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United States revokes license which authorized Iranian oil exports
On Tuesday, the United States revoked a general license which authorized the sale of Iranian crude oil. A U.S. official had warned that Iran's actions in the Strait of Hormuz are "wholly unacceptable" and that they will be met with consequences after attacks on tankers along the strategic waterway. The announcement led to an increase of more than 5% in oil prices. The U.S. Treasury announced that it would allow Iran to wind down its oil transactions until July 17, which were allowed under the license now revoked. An official from the United States said that despite this latest escalation, negotiators were still working in good faith towards a final deal with Iran. In a recent report, the British Navy-affiliated?UKMTO reported that the U.S. action was taken after three tankers had reported being?hit by unknown projectiles near and in the Strait of Hormuz over the past few days. No immediate response from Tehran was received, nor any claim of blame. The attacks and U.S. reaction 'threaten to place a fragile diplomatic agreement between Washington and Tehran in a precarious position, raising the?risk that further retaliation could derail negotiations for a wider agreement. Unnamed U.S. officials said that initial indications indicated that Iran fired on three commercial vessels. Both sides were working towards a deal which included restrictions on Iran's oil exports and relief from certain sanctions. The Strait of Hormuz is a narrow waterway that connects Iran and Oman. It's one of the most important energy chokepoints in the world, as it accounts for a fifth of all global oil consumption, and a large volume of liquefied gas shipments pass through every day. A prolonged disruption would likely increase the cost of fuel and put pressure on both consumers and government. Oil exports are a major source of revenue for Iran. They provide billions of dollars in hard currency to fund government expenditures and support an economy that has been weakened by U.S. sanctions. Tehran has been able to increase oil sales in recent years - mainly to China - despite the restrictions. A renewed effort to curb these exports would put Iran's finances under additional strain, and could affect its ability to maintain domestic programs and regional initiatives. Reporting by Steve Holland and Jarrett Renshaw, with additional reporting from Ismail Shakil and Timothy Gardner; editing by Costas Pittas and Michelle Nichols.
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Canada has agreed to a possible C$400-million investment by Teck for strategic metals production.
In a statement released on Tuesday, Canada's Natural Resources Ministry announced that the government could invest up to C$400,000,000 ($281.93,000,000) in Teck Resources to expand the facility Trail Operations in British Columbia to produce strategic metals. The agreement includes a framework agreement for an offtake contract from the Canadian Government to "secure rights" for Teck's production of rare earths metals like germanium, gallium, and antimony. These metals are widely used in industries like infrared optical systems in defense, semiconductors and radar systems. Teck plans to invest C$850m to maintain and improve critical minerals processing capacity at Trail Operations. The Canadian Natural Resources Minister Tim Hodgson stated that the plan was designed to be practical, giving companies the confidence they need to invest in critical Canadian mineral mining and processing project even in volatile global markets. Canada and its 'Group of Seven' partners have been stockpiling a variety of strategic metals that are currently controlled solely by China. Canada announced earlier this 'year an offtake deal, in which it would buy graphite at a fixed price from Montreal-based 'Nouveau Monde Graphite' and sell it to allies. Over the past?two-years, the G7 countries have proposed a number of measures to combat the dominance of China in rare Earths - difficult-to extract metals that are used in high-tech weapons, cell phones and EVs. China controls a whopping 90% of this metal and implemented export controls in response to U.S. Tariffs last year. Teck Resources is the biggest producer of germanium on North American soil.
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Official: US revokes license which authorized Iranian oil exports
A U.S. official announced on Tuesday that the United States was revoking the 'general license' that allowed the sale of Iranian oil. The official warned that Iran’s actions in the Strait if Hormuz are "wholly unacceptable", and that they would be met with consequences following the attacks on tankers along the strategic waterway. In a recent report, UKMTO (an agency affiliated with the British Navy) said that three tankers had reported being hit by unknown projectiles near and in the Strait of Hormuz. Tehran has not yet made any comment or claimed responsibility. An official from the United States said that despite this latest escalation, negotiators continue to?work in good faith towards a final deal with Iran. The attacks and the U.S. reaction threaten to undermine a fragile diplomatic agreement between Washington, D.C. and Tehran. This raises?the possibility that further retaliation may derail negotiations for a larger agreement. The 'potential escalation' comes at a time when?both sides were working towards a deal which included limitations on Iran’s nuclear program, and relief from certain sanctions including restrictions on oil imports. The Strait of Hormuz is a narrow waterway that connects Iran to Oman. It's one of the most important energy chokepoints in the world, as it passes through a large volume of LNG shipments and a fifth of global oil consumption each day. A prolonged disruption can increase?energy costs and put pressure on governments and consumers already dealing with higher fuel prices. Oil exports are a major source of revenue in Iran. They provide billions of dollars of hard currency to fund government spending and bolster an economy that has been weakened for years by U.S. sanctions. Tehran has been able to increase oil sales in recent years - primarily to China - despite restrictions. If Iran continues to export these products, it could face additional financial pressure and be unable to maintain its domestic programs or regional activities. (Reporting by Steve Holland and Jarrett Renshaw, additional reporting by Daphne Psaledakis, editing by Costas Pitas).
