Gold fell about 3 percent on Friday after a stronger-than-expected US jobs report reinforced expectations that ‌the Federal Reserve will keep interest rates higher for longer amid inflation concerns fuelled by the war in the Middle East.

Spot gold was down 2.96 percent at $4,341.52 per ounce at 1:44 p.m. EDT (1744 GMT), after falling ​to its lowest level since March 24 earlier in the session. Bullion was down ​about 4.3 percent this week.

US gold futures for August delivery settled 3.1 percent lower at $4,365.3.

Nonfarm ⁠payrolls increased by 172,000 jobs in May after rising by an upwardly revised 179,000 ​in April, the US Labor Department’s Bureau of Labor Statistics said in its report. A Reuters ​poll had forecast a gain of 85,000 jobs after a previously reported rise of 115,000 in April.

“We’ve got payrolls that came in fairly significantly over what was expected,” said Bart Melek, global head of commodity strategy ​at TD Securities.

“In light of the fact that we continue to have the war in ​Iran and very large energy prices and inflationary pressures, it makes it quite unlikely that the Fed is ‌in ⁠any mood whatsoever to lower rates. The implication for gold here is that the cost of carry is getting quite high.”

US Treasury yields jumped after the release of the jobs data, increasing the opportunity cost of holding non-yielding bullion.

The price of Brent crude oil was on track ​for a weekly gain. ​Bullion has fallen more ⁠than 17 percent since the US-backed war with Iran began in late February. The conflict has led to a surge in oil prices and stoked fears of ​inflation and higher interest rates.

Although gold is seen as an inflation hedge, ​higher rates tend ⁠to weigh on the metal. Markets are currently pricing about a 72 percent chance of a Fed rate hike in December, according to CME Group’s FedWatch tool, compared to about 50 percent before the jobs data.

Gold demand ⁠was ​subdued in India this week, while premiums in China ​eased.

Two decades of state investment have transformed Turkey into a major exporter of drones and other military equipment, and the NATO member is now looking to build on that momentum as the West rearms and security alliances are reshaped.

Turkey, once heavily reliant on foreign arms makers, now supplies nearly 40 countries mainly in the Gulf, Africa, Asia and parts of Europe with weapons that many buyers see as cheaper, faster to deliver and more adaptable than alternatives.

As European governments reassess security dependencies following Russia's invasion of Ukraine and question the durability of US guarantees, many NATO allies increasingly see Turkey not only as a military bulwark on the alliance's south-eastern flank but also as a potential industrial partner.

Ankara hopes hosting US President Donald Trump and other NATO leaders at a summit next month will help expand arms sales and joint production in Western markets, particularly the European Union. There, Turkish firms face structural barriers including members-only defence initiatives and political resistance tied to broader diplomatic disputes.

A Reuters review of trade figures shows Turkish defence exports - including the high-profile armed drones used by Ukrainian forces - have more than tripled since 2021 to $10 billion last year, accounting for about 3.7% of total exports from the major emerging market economy.

Exports to Europe and the US almost quadrupled over the same period to $5.6 billion.

That growth reflects a maturing domestic defence industry that includes drone-maker Baykar, Turkish Aerospace Industries, and smaller firms such as Arca Defense and Kale.

Analysts say sustained state backing, flexible supply chains and a willingness to customise systems for buyers have allowed such firms to move quickly into markets where Western suppliers face capacity constraints or lengthy procurement cycles.

War threats and opportunities

Turkey aims to double defence exports in two years, its defence agency says, potentially generating vital revenues as it looks to pay down debt and fund further development.

Sitting between two major conflicts - Ukraine to the north and Iran to the south-east - Turkey's own security is also at stake, given its gaps in air defences and jet and tank engines that could be addressed through trade and technology deals.

Can Kasapoglu, senior fellow at the Hudson Institute, said Turkey's defence industry had made a "major leap" by exporting advanced systems, especially aerial drones.

The war in Ukraine, he said, underscored that modern warfare depended not only on cutting-edge platforms but also on industrial depth and sustainability - areas where Turkey has gained credibility.

Nato summit showcase

Turkey supplies about 65% of armed drones used worldwide and is a major exporter of ammunition. It also produces, or plans to produce, frigates, an aircraft carrier, air defence systems and armoured vehicles. Indonesia said last year it would buy 48 Turkish fighter jets currently under development.

Turkey's ambitions also carry political and reputational risks. Last month, it unveiled a prototype domestic intercontinental ballistic missile at a defence show in Istanbul, prompting criticism from some experts over feasibility and messaging after a promotional video depicted a hypothetical launch that appeared to target North America.

Turkish officials say the defence sector will be a focal point at the NATO meeting in Ankara on 7–8 July. Alliance chief Mark Rutte has said a planned defence industry forum there would be NATO's most comprehensive yet.

Oil ​prices fell on Friday as traders gained confidence that renewed conflict between the US and Iran ‌was growing less likely.

Brent crude futures settled at $93.09 a barrel, down $1.94 or 2.04 percent. The previous session, Brent settled 2.84 percent lower.

US West Texas Intermediate crude finished at $90.54 a barrel, down $2.50, or 2.69 percent, following a 3.1 percent loss on Thursday.

“The market is not seeing ​escalation between the parties,” said Phil Flynn, senior analyst at Price Futures Group. “Even though we don’t ​have a deal, it seems the market is seeing a de-escalation.”

Petroleum Development Oman said operations at Mina al Fahal port were unaffected after three sources told Reuters that oil loading had been ​suspended following an explosion near its mooring berths. Oman exports 800,000 to 900,000 barrels per day of crude from the ​terminal.

Both contracts still looked set to post their first weekly gains in three weeks, with Brent up 1.18 percent and WTI around 3.64 percent.

The contracts rose earlier in the week after fighting flared in the Middle East as US-Iran war peace talks dragged ​on while traffic in the Strait of Hormuz, where a fifth of the world’s oil passes, remained limited.

