Ceasefire Deal Nears Collapse, Oil Prices and Inflation Risks Rise Again

Daily News

Summary:

Trump resumes military strikes against Iran; shipping traffic through the Strait of Hormuz plunges, approaching a standstill...

Highlights

1. Multiple countries mediate to ease U.S.-Iran tensions, with nuclear talks potentially set for a new restart.

2. Trump resumes military strikes against Iran, while Republicans worry the conflict could hurt the midterm elections.

3. Russian Foreign Minister Lavrov: Russia no longer believes the West is willing to negotiate.

4. Burnham secures support from most UK Labour MPs, effectively locking in the party leadership position.

5. Strait of Hormuz traffic plunges, nearly coming to a halt.

6. Iran urgently ships out around 11 million barrels of crude oil.

7. Williams: Energy prices are still expected to decline even if Middle East conflicts resume.

8. ECB meeting minutes: Inflation remains persistent and above target despite expectations for nearly three additional rate hikes.

Details

Multiple Countries Mediate to Ease U.S.-Iran Tensions, Nuclear Talks May Restart

According to two sources from mediating countries and a U.S. official, regional mediators including Qatar and Pakistan are actively working to ease tensions between the United States and Iran, creating conditions for the resumption of nuclear negotiations. Officials from Qatar, Pakistan, Türkiye, Egypt, and Saudi Arabia held multiple calls with both sides on Wednesday in an effort to stabilize the situation amid escalating military tensions.

A regional source involved in the mediation said that the immediate priority is to achieve a de-escalation of tensions before setting a date for the next round of technical negotiations between the two sides. This indicates that mediators are attempting to move Washington and Tehran away from confrontation and back toward diplomacy.

A U.S. official told media that the Trump administration remains committed to finding a solution and that technical-level discussions are continuing. However, disagreements remain over key issues, including Iran’s nuclear program, sanctions relief, and control of the Strait of Hormuz. With Trump publicly declaring that the U.S.-Iran ceasefire agreement has ended, the outlook for negotiations remains uncertain.

Trump Resumes Military Strikes Against Iran, Republicans Fear Electoral Fallout

U.S. President Donald Trump recently announced that the temporary ceasefire agreement between the United States and Iran had ended, citing continued Iranian attacks on vessels passing through the Strait of Hormuz. Shortly afterward, the U.S. military launched large-scale strikes against at least 170 military targets inside Iran within 48 hours, while Iran retaliated by targeting U.S. military bases in the Middle East. The sudden escalation has once again pushed Washington into a potentially prolonged and unpopular conflict.

With only months remaining before the November midterm elections, the escalation has put Republican lawmakers in a difficult position: whether to support the president’s policy or worry that the conflict could damage their electoral prospects. Some Republicans have openly voiced concerns, with one House Republican member saying that Trump was "leading us toward political disaster." They fear Trump is prioritizing confrontation with Iran over the party’s political interests and voters’ concerns.

Economic concerns are at the center of Republican anxiety. The previous ceasefire agreement had helped push oil prices lower, but the renewed military action has driven Brent crude prices back toward $80 per barrel. Republican strategists noted that the current rise in oil prices comes during the peak summer travel season, while consumers remain highly sensitive to living costs, potentially weakening the party’s advantage on economic issues.

The chair of the Main Street Partnership also warned that renewed increases in gasoline and food prices could seriously hurt election prospects. Meanwhile, the high cost of military operations has drawn attention from Congress. The Pentagon has requested an additional $67 billion in funding to cover the costs of operations against Iran. Both Democrats and Republicans have called on the administration to provide a more detailed spending plan. Despite mounting pressure, the White House defended Trump’s actions, saying he is fulfilling his commitment to prevent Iran from obtaining nuclear weapons.

Lavrov: Russia No Longer Believes the West Is Willing to Negotiate

According to Russia’s Sputnik news agency, Russian Foreign Minister Sergey Lavrov said at a press conference that Moscow no longer believes the West is willing to negotiate over the Ukraine issue. Lavrov stated that Russia would no longer trust the West’s willingness to resolve the conflict through negotiations, adding that the goodwill and hopes previously held by Moscow had been completely exhausted.

Lavrov said Russia had presented its assessment of the current situation in Ukraine, including what he described as actions taken by Western countries. He accused the West of pretending to prepare for negotiations while simultaneously issuing public ultimatums against Russia, as European countries have already announced.