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Gold prices fall as Middle East tensions drive oil prices up. Fed minutes are awaiting.
Investors watched the Middle East hostilities that pushed oil prices higher and waited for the minutes of the U.S. Federal Reserve meeting in June to get a sense of the outlook for monetary policy. By 2:00 pm ET (1800 GMT), spot gold had fallen 0.5% to $4,144.36 an ounce. U.S. gold futures for delivery in August settled at $4,157.40 per ounce, down 0.3%. Bullion?hit a 2-week high on monday as markets lowered expectations of interest rate hikes in the near future after a weaker-than-expected U.S. jobs report last week. Peter Grant, senior metals analyst at Zaner Metals and vice president, said that "higher for longer seems to be the most likely Fed path." According to the CME FedWatch tool, traders still expect a 60% chance of a rate increase in September. The minutes of the Fed meeting, which are scheduled to be released on Wednesday, have now caught our attention. Two tankers were damaged in the Strait of Hormuz, and Iran announced that there would be no peace talks until U.S. president Donald Trump stopped his threats to restart war. The news prompted a slight increase in oil prices, which fueled inflation fears as fuel prices continue to rise. When inflation worries keep interest rates high, gold is often under pressure. This reduces the appeal of non-yielding investments such as bullion. China's central banks has maintained its gold purchasing for the 20th consecutive month. Its?reserve reached 75.44 millions fine troy pounds by the end of June, an increase from 74.96 one month earlier. Hong Kong has launched a gold central clearing system on Tuesday and revived the gold futures market as it aims to become a regional bullion reserve hub. Silver spot fell 1.7%, to $61.00 an ounce. Palladium rose 0.9% and platinum gained 1.2%. (Reporting by Sukanya Mitra in Bengaluru; Editing by Diti Pujara and Jonathan Ananda)
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New York Fed: US consumers' expectations of near-term inflation rise in June
?U.S. In June, consumers were less concerned about the near-term inflation rate even though their concerns about gas prices had decreased. They also felt more optimistic about current and future finances. This was revealed in a report by the New York?Federal Reserve on Tuesday. The regional Fed bank stated in its latest Survey of Consumer Expectations that inflation in a year's time was expected to reach 3.7% in the month of June. This would be the highest reading in the last nine years. In May, the figure was 3.5%. Three years hence, inflation was predicted to reach 3.3%. This would be the highest since June 2022. Comparatively, the May reading was 3.1%. The central bank officials who are most interested in inflation five years from now continue to watch it closely. It is expected to remain at 3%. The war in the Middle East has caused a spike in energy prices, which is putting pressure on the inflation rates. Personal Consumption Expenditures Prices Index increased 4.1% year-over-year in May, compared with a 3.8% increase in April. The war has slowed the flow of vital energy products, as well as other goods. This has led to sharp price increases for commodities like gasoline and diesel. The drop in energy costs following the preliminary U.S. Iran peace agreement is expected to reduce price pressures. Less Concern About Gasoline Prices In a TV interview on Tuesday, New York Fed president John Williams stated, "Inflation remains too high." He added, "I feel a bit more optimistic about the near-term outlook for inflation because of the declines in energy prices that we will see." Fed officials are closely monitoring inflation expectations, as they believe that public perceptions of where prices will be heading have a significant impact on where the price pressures are currently at. The public is largely in agreement that inflation will eventually return to the target set by the central bank due to the stability of long-term expectation readings. Fed Chairman Kevin 'Warsh stated in a press conference last month that "the members of (Federal Open Market Committee), are unambiguous, and unanimous: this Committee will deliver... price stability." The Fed left its benchmark interest ?rate unchanged in the 3.50%-3.75% range following the end of its June 16-17 meeting, although a number ?of policymakersindicated a need for higher rates later this year to control inflation. New York Fed's survey revealed that, while the expected inflation path near-term has?modified, the public remains less concerned about gasoline prices, which, in June, moderated to levels last seen in August 2022. In the report, it was also revealed that in June the public had improved its outlook for the labor market and were more optimistic about their current and future personal finances. The public's views on credit access are mixed.
