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As the Gulf conflict flares again, oil prices surge, stocks fall and bond yields increase.
On Monday, oil futures rose nearly 9% and stocks fell as the conflict between the United States and Iran flared up over the weekend. This has once again affected the flow of goods across 'the 'key Strait of Hormuz. Tehran claimed to have closed the Strait of Hormuz, an important global shipping artery, over the weekend. Donald Trump said Monday that the U.S. would reinstate its blockade against Iranian shipping in Gulf. Trump promised to keep the Strait open at a cost, even though the U.S. had not been able wrest control from Iran of the waterway since the beginning of the war in February. The re-start of the blockade shocked oil markets, which had been rising after both sides exchanged drone and missile attacks at the weekend. U.S. crude ended up 9.4% or $6.73 to $78.14 per barrel. Brent finished at $83.30 a barrel, an increase of 9.6% or $7.29. Robert Pavlik is a senior portfolio manager with Dakota Wealth in Fairfield Connecticut. He said that the trading of bombs between Iran and the United States is a major issue. It's the same old uncertainty about the Middle East. What will be the resolution and when? MSCI's index of stocks around the world fell 10.26 points or 0.9% to?1,116.28. Wall Street saw the Dow Jones Industrial Average fall 138.37, or 0.3% to 52,498.64. The S&P 500 dropped 60.05, or 0.8% to 7,515.34 while the Nasdaq Composite closed the session at 25,873.18 down 408,43 points or 1.6%. On Monday, technology shares were the most weak sector as investors sold shares related to artificial-intelligence and semiconductors. SK Hynix shares listed in the United States finished down 9%, after a sharp rally on their Nasdaq launch on Friday. South Korea's KOSPI KOSPI finished down almost 9% overnight. This?index is now a leading global barometer of sentiment in the chip sector. The pan-European STOXX 600 finished the day down by 0.01%. U.S. Treasury rates rose after the U.S.-Iran conflict and rising oil prices sparked concerns about inflation and its potential impact on Federal Reserve monetary policies. The yield of the U.S. benchmark 10-year note increased 5.06 basis points from 4.569% to 4.62% late Friday. The 30-year bond rate rose 3.31 basis point to 5.104%. The yield on the two-year bond, which moves typically in line with Federal Reserve expectations of interest rates, rose 6.71 basis to 4.275%. This is its highest yield since 2025. The U.S. Dollar Index, which measures greenbacks against a basket of currencies including the yen, the euro and others, rose by 0.26% at 101.32. However, the euro fell by 0.32% to $1.1377. The dollar gained 0.48% against the Japanese yen to 162.47. The pound fell 0.47%, to $1.3345 at the beginning of a crucial week in British politics. Andy Burnham will be formally appointed as Labour leader this Friday. He is also expected to become UK Prime Minister on July 20, after he has been officially named. The precious metals market fell due to concerns about the possibility of higher interest rates in the United States for a longer period. Spot gold dropped 3% to $3.998.52 per ounce, while spot silver dropped 3.8% to $57.56. (Reporting and editing by Helen Popper; Chizu Nomiyama Susan Fenton David Gaffen, Helen Popper and Stefano Rebaudo)
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Workers at Venezuela's smallest refinery say that the catalytic cracker has been restarted in the refinery.
