmaker, Toyota, has reported a £3bn hit, as prices of parts and materials soared and sales dropped. A doubling of jet fuel prices The International Energy Agency, the world’s energy watchdog set up in the 1970s as a response to an oil crisis, has been clear in its assessment of the impact of the conflict on fossil fuels. “The war in the Middle East is creating the largest supply disruption in the history of the global oil market,” it said. View image in fullscreen The war as created the largest-ever disruption to oil supply, according to the International Energy Agency. Photograph: AP Responding to the US-Israeli bombing, Iran closed the strait of Hormuz, the waterway through which about 20% of the world’s oil and gas supply previously moved. Facing calls to reopen the waterway, Trump put pressure on Iran to end its blockade, but failed and later decided to impose his own blockade, leading to more fuel price hikes and threats of long-term inflation. Jet fuel prices have doubled, and thousands of flights have been cut. One US-based airline has already gone under. While the deal announced this week led oil prices to drop, they only reduced by a few US dollars. With oil prices hitting highs, the big energy companies’ profits have soared. Defence contractors are also profiting from the insecurity and rush to buy anti-missile technology. Shareholders, too, are celebrating that stock markets have shown resilience, in large part because of the AI boom, although there are concerns that traders are not properly considering the risk of long-term upheaval. There is hope, however, that in the long-term the crisis could reshape the global energy order, spotlighting a reliance on Middle East fossil fuels and accelerating a move towards renewables. A new crisis during a cost of living crisis View image in fullscreen Vietnam and other countries in Asia have rationed fuel. Photograph: Khanh Vu/Reuters The closure has created a bottleneck in which energy disruptions cascade through chemicals and fertiliser production into food prices, amplifying losses for the world’s poorest countries. There are already signs of the war’s burden on people and businesses worldwide. In Asia, the most populous continent, restaurants have closed owing to a lack of cooking gas and petrol stations are rationing fuel. In Thailand, some temples have stopped cremations. View image in fullscreen More than 800 ships and about 20,000 crew members remain stranded west of the strait of Hormuz. Photograph: Reuters More than 800 ships and roughly 20,000 crew members remain stranded west of the narrow waterway. The consequent rise in the oil price has fuelled fears of damaging inflation. Last month, Turkey’s central bank raised its year-end inflation forecast to 26% from 16%. Meanwhile, exports of vital goods, such as fertilisers required for food production, have collapsed. The UN estimates that 32 million people could be plunged into poverty as a result of the war, largely through its impact on energy and fertiliser supplies.

Economic data released on Friday showed that the University of Michigan’s preliminary U.S. consumer sentiment index rose to 48.9 in June, stronger than expectations of 46.1. Also, the University of Michigan’s U.S. June year-ahead inflation expectations unexpectedly eased to 4.6% from 4.8% in May, and 5-year implied inflation expectations eased to 3.4% from 3.9% in May. In Friday’s trading session, Wall Street’s major equity averages ended in the green. Chip and AI infrastructure stocks climbed, with Arm Holdings (ARM) surging over +11% to lead gainers in the Nasdaq 100 and Seagate Technology Holdings (STX) rising more than +7%. Also, airline stocks advanced as oil prices slid, with Southwest Airlines (LUV) and United Airlines (UAL) gaining more than +2%. In addition, SpaceX (SPCX) jumped over +19% after its record-breaking IPO. On the bearish side, Adobe (ADBE) fell more than -6% and was the top percentage loser on the Nasdaq 100 after the company announced that its chief financial officer would depart, overshadowing its better-than-expected FQ2 results and FQ3 guidance. The price of WTI crude sank more than -5% on Monday. Treasuries rose across the curve as lower oil prices eased inflation concerns, prompting traders to dial back expectations for a Fed rate hike. U.S. President Donald Trump said in a social media post on Sunday that the Strait of Hormuz would reopen on Friday, allowing time “for purposes of mine removal.” In an earlier post, Mr. Trump said the strait would reopen “toll-free” and that the U.S. naval blockade of Iranian ports would be lifted simultaneously. Pakistani Prime Minister Shehbaz Sharif said the agreement would be officially signed on Friday in Switzerland. Bloomberg reported on Monday that Qatar will host U.S. and Iranian delegations this week to finalize the details of the signing and prepare for a new round of negotiations on Iran’s nuclear program. Trump told the New York Times that if a nuclear agreement is not reached, he could resume military strikes. June S&P 500 E-Mini futures (ESM26) are up +1.22%, and June Nasdaq 100 E-Mini futures (NQM26) are up +1.99% this morning, pointing to a sharply higher open on Wall Street as oil prices sank after the U.S. and Iran reached an interim peace deal that would reopen the Strait of Hormuz. Story Continues “In keeping with the recent easing in oil and gas prices, the pullback in consumers’ short- and long-term inflation expectations offers some relief from a monetary policy standpoint. However, the inflation metrics remain elevated versus pre-war levels and in a broader historical context,” said Vail Hartman at BMO Capital Markets. The Fed’s interest rate decision will take center stage in this holiday-shortened week. The Fed convenes on June 16-17 for the first meeting to be chaired by new Chairman Kevin Warsh. The central bank is widely expected to keep the Fed funds rate unchanged in a range of 3.50% to 3.75%, but the outlook is less certain. Much of policymakers’ debate will be focused on mounting concerns about persistent inflation, as higher energy costs gradually filter through to other goods and services. Investors will be watching for any signals on whether a rate hike is likely. Economists expect the FOMC to remove the so-called “easing bias” from its post-meeting statement and instead signal that its next policy move is just as likely to be a hike or eliminate the line in question altogether. Investors will also focus on how