Oil price lowest since early March despite doubts over how quickly strait of Hormuz will reopen<\/p>\n
The oil price has dropped to its lowest level in almost 15 weeks, despite uncertainty over how quickly the strait of Hormuz will reopen.<\/p>\n
Brent crude has fallen by almost 2.5% today to just over $81 a barrel, adding to Monday\u2019s 4.75% drop. That\u2019s its lowest level since 4 March, the first week of the Iran war.<\/p>\n
However, it\u2019s still some way above Brent\u2019s pre-war level of $72.48 a barrel.<\/p>\n
Oil traders are calculating that the reopening of the strait of Hormuz will lead to a rise in oil supplies from the Middle East, after Donald Trump said the vital waterway will reopen once the US and Iran have signed an initial memorandum of understanding.<\/p>\n
Economists are warning, though, that it will take time for traffic through the strait to return to normal, as some production facilities need to be reopened, or repaired, and some oil and gas tankers are in the wrong places.<\/p>\n
The head of the world\u2019s biggest tanker operator, Mitsui OSK Lines, has told the Financial Times<\/a> that ahipowners will not resume transit through the Strait of Hormuz for weeks until they are confident that the US-Iran deal is \u201cmaterial\u201d.<\/p>\n Kathleen Brooks, research director at XTB, explains:<\/p>\n double quotation markBosses of the world\u2019s biggest shipping companies want to see more than just an agreement in place, mines need to be swept, and all hostilities must end, before tankers with hundreds of millions of dollars\u2019 worth of cargo will be able to traverse the Strait without fear of a flare up in tensions that could close the Strait mid-voyage.<\/p>\n Thus, even if a deal is signed to end the US\/Iran war, the situation is not without its challenges. Brent crude remains above $80 per barrel, and it is unlikely to fall below this level until we start to see cargo ships successfully get through the Strait.<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.37 EDT<\/p>\n Key events<\/p>\n European gas prices have dipped a little today, adding to Monday\u2019s falls.<\/p>\n The month-ahead UK gas contract is down 0.8% at 100.19p a therm. That still leaves it above its levels before the Iran war began, when it traded below 80p a therm, but below March\u2019s high of 180p a therm.<\/p>\n Share<\/a><\/p>\n The head of the International Energy Agency has said it is essential to \u201cunconditionally\u201d opening the Strait of Hormuz to Gulf tanker traffic, to end the oil and gas price shock.<\/p>\n IEA chief Fatih Birol told a press conference:<\/p>\n double quotation mark\u201cThe single most important solution to this problem is the fully and unconditionally opening up of the state of Hormuz to shipping.\u201d<\/p>\n Birol also \u201cwarmly\u201d welcomed the US-Iran deal, calling it \u201cgreat news\u201d that \u201cwill give a comfort to the markets\u201d, adding:<\/p>\n double quotation mark\u201cThe crisis has started almost four months now.\u201d<\/p>\n Last month, Birol warned that oil markets would enter the \u201cred zone\u201d by July and August<\/a>, unless the strait was reopened.<\/p>\n Share<\/a>SpaceX to buy Cursor firm Anysphere for $60bn<\/p>\n SpaceX has just revealed it is acquiring code-generation startup Cursor for $60bn in stock, just days after Elon Musk\u2019s company floated on the US stock market.<\/p>\n In an SEC filing, SpaceX says it has entered into an Agreement and Plan of Merger with Anysphere, the company behind Cursor, under which Cursor will become a wholly owned subsidiary.<\/p>\n The merger is expected to close during the third quarter of 2026.<\/p>\n Cursor uses artificial intelligence to automate coding. The deal could give xAI, the Grok chatbot maker that SpaceX merged with in February, a stronger foothold in the AI coding market where it has so far lagged rivals. It also provides Cursor with more computing capacity to develop AI models.<\/p>\n Back in April, SpaceX secured an option to either acquire Cursor for $60bn, or pay $10bn for their new partnership.<\/p>\n Cursor shareholders will receive shares in SpaceX, based on the average closing price over the seven consecutive trading days before the Merger closes.