Supertankers Turn Back at Hormuz as Tensions Escalate After US Strikes on Iran

Middle East Situation

Summary:

Two crude supertankers reversed course in the Strait of Hormuz following U.S. airstrikes on Iran, signaling rising uncertainty over shipping safety in the world’s most critical oil transit corridor....

Rising Risk Disrupts Tanker Movement Through Vital Waterway

Following the U.S. military strikes on Iranian nuclear facilities, concerns over maritime security in the Persian Gulf have started to manifest in tanker movements. On Sunday, two very large crude carriers (VLCCs)—Coswisdom Lake and South Loyalty—executed sudden U-turns after entering the Strait of Hormuz, one of the world’s most strategic chokepoints for oil transit. While one of the vessels later re-entered the strait, the other remained outside the Gulf, reflecting a shift in shipping behavior triggered by rising geopolitical risks.

This incident marks the first tangible signal that maritime operators are actively reassessing risk exposure in the Strait. Although jamming of ship signals and broader navigation interference have increased since Israeli airstrikes on June 13, the recent U-turns align more closely with deliberate rerouting decisions than with technical errors.

Strategic Calculus Amid Shipping Uncertainty

The Strait of Hormuz is the conduit for roughly 20% of global crude flows. Even a temporary disruption can significantly alter trade routes and pricing in the oil market. Vessel operators and national authorities are now reacting preemptively, as seen in Greece’s advisory urging commercial fleets to delay passage through the strait or anchor at safer nearby ports.

The decision-making calculus for tanker captains and shipowners now includes weighing operational delays at loading ports, heightened insurance risks, and potential military encounters. Such responses represent an early but meaningful reconfiguration of maritime logistics under pressure.

Market Impact: Freight Rates and Derivatives Surge

The rerouting of just a few tankers, combined with the broader threat of disruption, has already triggered a market response. Before the U.S. strikes, benchmark VLCC freight rates were already up nearly 90%. Following Sunday’s developments, freight derivatives surged as traders priced in the likelihood of higher rates, longer voyages, and elevated insurance premiums.

This market reaction reflects a causative linkage between geopolitical escalation and shipping costs. As perceived risk increases, so too does the cost of insuring and operating vessels in conflict-adjacent regions. If more ships choose to avoid Hormuz or delay entries, tightness in available tanker capacity could magnify, pushing global freight costs higher and disrupting timely delivery of oil cargoes.

A Strategic Flashpoint for Energy Markets

The double U-turn maneuver by Coswisdom Lake and the lingering hesitation of South Loyalty underscore the high stakes now surrounding the Strait of Hormuz. While oil and gas carriers continue to transit the corridor, their altered routes suggest operators are no longer treating the passage as routine. If hostilities escalate or Iran threatens retaliatory action in the strait, re-routing could become widespread—constraining global oil flows and adding fuel to upward pressure on crude prices and maritime freight.

With geopolitical tensions converging on the Gulf, the security of global energy logistics is entering a precarious phase. The shipping world’s early response may be a precursor to broader trade adjustments if regional instability intensifies.

Source: Bloomberg

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Gerik

Economic

Contraction Accelerates Across Sectors

France’s private sector recorded a sharper contraction in June 2025, as shown by the latest S&P Global Purchasing Managers’ Index (PMI) figures. The composite PMI dropped to 48.5, down from 49.3 in May, signaling a more pronounced decline in overall business activity across the eurozone’s second-largest economy. The services sector, traditionally the cornerstone of French economic activity, registered a flash PMI of 48.7, slightly below expectations and further below the 50-point threshold that separates growth from contraction. Meanwhile, the manufacturing PMI slumped to 47.8, underperforming both the previous month’s 49.8 and the forecast of 50.0.

These figures suggest a synchronized weakening in demand and production, highlighting a causative downturn fueled by both structural and external pressures. The deterioration reflects not only cyclical adjustments but also persistent economic fragility as firms grapple with demand uncertainty and tightening global conditions.

Manufacturing Weakness Signals Structural Strain

France’s manufacturing sector continues to be weighed down by surplus inventory levels among clients, deteriorating market conditions, and persistent order postponements. Notably, factory orders posted their steepest drop since February, marking the thirteenth straight month of declining new orders. This signals entrenched softness in domestic and foreign demand, suggesting that the recent weakness is not transitory but reflective of a broader industrial malaise.

This decline also reflects a direct causal linkage between global economic pressures and France’s industrial base. With ongoing geopolitical instability and sluggish international trade dynamics, firms are increasingly hesitant to commit to new orders, leading to suppressed output levels and declining business confidence.

