South Korea Warns of Trade Disruption Risks Following US Strikes on Iran

Economic

Middle East Situation

Summary:

Seoul raises concerns over potential export and import shocks as tensions in the Middle East escalate following US military action....

Heightened Geopolitical Tensions Spark Trade Anxiety in Seoul

South Korea’s first vice industry minister, Moon Shin-hak, publicly voiced concerns on Monday regarding the trade implications of the recent U.S. airstrikes targeting Iranian nuclear facilities. During a monthly export monitoring meeting, Moon emphasized that the evolving Middle East situation poses risks to the nation’s import-export dynamics. This statement reflects growing anxiety in Seoul over how escalating conflict in the Gulf region could disrupt energy supplies and global trade flows.

The primary area of concern lies in South Korea’s overwhelming dependence on Middle Eastern crude oil, which represented 72% of the country's total oil imports in 2023. As global oil prices surged to their highest levels since January—immediately following news of the U.S. military action—traders began anticipating even steeper rises should Iran retaliate by restricting or blocking the Strait of Hormuz. This narrow waterway is a strategic chokepoint through which nearly 20% of global crude flows, and any disruption there would exert direct upward pressure on oil prices, raising costs for energy-dependent economies like South Korea.

The connection here is not merely correlational but causative. Rising geopolitical instability, particularly involving Iran’s oil infrastructure or maritime routes, directly impacts oil prices. These price movements, in turn, feed into South Korea’s economic stability by inflating input costs for key industries.

Emergency Measures Reflect Strategic Concerns

The South Korean government convened an emergency security and economic task force on Sunday to assess the short- and medium-term impact of the U.S. strike. While specific policy adjustments have not yet been disclosed, this reactive stance suggests a high level of concern over volatility in trade flows, energy pricing, and broader macroeconomic stability. The decision by President Lee Jae Myung to forgo attending this week’s NATO summit, citing regional uncertainties, further signals how seriously Seoul is treating the potential fallout.

South Korea’s strategy moving forward will likely involve diplomatic engagement with both Washington and regional Middle Eastern actors to minimize exposure. Seoul has already been engaged in talks with the U.S. aimed at delaying or revising tariffs and securing cooperation in other trade areas. However, the new geopolitical volatility could complicate these efforts by adding urgency to discussions around energy security and trade continuity.

In conclusion, the U.S. strike on Iran introduces significant external risk to South Korea’s trade and economic outlook. While short-term market reactions are immediate—such as oil price spikes—the long-term implications hinge on whether the conflict escalates further and how effectively South Korea can adapt its supply chain strategies in response.

Source: Reuters

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Olivia Brooks

Cryptocurrency

Bitcoin's recent price action suggests the cryptocurrency may be poised for a significant pullback to the $93,000-$94,000 range, according to on-chain analyst Burak Kesmeci, who cited multiple technical indicators supporting a bearish outlook for the world's largest digital asset.

What to Know:

●Bitcoin has struggled to build momentum above $100,000 despite reaching $108,000 earlier this week

●Technical indicators including RSI below 50 and the 50-day moving average signal weakening bullish momentum

●The $95,000 level represents critical resistance that could trigger further selling pressure if breached

Technical Indicators Paint Bearish Picture

The flagship cryptocurrency has maintained its position above the psychological $100,000 level since early May but has failed to capitalize on this milestone. Over recent days, Bitcoin has been confined to a narrow trading range between $103,000 and $106,000, displaying what analysts describe as lackluster price performance.

Kesmeci's analysis, shared on social media platform X on June 21, highlighted several key technical factors supporting his bearish thesis. The Fixed Range Volume Profile Intensive Swap Level stands at approximately $95,000, marking a significant resistance zone where buyer-seller dominance has historically shifted with heavy volume.

This resistance level becomes particularly concerning when combined with Bitcoin's proximity to the 50-day Simple Moving Average. Currently positioned near $105,000, the SMA50 represents the same level Bitcoin appears ready to close below for the second time. Such a breach could accelerate downward momentum, according to Kesmeci's assessment.