Venezuela's smallest ?refinery, the 146,000-barrel-per-day ?El Palito ?in ?the country's central region, has restarted its fluid catalytic cracker (FCC), key for producing motor fuel, four workers said on Monday. After twin quakes in late June, the refinery's operational units have been slowly reactivated in recent days. The 'FCC' is in operation and we are working to increase (production)," said one of the workers. He added that it took several attempts to get the unit into service and now processes 35,000 bpd. On the weekend, the country's oil minister said that fuel supplies were guaranteed in all areas including the coastal state of La Guaira. The oil ministry did not elaborate on the volumes but there are still short lines in front of gas stations, indicating enough distribution. Power?and water?supply?remains the most affected services. Reporting by Tibisay Roma y Mircely Guanipa, Editing by Marianna Paraga and Julia Symmes Cobb
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ReElement Technologies receives $25 million from the Pentagon
The U.S. Department of Defense announced?on Monday that it would invest $25,000,000?in the rare earths startup ReElement Technologies. This is part of an?overall push by the 'Trump administration? to bolster domestic supplies of vital minerals and challenge China’s dominance of this sector. ReElement plans to refine rare Earths and other essential?minerals in its commercial facility planned for Marion, Indiana. Rare?earths will be used to make magnets for a variety of military equipment including fighter jets missiles and subs. The $25 million investment was not immediately clear whether it is a loan, grant or other funding mechanism. Pentagon and ReElement representatives were not available for comment. China dominates the global magnet and rare earths production and processing. The United States and its allied countries have sought to diversify this strategic supply chain. The Pentagon stated that the funds will be used to buy and install equipment at the 'Marion' site. This is where it is hoped to recycle magnets, produce rare earths, as well as germanium, and gallium. These are critical minerals used in semiconductors, defense, and other applications. The Pentagon announced last week that the $80 million loan had been withdrawn by 'ReElement' after it failed to meet the due diligence requirements of the federal government. (Reporting and editing by Ernest Scheyder)
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Copper remains firm as US-Iran conflict weighs on sentiment
The copper prices held steady on Monday, as the dollar eased. However, gains were limited as the 'fighting' between the U.S.A. and Iran intensified and oil prices rose, reinforcing fears of inflation and growth. At 1601 GMT, the benchmark copper price on 'the?London Metal Exchange' was up 0.3% to $13,528 per metric tonne. The lower dollar makes metals priced in dollars cheaper for holders of currencies other than the U.S. dollar, which could increase demand. The price of oil has risen after renewed military attacks between the United States of America and Iran re-ignited concerns over energy shipments via the Strait of Hormuz. The focus was also on the falling copper inventories. Since the end of last month, copper stocks in LME approved warehouses dropped by more than 20 percent. They now stand at a four-month-low of 305 200 tons. Metal earmarked for shipment at almost 43% or cancelled warrants indicate that another?130.525 tonnes is expected to leave the LME. Sources in the industry say that a large amount of this copper is heading to the United States, where President Donald Trump may impose tariffs on metal used for construction and power industries. Since Trump's order to launch a national-security probe in February of last year, traders and producers have shipped metals into the United States. Since then, copper stocks in warehouses registered at Comex have increased by nearly 600%. The Shanghai Futures Exchange monitors a number of warehouses where copper stocks have dropped by?nearly 80 percent since mid-March. Alastair Munro, senior metals strategist with broker Marex, explained that rapidly falling stocks create a higher floor price. Kevin Warsh, the Federal Reserve Chairman and U.S. Inflation data can provide clues about the direction of the dollar. Aluminium increased 0.7% to $3.163.5, while zinc fell 1.5%, lead dropped 1.5%, and nickel added 0.4%.
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Spain identifies six fatalities in wildfire
Authorities announced on Monday that six victims of one of Spain's most deadly wildfires in recorded history have been identified. Meanwhile, forensic teams are continuing to work on DNA testing and confirming the identities?of?six other individuals. Authorities said that the victims included a married Spanish and British couple. Other victims identified include a British woman and man, a French woman, and a Belgian. All of the victims were adults. The death toll now stands at 13. Seven other people were also injured by the fire, which scorched approximately 7,000 hectares (17.300 acres). Sophie Vandebroek said that the Belgian man who was identified as Stanislas?Verdonckt was a 63-year old businessman. He had tried to flee via a mountain?track but was engulfed in flames. She said that his dog Schubi had also been 'found near to the body. On Thursday night, Spain's deadliest fire in over four decades trapped residents as they tried to escape from the flames in a rough area with scattered houses. Scientists have linked the increasing severity of wildfire seasons in Spain and Southern Europe to climate change. Experts say that unusually heavy spring rains this year prompted vegetation growth in parts of southern Spain. This created abundant fuel which later dried out during extreme summer heat and helped the fire spread quickly. The remaining six victims are expected to be identified within the next few days, after the relatives of the deceased have provided their biological samples. This will be done with the help of Belgian, British, and French consular officials. Authorities say that 10 people remain missing. However, some of those could be amongst the bodies yet to be identified. The investigators stated that DNA analysis is the only primary method of identification because of the condition of remains. Andalusia’s?regional govt. on Monday reduced?the alert level for wildfires to pre-emergency after the fire was stabilized, evacuation orders were lifted and residents allowed to return home. Reporting by Emma Pinedo, Aislinn laing and Hugh Lawson; Editing by Charlie Devereux & Hugh Lawson