Geopolitical and Trade Uncertainty Exacerbate Risks

While domestic consumption is cooling, broader geopolitical factors are compounding the situation. The ongoing military conflict between Israel and Iran and heightened uncertainty over global tariff regimes are acting as suppressive forces on trade flows and investment planning. These exogenous shocks introduce volatility that businesses must price into their operations, often resulting in delayed capital expenditures and cautious hiring.

Junior economist Jonas Feldhusen of Hamburg Commercial Bank emphasized this in his commentary, noting that while certain policy tools such as European Central Bank rate cuts, deregulation efforts, and increased defense spending may support long-term industrial revival, the near-term outlook remains subdued. The concurrent rise in geopolitical risks undermines business visibility and weakens forward-looking indicators.

Policy Measures May Offer Limited Relief

Despite marginal support from ECB monetary easing and EU-level deregulation, the data suggest these efforts have not yet filtered through meaningfully to stabilize output. The absence of growth in both services and manufacturing despite these policy levers implies that France may require more targeted fiscal interventions or sector-specific stimulus to reverse the contraction trend.

At the same time, rising global competition and fragmented demand continue to challenge France’s industrial repositioning. Firms not only face internal inefficiencies but also mounting pressure from agile international competitors operating with lower costs or stronger supply chain resilience.

The June PMI data signal that France’s private sector is entering a deeper phase of contraction with few signs of imminent recovery. The persistent decline in new orders, weak domestic demand, and rising global tensions indicate that the contraction is structurally embedded rather than cyclical. Without stronger demand-side measures or a reduction in external uncertainties, France risks slipping into a prolonged period of economic stagnation, marked by underutilized capacity, restrained investment, and suppressed employment growth.

Source: Reuters

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Middle East Situation

Political

Two Wars, One Presidency: A Volatile Political Calculus

Within five months of returning to the White House, President Donald Trump finds himself at the center of two unfolding crises—an intensifying trade war and a high-stakes military confrontation with Iran. While Trump had hoped to focus his early tenure on domestic wins like tax reform and deregulation, the gravity of recent events has pulled the administration into global conflict. The U.S. airstrikes on June 21 targeting three Iranian nuclear sites represent the first direct attack on Iranian soil authorized by an American president, a decision that has both strategic and political ramifications.

The U.S. assault followed a week-long Israeli operation aimed at dismantling Iran’s nuclear infrastructure. Israel reportedly neutralized much of Iran’s air defense system and targeted key personnel, but it lacked the firepower to destroy deeply buried facilities. Trump’s decision to deploy U.S. “bunker buster” bombs completed the operation, with initial claims suggesting a successful blow to Iran’s nuclear capabilities. However, the Pentagon may never fully confirm the strike’s effectiveness, and speculation is already rising that Iran retained enriched uranium and critical infrastructure components.

The military action may have been designed as a one-off intervention, but Iran’s response remains the wild card. The principle at play here is causative: U.S. aggression invites Iranian retaliation, which could escalate into a broader conflict. Iran’s options range from symbolic military displays to covert attacks via proxy groups or direct assaults on U.S. assets. Each potential response risks reigniting tensions and expanding the conflict's scope—placing Trump’s foreign policy credibility on the line.

Geoeconomic Fallout: Oil Prices and Trade Deadlines Collide

One of the most immediate global risks is the potential disruption of oil supplies through the Strait of Hormuz, a chokepoint for 20% of the world’s crude. Even the threat of closure could propel oil prices well beyond $100 per barrel, undermining global growth and exacerbating inflation. Higher energy costs would compound the inflationary effects of Trump’s tariff policies, which economists already estimate could raise consumer prices by a full percentage point or more.

The economic implications of the Iran strike bleed directly into Trump’s other pressing front: trade. The president has set a July 9 deadline for dozens of nations to revise trade agreements or face punitive reciprocal tariffs. But the heightened geopolitical volatility could force him to delay that deadline to avoid further rattling financial markets—a move that would be welcomed by investors but also seen as a political retreat.

Strategic Trade Agenda Faces Market Skepticism

While Trump insists on reshaping global trade through brinkmanship, markets have begun to discount his threats due to repeated backtracking when equities falter. The current geopolitical risk amplifies that market sensitivity. Any perception that Trump is overreaching or losing control—militarily or economically—could erode investor confidence, reduce foreign capital inflows, and suppress equity valuations. In essence, Iran’s reaction could materially influence the success or failure of Trump’s trade strategy.