“As ​hopes for an agreement between the US and Iran were dashed once again, the price of Brent crude and European ‌natural gas rose slightly this week,” Commerzbank analysts said on Friday.

However, Brent’s gains have been capped by oil inventories lasting longer than expected, rerouted exports and falling demand, Commerzbank added.

Hezbollah leader Naim Qassem rejected on Thursday a US-brokered agreement between Israel and the Lebanese government to halt the fighting. Iran has made a ceasefire in Lebanon a ​condition for any peace deal ​with Washington.US President Donald ⁠Trump said on Thursday he believed progress was being made between Israel and Lebanon and that Lebanon deserved to have peace.

“Any optimism remains heavily clouded by a ​tangled web of headlines and counter-headlines,” IG market analyst Tony Sycamore said in ​a note.

Opec is ⁠sticking to its oil demand growth forecast of 1.2 million bpd for this year, Secretary General Haitham Al Ghais said on Thursday, despite the Middle East conflict and closure of the Strait of Hormuz.

Iranian oil exports have fallen to their ⁠lowest level ​in six years mainly due to the US naval blockade, according ​to shipping data, although weak demand in China has depressed prices for the oil.

Bitcoin dropped below $60,000 on Friday, its lowest level since October 2024, just before Donald Trump’s election, which propelled it to a record high.

The currency fell by about 6 percent around 1615 GMT, to $59.7709, before paring its losses slightly.

The election of Trump, a staunch advocate of cryptocurrencies, to the White House for a second term in November 2024 sparked a wave of enthusiasm in the sector, sending the price of bitcoin soaring to nearly $110,000.

The current dip has been caused by factors including one corporate selloff, according to Emma Bernuau, a consultant at Eurosagency.

A surprise sale by Strategy -- one of bitcoin’s most prominent corporate holders -- rattled confidence. The firm revealed it had sold 32 BTC from its reserves, the first such disposal in several years.

“Although the amount was minimal, the symbolic significance is considerable,” Bernuau said.

“The market had generally considered that Strategy had no intention of selling its bitcoin and would continue accumulating regardless of market conditions.”

Bernuau said long-term investors could view the dip as a buying opportunity, and flagged several potential tailwinds including progress on US legislation to support the sector.

OpenAI is planning its biggest ChatGPT overhaul yet, aiming to turn it into a "superapp" with coding tools and AI agents to boost revenue ahead of a potential stock market listing, the Financial Times reported on Sunday.

The changes are part of a broader reorganisation at OpenAI, as it shifts resources to target lucrative enterprise clients and intensify competition with rival Anthropic, the report said, citing more than a dozen current and former employees.

Reuters could not immediately verify the report. OpenAI did not immediately respond to Reuters' request for comment.

The overhaul will give greater prominence and resources to OpenAI's coding product Codex and is set to roll out in the coming weeks, initially appearing as updates to ChatGPT's website and mobile apps, the FT said.

To drive uptake, OpenAI is redesigning ChatGPT's interface with new prompts and features steering users towards coding tools, image generation and partner services such as Canva and Booking.com, the report added.

Most Codex users are paying customers, while 2 million businesses account for about 40% of OpenAI's revenue, FT said, adding that the company expects that share to rise to 50% by year-end.

ChatGPT serves more than 900 million weekly active users, OpenAI said earlier this year, adding that it had surpassed 50 million consumer subscribers.

Reuters reported in May that OpenAI was preparing a confidential US IPO filing in the coming weeks. However, CEO Sam Altman has said the company is not focused on timing and will go public when it makes sense.

India has hiked domestic cooking gas price by Rs 29 per cylinder, in the second increase in three months as state-owned fuel retailers continue to grapple with elevated global energy costs due to West Asia conflict.

The price of a 14.2-kg domestic cooking gas cylinder in Delhi will rise to Rs 942 from Rs 913 with effect from 7 June, Indian media reported today citing industry sources.

The latest increase follows a Rs 60-per-cylinder hike on 7 March after the conflict in West Asia disrupted global energy supplies and drove up international fuel prices.

Industry sources said the increase had only partly offset losses incurred on domestic LPG sales.

Petrol and diesel prices have been raised by a cumulative Rs 7.50 per litre since mid-May while compressed natural gas (CNG) rates were increased by around Rs 6 per kg.

Meanwhile, the Petroleum And Natural Gas Ministry said in a statement today recipients of subsidized cooking gas under a special scheme for women will receive Rs 300 a cylinder on the first four refills each year.

The effective cooking gas price under the subsidized scheme for women for the first four cylinders at Rs 642 is at a discount of about 60% to the actual international price of an LPG cylinder, it said.

The statement said cooking gas cylinders in India are cheaper than in any neighbouring country and far below the price in advanced economies such as the United States, Australia and Canada.

The cost of supplying a cylinder has risen to over Rs 1,600, an under-recovery of about Rs 700 on each domestic cylinder.

The prices of petroleum products in India are linked to the corresponding prices in the international market.

What the household does not bear the brunt of is the several hundred rupees a cylinder which the government is bearing.

As the West Asia conflict tightened the Strait of Hormuz, through which roughly a fifth of the world's oil and a large share of India's energy imports pass, most commercial traffic in the waterway was brought to a near halt.

About 54 per cent of India's LPG consumption was routed through the Strait, leaving the cooking-gas supply directly exposed to the disruption.

However, India was among the few that kept its energy cargoes moving. In fact, India brought out the largest number of energy-carrying without paying any toll.

Besides, sourcing was widened to suppliers across the world, including those that do not route through the Hormuz Strait, like the United States, Canada and Algeria and available LPG was directed to households and to priority users such as hospitals and educational institutions.

The ministry said measures were taken to secure supply through the disruption. On the supply side, domestic LPG production was raised by more than 60 per cent to offset the constrained imports.

OPEC+ is set to agree on Sunday a fourth increase in oil output targets in as many months, three OPEC+ sources said, even though the US war with Iran is still preventing several of the group's members from pumping more.

