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Airlines steered clear of much of the Middle East on Friday after Israeli attacks on Iranian sites forced carriers to cancel or divert thousands of flights in the latest upheaval to travel in the region.

Proliferating conflict zones around the world are becoming an increasing burden on airline operations and profitability, and more of a safety concern. Detours add to airlines' fuel costs and lengthen journey times.

Israel on Friday said it targeted Iran's nuclear facilities, ballistic missile factories and military commanders at the start of what it warned would be a prolonged operation to prevent Tehran from building an atomic weapon.

Tel Aviv's Ben Gurion Airport was closed and Israel's air defence units stood on high alert for possible retaliatory strikes from Iran.

Israel's El Al Airlines (ELAL.TA), opens new tab said it had suspended flights to and from Israel as did Air France KLM (AIRF.PA), opens new tab and budget carriers Ryanair (RYA.I), opens new tab and Wizz (WIZZ.L), opens new tab.

Wizz said it had re-routed flights affected by closed airspace in the region for the next 72 hours. Israeli airlines El Al, Israir (ISRG.TA), opens new tab and Arkia were moving planes out of the country.

FlightRadar data showed airspace over Iran, Iraq and Jordan was empty, with flights directed towards Saudi Arabia and Egypt instead.

About 1,800 flights to and from Europe had been affected so far on Friday, including approximately 650 cancelled flights, according to Eurocontrol.

With Russian and Ukrainian airspace closed due to war, the Middle East region has become an even more important route for international flights between Europe and Asia.

The escalation of the Middle East conflict knocked shares in airlines around the world with British Airways owner IAG (ICAG.L), opens new tab down 4% and Ryanair off 3.5%. A surge in oil prices after the attack also stirred concerns about jet fuel prices.

Many global airlines had already halted flights to and from Tel Aviv after a missile fired by Yemen's Houthi rebels towards Israel on May 4 landed near the airport.

Iranian airspace has been closed until further notice, according to state media and notices to pilots.

Air India, which flies over Iran on its Europe and North American flights, said several flights were being diverted or returned to their origin, including ones from New York, Vancouver, Chicago and London.

Germany's Lufthansa (LHAG.DE), opens new tab said its flights to Tehran have been suspended and that it would avoid Iranian, Iraqi and Israeli airspace for the time being.

Emirates (EMIRA.UL) also cancelled flights to and from Iraq, Jordan, Lebanon, and Iran while Qatar Airways axed flights to Iran, Iraq and Syria.

Iraq early on Friday closed its airspace and suspended all traffic at its airports, Iraqi state media reported.

Eastern Iraq near its border with Iran contains one of the world's busiest air corridors, with dozens of flights crossing between Europe and the Gulf, many on routes from Asia to Europe, at any one moment.

Jordan, which sits between Israel and Iraq, also closed its airspace several hours after the Israeli campaign began.

Russia's civil aviation authority Rosaviatsia said it had instructed Russian airlines to stop using the airspace of Iran, Iraq, Israel and Jordan until June 26. It said flights to airports in Iran and Israel were also off limits for civil carriers.

FLIGHT DIVERSIONS

"Traffic is now diverting either south via Egypt and Saudi Arabia, or north via Turkey, Azerbaijan and Turkmenistan," according to Safe Airspace, a website run by OPSGROUP, a membership-based organisation that shares flight risk information.

The Israeli-Palestinian conflict in the Middle East since October 2023 led to commercial aviation sharing the skies with short-notice barrages of drones and missiles across major flight paths – some of which were reportedly close enough to be seen by pilots and passengers.

Six commercial aircraft have been shot down unintentionally and there have been three near misses since 2001, according to aviation risk consultancy Osprey Flight Solutions.

Last year, planes were shot down in Kazakhstan and in Sudan. These incidents followed the downing of Malaysia Airlines flight MH17 over eastern Ukraine in 2014 and of Ukraine International Airlines flight PS752 en route from Tehran in 2020.

Source: Reuters

Israeli airstrikes on Iran earlier on Friday should have limited impact on global inflation and growth, according to analysts at Capital Economics.

In a note to clients, the analysts led James Swanston said that the violence could affect the world economy through higher oil prices. Should Israel choose to attack Iran’s oil production and export facilities, they estimated that Brent crude could jump to around $80 to $100 per barrel, which would add roughly 0.5 to 1 percentage points to developed market inflation by the end of the year.

Any rise in energy inflation would be another reason for central banks to proceed cautiously with cutting interest rates, and for the Federal Reserve to maintain its current wait-and-see attitude to future rate reductions, the analysts said.

However, they flagged that, even after a spike in crude following the strikes, oil prices are "considerably lower than they were a year ago."

Israel launched what it called a "preemptive" large‑scale airstrike on Iran early Friday, hitting “dozens” of military and nuclear targets, while a state of emergency was declared across Israel amid warnings of an imminent missile and drone counter‑strike from Tehran.