Wars have historically affected presidential approval ratings in unpredictable ways. A swift, successful operation might boost Trump’s standing and free up political capital for domestic reforms. But a drawn-out or mismanaged conflict—especially if it involves American casualties—could derail legislative goals and weigh heavily on public opinion. The memory of Lyndon Johnson’s withdrawal amid Vietnam backlash serves as a historical caution.

Adding to the stakes is the prospect that Iran, rather than being deterred, might fully abandon international nuclear oversight and accelerate its pursuit of a weapon. Analysts such as Ilan Goldenberg argue that the strikes have made a diplomatic resolution less likely, not more. If Tehran reconstitutes its nuclear program clandestinely, Washington may be drawn into repeated military engagements with diminishing returns.

Strategic Uncertainty on Two Fronts

President Trump is now navigating two crises that interact in dangerous and unpredictable ways. His decision to escalate in Iran complicates an already fragile global economic landscape, dominated by trade uncertainty and volatile energy markets. While the Iran strike may reflect strategic intent to prevent nuclear proliferation, its long-term effectiveness hinges on Iran’s response and Trump’s ability to contain fallout on both fronts.

Ultimately, the administration’s capacity to manage these parallel conflicts—one with bombs and the other with tariffs—will define not only Trump’s foreign policy legacy but also the broader trajectory of U.S. economic and geopolitical stability in 2025.

Source: Yahoo Finance

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Michelle

Economic

Forex

British business activity expanded modestly in June as new orders grew for the first time this year but employers cut jobs more quickly and worried about the conflict in the Middle East, a survey showed on Monday.

The S&P Global UK Composite Purchasing Managers' Index (PMI), a gauge of the private sector economy, rose to 50.7 from 50.3 in May - inching further above the 50.0 growth threshold. A Reuters poll had forecast a rise to 50.5.

The services sector, which dominates Britain's economy, marked its fastest growth in three months. Factory activity dropped for a ninth month running but it was the smallest contraction since January.

Survey company S&P Global said the report was consistent with economic growth of around 0.1% in the April-June period - matching the Bank of England's estimate of the current underlying pace of the economy's expansion.

"The UK economy remained in a sluggish state at the end of the second quarter, according to the early PMI survey data," said Chris Williamson, chief business economist at S&P Global Market Intelligence.

"Although business conditions have continued to improve since April's downturn, quelling recession fears, growth of business activity remains disappointingly lacklustre," Williamson said.

Official data published earlier this month showed Britain's economy slowed sharply in April, reflecting shockwaves from U.S. President Donald Trump's announcement of wide-ranging tariffs and a one-off hit from the end of a tax break on property sales.

The composite PMI's employment, new export business and future output indexes worsened in June, with the latter affected by "elevated global economic and political uncertainty", according to S&P Global.

The new orders index ticked above the 50 growth threshold for the first time since November.

The survey was conducted between June 12 - the day before Israel started to attack sites in Iran - and June 19.

Williamson said the hit to staffing also reflected the increase in employers' social security contributions which finance minister Rachel Reeves introduced in April.

Selling prices increased at the slowest pace since January 2021 - something that will reassure the Bank of England as it monitors an increase in the headline rate of consumer price inflation that it hopes will be temporary.

The PMI for the services sector rose in June to 51.3 from 50.9 in May. The manufacturing PMI rose to 47.7 from 46.4.

Source: Reuters

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Gerik

Economic

Commodity

Middle East Situation

Investor Confidence Wavers as Oil Prices Climb

The beginning of the trading week saw a broad selloff across emerging market assets after U.S. President Donald Trump confirmed military strikes on three Iranian nuclear facilities. The geopolitical escalation raised immediate fears of supply disruption in global energy markets, particularly through the Strait of Hormuz, and led to a spike in oil prices. Brent crude approached $80 per barrel, triggering inflationary concerns that directly impacted investor sentiment in emerging markets.

The reaction in financial markets illustrates a causal relationship: military escalation elevates geopolitical risk, which leads to oil price volatility, prompting capital outflows from risk-sensitive assets like emerging market currencies and equities.

Currencies in Asia Lead the Decline

Asian currencies bore the brunt of the selloff, with South Korea’s won leading the regional decline and contributing significantly to the 0.3% fall in the Bloomberg Asia Dollar Index. Indonesia’s rupiah also weakened, prompting the country’s central bank to intervene in both domestic and offshore markets to contain further depreciation.