The Relative Strength Index adds another layer of concern to the technical picture. Trading below 50 and beneath its 14-day moving average, the RSI indicates a clear loss of bullish momentum. Lower lows forming in the RSI provide additional evidence of seller dominance in the current market environment.

$94,000 Target Backed by Multiple Confluences

Kesmeci's specific target of $94,000 stems from the Value Area Low in the Fixed Range Volume Profile, which points to the $93,000-$94,000 range. This zone could serve as strong support during any potential selloff, offering buyers an opportunity to re-enter the market at favorable levels.

The 200-day Simple Moving Average provides additional confirmation of this bearish scenario. Converging near the $95,000 level, the SMA200 creates a confluence of technical factors that strengthen the case for downward price movement.

Market participants should prepare for potential opportunities around the highlighted support zone, Kesmeci advised. The analyst emphasized that good buying opportunities might emerge if Bitcoin does indeed test these lower levels.

Current market conditions show Bitcoin trading at approximately $101,596, representing a 1.3% decline over the past 24 hours. This recent weakness aligns with the technical deterioration outlined in Kesmeci's analysis.

Market Outlook and Key Levels

The convergence of multiple bearish indicators suggests Bitcoin faces headwinds in the near term. The inability to sustain momentum above $105,000 combined with weakening technical indicators creates a challenging environment for bulls.

Traders and investors will be closely monitoring Bitcoin's ability to hold above the $95,000 resistance-turned-support level. A decisive break below this threshold could accelerate selling pressure and push the cryptocurrency toward Kesmeci's projected target range.

The analyst's methodology incorporates various timeframes and technical tools, lending credibility to the forecast. Volume profile analysis, moving averages, and momentum indicators all point toward potential weakness in Bitcoin's short-term trajectory.

Despite the bearish near-term outlook, the $93,000-$94,000 zone represents what technical analysts consider a high-probability reversal area. This support confluence could provide the foundation for Bitcoin's next significant move higher.

Closing Thoughts

Technical analysis from on-chain analyst Burak Kesmeci indicates Bitcoin may face downward pressure toward the $93,000-$94,000 support zone, with multiple indicators suggesting weakening bullish momentum. The confluence of resistance at $95,000, deteriorating RSI conditions, and proximity to key moving averages creates a challenging environment for Bitcoin bulls in the coming weeks.

Source: CryptoSlate

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Commodity

Political

Middle East Situation

Crude Rally Reflects Deepening Geopolitical Risk

Oil markets entered a fresh wave of turbulence after the U.S. launched direct strikes on Iranian nuclear sites, dragging Washington into the Israel-Iran war. Brent crude rose nearly 2% to $78.53 per barrel while WTI crossed $75. This comes on top of Friday’s sharp jump of over 7%, the largest one-day gain in months, driven by fears of disrupted supply.

The escalation has raised serious alarms among energy analysts and traders, who now see oil prices potentially hitting or exceeding $100 per barrel—levels last seen in the aftermath of Russia’s invasion of Ukraine in 2022.

The Strait of Hormuz: Oil’s Most Fragile Chokepoint

Much of the anxiety centers around the Strait of Hormuz, a narrow maritime corridor between Iran and Oman through which nearly 20 million barrels of oil pass daily—roughly one-fifth of global supply. Iranian parliament's approval to close the strait, following U.S. airstrikes, has jolted markets and reignited memories of previous threats from Tehran during past geopolitical flare-ups.

Analyst Saul Kavonic of MST Marquee warned that even limited interference in the strait—such as harassing oil tankers—could induce significant price spikes. A full closure lasting more than a few weeks would almost certainly drive crude prices above $100 and potentially trigger direct Western military intervention to reopen the route.

Energy Infrastructure Still Safe — But for How Long?