The war has cut oil flows via the Strait of Hormuz, creating the world's biggest ever supply crisis as key OPEC+ members including Saudi Arabia have been unable to supply customers in full since the end of February. The crisis for OPEC+ deepened when the United Arab Emirates left the Organization of the Petroleum Exporting Countries after almost 60 years.

Seven core members of OPEC+, which groups OPEC and allied producers including Russia, have increased their output quotas from April to June by almost 600,000 barrels per day.

In reality, the group's production has collapsed due to export cuts by Gulf members, averaging 33.19 million bpd in April versus 42.77 million in February, according to OPEC figures.

On Sunday, the seven members will likely increase targets by about 188,000 bpd from July, the sources said. This is the same as the June hike, which was adjusted down from monthly increases of 206,000 bpd in May and April to take into account the UAE exit.

All the sources spoke on condition of anonymity and said a final decision had not been made.

The seven of 21 OPEC+ members due to meet on Sunday are Saudi Arabia, Iraq, Kuwait, Algeria, Kazakhstan, Russia, and Oman.

A full OPEC+ ministerial meeting is also scheduled for Sunday but is not expected to make any policy changes, the sources said.

The global airline industry nearly halved its ​2026 profit forecast on Sunday, citing conflict in the Middle East that has driven up fuel costs, disrupted key air ‌corridors and exposed the fragility of a sector operating on thin margins.

The International Air Transport Association, which represents more than 370 airlines accounting for about 85 percent of global air traffic, said in its annual report that it now expects the industry to post a combined net profit of $23 billion in 2026, well below a previous projection of ​about $41 billion and down from $45 billion in 2025.

The downgrade underscores airlines’ exposure to geopolitical shocks and fuel volatility, even as passenger ​demand remains resilient, planes are flying fuller and revenues are set to rise to more than $1.1 trillion.

“There are two major factors: one is the significant increase in jet fuel prices, which has gone way higher than I think anybody would have expected, and ​then the disruption to the airlines in the Gulf region, so that combination has led us to reduce the forecast,” IATA Director General Willie Walsh ​told Reuters at the group’s annual meeting in Rio de Janeiro.

Walsh said he expects some smaller airlines to go bankrupt or be taken over by bigger carriers this year and next as higher fuel costs bite. US low-cost carrier Spirit Airlines shut down last month, the first airline casualty of the Iran war.

Airlines are also expected to cut ​unprofitable routes to protect margins, while fares - which have surged since the start of the Iran war - are unlikely to fall soon, Walsh said.

“In ​an environment where demand remains pretty robust, but capacity comes down, that will likely lead to a situation where fares will remain elevated,” Walsh said.

The Middle East conflict, triggered by US and Israeli airstrikes on Iran, has forced airlines to reroute flights around closed or restricted airspace, adding hours to some journeys, increasing fuel burn and straining already tight capacity.

At the same time, oil prices have surged on fears of supply disruption, pushing jet fuel prices sharply higher and widening refinery margins, leaving airlines facing a steep jump in their largest cost.

Gulf airlines such as Emirates, Qatar Airways ​and Etihad Airways face the greatest ​operational uncertainty after a near-complete shutdown of regional airspace at the start of the conflict.

Walsh said most regions should remain profitable, though at lower levels, while Middle East airlines are likely to slip into the red due to the conflict and weaker ​demand.

IATA expects airlines’ fuel bill to surge to about $350 billion this year from roughly $252 billion in 2025, with ​fuel accounting for ⁠nearly a third of operating costs.

That is eroding profitability per passenger, with airlines now expected to earn about $4.50 per passenger, roughly half last year’s level.

On the upside, IATA expects industry revenues to rise 9.4 percent to around $1.16 trillion this year, driven by steady travel demand, higher fares, and growing income from extras such ⁠as seat ​upgrades and onboard services.

Aircraft shortages are also squeezing the sector. Delivery delays at Boeing and ​Airbus are forcing airlines to keep older, less fuel-efficient planes in service for longer, raising maintenance bills and blunting efforts to improve margins, Walsh said.

Global oil inventories are running dangerously low as a deal to re-open tanker traffic through the Strait of Hormuz has proven elusive, and industry executives and analysts warn there could be another oil price shock in the ​coming weeks, severe enough to upset broader financial markets.

Some fear the next move higher for oil prices would pose a risk to economic growth, bond yields and the bull market ‌for stocks. “We’re approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that’s going to hit those really low levels in two weeks or three weeks. But once you get to that point, you’ll see prices shoot up,” Neil Chapman, Exxon Mobil senior vice president, said at the Bernstein conference in New York on May 28.

Chapman said that if inventory levels get much lower, dated Brent, which is used to price more than 60 percent of globally traded crude, could rise to $150 ​or $160 a barrel.

Crude inventories and strategic reserve releases have kept oil prices somewhat under control in the four months that the war with Iran has kept supplies from reaching much of the world. ​Crude futures have been trading below $100 a barrel despite the strait remaining effectively closed.

For days, US President Donald Trump has said a deal to reopen the strait is imminent. But so far it has been elusive, and warnings from the oil industry have gotten sharper.

If stock draws continue at their current pace, sinking global oil inventories could hit critically low levels just as summer fuel demand hits ​its peak, the head of the International Energy Agency’s oil industry and markets division, Toril Bosoni, said on Tuesday.

“Once they (cushions) thin out, prices have to do more of the adjustment work. That means either consumers pay more or ​demand gets destroyed,” said Mehmet Beceren, vice president and senior market strategist at Rosenberg Research, who said a tipping point could be reached by the end of June.

If stock draws continue at their current pace, sinking global oil inventories could hit critically low levels just as summer fuel demand hits ​its peak, the head of the International Energy Agency’s oil industry and markets division, Toril Bosoni, said on Tuesday.

“Once they (cushions) thin out, prices have to do more of the adjustment work. That means either consumers pay more or ​demand gets destroyed,” said Mehmet Beceren, vice president and senior market strategist at Rosenberg Research, who said a tipping point could be reached by the end of June.

US crude stocks are down almost 64 million barrels since the start of the war, and have fallen ​for eight straight weeks.