Currency strategist Fiona Lim of Malayan Banking Berhad noted that pro-cyclical Asian currencies — particularly those belonging to net oil importers — are most vulnerable. Her observation underscores a fundamental macroeconomic link: as oil prices rise, net importers face deteriorating trade balances and imported inflation, pressuring their currencies and widening economic fragility.

Equity Markets Reverse on Risk Aversion

MSCI’s Emerging Market equities index fell as much as 1.3%, as equity investors reassessed the risk-return balance amid fears of escalating conflict and oil-related shocks. Taiwan’s stock exchange experienced some of the steepest losses, driven in part by a broad retreat in semiconductor stocks. This reaction was not only tied to geopolitical developments but also to renewed speculation that the U.S. may revoke waivers allowing tech firms to supply China — signaling the potential for a broader geopolitical decoupling in critical industries.

The sudden shift in sentiment could threaten the rally in local currency bond markets that has persisted in recent months. Investors had been moving into emerging market bonds amid weakening dollar expectations and a dovish global outlook. However, geopolitical instability may reverse this flow, particularly if energy-driven inflation forces central banks to reassess rate paths.

A striking indicator of market fragility is the growing inverse correlation between oil prices and the Asia Dollar Spot Index, which reached -0.45 — its most negative level since March 2022. This statistic highlights a structural relationship: oil price shocks exert downward pressure on regional currencies, reinforcing volatility and exit risk for foreign investors.

Strategic Forecasts and Exposure Assessment

Wells Fargo identified the Indian rupee, South Korean won, Thai baht, and Philippine peso as the most exposed to further depreciation. The firm highlighted that the won and baht are particularly vulnerable due to high levels of speculative positioning. This makes them susceptible to rapid unwinding during risk-off periods, compounding short-term currency weakness and market instability.

According to Robin Brooks of the Brookings Institution, prior to the strike announcement, investor sentiment had been heavily skewed in favor of emerging markets. The sudden geopolitical shock thus risks triggering a sharp reversal in portfolio flows, exacerbating downward pressure on asset prices in these economies.

The U.S. strike on Iran has introduced a fresh layer of uncertainty to global markets, with emerging markets particularly exposed due to their dependency on imported energy and vulnerability to capital flight. If tensions persist or escalate, markets may experience prolonged volatility, forcing policymakers in Asia and beyond to adopt defensive interventions. As oil prices become a new macroeconomic risk anchor, the sustainability of EM capital inflows and exchange rate stability is now deeply contingent on geopolitical developments in the Middle East.

Source: Bloomberg

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Glendon

Economic

Forex

The euro area’s private sector barely grew in June, remaining in limbo as erratic US trade policy and geopolitical conflicts leave companies in the dark on what’s next.

The Composite Purchasing Managers’ Index by S&P Global held at 50.2, remaining just above the 50 threshold separating growth from contraction, data Monday showed. Economists had anticipated an acceleration to 50.5. Services made it back to the vital 50 level as well, while manufacturing stayed at 49.4 — failing to grow for a 36th month.

“The euro-zone economy is struggling to gain momentum,” said Cyrus de la Rubia, an economist at Hamburg Commercial Bank. “For six months now, growth has been minimal.”

The data suggest economic output in the second quarter will be constrained. That would match the view of economists, who predicted in the latest Bloomberg survey that gross domestic product will stagnate in the three months through June — held back by massive uncertainty over US President Donald Trump’s tariff push and wars in Ukraine and the Middle East.

The survey was conducted June 12-19, before US strikes on Iran over the weekend. The final readings for the month will be published in the first week of July.

National PMI numbers on Monday were mixed: While Germany unexpectedly returned to growth after just one month of contraction, France again stayed under the 50 threshold. It’s been in that territory since September and de la Rubia highlighted that the euro area’s second-biggest economy “continues to drag its feet.”

The European Central Bank expects the region to expand just 0.9% this year — even as inflation now seems to be tamed. That allowed the ECB cut for an eighth time this month, though a hold is now widely expected at the July meeting and some policymakers have suggested the easing cycle may be over.

“The ECB can remain relatively calm, as the strong euro and the deflationary effect of US tariffs argue against a short-term rise in inflation,” de la Rubia said.

The PMI numbers come at the start of a big week in European politics, with heads of state and government first meeting in The Hague for their annual NATO summit and then in Brussels. The North Atlantic Treaty Organization is attempting to raise military spending goals, something that could help boost economic output across the region.

PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.

PMI data earlier on Monday revealed continued expansion in Japan, India and Australia, and UK and US numbers are also expected to show readings above 50.

