U.S. Launches Strikes on Iranian Targets; EIA Lowers Oil Price Forecasts

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Summary:

The U.S. military said it has begun a series of strikes against Iranian targets; the EIA has lowered its Brent crude oil price forecasts for this year and next...

Highlights

1. U.S. military says it has begun a series of strikes against Iranian targets.

2. France's far-right leader announces bid for the presidency.

3. U.S. reinstates sanctions on Iranian oil.

4. EIA lowers Brent crude price forecasts for 2026 and 2027.

5. Williams: Falling energy prices make him more optimistic about the inflation outlook.

6. U.S. trade deficit widens to its largest level in more than a year.

7. Bank of England warns of multiple risks emerging simultaneously.

Details

U.S. Military Says It Has Begun a Series of Strikes Against Iranian Targets

On July 7 (local time), the U.S. Central Command (CENTCOM) announced that its forces had launched a series of powerful strikes against Iranian targets in response to Iran's attacks on commercial vessels operated by civilian crews in international waterways.

CENTCOM stated that the strikes were carried out in retaliation for Iran's attacks on three merchant ships transiting the Strait of Hormuz. It added that Iran's actions were unjustified, dangerous, and constituted a clear violation of the ceasefire agreement.

France's Far-Right Leader Announces Presidential Bid

On the evening of July 7 (local time), Marine Le Pen, leader of France's far-right National Rally parliamentary group, announced during an appearance on TF1 television that she would run in the 2027 French presidential election.

Le Pen has performed strongly in recent opinion polls. She has previously run for president three times, reaching the runoff in both 2017 and 2022 before losing to incumbent President Emmanuel Macron. Earlier that day, the Paris Court of Appeal upheld her conviction in an embezzlement case but modified her sentence, allowing her to remain eligible to contest the 2027 election.

U.S. Reinstates Sanctions on Iranian Oil

According to the U.S. Treasury Department's Office of Foreign Assets Control (OFAC) on July 7 (local time), the United States has revoked a general license that had authorized the sale of Iranian oil. Wind-down transactions will be permitted until 12:00 a.m. EDT on July 17. International oil prices rose following the announcement, while Iran has yet to issue an official response.

According to anonymous U.S. officials, preliminary evidence indicates that Iran recently opened fire on three commercial vessels in the Strait of Hormuz. The officials described the incident as completely unacceptable and warned that it would have consequences. They also stressed that despite the escalation, U.S. negotiators remain committed to pursuing a final agreement with Iran in good faith.

On June 22, U.S. Treasury Secretary Scott Bessent announced a 60-day general license as part of the U.S.-Iran negotiating framework, authorizing the production, delivery, and sale of Iranian oil. According to the OFAC notice issued at the time, transactions involving Iranian crude oil, petrochemical products, and petroleum products that had previously been prohibited under various U.S. executive orders and regulations were exempted through August 21, 2026.

EIA Lowers Brent Crude Price Forecasts for 2026 and 2027

The U.S. Energy Information Administration (EIA), in its latest Short-Term Energy Outlook (STEO), said that disruptions to global oil production and trade flows caused by the Iran conflict are expected to be fully resolved by the end of this year.

The agency lowered its Brent crude price forecasts by $13 per barrel for 2026 and $14 per barrel for 2027, while raising its forecast for U.S. oil production this year.

The EIA now expects Brent crude to average $82 per barrel in 2026, down from its previous forecast of $95, and $65 per barrel in 2027, compared with the previous estimate of $79. It also projects WTI crude to average $76.26 per barrel in 2026, down from $88.32, and $60.76 per barrel in 2027, compared with the previous forecast of $74.39.

Williams: Falling Energy Prices Make Him More Optimistic About Inflation

New York Fed President John Williams said he has become less concerned about inflationary pressures in the economy.

"Inflation remains too high," Williams said, "but with energy prices expected to decline, I have become somewhat more optimistic about the near-term inflation outlook." However, he did not indicate that this assessment would alter his long-standing monetary policy stance.

U.S. Trade Deficit Widens to Largest in More Than a Year

The U.S. trade deficit widened in May to its largest level since March 2025, as exports declined while imports increased.

Data released Tuesday by the U.S. Department of Commerce showed that the trade deficit in goods and services expanded 42.2% month-on-month to $77.6 billion. Exports fell 3.2%, mainly due to weaker non-monetary gold exports, while imports rose 3.3%.

In previous months, stronger exports of crude oil and petroleum products—boosted by the Iran conflict—had helped offset a surge in capital goods imports related to domestic data center construction.

The report also showed continued growth in petroleum exports. Imports of computer components and semiconductors increased again, while imports of computers and telecommunications equipment declined. Recent PMI surveys suggest that imports may also have been supported by businesses stockpiling goods to avoid potential supply chain disruptions and price increases linked to the conflict. The May trade data is expected to help economists refine their estimates for second-quarter GDP growth.

Bank of England Warns of Multiple Risks Emerging Simultaneously

Bank of England Governor Andrew Bailey said the central bank is concerned that a range of risks facing banks and other financial institutions could materialize at the same time.

Speaking after the release of the Bank of England's semiannual Financial Stability Report, Bailey said that the Middle East conflict, volatility in sovereign bond yields, rising market interest rates, and risks in high-yield credit markets all pose potential threats. The report also warned of risks associated with artificial intelligence.

Bailey added that several financial vulnerabilities have become more pronounced since the previous report, particularly increased leverage in equity markets. The Financial Policy Committee is especially concerned that some of these vulnerabilities could emerge simultaneously.

Today's Focus

10:00 (UTC+8) Reserve Bank of New Zealand Interest Rate Decision (July)

11:00 (UTC+8) RBNZ Governor Christian Hawkesby holds a monetary policy press conference

15:00 (UTC+8) ECB Governing Council member Kocherlakota speaks

19:30 (UTC+8) ECB Governing Council members Joachim Nagel and Dolenc speak

20:00 (UTC+8) ECB Governing Council member François Villeroy de Galhau speaks

21:30 (UTC+8) ECB Governing Council member Pereira speaks

22:00 (UTC+8) U.S. May Wholesale Sales MoM

00:00 (UTC+8) ECB Governing Council member Kocherlakota speaks

02:00 (UTC+8) Federal Reserve releases the minutes of its latest monetary policy meeting

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