Warsh communicates at the press conference. In addition, the Fed will release updated projections for the economy along with its “dot plot” interest-rate forecasts, and there is speculation that Warsh may choose not to submit his dots to signal his opposition to so-called forward guidance. Market watchers will also monitor U.S. economic data this week. U.S. Retail Sales data for May will be the main highlight, offering insight into how consumers have held up amid the Middle East conflict. Other noteworthy data releases include the Import Price Index, the Export Price Index, Building Permits (preliminary), Housing Starts, Pending Home Sales, the Philly Fed Manufacturing Index, Initial Jobless Claims, and the Conference Board’s Leading Economic Index. In addition, IT and consulting company Accenture (ACN), grocery store operator Kroger (KR), and supplier of electronic parts Jabil (JBL) are slated to release their quarterly results this week. On Friday, U.S. stock and bond markets will be closed for Juneteenth. Today, investors will focus on U.S. Industrial Production and Manufacturing Production data, set to be released in a couple of hours. Economists project Industrial Production to rise +0.3% m/m and Manufacturing Production to rise +0.3% m/m in May, compared to the April figures of +0.7% m/m and +0.6% m/m, respectively. The New York Fed-compiled Empire State Manufacturing Index will also be released today. Economists expect the June figure to come in at 13.2, compared to 19.6 in May. In the bond market, the yield on the benchmark 10-year U.S. Treasury note is at 4.45%, down -0.85%. The Euro Stoxx 50 Index is up +1.09% this morning as sentiment got a boost after the U.S. and Iran agreed to end their war and reopen the Strait of Hormuz. Luxury, automobile, and travel stocks led the gains on Monday. At the same time, energy stocks underperformed as oil prices sank. Data from Eurostat released on Monday showed that Eurozone monthly industrial production edged higher in April as factories raced to fulfill orders placed by customers seeking to avoid price increases and shortages caused by the Middle East conflict. Meanwhile, European Central Bank Governing Council member Joachim Nagel said on Monday that there would be no immediate relief from the energy-driven surge in inflation even if the Strait of Hormuz reopens soon, as it will take months for oil supply to return to pre-war levels, adding that the bank was “keeping all options open” for its meeting next month. Investor focus this week is on the monetary policy decision from the Bank of England. The BoE is widely expected to leave rates unchanged at 3.75%. Sweden’s Riksbank and Norway’s Norges Bank will also announce their interest-rate decisions this week, with both central banks widely expected to keep borrowing costs steady. Beyond monetary policy, attention will center on final Eurozone inflation data for May, Germany’s ZEW economic sentiment index for June, and the ECB’s wage tracker. In corporate news, Renault (RNO.FP) rose over +4% after the carmaker said it would build a military vehicle in partnership with defense technology company Thales. Eurozone’s Trade Balance and Industrial Production data were released today. Eurozone’s April Trade Balance came in at -1.0 billion euros, weaker than expectations of 7.8 billion euros. Eurozone’s April Industrial Production rose +0.1% m/m, weaker than expectations of +0.2% m/m. Asian stock markets today closed in the green. China’s Shanghai Composite Index (SHCOMP) closed up +1.61%, and Japan’s Nikkei 225 Stock Index (NIK) closed up +4.99%. China’s Shanghai Composite Index closed higher today, tracking gains across Asian markets after the U.S. and Iran reached an interim peace agreement. 5G Communication and AI-related stocks outperformed on Monday. Wee Khoon Chong, APAC Macro Strategist at BNY, said, “Risk sentiment improved sharply on Monday following the weekend announcement of a U.S.-Iran peace agreement. The development is supporting equities, and AI-led equity optimism remains intact.” Meanwhile, global ratings agency Fitch on Monday reaffirmed China’s long-term sovereign rating at “A” with a stable outlook, citing its large and diversified economy. In other news, Reuters reported on Monday that Chinese technology company ByteDance was in discussions with Iluvatar CoreX to buy AI chips for inference workloads and was also considering a similar deal with Baidu. In corporate news, Zhipu AI jumped over +32% in Hong Kong after the AI agent developer announced unrestricted access to its latest model. Investor attention this week is on a raft of China’s activity indicators for May, which will offer the latest assessment of the world’s second-largest economy. Retail sales are expected to decline from a year earlier, while industrial production is projected to accelerate modestly. Investors will also closely watch fixed-asset investment, property investment, and residential sales data. Japan’s Nikkei 225 Stock Index closed sharply higher today, hitting a new record high after the U.S. and Iran reached a deal to reopen the Strait of Hormuz. The benchmark index surpassed the 69,000 mark for the first time. Technology and AI-related stocks led the gains on Monday, with Kioxia Holdings surging about +12% and SoftBank Group climbing over +10%. The rally was also supported by gains in U.S. tech stocks on Friday, where Elon Musk’s SpaceX popped in its Nasdaq debut. Also, construction and automobile stocks jumped. The advance came as oil prices dropped, easing inflation concerns and reducing cost pressures for major energy-importing nations such as Japan. The reopening of the Strait of Hormuz would be a major step toward easing a supply chain crisis that has burdened Asian manufacturers since the conflict began. Before the war, Japan sourced more than 90% of its oil imports from the Middle East, and the blockade triggered production cuts and price increases across the petrochemical industry. Investor focus now turns to the Bank of Japan’s monetary policy decision. The central bank is widely expected to raise its benchmark rate by 25 basis points to 1.00% on Tuesday, continuing its gradual normalization cycle. That would mark its first interest-rate hike since December, lifting its benchmark rate to the highest level since 1995. In addition, investors will be closely watching Japan’s May trade and inflation data due later this week. The Nikkei Volatility Index, which takes into account the implied vo