Despite missile exchanges and escalating rhetoric, energy assets have remained untouched for now. Rebecca Babin from CIBC noted that neither side has shown intent to directly attack oil infrastructure, indicating a shared incentive to keep energy flows steady despite growing military aggression.

However, Rapidan Energy Group's Bob McNally warned that if Iran turns its arsenal toward disrupting Gulf production or LNG shipping, oil could experience an even more violent surge, possibly surpassing previous crisis levels.

Historical Echoes with a Modern Twist

Iran has made similar threats before—in 2018 after the U.S. withdrew from the JCPOA, and in 2011–2012 during sanctions over nuclear enrichment. Yet none materialized into long-term closure of the strait. The difference now, as Andy Lipow of Lipow Oil Associates emphasized, is the sustained exchange of missile fire and the active involvement of a global superpower, raising the threat level beyond prior episodes.

While price action is aggressive, analysts remain divided on the probability of a worst-case scenario. Vandana Hari, CEO of Vanda Insights, pointed out that despite serious rhetoric, the physical feasibility of closing the Strait of Hormuz is limited, and markets will likely remain reactive rather than preemptively panicked unless escalation becomes more tangible.

The CBOE Crude Oil Volatility Index has already climbed to levels last seen in March 2022, a reflection of hedging activity and market uncertainty. However, with no confirmed damage to energy assets and tanker traffic still flowing, the base-case scenario among traders is caution—not collapse.

The U.S. entrance into the Iran-Israel conflict has fundamentally altered oil’s risk calculus. While a closure of the Strait of Hormuz or strikes on Gulf infrastructure remain worst-case outcomes, even the specter of such disruption is enough to put a $100 crude environment within reach. As energy traders brace for Iran’s next move, the world’s most strategic waterway now holds the key to global price stability—or the next major energy shock.

Source: CNBC

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Economic

Markets in Limbo Amid Geopolitical Shock

Following the U.S. airstrikes on Iran’s nuclear sites over the weekend, global financial markets opened the week with a mix of guarded moves. The dollar showed modest gains against major currencies, while oil surged to a five-month high and equities retreated globally. Investors are clearly in wait-and-see mode, absorbing the gravity of the U.S.-Iran conflict while resisting overreaction—at least for now.

The dollar index rose 0.12% to 99.037, underpinned by a 0.25% gain against the Japanese yen and a 0.33% decline in the euro. The Australian dollar, viewed as a risk-sensitive currency, weakened 0.2% to $0.6437, reflecting market aversion to risk exposure. Sterling and the New Zealand dollar also declined.

Currency Markets Signal Contained Panic—For Now

According to Carol Kong of the Commonwealth Bank of Australia, investors are more concerned about the inflationary effects of the rising oil prices than about immediate economic disruption. That explains the muted flight to safety, as markets hope the latest military action remains limited and does not evolve into a broader regional war.

The cautious tone was reinforced by Saxo Bank strategist Charu Chanana, who noted that current haven flows remain restrained, reflecting an assumption that this is a tactical escalation rather than a prelude to systemic disruption in global oil supply or trade.

Still, safe-haven currencies like the Japanese yen and the U.S. dollar are likely to benefit if the conflict worsens. The potential closure of the Strait of Hormuz—a strategic chokepoint for nearly a quarter of global oil flows—would dramatically shift risk pricing in all asset classes, including currencies.

Oil’s Surge Highlights Real Inflation Threat

While forex markets remain somewhat subdued, energy markets are not. Oil jumped to its highest level since January as traders braced for supply shocks, especially after Iran’s parliament approved a move to close the Strait of Hormuz in retaliation. The closure, if carried out, would severely limit shipments from Saudi Arabia, Kuwait, Iraq, and Iran, exacerbating global inflation pressures.

These inflationary concerns also have potential feedback loops into monetary policy, especially in economies like the U.S., where central bank interest rate decisions are finely balanced between inflation control and growth support.