<\/p>\n SpaceX\u2019s shares are set to jump by 9% when trading begins on Wall Street later today, having jumped around 19% on Friday \u2013 the day they floated \u2013 and another 19% yesterday.<\/p>\n Share<\/a><\/p>\n Updated at\u00a006.55 EDT<\/p>\n Global investors are less pessimistic about the growth outlook, according to a poll of fund managers from Bank of America.<\/p>\n BoA reports:<\/p>\n double quotation markA net 1% of investors think global growth will slow over the next twelve months, down from 36% in April.<\/p>\n A net 11% now expect European growth to accelerate over the coming twelve months, versus a net 16% that saw a slowdown last month, though this is still well below the net 60% expecting better growth in February before the start of the Iran war.<\/p>\n Share<\/a><\/p>\n The drop in the oil price is also pushing down government borrowing costs.<\/p>\n The yield, or interest rate, on UK 10-year bonds has dipped by 0.67% to 4.781%, close to the two-month low set yesterday.<\/p>\n That will take some fiscal pressure off Britain\u2019s government, and held Rachel Reeves keep to her ambition of not raising taxes in the coming months (see earlier post)<\/a>.<\/p>\n Share<\/a>Two Iran-linked tankers sailing through Hormuz<\/p>\n In an encouraging development, two Iran-linked tankers are sailing eastward through the Strait of Hormuz.<\/p>\n The Musik is in the strait, while the Argo Maris has already passed through and is in the Gulf of Oman, but is still within the US blockade line that runs from the easternmost tip of Oman to the Iran-Pakistan border.<\/p>\n A chart showing traffic through the strait of Hormuz Photograph: LSEG<\/p>\n Bloomberg reports that satellite imagery shows Musik loaded a cargo at Iran\u2019s Bandar Imam Khomeini port deep in the Persian Gulf on June 10. Argo Maris was seen departing the Iranian port of Bandar Abbas in late May, according to shiptracking firm Kpler.<\/p>\n They add:<\/p>\n double quotation markIt\u2019s unclear if they will attempt ship-to-ship transfers at points such as Sohar or Fujairah, wait near the US blockade line, or attempt to cross it.<\/p>\n Both vesesels appear on a list of officially blacklisted tankers<\/a> for transporting Iranian oil.<\/p>\n Share<\/a>Bloomberg: US at odds with allies over how easy it is to reopen Hormuz<\/p>\n Over at the G7 summit in \u00c9vian-les-Bains, European allies don\u2019t appear to share Donald Trump\u2019s optimism that the strait of Hormuz will reopen by Friday.<\/p>\n One G7 official has told Bloomberg there are serious difficulties in finding a common position among the group about how to deal with the situation in Iran.<\/p>\n They add:<\/p>\n double quotation markOne senior US official said traffic in the waterway would ramp up over time, and it could take as many as two weeks for shipping to significantly increase \u2014 and even longer for it to return to the levels seen before the US and Israel attacked Iran in February.<\/p>\n There are mines in the strait that still need to be cleared and shippers have different risk tolerances about navigating Hormuz, the official said.<\/p>\n More here<\/a>.<\/p>\n Share<\/a>Oil price lowest since early March despite doubts over how quickly strait of Hormuz will reopen<\/p>\n The oil price has dropped to its lowest level in almost 15 weeks, despite uncertainty over how quickly the strait of Hormuz will reopen.<\/p>\n Brent crude has fallen by almost 2.5% today to just over $81 a barrel, adding to Monday\u2019s 4.75% drop. That\u2019s its lowest level since 4 March, the first week of the Iran war.<\/p>\n However, it\u2019s still some way above Brent\u2019s pre-war level of $72.48 a barrel.<\/p>\n Oil traders are calculating that the reopening of the strait of Hormuz will lead to a rise in oil supplies from the Middle East, after Donald Trump said the vital waterway will reopen once the US and Iran have signed an initial memorandum of understanding.<\/p>\n Economists are warning, though, that it will take time for traffic through the strait to return to normal, as some production facilities need to be reopened, or repaired, and some oil and gas tankers are in the wrong places.<\/p>\n The head of the world\u2019s biggest tanker operator, Mitsui OSK Lines, has told the Financial Times<\/a> that ahipowners will not resume transit through the Strait of Hormuz for weeks until they are confident that the US-Iran deal is \u201cmaterial\u201d.