The US is in the process of releasing 172 million barrels from the SPR, part of a coordinated effort by the IEA to release a record 400 million barrels of oil to combat rising prices.

Those stock releases alongside a ‌drop in Chinese seaborne crude imports, which in May hit the lowest level in nearly 10 years, have helped quell some of the supply shock.

“I think the risk of a second price shock is real, but the key point is that it may come from the exhaustion of buffers rather than from the initial Hormuz closure itself,” Shohruh Zukhritdinov, a Dubai-based oil trader, said.

Drawdowns in US strategic petroleum reserves, fuel substitution and other factors that have limited the price spike may not be enough if the disruption drags on, analysts in JPMorgan’s Data Assets and Alpha group said.

The White House did not respond to a request for comment.

KNOCK-ON EFFECTS

Investors said that the conflict has embedded a ​lasting risk premium in crude, with knock-on effects for ​inflation, bond yields and consumer spending.

Recent events suggest a lasting structural change in energy markets, said Joseph Tanious, chief investment strategist at Northern Trust Asset Management.

“The Strait of Hormuz is now firmly established as a persistent geopolitical chokepoint,” Tanious said, adding that a return to pre-war oil prices below $70 looked unlikely even if tensions eased.

As a result, he sees an uneven global impact, ​with Europe and Asia remaining more vulnerable to sustained energy inflation, while the US, a net exporter, is relatively better insulated.

Higher oil prices are “a modest headwind” ​for the US economy, said Adam ⁠Schickling, senior economist at Vanguard, thanks to domestic oil production and strong investments in artificial intelligence which have offset pressure on consumers.

Yet in a scenario where crude rises to around $120 per barrel and remains there for a year, US economic growth could slow by about 0.4 percentage points, according to Vanguard’s estimates.

For households, the impact depends less on the precise level of oil prices and more on how long they stay elevated. Consumers retain some buffer, with fuel costs ⁠accounting for a ​smaller share of income than in previous oil shocks. But that cushion diminishes over time.

If prices remained high through the next three ​months as the summer driving season begins, consumer spending could slow further, said Phil Blancato, chief market strategist at Osaic.

“Consumer sentiment is already at all-time lows, but if oil prices stay here for another three months, or move meaningfully higher in the short-term, start to ​look for a real economic impact,” Blancato said, urging portfolio diversification, including looking outside of equities.

US-traded chipmakers plunged on Friday, losing about $1.3 trillion in market value, with deep losses in AI heavy hitters including Nvidia, Micron Technology and Advanced Micro Devices, as Broadcom's weak report earlier this week reverberated across Wall Street.

The PHLX chip index slumped 10.3% in its steepest one-day loss since March 2020, when the coronavirus pandemic threw global markets into a tailspin.

Friday's sell-off added to losses on Thursday after Broadcom issued a quarterly report that showed demand for its custom AI chips business falling short of lofty expectations.

The PHLX's combined loss of 12% over two sessions shows investors are becoming more concerned about pricey, high-flying tech stocks just as Elon Musk prepares a blockbuster initial public offering next week for SpaceX at an exceedingly high $1.75 trillion valuation.

The chip index hit a record high on Wednesday, and even after Friday's losses it remains up 73% year to date.

Nvidia, the world's most valuable chipmaker, fell about 6%, cleaving more than $300 billion from its market capitalisation.

Micron Technology tumbled 13%, evaporating about $150 billion in market value. Recent investor darling Marvell Technology gave back 17%, while AMD lost almost 11%.

"You've had a lot of people here that were just blindly buying the dip," said Dennis Dick, a proprietary trader at Triple D Trading. "Blindly buying the dip had been winning you money, but that ended today."

Worries about higher interest rates also spooked investors across the US stock market following stronger-than-expected jobs data, and the S&P 500 fell 2.6%.

One of the biggest beneficiaries of the AI race, Broadcom, lost 7.9%, bringing its two-day loss to almost 20%.

"The semiconductor sector was way overbought. That's why we're seeing the sell-off. I don't think it's the end of the (semiconductor) bull market," said Ohsung Kwon, Chief Equity Strategist at Wells Fargo.

The dollar clung to its recent strength near a two-month ​high today (4 June) as fresh Gulf hostilities sapped risk appetite, while the Japanese yen hovered near ‌the key 160 level that kept traders on intervention alert.

Iran on Kuwait damaged its airport and injured dozens yesterday, while the US military carried out strikes near the Strait of Hormuz, complicating prospects for a diplomatic end to the war.

Although Israel and Lebanon ​agreed to a broader peace deal remained elusive, keeping oil prices elevated and supporting demand ​for the safe-haven dollar.

The euro was 0.1% stronger at $1.1609. The European ⁠Central Bank is set to raise its deposit rate to 2.25% on 11 June to curb inflation. The ​British pound traded flat at $1.3427 .

The risk-sensitive Australian dollar was steady at $0.7129 after data showed Australia's balance on goods trade swung ​back into surplus in April.

The New Zealand dollar rose roughly 0.3% to $0.5875, recovering from a one-week low.

The dollar index, which measures the greenback against a basket of currencies including the yen and the euro, was a shade higher at 99.45, hovering near the ​strongest level since 7 April in the previous session.

"The USD's safe-haven status appears to be strengthening again" with oil ​prices and global yields rebounding on geopolitical tensions, said Sim Moh Siong, FX strategist at OCBC.

"There is no strong case for ‌a bearish ⁠USD," he said, adding the bank stays neutral and expects a firm but range-bound greenback.

On the data front, yesterday's data showed a measure of prices paid by US services businesses jumped to the highest level in nearly four years last month, cementing economists' views that the Federal Reserve would hold interest rates unchanged well into next ​year.

The Japanese yen fetched 159.92 ​per dollar, off lows ⁠yesterday that pushed it past the critical 160-per-dollar mark for the first time since 30 April, triggering action from authorities.

The 160 level is widely seen in markets ​as a line in the sand for potential official intervention.