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Gold prices fall as Middle East tensions drive oil prices up. Fed minutes are awaited.
As 'investors' watched the escalating hostilities that have risen oil prices in the Middle East, gold slid on Tuesday. They also awaited the minutes of the U.S. Federal Reserve meeting from June for any guidance on monetary policy. By 11:55 am ET (1555 GMT), spot gold had fallen 0.6% to $4,138.39 an ounce, while U.S. gold futures for delivery in August fell?0.5%, to $4,148.50. Bullion reached a two-week-high on Monday, as markets lowered expectations for interest rate hikes in the near future after a weaker-than-expected U.S. jobs report last week. Peter Grant, senior metals strategist at Zaner Metals, said that "I think reality is setting in?that the Fed still is very focused on reigning inflation. So higher for longer seems to be the'most likely Fed pathway. According to the CME FedWatch tool, traders still expect that there is a 60% chance for a rate increase in September. The minutes of the Fed meeting, which are scheduled to be released on Wednesday, have now caught our attention. Two tankers were struck in the Strait of Hormuz, and Iran announced that there would be no more peace talks until U.S. president Donald Trump stopped his repeated threats of restarting the war. Following the news, oil prices rose. When inflation worries keep interest rates high, gold is often under pressure. This reduces the appeal of non-yielding investments such as bullion. China's central banks has maintained its gold purchasing for the 20th consecutive month. Its reserve reached 75.44 million fine ounces at the end of June, an increase from 74.96 one month earlier. Hong Kong introduced a central clearing system on Tuesday and revived the gold futures market as it aims to become a regional bullion hub. Silver fell 2.6% per ounce to $60.46. Palladium rose by 0.1%, to $1,271.33, while platinum gained 0.5%, to $1639.18. (Reporting by Sukanya Mitra in Bengaluru; Editing by Diti Pujara and Jonathan Ananda)
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NY Fed survey shows rising expectations for inflation in the near future
The Federal Reserve Bank of New York released a report on Tuesday that said 'Americans became more concerned in June about the near-term inflation pressures, even though they predicted a moderated gasoline price increase and an upbeat view?on their current and future finances. The Bank of Canada's latest Survey of Consumer Expectations showed that inflation in a year was 3.7%, up from the 3.5% recorded in May. This is the highest level since September 2023. The June reading was the highest since June 2022. The central bank officials who are most interested in the five-year outlook for inflation expect it to remain at 3%. Energy prices have risen due to the Middle East conflict, putting pressure on prevailing inflation readings. The May?price index for personal consumption expenditures was up 4.1% from the same period a year earlier, compared to April's gain of 3.8%. The conflict caused a sharp increase in the price of gasoline and diesel. This was on top of inflation pressures which had already exceeded 2%. In a television interview earlier on Tuesday, New York Fed President John Williams said that "inflation is still too high." He added that energy prices had retreated and this suggests future price pressures would moderate. John Williams, the New York Fed president, said in a TV interview on Tuesday that "inflation was still too high." He added, "I feel a bit more optimistic about the near-term outlook for inflation because of the energy prices declines we're likely to see." Fed officials are closely tracking inflation expectations because they agree that where people think prices will go has a big impact on where we currently stand. The public is largely in agreement that they expect price pressures to return to their target levels due to the stability of long-term expectations readings. Kevin Warsh, Fed Chairman in his first press conference last month, said: "I'm pleased to report that the members of [the Federal Open Market Committee] have been unambiguous and unanimous. This Committee will deliver stability in prices." At the June policy meeting, the Fed kept its target interest rate range at 3.5% to 3.75%. However, a number central bankers questioned the need for a rate increase later in the year due to inflation concerns. In the New York Fed survey, it was found that, although inflation is expected to moderate in the near term, 'the public has become less concerned about gasoline prices.' These have moderated since June, reaching a level not seen since August 2022. In the report, it was also revealed that in June, the public had upgraded its views about the labor market. They were also more optimistic about their current and future personal finances. The public's views are mixed on the future and current access to credit. (Reporting and editing by Andrea Ricci; Michael S. Derby)
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Sources say that Russia's largest refinery has halted processing following a drone attack