Dollar Outlook: Caught Between Geopolitical Safety and Domestic Risk

Despite Monday’s gains, the U.S. dollar is still down 8.6% year-to-date, reflecting broader concerns about domestic growth headwinds, particularly stemming from President Trump’s aggressive tariff policies. Investors remain hesitant to fully embrace the dollar given the uncertainty surrounding trade policy, fiscal tensions, and Trump’s unpredictable geopolitical decision-making.

This explains why the dollar’s ascent, although present, lacks conviction. A sustained move higher would likely require confirmation of either further escalation in the Middle East or signs of financial market distress globally.

In the digital asset market, Bitcoin rose 1.3% and Ether rebounded 2.3% on Monday after both experienced sharp losses on Sunday. While cryptocurrencies remain volatile, their relative resilience indicates speculative investors may also be positioning for broader financial instability.

Monday’s market reaction reveals a landscape suspended in anticipation. While the dollar has found some footing as a haven, broader movements are measured, not panicked. The world is now watching Tehran’s next move. Should Iran proceed with closing the Strait of Hormuz or retaliate directly, the fragile equilibrium holding back broader market panic could quickly unravel—sending oil, currencies, and global risk assets into much more dramatic territory.

Source: Reuters

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Political

Contradiction Between Words and War

Just five months after declaring peace a hallmark of his presidency during his January 2025 inauguration, Trump has overseen a major escalation in Middle East tensions. His remarks then — “We will measure our success… by the wars we never get into” — now stand in stark contrast to his decision to bomb three Iranian nuclear sites: Fordow, Natanz, and Isfahan. The airstrikes mark the first direct U.S. military engagement against Iran since the Israel-Iran conflict erupted earlier in June.

This sudden shift from diplomatic patience to military aggression has put Trump’s carefully cultivated image as a conflict-averse leader into question. His previous pledges to prevent World War III and end Middle East chaos, often repeated on the campaign trail, now appear undermined by his administration’s forceful intervention.

Strategic Shift or Political Whiplash?

Only two days before the attack, Trump publicly claimed the U.S. would wait “two weeks” before deciding on a course of action in response to Israel’s initial strikes on Iran. That posture of restraint quickly vanished. On Saturday night, he confirmed via Truth Social that the U.S. had dropped a “full load of BOMBS” on Iran’s key nuclear site at Fordow. This abrupt pivot left observers questioning the reliability and coherence of U.S. foreign policy under Trump’s second term.

While the administration argues that preventing Iran from obtaining a nuclear weapon remains consistent with Trump’s long-held views, critics contend that the means of achieving that end have dramatically shifted. Trump once described his 2018 withdrawal from the JCPOA as a diplomatic maneuver to exert pressure on Tehran. But Saturday’s military action veers into territory he had pledged to avoid: direct conflict.

Legacy of the Abraham Accords Under Strain

Trump has frequently pointed to the 2020 Abraham Accords as a crowning foreign policy achievement—normalizing relations between Israel and several Arab nations without resorting to military pressure. His assertion at rallies that he “wants peace in the Middle East” and had already delivered it through diplomacy is now being overshadowed by his willingness to engage militarily.

The new conflict raises concerns over whether the fragile framework of cooperation built through the Accords can withstand the fallout. Regional stability, especially among Gulf states wary of a full-scale war, is once again in doubt.

From Diplomacy to Uncertainty

Despite the sharp rhetoric, Iranian officials have not yet signaled how they will respond. Foreign Minister Abbas Araghchi dismissed the idea of diplomacy, stating the U.S. only “understands the language of force,” though he did not commit to specific retaliatory measures. Meanwhile, Iran’s Supreme National Security Council is considering a possible closure of the Strait of Hormuz, which could provoke a global energy crisis and further inflame tensions.

Trump’s defenders argue that the strikes were necessary to halt Iran’s nuclear development and prevent future conflict. But critics warn the immediate consequence may be a deeper entanglement with Tehran, loss of diplomatic leverage, and the undermining of Trump’s own “America First” foreign policy doctrine.