Bank of Japan Governor Kazuo ​Ueda cemented a ⁠June rate hike in a clear toward inflation fighting, as the Iran war-driven energy shock sharpens price risks and opens the door to more frequent increases in borrowing costs.

"The hawkish tone has strengthened further, including a clear expression of ⁠concern about ​behind-the-curve risk," wrote Naohiko Baba, head of Japan research and chief ​Japan economist at Barclays. "We stick to our June rate hike call."

Bitcoin hit a four-month trough and was last traded 1.3% lower at $63,984. Ether hit ​its weakest since April 2025 before gaining 0.6% to $1,791.

Britain floated the idea of striking a tech deal with the EU to boost ties in AI and other innovative sectors on Friday, as part of a push to rebuild post-Brexit relations.

UK business and trade secretary Peter Kyle said he discussed the possibility with EU trade chief Maros Sefcovic during a Brussels meeting focused on other bilateral issues.

“There are enormous opportunities out there for us to partner,” Kyle told a conference in the Belgian capital. “A tech partnership, for example.”

With its vast capital markets London could play a key role in helping scale-up tech firms to rival American and Asian giants, he said.

“We are the spin-out capital of Europe. We are the unicorn capital of Europe,” Kyle later told reporters, referring to the creation of new companies and start-ups valued at more than $1 billion.

“But I want to go much further, and we are much more likely to go global by working with European countries and the European Union.”

Britain signed a similar -- later-suspended -- deal to align on innovation and spur private-sector investment with the United States in September.

The idea of a repeat with the EU comes as London and Brussels painstakingly negotiate other matters under a “reset” in relations vowed by British Prime Minister Keir Starmer to fire up Britain’s insipid economy.

Kyle met Sefcovic as the EU and UK are due to hold a summit at a yet-to-be confirmed date, likely in July.

Both parties are hoping to present several deals, namely on food and animal safety standards, a youth mobility scheme, and the linking of their emissions trading systems, at the event.

But discussions have hit a series of roadblocks.

Britain is said to be wanting a cap on the number of visas granted under the mobility scheme and to be unwilling to pay into some EU funds as requested by Brussels.

The EU on the other hand has been demanding greater access to British universities for its 18- to 30-year-olds -- and for them to be allowed to pay the same tuition fees forked out by their local peers.

Kyle said he had “hope and optimism” concerning the summit, after what he described as a “positive” and “vigorous” conversation with Sefcovic.

Global oil inventories are running dangerously low as a deal to re-open tanker traffic through the Strait of Hormuz has proven elusive, and industry executives and analysts warn there could be another oil price shock in the coming weeks, severe enough to upset broader financial markets.

Some fear the next move higher for oil prices would pose a risk to economic growth, bond yields and the bull market for stocks.

"We're approaching unheard of inventory levels. I mean, really, really low levels. You can debate whether that's going to hit those really low levels in two weeks or three weeks. But once you get to that point, you'll see prices shoot up," Neil Chapman, Exxon Mobil senior vice president, said at the Bernstein conference in New York on 28 May.

Chapman said that if inventory levels get much lower, dated Brent, which is used to price more than 60% of globally traded crude, could rise to $150 or $160 a barrel.

Crude inventories and strategic reserve releases have kept oil prices somewhat under control in the four months that the war with Iran has kept supplies from reaching much of the world. Crude futures have been trading below $100 a barrel despite the strait remaining effectively closed.

For days, US President Donald Trump has said a deal to reopen the strait is imminent. But so far it has been elusive, and warnings from the oil industry have gotten sharper.

If stock draws continue at their current pace, sinking global oil inventories could hit critically low levels just as summer fuel demand hits its peak, the head of the International Energy Agency's oil industry and markets division, Toril Bosoni, said on Tuesday.

"Once they (cushions) thin out, prices have to do more of the adjustment work. That means either consumers pay more or demand gets destroyed," said Mehmet Beceren, vice president and senior market strategist at Rosenberg Research, who said a tipping point could be reached by the end of June.

"Once we move into the back half of June it is likely that we see oil prices rapidly appreciate" unless the Strait of Hormuz throughput normalises to pre-conflict levels, JPMorgan's Data Assets and Alpha group predicted, citing the bank's research.

In the US, the world's largest crude producer, crude inventories including the Strategic Petroleum Reserve fell to 791 million barrels in the week to 29 May, their lowest since February 2024, the Energy Information Administration said on Wednesday.

US crude stocks are down almost 64 million barrels since the start of the war, and have fallen for eight straight weeks.

The US is in the process of releasing 172 million barrels from the SPR, part of a coordinated effort by the IEA to release a record 400 million barrels of oil to combat rising prices.

Those stock releases alongside a drop in Chinese seaborne crude imports, which in May hit the lowest level in nearly 10 years, have helped quell some of the supply shock.

"I think the risk of a second price shock is real, but the key point is that it may come from the exhaustion of buffers rather than from the initial Hormuz closure itself," Shohruh Zukhritdinov, a Dubai-based oil trader, said.

Drawdowns in US strategic petroleum reserves, fuel substitution and other factors that have limited the price spike may not be enough if the disruption drags on, analysts in JPMorgan's Data Assets and Alpha group said.

The White House did not respond to a request for comment.

Knock-on effects

Investors said that the conflict has embedded a lasting risk premium in crude, with knock-on effects for inflation, bond yields and consumer spending.

Recent events suggest a lasting structural change in energy markets, said Joseph Tanious, chief investment strategist at Northern Trust Asset Management.

"The Strait of Hormuz is now firmly established as a persistent geopolitical chokepoint," Tanious said, adding that a return to pre-war oil prices below $70 looked unlikely even if tensions eased.

As a result, he sees an uneven global impact, with Europe and Asia remaining more vulnerable to sustained energy inflation, while the US, a net exporter, is relatively better insulated.

Higher oil prices are "a modest headwind" for the US economy, said Adam Schickling, senior economist at Vanguard, thanks to domestic oil production and strong investments in artificial intelligence which have offset pressure on consumers.