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Venezuela's complicated and contested debt problem
Investors will be impacted by the size of Venezuela's debt and the creditors who hold it. This could make for one of the biggest sovereign debt restructurings ever. Venezuela hasn't published a comprehensive debt?statistics for years and sanctions in 2017 isolated it from the Western Financial World. Caracas said it would complete a comprehensive debt?assessment before the end of June. Investors now expect it to be released this month. However, it's unclear whether it will be shared with the public. The Financial Times reported that Venezuela is set to reveal a debt pile larger than expected, of $240 billion. Most analysts had estimated debts between $150 and $200 billion. What we know and what we don't about Venezuela's debt is listed below: WHAT IS CARACAS'S BOND DUTY? Venezuela announced in May that it plans to restructure the outstanding commercial Eurobonds issued by Petroleos de Venezuela (PDVSA), a state-owned oil company, and its government. Since the default in 2017, these bonds have accrued interest. JPMorgan estimates that total bond claims including interest past due, amount to $102 billion. A deal could be complicated by different terms. A PDVSA 2020 bond is backed up by a majority share in U.S. refiner Citgo. Older bonds are more susceptible to holdout litigation. Elecar, the Electricidad de Caracas company, has also issued a $650-million electricity sector bond. How much does Venezuela owe to other governments? According to reports, the total bilateral lending of Venezuela is approximately $25 billion. Bilateral creditors often restructure first. The Paris Club, a group of 22 official creditors nations, usually sets the standard for debt relief that other creditors are expected to provide. Venezuela owes Paris Club members $8.69 billion. AidData reports that Russia has extended at least 2 loans in the last 15 years. This includes $3.2 billion in 2017 restructured. Venezuela owes China an amount that is substantial through oil-backed loan, which could give Beijing a competitive edge over other creditors. JPMorgan puts the obligations between $13 and $15 billion. Beijing condemned the redirection in January of Venezuelan oil imports and said that "legitimate interests and rights of China and other nations in Venezuela must also be protected". Venezuela is vague on plans to address the official debt. It says that this will be done through "institutional standardization", without revealing any details or if it would include a formal restructuring. What does CARACAS owe to multilateral lenders? The country owes about $4 billion to multilateral development banks, according to Fitch, chiefly to Caracas-headquartered CAF Development Bank of Latin America and the Caribbean and the Inter-American Development Bank (IDB). These institutions are usually preferred creditors and do not expect to suffer losses during a reorganization. How much do arbitration claims and court awards amount to? Following expropriations by former President Hugo Chavez, more than 50 companies have filed?claims. Transparencia Venezuela's data and that of #PublicDebtIsPublic, which compiled the information, show that arbitration awards and court judgements total more than $20 billion. This excludes past due interest. However, this group cautions their data may not capture all claims. Some creditors seek recovery through the court-ordered sales of Citgo Petroleum, which require U.S. approval. Arbitration awards and court judgments are legally binding claims that creditors hold, but there is no "collective mechanism" to bind the various creditors into a "negotiated agreement". Experts say that they account for at least 10% in Venezuela's debt. The rest is up to you. Where is the rest of the $40 billion? Some debts were never litigated or arbitrated, which makes them more difficult to track. Repsol, a Spanish oil company, claims Venezuela owes them EUR4,55 billion ($5.16billion). Meanwhile, ENI, an Italian firm, said its back-due PDVSA bills would reach $3.3billion by the end of 2025, including $1 billion in interest. Promissory notes, which are legally binding IOUs tied to export credits or supplier credits, may also be included. Investors were concerned that domestic debt could be added to the total, since it was harder to determine if they were legitimate. Investors may be concerned about the claims assessment and debts included without an external audit, or involvement by institutions like IMF or World Bank. Venezuela was ranked 180th among 182 countries in Transparency International’s 2025 Corruption Perceptions Index. The inclusion of claims deemed to be valid for the debt restructuring area could cause controversy, as they could increase the total debt and result in greater losses for creditors.
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Central Asia is feeling the impact of Russia's fuel shortage
Traders and fuel market participants reported that the fuel?shortages?in Russia caused by?Ukrainian drone attacks on its refineries?have reached Central Asian nations, who are dependent on Russian supplies. Sources claim that the amount of jet fuel shipped by rail by Central Asia and Afghanistan dropped 92% from May to 3,800 metric tons in June, while gasoline supplies fell 34% to 99 300 tonnes. According to traders, diesel exports grew?in June from 167.500 tons in May to 237.700 tons. Despite the larger drop in June, Russian fuel imports to Central Asia & Afghanistan rose by 7% from a year earlier to 3,82 million tons. Russian fuel exports rose 19% to the region last year. Rosneft, the Russian oil giant, supplied almost half of all gasoline. Gazpromneftekhim Salvat and 'Gazprom neft are also suppliers. Ukraine has intensified its attacks on Russia's oil refineries and energy infrastructure in order to undermine Moscow's war efforts. The decline in oil refinery led to a fuel crunch in Russia. Long queues formed at filling stations and gasoline and diesel prices increased significantly. Last week, Tajikistan’s?energy ministry said that the country had fuel reserves for 60 days and was in discussions with its neighbours to ensure future supplies. Kyrgyzstan asked neighbours to help it with fuel supplies earlier this month. Russia has banned the export of jet fuel, diesel and gasoline. This ban does not apply to supplies made under intergovernmental agreements.
