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Mike Dolan: A weak dollar can soften the impact of any oil shock on Europe.
Oil-importing nations will not be able to avoid a blow in the event of a second energy price shock due to Middle East tensions. However, a rare period of dollar weakness can help soften the blow for other countries. The majority of crude oil prices are in U.S. Dollars, so the impact on regions such as Europe is magnified when the price increases during times of dollar strength. The dollar's decline has actually had the opposite impact, reducing the price of oil as a result of the ongoing Israel-Iran conflict. We're not in a'shock zone' yet, but we are still a long way from it. The dollar-based price of global crude oil has risen by about 14% in the last week. However, they are still well below their January peak and about 7% less than a year ago. The impact on Europe has been more benign, thanks to the 12% increase in the euro against the dollar this year. The euro price for Brent crude has fallen by 20% in the last year and is down 12% this year. The greenback's fall is a welcome respite for oil-importing countries, as it helps to soften the blow of soaring oil costs and limit the economic impact. If the dollar continues to fall, this could reduce the relative impact of a renewed squeeze on energy prices in Europe. This could, in turn support Europe's performance against the United States in this year, and further undermine the American exceptionalism narrative that has fuelled extraordinary portfolio flows into the U.S. over the past few years. The continued dollar weakness, coupled with a new drop in energy prices, would only increase pressure on the European Central Bank (ECB) to lower interest rates. This is to avoid a significant undershoot to its 2% inflation goal. INCREASINGLY INSTABLE According to UniCredit's Keller the dollar/oil relationship is another example of an economic relationship that has become, "increasingly instabile" this year. The dollar's correlation to stocks, bonds, and commodities has changed as foreign investors who have trillions invested in U.S. bonds and stocks began rethinking the dollar in light of America’s trade wars, reworked allies, and upended local institutions. The dollar's loss of its'safe-haven' status in times of stress and uncertainty is most obvious. It fell along with stocks and bonds, during an April that was turbulent. The link between the dollar and oil has become especially unstable. A stronger dollar, all else being equal should lower oil prices because it will reduce demand from non-Americans around the globe due to the additional local currency costs of a barrel. The opposite, theoretically, should also be true. In recent years the opposite was true. A spike in oil price after Russia's invasion of Ukraine in 2022 triggered inflation, and steep Federal Reserve rate increases. This was followed by a subsequent drop in oil and inflation, and the start of a Fed easing program. The dollar's movement was closely correlated with the energy price during that period. The dollar index soared by 20% when the oil prices doubled between the mid-2021 and immediate aftermath of the Ukraine Invasion. This amplify the rising costs of energy for Europe. This relationship was broken again after the U.S. elections last year, when the dollar rose initially even though oil prices were falling. The dollar hasn't strengthened as much this month, despite the fact that the correlation was positive after January. This is because the rise in crude oil prices after the Israel/Iran conflict broke out did not coincide with the strengthening of the dollar. The greenback is still hovering near new lows. Relationships are influenced by the background, of course. The primary concern at the moment is that after a decade-long dollar strength, a multiyear unwind will be required as trade, investment and economic imbalances must be corrected. If this is the case, a new oil price spike will be less severe for global economies than it was last time. These are the opinions of a columnist who writes for.
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UK farm switches milk for cuddles with cows after floods and high food prices have taken their toll
A dairy farm in England’s northeast has stopped milking cows after years of flooding and low food prices. Instead, visitors are charged to cuddle the cows. Dumble Farm began as a milk farm in the 1970s. However, flooding in recent years washed away crops and destroyed the grass that cows love to eat. In addition, the price of milk fell below the cost of production, which proved a difficult challenge. Fiona Wilson said that the amount of flooding, and pressure on the land made it impossible for the farm to continue. Climate change is affecting agriculture in Europe, and beyond, as farmers are suffering from increasing heat, flooding, and drought. Dumble Farm, in 2022, sold most of its milk cows, but kept a few. In an effort to reinvent itself, they began to offer "cow cuddling experiences" to fund a wildlife protection scheme. Visitors can stroke, cuddle and brush the cows lying on straw in a straw-covered enclosure within a barn for 95 pounds (127.80). This experience includes a Highland cattle safari. Emma Hutton, a 25-year-old guest, said that it was worth the effort to be so close to cows. They are gentle and loving. James McCune, a farmer, said that it took a year for the cows' comfort level to be raised. Now, the animals are fully accustomed to cuddling. "They enjoy being treated well." They are big dogs... McCune explained that it's like a spa for cows. The proceeds are used to create habitats for wildlife protection and to support endangered species such as lapwings. Wilson stated that it was great that visitors could fund the conservation program by visiting the farm. That's the real bigger picture.