President Trump’s decision to strike Iran may have tactical merit in the eyes of military hawks, but it has undoubtedly eroded the foundations of his peace-focused narrative. Whether this action signals a limited deterrent strike or the beginning of a prolonged conflict remains to be seen. What is clear, however, is that Trump’s once-prized identity as a non-interventionist leader has been fundamentally shaken—raising new questions about how the U.S. defines and pursues peace in a volatile Middle East.

Source: CNBC

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Forex

Economic

Dollar Strengthens on Safe-Haven Flows, But Caution Persists

Following the U.S. strikes on Iranian nuclear facilities, the dollar registered modest gains against major currencies in early Monday trading, supported by investors seeking safety. The greenback rose slightly against the euro and other Asian peers, reflecting increased risk aversion. U.S. equity futures slipped, while crude oil futures climbed as concerns over energy disruptions mounted. Treasury yields, after a brief dip, ticked higher on inflation concerns.

Despite this movement, analysts characterize the reaction as measured. As Diego Fernandez of A&G Banco noted, “The world may be a safer place without the Iranian nuclear threat, but we still need to see the Iranian reaction.” The dollar’s rise, though limited, reflects the return of its traditional safe-haven appeal during times of geopolitical stress.

Markets React to Threats but Wait for Escalation Signal

Iran has threatened “everlasting consequences” and stated that “all options are on the table,” yet has not specified a response. Most notably, the Iranian parliament urged the closure of the Strait of Hormuz, through which roughly 20% of global oil and gas exports flow. However, the final decision lies with Iran’s Supreme National Security Council.

Vice President JD Vance called such a move “suicidal,” given Iran’s dependence on the strait for its own oil exports. Secretary of State Marco Rubio similarly warned against the economic and strategic costs of such action. Analysts like Javier Blas and Noam Raydan echoed this view, suggesting Iran’s threats are likely rhetorical — intended to rattle markets rather than trigger outright closure.

Oil Surges but Remains Below Crisis Thresholds

Oil prices surged as markets opened in Asia, with Brent briefly spiking 5.7% to $81.40 per barrel before retreating. While the gains were meaningful, they remained below crisis levels. Morgan Stanley analysts suggested that if tensions de-escalate quickly, oil could return to the $60s per barrel. But if supply is disrupted — especially through the Strait — prices could rise significantly higher.

Such a rise would likely accelerate global inflation and force central banks, particularly the U.S. Federal Reserve, to reassess interest rate paths. JP Morgan warned that a blockade of the Strait of Hormuz could push oil above $120 and U.S. inflation near 5%, an outcome that would likely alter bond and currency markets significantly.

Equities Stay Resilient Amid Uncertainty

Despite geopolitical stress, equities remain relatively stable. The S&P 500 is down just 3% from recent highs, and broader global indices have seen only modest pullbacks. Strategists at Societe Generale and UBS argue that today’s markets are better positioned to absorb shocks than during past oil crises, thanks to more accommodative central bank policies and subdued investor exuberance.

Nonetheless, equity downside remains possible if the conflict escalates. Analysts from Barclays and Liquidnet suggest that while any oil shock may be short-lived, prolonged tensions could trigger risk-off behavior, especially in European and emerging markets that are more exposed to energy supply shocks and capital outflows.

Mixed Outlook for Treasuries and Inflation Risk

U.S. Treasuries are experiencing mixed signals. While some investors are rotating into bonds for safety, rising oil prices complicate inflation forecasts, limiting the Fed’s flexibility. The 10-year Treasury yield rose slightly to 4.38%, with analysts watching inflation-linked data closely. Jason Schenker from Prestige Economics noted that conflicting forces — rising inflation versus safe-haven buying — could keep bond markets volatile.

Although the dollar has regained some of its safe-haven role, strategists question whether the rally is sustainable. Neil Birrell of Premier Miton Investors noted that while the greenback is unpopular in recent positioning, geopolitical pressure could reverse sentiment. Viraj Patel at Vanda Research sees a potential “pain trade” brewing, as crowded short-dollar bets may unwind if volatility persists.