Two industry sources said on Tuesday that the largest oil refinery in Russia, Omsk, had halted operations following an attack by a Ukrainian drone. The attack on the refinery in Siberia was the longest-ranged Ukrainian attack of the war, which is now well into its fifth anniversary. Fuel shortages are likely to be worsened by the shutdown of the plant. It is the top petrol producer in Russia. The attack on Monday damaged the facilities at the Omsk refinery. Anatoly Seryshev said that no plant personnel were injured in a Tuesday statement. Seryshev stated that a damage assessment was underway and that competent services had organized restoration work. He did not elaborate on how the refinery's operation was affected. Gazprom, the owner of the refinery did not respond immediately to a comment request. Sources claim that a crude distillation system, CDU-10 (which accounts for 38% of production capacity at the plant with a daily capacity of 24,580 metric tonnes), was damaged and set ablaze in the attack. According to the data of the Saint Petersburg International Mercantile Exchange, the Omsk Refinery has stopped selling petrol and diesel since Tuesday. Sources said that another primary unit, CDU-11 was also shut down. The unit accounts for 37%?of the plant's capacity, and can process up to 24,000 tons of?oil per day. Sources said that while the unit itself was not damaged, certain network links vital to its operation had been damaged. The sources said that CDU-11, which began operations in 2023, may resume its work in the near future. The Omsk refinery is home to two primary refining unit CDU-7 and CDU-8. Each has a capacity of 10,000 tons. The plant could theoretically restart them. Sources indicate that the Omsk oil refining plant will process 22 million tons or 440,000 barrels of oil per day in 2024. This would produce 5 million tonnes of petrol and 8 millions tons of diesel. Reporting and Editing by Tomasz Janovowski
As NATO meets, oil prices are pushed up by tensions over the Hormuz region and AI concerns on Wall Street
Investors' worries about the?sustainability? of an AI rally coupled with renewed Middle East tensions drove oil prices up.
The Nasdaq Composite, which is dominated by tech stocks, was down 0.61% at midday. Meanwhile the S&P 500 dropped 0.26% while the Dow Jones Industrial Average fell 0.33%. MSCI's global stock index was down by 0.49%. Samsung Electronics, the world's largest memory chipmaker, forecasted a 19-fold increase in its April-June operating profits to 89.4 trillion dollars.
Rather than reassuring shareholders, the results triggered a sell-off in Samsung and rival SK Hynix. Investors are increasingly questioning whether artificial intelligence-related profit growth can be sustained in the event that supply bottlenecks for key components like memory chips ease.
Kathleen Brooks said that these results are a record, but they have not placated the markets. Instead, the strong results have led to concerns about the AI chip boom's sustainability.
A report stating that the Chinese startup DeepSeek is developing its own AI chip could further weigh on markets. This would reduce their reliance on major chipmakers for training and running its AI models.
SK Hynix will?join the Nasdaq in a?$28 billion listing this week, one of the largest new share sales worldwide, as the chipmaker tries to capitalize on the AI boom. The Philadelphia SE Semiconductor Index was down 4% at midday and 13% in the past month.
As reported, the tentative calm in the Middle East suffered a test on Tuesday when Qatar accused Iran of an attack against two tankers in Strait of Hormuz. One tanker was evacuated by its crew, and another tanker was at risk of explosion.
Oil prices rose after returning to levels similar to those seen before the war. U.S. crude oil rose by 2.83%, to $70.49 per barrel. Brent was up 3.03% for the day to $74.17 a barrel.
NATO MEETS in Turkey
NATO leaders met Tuesday in Turkey, where European leaders announced arms deals worth billions of dollars. Donald Trump, the U.S. president, expressed his frustration over what he called the insufficient support of the U.S. and Israeli war against Iran. He also re-issued calls for the 'U.S. Greenland should be taken back from Denmark.
Trump stated on Monday that the U.S. will either "finish the deal" with Iran, or reach an agreement. He renewed his threat of military actions as Tehran continues to show defiance following the funeral of the Supreme Leader Ayatollah Ayatollah Khamenei.
The dollar index, which measures the U.S. dollar against six other currencies, rose 0.12% to reach 100.98. Meanwhile, the euro fell 0.16% versus the dollar.
The yen remained above its 40-year lows and last traded at 161.92 to the dollar. The traders were on high alert for any possible intervention by the Japanese authorities.
The yield on the benchmark 10-year U.S.?notes rose 4.41 basis points, to 4.523%, ahead of Wednesday's release of the minutes from the Federal Open Market Committee. Investors may get a better idea of how the new Federal Reserve Chair Kevin Warsh will approach monetary policy. (Additional reporting from Satoshi Sugiyama, in Tokyo, and Amanda Cooper, in London. Editing by Mark Potter and Kevin Liffey.
(source: Reuters)