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China's imports of iron ore are rising even as steel is struggling: Russell
China's imports of iron ore are expected to be their highest month in this year in June, a sign of resilience not mirrored by the steel industry's sluggishness. According to analysts LSEG & Kpler, China is expected to import nearly 110 million metric tonnes of this key raw material for steel. Kpler estimates that 109.56 millions tons of cargo will arrive in June, while LSEG predicts 109.1million. It would be an increase of about 11% over May's official imported 98.13 millions tons, and the best month since December's 112,49 million tons which was the second highest on record. Why are Chinese steel mills, traders and steel producers buying more iron ore despite the fact that both the domestic and international steel industry is showing signs of slowdown? Early in June, spot iron ore prices fell to their lowest level in eight months. Since the peak of $107.81 per ton in 2025 on February 12, the trend for iron ore futures at the Singapore Exchange has been downward. On June 18, they dropped to $94.17 per ton, the lowest level since September 30, before slightly recovering to finish at $94.30 a ton Wednesday. It's too late for the low of June to affect imports in this month. The lag between cargoes being arranged and delivered is too great. However, it's important to note that the Singapore price continues to drop steadily from its previous peak at the end of May. Restocking inventories may also have contributed to the higher imports of June. These stocks have been on a downward trend. SteelHome consultants SteelHome monitor port stockpiles In the week ending June 6, exports fell to their lowest level in 16 months, at 132 million tonnes. The strong imports so far in this month helped boost inventories to a total of 133.4 million tonnes in the week ending June 13. However, this is still below the 146.6 millions from the same period in 2024. Iron ore imports may continue to grow in the coming weeks but there are questions about how long they can do so if the steel industry is weak. STEEL SAGS According to data released by the Chinese government on June 16, China's steel production dropped dramatically in May, falling 6.9% from last year to 85.55 millions tons. In the first five month of this year, steel production fell 1.7% to 431.63 million tons. The state-backed China Iron and Steel Association said last week that the output was expected to drop 4% from 2024 this year. China's steel production is being affected by the struggles of its key property sector. This sector has shown little signs of positive response to the recent stimulus measures. China's new house prices dropped 0.2% in May, after showing no growth during the preceding month. Calculations based on the data released by the National Bureau of Statistics on 16 June were able to confirm this. The latest statement from Donald Trump suggests that up to 55% of all imports will be taxed. The price of steel has also fallen. On Wednesday, Shanghai Exchange rebar contract prices ended at 2,982 Yuan ($414.74) per ton, down 14% since the year's peak, which was 3,466 Yuan on February 5. On June 3, the contract dropped to 2,912 Yuan per ton, its lowest level since February 2020. Exports, which increased by almost 10% in May compared to the same month last year, amounted to 10,58 million tons. Steel exports for the first five month of the year rose by 8.9%, to 48.47 millions tons. This is a record. China's steel exports may be a victim of its own success, as other countries increase their protectionist measures. India and the United States are two recent examples. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Oil prices fall as investors consider the possibility of US intervention in Iran/Israel conflict
Oil prices dropped on Thursday as investors hesitated to make new investments after President Donald Trump sent mixed signals about possible U.S. intervention in the Israel-Iran Conflict, and the Federal Reserve kept interest rates the same. Brent crude futures dropped 20 cents or 0.26% to $76.5 per barrel at 0421 GMT after gaining 0.3% the previous session, when high volatility caused prices to fall up as much as 2.7%. U.S. West Texas Intermediate Crude for July dropped 4 cents or 0.05%, to $75.10 per barrel. It had previously risen 0.4%, but then fell as much as 2.4%. The contract for July expires this Friday, and the contract for August, which is more active, was down 8 cents or 0.11% to $73.42 per barrel. In a note to clients, Tony Sycamore said that there is still a healthy risk premium built into the price, as traders wait to see if the next phase of the Israel-Iran Conflict is a U.S. military strike or peace negotiations. Goldman Sachs said on Wednesday that a geopolitical premium of $10 per barrel was justified, given the lower Iranian oil supply and the risk of a wider disruption which could push Brent crude over $90. Trump told reporters on Wednesday that he