Yet in a scenario where crude rises to around $120 per barrel and remains there for a year, US economic growth could slow by about 0.4 percentage points, according to Vanguard's estimates.

For households, the impact depends less on the precise level of oil prices and more on how long they stay elevated. Consumers retain some buffer, with fuel costs accounting for a smaller share of income than in previous oil shocks. But that cushion diminishes over time.

If prices remained high through the next three months as the summer driving season begins, consumer spending could slow further, said Phil Blancato, chief market strategist at Osaic.

"Consumer sentiment is already at all-time lows, but if oil prices stay here for another three months, or move meaningfully higher in the short term, start to look for a real economic impact," Blancato said, urging portfolio diversification, including looking outside of equities.

SpaceX’s record-smashing IPO plan shows investors are eager to keep pouring money into all things AI, even as alarm bells ring for the wider economy.

And that has analysts wondering: Where will the cash come from if soaring inflation dents growth? Or if the artificial intelligence rollout proves less profitable than hoped?

HISTORIC INFLUX

Investment by AI labs is at historically “unprecedented” levels, with expected outlays by the 11 top American players over the next 12 months representing nearly three percent of US GDP, said Raphael Gallardo, chief economist at asset management group Carmignac in Paris.

At the beginning of this year confidence in that spending surge wobbled, with chipmakers and other tech hardware firms taking a hit on stock markets worldwide. But despite the outbreak of an ongoing war in the Middle East, “for now, those concerns largely have been dismissed by the markets” after reassuring profit reports, said Adam Sarhan of 50 Park Investments in New York.

“If you look at the actual earnings, those fears did not come to pass and in fact a lot of companies” committed to spend more on AI, Sarhan told AFP. Google for example announced this week that it would raise up to $80 billion for a major expansion of its AI infrastructure.

It said it was “compute constrained in the near term” -- jargon meaning it cannot build necessary infrastructure fast enough to meet demand. SpaceX meanwhile aims to raise $75 billion in an initial public offering expected next week, by far the largest IPO ever.

Its rivals OpenAI and Anthropic, behind ChatGPT and Claude respectively, are set to follow suit in the coming months, valuing the companies around a whopping $1 trillion.

GOBBLING UP CHIPS

Beyond US-based chatbot makers, companies worldwide have profited from the AI rush, especially chipmakers providing their computing power.

South Korea’s benchmark Kospi stock index for example has nearly doubled its value since January this year, propelled by chipmakers Samsung Electronics and SK hynix -- both also now trillion-dollar companies.

Those two companies alone account for half the Kospi’s market capitalisation.

“The fact that two companies make up such a large portion of the market highlights just how concentrated that dependence is, and that is the biggest risk factor,” said Kim Dae-jong, a professor at Sejong University.

In Taiwan, TSMC, a supplier to AI chip specialist Nvidia, represents on its own 40 percent of the Taipei stock market, while technology investor SoftBank in Japan this week surpassed Toyota as the country’s most valuable company.

In the United States, red-hot demand for Micron and Intel chips have seen their share prices more than double so far this year, while European equity benchmarks have soared thanks in large part to Infineon and STMicroelectronics.

TOO HOT FOR COMFORT

There are signs however that market expectations have outstripped the ability of companies to meet them.

This week the US chip specialist Broadcom saw its shares plunge despite its second-quarter profit having nearly doubled to $9.3 billion as its forecast for third-quarter chip revenue growth of over 200 percent failed to meet expectations.

“The support provided by huge capital inflows to AI and chip stocks is fading, exposing the often extreme overpricing in these sectors,” said Andreas Lipkow, analyst at CMC Markets.

“In a best case, investors will take profits ahead of the summer pause, and markets would have time to consolidate,” he said, especially if they sell tech holdings to buy the new SpaceX shares.

“If not, the likelihood of a major short-term correction on international equity markets remains high,” he said.

“These companies are cash cows and we’re in one of the biggest investment cycles in history”, said Frederik Ducrozet, head of macroeconomic research at Pictet Wealth Management in Switzerland.

But so far none of the three AI powerhouses -- SpaceX, Anthropic and OpenAI -- are turning profits, he noted, “which argues for more caution”, he said.

AI VS STAGLFATION?

Analysts and policymakers are worried that AI enthusiasm cannot escape the gravitational pull of soaring energy costs -- data centres suck huge amounts of electricity -- and slowing growth overall.

In the US alone, AI investments currently account for nearly nine-tenths of GDP growth overall -- overshadowing weak consumer demand and rising costs for small and midsize firms, said Gallardo at Carmignac.

“AI-related spending has become a huge part of the US growth story... the same handful of firms raising money, buying chips, leasing compute and booking revenues off one another,” added James Smith, an economist at ING.

“But the fact remains that if you strip out AI, the rest of US private non-residential investment has been falling year-on-year for six straight quarters,” he said.

And the situation could worsen if the US Federal Reserve, the European Central Bank and other central banks raise rates to contain energy-fuelled inflation, something many analysts consider inevitable.

The war in the Middle East has dented economic growth prospects worldwide, with a more severe shock likely if no effective ceasefire is agreed before 2027, the OECD warned today (3 June).

Global economic growth is now forecast to slip to 2.8% for 2026 if Gulf exports of oil and gas return to pre-conflict levels in the third quarter, the group of 38 industrialised countries said in its quarterly update.

Previously, the OECD had forecast full-year global growth of 2.9%.

But if the Mideast war continues into next year, global growth could slow to 2.1%, the OECD said -- well below the average annual growth of 3.45% seen from 2013 to 2019, before the Covid pandemic.

"The longer the disruptions last, the larger the economic and social costs become," the group's chief economist Stefano Scarpetta said in the report.

Many countries would risk falling into recession, he noted, and a drop in investment spending -- "including in energy-intensive AI" -- would likely push up unemployment.

Sustained high prices for energy as well as fertiliser and other key products from hydrocarbon production in the Gulf would weigh especially hard on developing countries that have "higher shares of energy and food in household consumption".

