summary:
- Iran fired missiles and drones at US military sites in Kuwait and Bahrain over the weekend; The United States responded, but the two sides agreed on Sunday to cease hostilities and return to talks in Qatar, scheduled for Tuesday, over the dispute over the Strait of Hormuz.
- Ship transits in the Strait of Hormuz fell to 48 during June 26-28, down from 70 on Wednesday, highlighting the fragility of the ceasefire and the pace of shipping recovery.
- Analysts warn that it could take the rest of the year before oil supplies in the Persian Gulf approach pre-conflict levels, as a backlog of tankers, damaged infrastructure and production shutdowns restrict physical flows.
- Oil prices rose at Monday’s open on weekend strikes before gains were capped by a renewed ceasefire and talks announcement. Gold fell as oil prices rose, reducing safe-haven demand
- A helicopter crash at Saudi Aramco’s Ras Tanura terminal killed 14 citizens on Sunday. The downloading operations continued and the reason remained unknown
- The People’s Bank of China (PBOC) first launched overnight reverse repo operations, offering 300 billion yuan to financial institutions without disclosing the borrowing price, surprising traders who were waiting for guidance.
- China has added 20 Japanese entities to its dual-use export control list, including the National Institute for Defense Studies and subsidiaries of Mitsubishi, Komatsu and Fujitsu, citing Japan’s rearmament and nuclear ambitions.
- South Korean stocks fell by more than 1% as chip makers declined due to losses from Friday’s American session. President Lee unveiled a $651 billion investment program in artificial intelligence, semiconductors and robotics
- Retail sales in Japan in May rose 5.3% year-on-year, the strongest since November 2023, beating all estimates. The draft economic blueprint targets real growth above 1% and nominal growth above 3% with investments worth $2.29 trillion through 2040, with the Bank of Japan urged to align policy with the government’s growth agenda.
Oil markets opened the week under a familiar cloud, with the US-Iran ceasefire once again the dominant price driver after a weekend of missile and drone exchanges, giving way to a new agreement to step down and return to talks, this time in Qatar and focused squarely on the mechanics of the Strait of Hormuz passage.
The rise in crude oil prices was real but contained. Analysts were quick to temper optimism about a rapid recovery in supplies, noting that a backlog of tankers, damaged infrastructure and production halts mean that physical flows from the Persian Gulf may remain restricted through the remainder of the year even if the diplomatic path continues. Traffic data in the strait reinforced this point: ship crossings through the strait fell to 48 during the period from June 26 to 28, down sharply from 70 on Wednesday before the latest round of strikes. Gold fell as oil movement absorbed the risk premium. At Aramco’s Ras Tanura terminal, loading operations continued despite a helicopter crash that killed 14 citizens on Sunday, without knowing the cause.
Elsewhere in the region, China has moved on two fronts. The People’s Bank of China launched its reverse repo operations for the first time overnight, injecting 300 billion yuan without disclosing the borrowing price in a move that missed traders who expected guidance on pricing the new instrument. Separately, Beijing added 20 Japanese entities to its dual-use export control list, including defense research and industrial names, citing Tokyo’s rearmament agenda.
In stock markets, South Korean stocks fell more than 1% with chipmakers tracking US losses on Friday, even as President Lee unveiled a $651 billion investment program in artificial intelligence and semiconductors. Japan provided a brighter domestic reading: May retail sales rose 5.3% year-on-year, the strongest reading since November 2023, while the draft economic blueprint set an ambitious real growth target of more than 1% and called on the Bank of Japan to maintain policy supportive of the government-led economic recovery drive.