might or might not decide if the U.S. would join Israel's attacks against Iran. On Thursday, the conflict entered its seventh day. Analysts said that direct U.S. participation would escalate the conflict and increase the risk of attacks on energy infrastructure in the area. Priyanka Sackdeva, Senior Market Analyst at Phillip Nova, said that because of Trump's unpredictable foreign policy, the markets remain jittery and are awaiting more firm signals that may influence the global oil supply or regional stability. Iran is the third largest producer of crude oil among the members of the Organization of Petroleum Exporting Countries (OPEC). It extracts about 3.3 millions barrels of crude oil per day. Around 19 million barrels of oil per day and oil products pass through the Strait of Hormuz, which runs along Iran's south coast. There is widespread concern that the fighting may disrupt trade. Separately the U.S. Federal Reserve held its interest rates at the same level on Wednesday, but penciled in two reductions by the end the year. Jerome Powell, the chair of the Federal Reserve, said that any cuts will be "data-dependent", and that they expect accelerated inflation due to Trump's proposed import tariffs. Lower interest rates could stimulate the economy and increase demand for oil. However, this could also lead to an increase in inflation. (Reporting and editing by Christian Schmollinger, Christopher Cushing and Colleen Li)
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Galp Secures Three Exploration Blocks in Brazil
Portugal's Galp has been awarded three offshore blocks as part of Brazil’s fifth Open Permanent Concession bid round.Galp acquired offshore early-stage exploration blocks P-M-1670/1672/1741 in the Pelotas basin, in the southern region of the country.The awarded consortium is composed by Petrobras, as operator with 70%, and Galp with a 30% interest.The gross aggregate signature bonus for the blocks amounts to approximately $2.08 million.The fifth cycle of the Permanent Concession Offer hosted today by the Brazilian National Petroleum, Natural Gas and Biofuels Agency (ANP).
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EEW SPC Delivers Last Three Monopiles for Sofia Offshore Wind Farm
EEW Special Pipe Constructions (EEW SPC) has loaded out the last three monopiles for RWE’s 1.4 GW Sofia offshore wind farm, being built off the U.K.’s North East coast.The total of 100 monopiles, with weights of 1,143 to 1,521 tons and lengths of up to 91.8 meters, were loaded onto a barge without incident using the RoRo (roll on/roll off) method with EEW's own SPMTs.In the meantime, 90 foundations have been transported to the installation site in the North Sea and installed by the transport and installation company Van Oord using the ship Aeolus.The Sofia wind farm will go into operation in 2026 and will then produce green electricity for around 1.2 million British households.Currently under construction on Dogger Bank, 195 kilometers from the nearest point on the U.K.’s north east coast, it will comprise 100 Siemens Gamesa 14 MW offshore wind turbines.First Turbine Stands Tall at RWE’s Sofia Offshore Wind FarmSofia Offshore Wind Farm Buzzing with Construction Activity
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Dalian iron ore continues to decline as China property slump weighs
The price of iron ore futures eased on Thursday for a sixth consecutive session, as the protracted property crisis in China continued to weigh down on demand prospects. As of 0300 GMT, the most traded September iron ore contract at China's Dalian Commodity Exchange was trading 0.36% lower. It was priced at 692.5 Yuan ($96.32), per metric ton. The benchmark July ore traded on the Singapore Exchange at $92.35 per ton. Hexun Futures, a broker, stated in a report that the Chinese downstream demand has entered its off-season and inventories are continuing to build. Steelhome data shows that the total iron ore stocks across Chinese ports increased by 1.06% in a week to 133.4 millions tons as of June 13. Hexun added that the market has become cautious and real estate sales have slowed. Official data released on Monday showed that China's new house prices dropped in May, continuing a stagnation of two years. Goldman Sachs projected late Monday that demand for new homes will remain below the 2017 market peak in the coming years. This suggests that China, the second largest economy in the world, is in for a prolonged property slump. The dollar index (which measures the currency in relation to six other units) was at 98.957, and it is expected to gain 0.8% for the week. This will be its best weekly performance since the end of February. Dollar-denominated investments are less affordable for holders of currencies other than the greenback. Coking coal and coke, which are both steelmaking ingredients, fell by 1.07% and 0.69 %, respectively. The benchmarks for steel on the Shanghai Futures Exchange are mixed. The benchmarks for steel on the Shanghai Futures Exchange were mixed.