Even if the war sparked by US and Israeli strikes on Iran in late February ends in the coming weeks, the OECD forecasts global inflation rising to 4%this year from 3.4% in 2025.

In this "time-limited disruption scenario", the group expects US growth to slow to 2% this year and 1.8% in 2027, after growing 2.1% last year.

In the eurozone, where many countries are highly dependent on energy imports, GDP growth will slump to 0.8% this year after 1.4% last year, assuming a Mideast ceasefire is secured in the coming weeks.

The global economic outlook hinges on how long the war in the Middle East lasts, with recession in some countries and sharply higher inflation a real possibility if it drags on into next year, the Organisation for Economic Co-operation and Development warned on Wednesday.

If the conflict proves short-lived, Gulf oil and gas production could gradually return to pre-crisis levels from the third quarter with shortages confined to Asia and cushioned by strategic reserves and shipments from other producers.

If energy disruption persists well into next year, global growth could slow sharply to 2.1 percent in 2026 and 1.8 percent in 2027 - rates rarely seen outside major crises such as the 2008 to 2009 financial crash or the COVID pandemic.

Some economies could fall into outright recession, with Asian countries reliant on Middle East energy supplies expected to be hit hardest.

In the protracted disruption scenario, higher energy prices could add 0.4 percentage points to global inflation in 2026 and 1.3 percentage points in 2027, likely prompting central banks to hike interest rates by 0.5 to 0.75 percentage points in the short term.

In the baseline scenario, the OECD forecast that inflation across G20 economies would peak at 4 percent this year before slowing to 3.1 percent next year with interest rates largely on hold this year and cuts expected next year.

“Around one-third of OECD economies are projected to experience negative real wage growth this year.

Workers in these countries will see their living standards fall, which is the human reality behind the inflation numbers,” OECD Secretary General Mathias Cormann said.

Global trade growth is set to moderate following a strong 2025, though robust demand for AI-related goods and investment, especially in Asia, should provide some support.

In the baseline scenario, stronger energy exports are expected to support US growth, partly offsetting the drag from higher prices on household purchasing power. Growth is projected to ease from 2.1 percent in 2025 to 2.0 percent in 2026 and 1.8 percent in 2027.

In Europe, euro zone growth was seen slowing from 1.4 percent to 0.8 percent this year before rising to 1.2 percent next year as resilient labour markets and higher defence spending help offset government belt-tightening.

In Britain, growth is projected to slow to 0.9 percent this year before recovering to 1.1 percent in 2027 as global trade stabilises and financial conditions ease.

In Asia, China was seen slowing from 5.0 percent growth in 2025 to 4.5 percent in 2026 and 4.3 percent in 2027 with ample energy reserves limiting exposure to oil price spikes. Exports are set to benefit from lower US tariffs and a competitive tech sector, although a property slump remains a drag.

Japan is expected to be among the hardest-hit by trade disruptions linked to the Gulf conflict, with growth slowing from 1.1 percent in 2025 to 0.6 percent in 2026 before edging up to 0.8 percent in 2027, a downgrade from March.

While subsidies will help cushion the energy shock, the OECD said Japan needs a “clear and credible” plan to rein in public finances over the medium term as interest rates rise.

Any new US tariffs on European Union goods on top of the rates agreed last year would be unacceptable, senior EU lawmaker said on Wednesday, ​rejecting US claims the EU was not curbing trade in forced labour ‌goods as “utterly absurd”.

The US Trade Representative’s office on Tuesday proposed imposing additional duties of 10 percent or 12.5 percent on imports from 60 economies, including the European Union, saying investigations showed they failed to curb ​trade in goods made with forced labour.

“The impression is increasingly emerging that a tariff measure is sought first, ​and only then is a suitable legal justification found. The approach here is: ​if it doesn’t fit, make it fit,” he said.

Lange said that at the end of 2024, the ‌European Union adopted the world’s strictest legislation against products made using forced labour and that companies were already preparing for the new requirements to make supply chains more transparent, identify risks and demonstrate that countermeasures are in place.

The European Commission was working on the ​final implementation guidelines ​for authorities and businesses, he said.

“The claim that the EU is not taking sufficient action against forced labour does not stand up to serious scrutiny. ​Anyone who examines the facts knows that the European Union is ​setting global standards in this area,” he said.

“The key question will therefore be whether the proposed additional tariff of ten per cent will exceed the Turnberry agreements,” he said referring to ⁠an agreement ​from July 2025 in which the EU agreed ​to remove tariffs on US goods and Washington agreed to a maximum tariff on most EU goods of ​15 percent.

Gold prices slipped on Wednesday, as renewed hostilities ‌in the Middle East pushed crude higher and stalled US-Iran talks, while investors awaited upcoming US economic data.

Spot gold fell 0.5 percent to $4,460.36 per ounce by 0702 GMT, after rising ​more than 1 percent in the previous session. US gold futures for August ​delivery slipped 0.7 percent to $4,488.90.

US Secretary of State Marco Rubio said on Tuesday that President ​Donald Trump’s negotiating team has not offered Iran sanctions relief in exchange for reopening the Strait of Hormuz and insisted that any sanctions relief was tied to Tehran giving up its ​nuclear programme.

“The market is now looking at the possibility that this ceasefire with ​Iran may not hold even though Trump is going to push for a peace deal ‌resolution,” said Kelvin Wong, a senior market analyst at OANDA.

“If we start to see further escalation, that could also dampen whatever recovery that gold might have had.”

Oil prices rose more than 1 percent, deepening concerns over inflation and interest rate hikes.

Cleveland ​Federal Reserve President Beth ​Hammack said on Tuesday the US central bank may need to raise interest rates soon should already-high inflation pressures continue to mount.

Investors are ​now awaiting the US nonfarm payroll data, due later in ​the day, and employment report due on Friday to gauge the Fed’s monetary policy path.

Although gold is typically viewed as a hedge against inflation, it tends to lose its appeal ​as a non-yielding asset in a high interest-rate ​environment.