Source: Bloomberg Europe

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Gerik

Economic

Commodity

Soaring Gold Prices Drive Informal Mining Surge

Amid a global gold rally with prices exceeding $3,300 per ounce, mine operators in West Africa are intensifying surveillance and enforcement efforts to combat the dramatic rise in wildcat mining. At Gold Fields' Tarkwa mine in Ghana, drones now patrol a 210-square-kilometer area, scanning for illicit activity masked by thick vegetation. The drones act as real-time intelligence tools, allowing rapid deployment of security teams. Recent drone footage led to a police-led raid that uncovered makeshift gold processing operations tainted with mercury and cyanide.

The motivation behind this push is direct: rising gold prices are incentivizing a rapid uptick in artisanal mining that undermines both the safety of workers and the profitability of licensed operations. This relationship is causative: higher market prices attract more informal miners, which in turn increases confrontations and threatens production.

Escalating Violence and Operational Disruption

The resurgence of wildcat mining is not just an environmental or legal issue—it’s becoming a violent struggle. Since late 2024, at least 20 illegal miners have died during confrontations at industrial mines operated by global firms such as Newmont, AngloGold Ashanti, and Nordgold. Although mine staff have remained unharmed, the clashes have halted production at multiple sites for up to a month, illustrating how security issues translate into material economic losses.

These confrontations often arise when miners forcibly enter secured concessions. At AGA’s Obuasi mine in Ghana, nine individuals were fatally shot in January after breaching the perimeter to extract gold. Similar incidents have occurred in Guinea and Burkina Faso. These cases demonstrate not just the volatility of informal mining, but its capacity to overwhelm state and corporate control mechanisms in fragile regions.

Underground Economies and Community Discontent

Roughly 30% of West Africa’s gold is extracted through informal channels. The UN estimates that 3–5 million individuals across the region depend on unregulated mining for survival. This economic reliance creates a complex relationship between large-scale mines and surrounding communities. Residents like Senegal’s Famanson Keita express disillusionment over promises of development and stable employment made by corporations—promises that often remain unfulfilled. For many, informal mining becomes not just a livelihood, but a necessity.

The transition from small-scale traditional mining to organized wildcat operations has also changed the nature of the threat. Local cartels and foreign financiers, particularly from China, now supply equipment and labor to informal mining outfits, expanding operations into protected forests and national water reserves.

Supply Chain Theft and Environmental Damage

Smuggling is an entrenched issue. Between 2019 and 2023, Ghana alone lost over 229 metric tons of gold—mostly from artisanal sources—due to untracked exports, according to NGO Swissaid. Marc Ummel from Swissaid identifies porous borders and weak regulatory oversight as primary contributors. The problem is not only economic; environmental degradation is widespread, with mercury contamination and deforestation posing long-term risks to ecosystems.

Corporate leaders also cite competition for ore bodies. Artisanal miners often reach depths of up to 100 meters, encroaching on ore reserves of licensed operators and effectively shortening the lifespan of official mines. These mining overlaps introduce direct financial losses, illustrating how informal mining competes not only in labor but also in resource extraction itself.

Militarization and Surveillance: A New Strategy

In response to the crisis, mining firms are spending significant capital on security upgrades. One major operation in Ghana now allocates roughly $500,000 annually to drone surveillance, patrols, and protective infrastructure. Yet incursions persist. Operators such as Nordgold, Galiano Gold, B2Gold, and Barrick Gold have all reported unauthorized access to their concessions in recent months.

Consequently, mining companies are lobbying for greater state protection. In Ghana, firms have requested military presence at high-risk sites. The Ghana Chamber of Mines reported that industry officials met with government leaders in April to request prioritized deployments. While discussions yielded tentative government support, companies were asked to shoulder the costs—estimated at $18,116 per day per military contingent.

Embracing AI to Regulate Mining Zones

Technological escalation is another line of defense. Ghana’s Minerals Commission is developing an AI-powered command center that integrates real-time data from 28 drones patrolling illegal mining hotspots. The initiative includes GPS-tracking excavators and a central system capable of remotely disabling machines operating beyond permitted areas. According to consultant Sylvester Akpah, this approach could tilt the balance in favor of official regulation—if fully embraced and resourced.

As the gold market rallies, West African mining firms are confronting a dual challenge: defending their assets against increasingly organized and well-funded wildcat miners, while navigating the social unrest and economic desperation that drive these underground economies. While drones, AI, and military partnerships may offer short-term deterrents, the broader solution demands deeper engagement with local communities and long-term employment pathways. Until then, gold’s rising value will continue to invite conflict at the edge of legality.