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As rising Middle East tensions fuel interest rate hikes, gold prices drop by nearly 3%
Gold prices dropped nearly 3% Monday after U.S. president Donald 'Trump' said he would reinstate a naval blockade against Iran. This would boost oil markets and reignite inflation fears, as well as raise the prospect of longer-term higher U.S. rates. By 10:38 am EDT (1438 GMT), spot gold had fallen 2.8%, to $4.005.59 an ounce. This was the lowest price since July 1. Prices fell for a second consecutive session. U.S. Gold Futures fell 2.4% to $4013.40. The Middle East conflict is causing oil prices to rise, and the Federal Reserve could tighten policy. This is bad for gold and other zero-yielding investments, said?Fawad Rasaqzada of Forex.com. He added that if oil prices continue to rise, gold prices may break down, and could initially head towards the $3,800 mark, and then possibly reach $3,500 if selling pressure increases. Rates Outlook Trump announced on Monday that the U.S. would reinstate a naval blocade against Iran and receive a 20% reimbursement on all cargo transported through the Strait of Hormuz, after Tehran claimed to have closed the strait. The news caused oil futures to jump 5%. Oil prices that are higher can cause inflation because they increase energy and transportation costs across the economy. This could lead central banks to raise interest rates to combat price pressures. CME Group's FedWatch Tool shows that traders believe there is a 71% probability that the U.S. central bank will increase interest rates this September. Kevin Warsh, Fed chair, is scheduled to give his first testimony on monetary policy before Congress on Tuesday. Market participants will be looking for clues in his remarks about the future of rates. This week, the U.S. Government will release important data, including the Consumer Price Index, Producer Price Index and Retail Sales?reports of June, as well as weekly claims for unemployment. Silver spot fell 3.5%, to $57.77 an ounce. Platinum dropped 1.4%, to $1.607,72. Palladium was down by 1.7%, to $1.254.94. Ashitha Shivprasad in Bengaluru and Anjana Anil, editors Helen Popper and Paul Simao.
Gold falls 3% amid rising Middle East tensions
After a?U.S. Donald Trump announced that he would re-impose a naval blockade against?Iran. This boosted oil markets and sparked inflation fears, which could lead to higher U.S. rates for longer. Gold spot fell for a second consecutive session. It was down 3% to $3,996.76 an ounce at 1:40 pm EDT (1740 GMT) after reaching its lowest level since the beginning of July.
U.S. Gold Futures closed 2.6% lower at $4,005.7.
The Middle East conflict is causing oil prices to rise, and the Federal Reserve may tighten policy. Fawad Rasaqzada is a?market analyst for Forex.com. He said that this was bad news for assets with zero yields like gold.
He added: "If oil prices keep rising, gold prices may break down, and initially head to the $3,800 level, and then possibly reach $3,500 if selling pressure increases."
Rates Outlook Trump announced on Monday that the U.S. would reinstate a naval blocade against Iran and receive a 20% reimbursement on all cargo transported through the Strait of Hormuz, after Tehran claimed to have closed the strait. On the news, oil futures rose 5%.
Oil prices that are higher can cause inflation because they increase energy and transportation costs in the economy, which could lead central banks to raise interest rates to combat price pressures.
The CME Group's FedWatch Tool shows that traders believe there is a 75% probability the U.S. central bank will raise interest rates this September.
Kevin Warsh, the Fed chair, is scheduled to give his first testimony on monetary policy before Congress on Tuesday. Market participants will be looking for clues in his remarks about the outlook for rates.
This week the U.S. Government will release important data, including the Consumer Price Index (CPI), Producer Price Index (PPI), retail sales for June and weekly claims of unemployment.
Silver spot fell 3.8%, to $57.55 an ounce. Platinum dropped 1.7%, to $1599.47. Palladium fell 2.1%, to $1249.70. Ashitha Shivaprasad in Bengaluru, Anjana Anil at the Editorial Desk; Helen Popper, Jonathan Ananda and Paul Simao.
(source: Reuters)