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As Middle East tensions increase demand, gold prices are on the rise
Gold prices rose on Thursday as the Middle East tensions boosted demand for safe-haven assets. However, the cautious U.S. Federal Reserve stance regarding future rate reductions kept gains in check. As of 0215 GMT, spot gold rose 0.2% to $3,376.48 per ounce. U.S. Gold Futures fell 0.4% to $3393.70. Gold has seen a modest rise as we wait for the next step in the Israel-Iran dispute. "If the U.S. decides to directly get involved in the conflict, this could increase the geopolitical risks," KCM Trade's Chief Market Analyst Tim Waterer stated. As geopolitical tensions increased, U.S. president Donald Trump refused to confirm whether the U.S. will join Israel in its bombardment of Iranian missile and nuclear sites on Wednesday. Residents of Tehran were forced to flee the city as air strikes continued. Two U.S. government officials said on Wednesday that the U.S. military had moved aircraft and ships out of bases in the Middle East which could be vulnerable to an Iranian attack. Gold is used to store value in times of geopolitical or financial uncertainty. The Fed kept interest rates unchanged on Wednesday. Fed policymakers are still expecting to cut rates by a half-percentage-point this year but have slowed down the pace. Jerome Powell, Fed chair, warned against placing too much emphasis on this forecast, warning that "meaningful" inflation is coming as import tariffs increase. "The Fed wasn't as dovish and hawkish as many had hoped. I would argue Powell was just a little more hawkish than most people wanted. Matt Simpson, senior analyst at City Index, said that the U.S. Dollar is likely oversold and this will likely cap gold gains over the next couple of weeks. Platinum rose 1.5% to 1,342.36, and palladium increased 0.6% to 1,055.18.
US construction spending declines unexpectedly in January
U.S. Construction Spending unexpectedly declined in January. This was mainly due to a decrease in multi-family housing construction.
Census Bureau of the Commerce Department reported on Monday that construction expenditures dropped by 0.2%, after a 0.5% rise in December. The economists surveyed by expected that construction spending would remain unchanged. Construction spending in January increased by 3.3% year-over-year.
Spending on private construction projects fell by 0.2%. Residential construction investment fell by 0.4% but new single-family project expenditures rose by 0.6%.
The high mortgage rates are still a problem. This situation could worsen if additional duties were imposed on imports such as appliances and lumber. A surplus of unsold homes is on the market due to weak demand.
The President Donald Trump ordered a new investigation into trade that could add more tariffs to imported lumber. This would be in addition to the existing duties on Canadian softwood timber and 25% tariffs due on Tuesday on all Canadian and Mexican products.
In January, spending on multi-family housing units fell by 0.7%. The spending on home improvements continued to increase.
In January, the investment in non-residential private structures such as offices and factories remained unchanged.
The spending on public construction projects increased by 0.1%. State and local spending fell by 0.1% while federal government expenditures grew by 3.2%. Reporting by Lucia Mutikani; Editing and proofreading by Andrea Ricci
(source: Reuters)