Iran’s state media also confirmed reports saying that Israel has killed Iran’s Revolutionary Guards Commander Hossein Salami.

Iran pledged a “harsh” retaliation against both Israel and the United States, while analysts have flagged worries that Tehran’s response could heighten security risks in the Strait of Hormuz, a critical artery for global shipping.

Elsewhere, U.S. Secretary of State Marco Rubio said that Israel carried out its military action against Iran independently, citing self-defense as the driving motive behind the strikes.

The White House had warned it would consider military measures should nuclear negotiations fail, with a key response deadline ending Thursday.

Source: Investing

A member of the Biden administration once described the Group of Seven industrialized countries—the US, Canada, Italy, France, Germany, the UK and Japan—as “a steering committee for the world’s most advanced democracies.” The three-day meeting of G-7 leaders, which gets underway in Canada on June 15, is unlikely to produce such bold pronouncements.

In place of the more or less amicable familial gatherings of recent years, the upcoming conclave feels like a last resort for finding common ground in a world where President Donald Trump keeps describing the host country as a potential 51st state for the US, where the West represents a dwindling share of the global economy and where businesses and investors are eager for any sign of US trade deescalation with the European Union and Japan. (The UK, for its part, is still waiting on actual implementation of its recent tariff deal with Trump.)

The risk of a schism between the US and the rest of the forum’s members—similar to the 2018 summit that produced those infamous images of a defiant Trump, arms folded—can’t be ruled out. After all, last month, with the ink barely dry on a G-7 finance ministers’ communique that promised more stability and less uncertainty, Trump threatened the EU with an even higher 50% blanket tariff. Trade isn’t the only irritant. The US is at odds with its partners on a number of issues, says Emma Ashford, senior fellow at the Stimson Center, a Washington think tank, including its attempts to obtain a settlement with Russia at the cost of Ukrainian sovereignty. Another point of contention is how best to deal with China.

Despite—or because of—these tensions, the G-7 this year still feels necessary, even if 50 years from its founding the club’s claim to being representative of the larger world has been looking increasingly flimsy. At its inception in the 1970s as a kind of geopolitical getting-to-know-you campfire, the grouping accounted for two-thirds of the global economy; today, it’s less than half.

The forum has been described to me by participants as the final frontier for “getting stuff done” as larger multilateral institutions from the United Nations to the World Trade Organization wither in the glare of de-globalization. The format is smaller, more informal and less binding. If China or Russia were involved—and Russia was a member until its 2014 annexation of Crimea—it would probably be a steering committee for absolutely nothing.

Canada’s Mark Carney, who became prime minister by rallying voters against Trump’s bullying, will have his work cut out playing the gracious host. He may be helped by the fact that, away from the Oval Office, Trump will find it harder to ambush unsuspecting guests with a public dressing-down.

Canada is also opting for a larger geopolitical chessboard with the guest list: Narendra Modi of India, a key member of the BRICs grouping that styles itself as a bridge between the West and the Global South, has been invited. So has Mexican President Claudia Sheinbaum, the other pillar of the United States-Mexico-Canada Agreement that Trump wants to tear up. Ukrainian President Volodymyr Zelenskiy also will be present and is expected to seize the opportunity to once again press Trump to take a tougher stance with Russian President Vladimir Putin, as he did when the two leaders met in April on the sidelines of Pope Francis’ funeral in Rome, says Nicoletta Perozzi, of the Italian think tank IAI.

The hope among other member countries is that a transactional Trump can be convinced of the benefits of a big, beautiful summit when it comes to dealing with his bugbears—like China. While the G-7 hasn’t taken a consistent approach on China, there’s an incentive to use the summit to adopt a united position with the US against economic and trade imbalances as China revs up its export engine to compensate for the pain of Trump’s tariffs. The G-7’s finance ministers’ communique made reference to harmful subsidies and unfair competition, as well as the flood of e-commerce packages from Temu and Shein that fly under customs officials’ noses.

At a press briefing last week, Germany’s new chancellor, Friedrich Merz, attempted to set the tone for a productive dialogue, saying: “Let’s stop talking about Donald Trump with a raised finger and wrinkled nose. You have to talk with him, not about him.” Still, the forum’s European members will have to work hard to strike a balance between bowing to the US president’s demands and defending their own positions, particularly in areas such as support for Ukraine, trade and harnessing trustworthy artificial intelligence.

People familiar with the preparations for the upcoming summit say member nations have already agreed they won’t try to reach consensus on a joint communique, as is tradition—an acknowledgment of the gulf separating the US from the other members on Ukraine, climate change and other issues.