<\/p>\n Kathleen Brooks, research director at XTB, explains:<\/p>\n double quotation markBosses of the world\u2019s biggest shipping companies want to see more than just an agreement in place, mines need to be swept, and all hostilities must end, before tankers with hundreds of millions of dollars\u2019 worth of cargo will be able to traverse the Strait without fear of a flare up in tensions that could close the Strait mid-voyage.<\/p>\n Thus, even if a deal is signed to end the US\/Iran war, the situation is not without its challenges. Brent crude remains above $80 per barrel, and it is unlikely to fall below this level until we start to see cargo ships successfully get through the Strait.<\/p>\n Share<\/a><\/p>\n Updated at\u00a005.37 EDT<\/p>\n Mark Dixon steps down as IWG CEO after nearly 40 years<\/p>\n Nearly 40 years after founding flexible office space company International Workplace Group, Mark Dixon is stepping aside as chief executive.<\/p>\n Dixon, who has an estimated wealth of $1.3bn (\u00a31bn), will shift to become executive chair, with IWG\u2019s board keen to keep his \u201cunrivalled industry knowledge, experience and long-term strategic perspective\u201d and allow him to advise his succcessor, Christian Schmitz.<\/p>\n Having left school at 16, Dixon had already made a small fortune<\/a> from selling a business venture manufacturing bread buns for hotdog sellers, before launching Regus (as IWG was previously known) after strugging to find a \u201csmall, quality office\u201d to rent for his own business in Brussels in 1989.<\/p>\n He told the Guardian last year:<\/p>\n double quotation mark\u201cWe can see more and more companies converting to a \u00adsimple notion\u2026which is: \u2018I don\u2019t need a big head office in one place \u2026 I need hubs, and I just use space on a platform where people need it.\u2019\u201d<\/p>\n Share<\/a>Reeves hopes to avoid tax rises before next budget<\/p>\n Chancellor Rachel Reeves has said on Tuesday she hoped to get to the next budget without raising taxes.<\/p>\n Reeves argued that the government now had enough fiscal headroom to withstand economic shocks, following last November\u2019s budget<\/a>.<\/p>\n She told a conference organised by the Financial Times in London:<\/p>\n double quotation mark\u201cWe made a decision to significantly increase the headroom against our fiscal rules.<\/p>\n \u201cI believe that that was the right decision.\u201d<\/p>\n Reeves\u2019s allies has been lobbying for her to remain as chancellor even if Keir Starmer is replaced by Andy Burnham, should the Manchester mayor win Thursday\u2019s Makerfield by-election.<\/p>\n Thomas Pugh, chief economist at audit, tax and consulting firm RSM UK, says the economy risks another messy leadership battle.<\/p>\n Pugh says:<\/p>\n double quotation markThe Labour Party would still have an incentive to install a new leader before its annual conference in late September.<\/p>\n A leadership contest focused on tax rises or ideas for borrowing will likely sap business and consumer confidence and spook financial markets, dragging on growth in a similar way to the previous two budgets effectively stalled the economy.<\/p>\n Share<\/a><\/p>\n There are signs that things are starting to return to normal in the Gulf.<\/p>\n Offshore marine support firm Gulf Marine Services has told the City that all its support vessels which had been temporarily evacuated due to the Iran war have now successfully returned to hire on the same contracts.<\/p>\n GMS\u2019s \u201cself-propelled, self-elevating support vessels\u201d are used to house workers and equipment at offshore oil and gas installations.<\/p>\n Mansour Al Alami, executive chairman of GMS, commented:<\/p>\n double quotation mark\u201cWe are very pleased to confirm that the fourth and final evacuated vessel has now returned to hire. This is a significant milestone, and we are encouraged by the positive momentum we are seeing both operationally and on the geopolitical front.<\/p>\n The swift and safe return of all four vessels is a testament to the professionalism of our crews and the strength of our client relationships, which have remained robust throughout this period.\u201d<\/p>\n Share<\/a>BoJ welcomes US-Iran peace memorandum<\/p>\n The Bank of Japan\u2019s deputy governor, Shinichi Uchida, has welcomed the US-Iran peace deal.