Still, longer-term challenges for the dollar remain. Charu Chanana of Saxo Markets warns that fiscal risks, institutional strain, and Trump’s unpredictable policies could erode the dollar’s credibility premium — especially if Congress remains sidelined in major foreign policy decisions.

The global financial system is walking a tightrope. The dollar’s modest gains and measured equity reaction show that markets have not yet priced in a full-scale Middle East war. Much depends on whether Iran retaliates — and how. If the Strait of Hormuz remains open and Iranian responses stay calibrated, the current market reaction may prove temporary. But if escalation continues or energy infrastructure is targeted, global inflation could rise sharply, challenging central banks and triggering a more sustained reallocation of capital toward defensive assets.

Source: Bloomberg

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Economic

Strategic Shift in Bond Issuance Eases Yield Pressures

In a notable preemptive move, Japan’s Ministry of Finance revealed a plan to slash issuance of 20-, 30-, and 40-year government bonds by a total of ¥3.2 trillion (approximately $22 billion) through March 2026. This adjustment—especially the ¥1.8 trillion cut in 20-year bonds—is more aggressive than earlier draft expectations and appears designed to avert another failed auction like the one seen in May, which had spiked yields and sparked global ripple effects. The announcement comes just ahead of the June 24 auction, where concerns about tepid demand had been mounting.

Monday morning saw Japanese government bonds fall, with 10-year yields rising two basis points to 1.415%, partially reflecting inflation fears amid Middle East tensions. The recent U.S. strike on Iranian nuclear sites has raised the specter of a supply shock via the Strait of Hormuz, potentially pushing oil prices higher. This, in turn, would pressure bond markets already grappling with inflation that is rising at multi-decade highs in Japan.

Although the Ministry’s move is seen as constructive by market strategists, some believe it may simply redistribute volatility rather than eliminate it. Cutting long-end issuance may ease super-long bond stress, but the increase in short-term debt—particularly the 1-year, 2-year, and 6-month tenors—risks crowding liquidity in other parts of the curve. Total issuance is now forecast to drop modestly by ¥500 billion to ¥171.8 trillion for the fiscal year.

Mixed Market Reactions and Strategic Rebalancing by the BOJ

Rates strategists across Tokyo, including Naoya Hasegawa from Okasan Securities and Shoki Omori from Mizuho Securities, applauded the issuance cut as a measure to bring clarity and calm to a jittery super-long bond segment. Still, concerns remain about demand sustainability. Mari Iwashita of Nomura noted that while the 20-year cut is “positive,” auction results will ultimately determine success. The upcoming 30-year auction on July 3 will be another key test of investor sentiment.

Strategically, the Ministry’s action followed a related announcement from the Bank of Japan (BOJ), which said earlier last week that it would decelerate its pace of market withdrawal starting next year, further signaling a focus on ensuring bond market stability rather than rushing normalization.

Debate Over Buybacks and Further Reductions Continues

Officials also noted during their meeting with primary dealers that buybacks of super-long bonds are not currently being pursued, despite some market participant requests. A Ministry spokesperson emphasized that buybacks would be complicated and risk harming market independence. However, strategists such as Katsutoshi Inadome of Sumitomo Mitsui Trust Asset Management questioned the rationale behind cutting more 20-year issuance than 30-year, where similar supply-demand imbalances exist. He suggested a further cut in 30-year bonds may still be on the table.

Japan’s move to cut long-end bond supply ahead of a key auction and amid Middle East uncertainty shows proactive risk management. It brings some immediate relief to bond investors rattled by recent volatility and rising global inflationary pressures. However, the underlying structural concerns—including Japan’s rising public spending ahead of elections, the inflation outlook, and dependence on foreign demand for long-dated debt—remain unresolved. The market’s next major signals will emerge during the 20-year auction on June 24 and the 30-year issuance on July 3. Until then, volatility may remain elevated, especially if geopolitical tensions continue to escalate.