Burnham Gains Majority Labour Support, Effectively Securing Party Leadership

On July 9, the first day of the UK Labour Party leadership election, Andy Burnham received nominations from 322 of the party’s 403 MPs, effectively securing the leadership position and potentially paving the way for him to become the next UK prime minister. Under Labour’s leadership election rules, candidates must receive at least 81 MP nominations to proceed to the next stage.

At present, no other Labour MP has received nominations besides Burnham. Having secured 322 nominations, Burnham needs only one more nomination to prevent other potential candidates from reaching the required threshold of 81 nominations. He would then become the only candidate. Despite overwhelming support, Burnham must still complete the formal election process by July 17 before being officially declared Labour leader. He would then be appointed by the King and become prime minister.

Strait of Hormuz Traffic Plunges, Nearly Comes to a Halt

Windward, a UK-based maritime analytics company, reported on July 9 that commercial shipping traffic through the Strait of Hormuz has sharply declined due to continued U.S.-Iran military exchanges, with outbound traffic from the Persian Gulf largely coming to a standstill.

The report said traffic through the Strait of Hormuz has experienced significant fluctuations recently. On July 7, there were 51 recorded transits through the strait, with outbound vessels from the Persian Gulf rising sharply to 35. On July 8, there were 35 recorded transits, but only two of the 18 outbound vessels used the southern route, indicating that shipping operators chose to avoid the Omani side of the waterway following attacks the previous night. From the night of July 8 into the early hours of July 9, only five transits were recorded, with just one vessel leaving the Persian Gulf.

The report noted that the southern route of the Strait of Hormuz has largely been abandoned, and outbound commercial traffic has effectively shut down for the first time since partial recovery began in mid-June. The risk level in and around the Strait of Hormuz is now considered critical. Continued U.S.-Iran clashes, the collapse of the ceasefire, renewed sanctions, and uncertainty over maritime security have further intensified regional risks.

U.S. Central Command announced on social media on July 8 that the U.S. military had conducted additional strikes against Iran. These strikes marked the second consecutive day of U.S. attacks against Iran in response to recent Iranian attacks on commercial vessels in the Strait of Hormuz. Iran retaliated by targeting multiple U.S. military positions in the Middle East. Following the U.S.-Iran memorandum of understanding, the Strait of Hormuz operated mainly through two routes: a northern route controlled by Iran and a southern route near Oman, where the U.S. provided navigation assistance.

Iran Urgently Ships Out Around 11 Million Barrels of Crude Oil

As U.S.-Iran tensions escalated again and President Trump threatened to restore a blockade on Iranian ports, Tehran urgently dispatched oil tankers over the past 24 hours to transport around 11 million barrels of crude oil.

According to tanker tracking data, five very large crude carriers (VLCCs) and one Suezmax tanker departed Iranian ports. Four tankers transmitted location signals in the Gulf of Oman, while another crossed the Strait of Hormuz on Thursday.

The tanker fleet departed as the U.S. military launched strikes against Iran for a second consecutive day in response to Tehran’s recent attacks on vessels. The already fragile temporary ceasefire agreement between the two countries is now at risk of collapse. The renewed deterioration in the situation has prompted other shipping companies to exercise greater caution, with most observable vessel traffic through the Strait of Hormuz nearing a standstill.

Williams: Energy Prices Expected to Decline Even if Middle East Conflict Resumes

New York Fed President John Williams said on Thursday that although conflict has resumed in the Middle East, he does not expect energy prices to continue rising throughout the remainder of the year.

Markets still expect oil prices to decline over the next 6 to 12 months. Williams said this was a "quite reasonable scenario" and maintained that, based on fundamentals, energy prices are likely close to their peak and will gradually decline afterward.

Given the risks facing the economy, Williams said the current monetary policy stance remains appropriate.

ECB Minutes: Persistent Inflation Remains Above Target Despite Expectations of Nearly Three More Rate Hikes

ECB meeting minutes showed that policymakers learned at last month’s meeting that inflation is expected to remain above target next year despite forecasts already incorporating nearly three additional rate hikes.

The minutes stated that even with nearly three 25-basis-point rate hikes included in projections, headline inflation is expected to rise further during the summer and remain well above the target through the first half of 2027.

ECB President Christine Lagarde said the central bank aims to bring inflation back to its target level within three years.

Today's Focus

14:15 (UTC+8) ECB Vice President Vujčić and Governing Council member Stournaras deliver speeches

15:00 (UTC+8) Switzerland June Consumer Confidence Index

16:00 (UTC+8) International Energy Agency (IEA) releases monthly Oil Market Report

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