<\/p>\n Speaking at a press conference following today\u2019s rate hike, Uchida said the deal was a \u201cwelcome move\u201d, explaining:<\/p>\n double quotation mark\u201cCompared with our previous meeting in April, the U.S. and Iran have signed a memorandum. That is a welcome move. Having said that, there is uncertainty on the pace of improvement in distribution (of oil).\u201d<\/p>\n Uchida also pointed to inflationary risks, saying:<\/p>\n double quotation markCompared with the previous meeting, the risk of a sharp deterioration in the economy has diminished. On the other hand, price rises are broadening, and there is a risk that underlying inflation may deviate from our target.\u201d<\/p>\n \u201cWith underlying inflation approaching 2%, it\u2019s important to ensure we achieve our target stably.\u201d<\/p>\n Uchida is standing in for BoJ governor Kazuo Ueda, who was hospitalized last week for treatment of a liver cyst infection.<\/p>\n Share<\/a><\/p>\n Investors may be relieved that the Bank of Japan<\/a> didn\u2019t hike interest rates more sharply today, explains Susannah Streeter, chief investment strategist at Wealth Club.<\/p>\n double quotation markThe Bank of Japan has raised its key interest rate to a 31-year high as a precaution, to try and stop energy costs being embedded more deeply across the economy.<\/p>\n The move \u2013 increasing the short-term policy rate to 1% from 0.75% \u2013 was widely expected, but it\u2019s a step-change in monetary policy for Japan, given it pushes borrowing costs to levels not seen since 1995. There was some relief that the move wasn\u2019t more hawkish, with even a 50-basis-point hike having been mooted.<\/p>\n That\u2019s why investors responded with relief and stocks rallied even higher<\/p>\n Share<\/a>Nikkei hits record closing high<\/p>\n The BoJ\u2019s interest rate hike didn\u2019t prevent Japan\u2019s Nikkei share index from hitting a fresh record high.<\/p>\n The Nikkei soared through the 70,000-point mark for the first time ever, and has ended the day at a new closing high of 69,404.5 points.<\/p>\n Other Asia-Pacific markets have also continued to rise today, amid ongoing optimism over the US-Iran peace deal.<\/p>\n Share<\/a>Thames Water rescue at risk as government opposes ‘weak’ deal<\/p>\n Thames Water has moved a step closer to nationalisation after government ministers reportedly formally objected to the \u00a310bn rescue deal proposed by its creditors.<\/p>\n According to The Times this morning, environment secretary Emma Reynolds has written to water regulator Ofwat this week to raise concerns about the plan for the struggling, indebted utility giant.<\/p>\n They explain:<\/p>\n double quotation markReynolds is understood to be concerned that the creditors\u2019 offer for Thames Water is \u201cweak\u201d, not least after \u201c15 years of mismanagement and failure\u201d.<\/p>\n Those who support placing Thames into special administration argue that this would give the company a fresh start by forcing existing investors to write off losses and allow the company to be sold without its existing debt pile.<\/p>\n Under the proposed rescue deal<\/a>, Thames Water\u2019s creditors would inject \u00a33.35bn of fresh equity, and write off a third of their debt.<\/p>\n They are also seeking up to 15 years\u2019 leniency from river pollution rules, arguing that this will make it easier to upgrade the trouble company\u2019s water network.<\/p>\n Reynolds\u2019s intervention comes just days after Manchester mayor Andy Burnham told the Guardian that Thames Water should be nationalised, just days before the Makerfield by-election which \u2013 should be win \u2013 could lead to a leadership challenge against Keir Starmer.<\/p>\n If the government were to approve the deal with creditors, then Thames Water \u2013 which currently has aroun \u00a320bn of debt \u2013 would be part-controlled<\/a> by the billionaire Trump donor and hedge funder Paul Singer.<\/p>\n Share<\/a>Introduction: Japan hikes interest rates to highest since 1995<\/p>\n Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.<\/p>\n The inflationary consequences of the US-Iran war continue to ripple across the global economy, even though the US and Iran have agreed a memorandum of understanding (MOU)<\/a> to end their conflict.<\/p>\n