Whatever happens in Canada, there will be lingering questions over the future of the G-7. One is whether the forum can survive as an exclusive talking shop. In the past, there have been plenty of suggestions from outside observers about whether membership should be expanded to other economies. One could imagine proposing Australia or South Korea, two economic growth engines that are also trusted allies of the West; Australia has been a target of Chinese coercion, and South Korea indirectly supplied more shells for Ukraine than all European countries combined. “There is a strategic choice coming,” says Paul Samson, head of Canadian think tank CIGI.

The other question is whether we are entering a prolonged era of coalitions rather than alliances. The US and China’s recent trade talks resemble a kind of G-2; meanwhile, Europe’s coalition of the willing on Ukraine looks effective precisely because it’s smaller, more credible on defense and more flexible than the EU’s current setup.

For the G-7, the existential risk is that the price of exclusivity is irrelevance.Read next: US Tariffs Threaten to Derail Vietnam’s Historic Industrial Boom

Source: Bloomberg Europe

Chicago soybeans rise on surging oil prices but biofuel worries cap gains.Wheat rebounds from 4-week low, corn eases to hold near 6-month low.Grain markets shrug off USDA report, focus on ample supply and tepid demand.

Chicago soybeans ticked up on Friday on the back of a jump in crude oil prices after Israel conducted strikes on Iran, though the oilseed market remained capped by uncertainty over U.S. biofuel targets and expectations of abundant global supply.

Wheat edged higher to recover from an earlier four-week low, while corn eased to move back towards a six-month low from last week.

Favourable crop prospects continued to hang over grain markets, with relatively benign weather in the U.S. Midwest and the onset of wheat harvesting in the Northern Hemisphere.

The most-active soybean contract on the Chicago Board of Trade (CBOT)was up 0.2% at $10.44-3/4 per bushel, rebounding from a one-week low on Thursday. CBOT soyoiladded 1.3%.

Oil prices jumped nearly 9%, hitting their highest in months after Israel said it struck nuclear and military sites in Iran, dramatically escalating tensions in the Middle East and raising worries about disrupted oil supplies.

"Rising crude oil prices lifted soyoil prices by making biodiesel more attractive, boosting demand for soyoil as a key biofuel ingredient," said Johnny Xiang, founder of Beijing-based AgRadar Consulting.

That brought relief for the soybean complex after renewed concern on Thursday about U.S. biofuel policy.

The U.S. Environmental Protection Agency (EPA) on Friday is expected to propose lower than-anticipated biofuel blending mandates, four sources told Reuters.

ADM, a key U.S. soybean crusher and biofuel producer, cut bids for soybeans this week ahead of the EPA announcement.

CBOT cornshed 0.7% to $4.35-1/2 a bushel.

The market shrugged off a tighter stocks forecast for U.S. corn in a monthly U.S. Department of Agriculture report on Thursday, which was broadly expected following brisk recent exports.

Supply pressure has built in corn and soybeans amid favourable growing weather in the U.S. Midwest and as Brazil begins harvesting what is expected to be a bumper second corn crop following a record soybean harvest.

CBOT wheatwas up 0.8% at $5.30-1/2 a bushel.

The wheat market is facing seasonal harvest pressure in the Northern Hemisphere, where large crops are anticipated in the United States, Europe and Russia, despite mixed weather in recent months.

"The groundwork for higher prices is there but the time frame is months rather than weeks, and before that can happen, we have to go through North Hemisphere harvest pressure," said Ole Houe, head of advisory services at IKON Commodities in Sydney.

Source: TradingView

The Setup: A Strategic Ambush

Mossad’s Role: Attacks from Within Iran

Devastating Losses for Iran’s Leadership

Nuclear Facility Damaged, Response Hindered

Unshaken by Trump, Israel Moves Alone

Source: CNN

The European Central Bank is approaching its goal for consumer-price growth, President Christine Lagarde said, warning of uncertainty emanating from US tariffs.

“Our primary responsibility at the ECB is price stability, and this is clearly defined in our strategy,” Lagarde told the Xinhua News Agency. “We are within reach of the 2% medium-term inflation target that we have defined as price stability. But we cannot have price stability if we do not have financial stability.”

Lagarde spoke to the Chinese media company a week after the ECB reduced interest rates for an eighth time, to 2%, with officials now saying they’re well placed to tackle the economic challenges ahead. A pause in rate cuts in July is widely expected, though analysts and markets still expect one more reduction by year end.

US President Donald Trump’s erratic trade behavior is one major factor clouding the outlook and potentially stoking prices.

“What will impact one will impact others, and if the situation is not resolved satisfactorily and the uncertainty is not removed, the corporate world will rethink their supply chains,” Lagarde said. “They will rethink their supply and their sourcing, and that will cause more fragility and a period of uncertainty, during which growth will probably be impaired, during which we could have inflationary pressure as a result.”

Source: Bloomberg Europe