The Trump administration on Tuesday (2 June) proposed imposing additional duties of 10% or ​12.5% on imports from 60 economies after determining that their failure to curb trade in ‌goods made with forced labour is unreasonable and restricts US commerce.

The proposal from the US Trade Representative's office (USTR) is the latest finding from a Section 301 unfair trade practices investigation to be released as the Trump administration seeks to ​rebuild its emergency tariffs, which were struck down by a US Supreme Court decision in ​February, Reuters reports.

The USTR said it determined that it would impose 10% duties related to ⁠the forced labour investigation on imports from Canada, Ecuador, the European Union, Indonesia, Mexico, Pakistan, Argentina, Bangladesh, ​Cambodia, El Salvador, Guatemala, Malaysia, Taiwan and Britain.

The trade agency said it would impose additional duties ​of 12.5% on the remaining 45 countries that it investigated.

"The failure of our most important trading partners to address the importation of goods made with forced labour is unacceptable," US Trade Representative Jamieson Greer said in a statement. "This creates ​a dynamic where American workers are forced to compete globally on an uneven playing field."

Reacting to the news, Fazlee Shamim Ehsan, executive president of BKMEA and president of the Employers Federation of Bangladesh, told TBS, "There is no justification for imposing this new tariff on Bangladesh, as the country is not among those accused of using forced labour.

"They are trying to use tariffs as a tool. This will ultimately harm the free market economy and the global economy."

The USTR said ​it was also proposing a textile mechanism that would allow for a certain volume of apparel and textile imports ‌to enter the US at a reduced tariff rate, though the duties and volumes were not disclosed, according to the Reuters report.

The announcement comes ahead of the 24 July expiration of a 10% temporary tariff imposed by the Trump administration on 10 February, the day the Supreme Court struck down US President Donald Trump's tariffs under the International ​Economic Emergency Powers Act.

The trade agency ​is also expected to soon unveil the findings of another major Section ​301 probe into ⁠the buildup of excess industrial capacity in 16 trading partners, including China.

The USTR said it would accept public comments on the proposed tariffs and other remedies through 6 July, with a public ​hearing scheduled for 7 July.

Dr Mohammad Abdur Razzaque, the chairman of Research and Policy Integration for Development - RAPID), told TBS, "It is unfortunate that a matter as universally important as the eradication of forced labour is being addressed through a unilateral trade investigation. This approach of the US appears to establish a new benchmark not grounded in any widely accepted international legal obligation."

Bangladesh has long supported international efforts to eliminate forced labour and remains committed to strengthening labour standards and enforcement, he mentioned.

"However, the present USTR proposal raises important conceptual, legal and practical questions that warrant careful consideration, particularly given its potential implications for developing countries and for the broader rules-based trading system," Razzaque added.

Bangladesh should support the objective but challenge the conceptual basis of the USTR framework, he said, adding, there is an important distinction between prohibiting forced labour itself, which is widely recognised under ILO conventions and domestic legal systems, and imposing a dedicated border measure that bans imports allegedly linked to forced labour. Bangladesh can argue that the latter represents one regulatory instrument among several and that its absence should not automatically be regarded as an unreasonable trade practice.

"Bangladesh should pursue a dual-track diplomatic strategy. On one track, we should work with other affected economies, including developing and advanced countries, to argue for proportionality, recognition of alternative regulatory approaches through international consensus, adequate transition periods, etc.

"On the other track, Bangladesh should maintain close bilateral engagement with Washington and present a credible domestic reform roadmap. Such a roadmap could include legal review, customs enforcement improvements, supply-chain due diligence measures, labour-inspection strengthening, and institutional coordination," Razzaque further said.

Bangladesh needs to project itself as reform-oriented and cooperative while avoiding unnecessary concessions or confrontation, he opined.

"It has been a matter of concern that the USTR proposal reflects a growing tendency to use tariff threats to advance regulatory norms that have not been established through multilateral agreement. While combating forced labour is a legitimate and widely shared objective, making market access conditional on a specific US-preferred regulatory model risks weakening the MFN-based trading system and further fragmenting global trade governance," Razzaque concluded.

A surge of US crude oil is arriving in Asia, but the record volumes are nowhere near enough to offset the loss of cargoes from the effective closure of the Strait of Hormuz.

Asia’s imports of US ​crude were 63.56 million barrels in May, the most for a single month although at 2.05 million barrels per day (bpd) they were slightly ‌behind the 2.07 million bpd from June 2023, according to data compiled by commodity analysts Kpler.

However, more US oil is on the way, with Kpler tracking arrivals of 2.32 million bpd in June and 3.07 million bpd in July.

This is more than double the average of 1.37 million bpd of US crude that Asia imported in the three months to the end of February.

The ​United States and Israel attacked Iran on February 28 and Tehran retaliated by effectively closing the Strait of Hormuz, through which about 20 percent of ​global crude oil and refined products moved prior to the start of the conflict.

While some Middle Eastern exporters such as Saudi Arabia and the United Arab Emirates have managed to re-route some oil exports to ports outside the strait, at least 10 million bpd of supply remains unavailable ​as the Iran conflict drags on.

About 1.2 million bpd of crude reached Asia in May through the Strait of Hormuz as some vessels secured Iranian approval to transit, ​but this is down from the average of 13.54 million bpd in the three months ended February.

The scale of the loss of cargoes through the strait overwhelms the additional volumes Asia has secured from the United States, as well as from other exporters in the Americas and Africa.

Asia’s seaborne crude arrivals in May were 19.47 million bpd, up from 18.7 million bpd in April, ​which was the lowest in more than 10 years, according to Kpler data.

However, even May’s higher arrivals were still 22 percent down from the average of 24.82 million ​bpd for the three months to the end of February.

It’s this loss of more than 5 million bpd in supplies that will ultimately lead to tough choices for Asia’s refiners.

So far ‌they have managed to keep plants operating by a combination of using up commercial and in some cases strategic stockpiles, while also reducing processing rates.

But there are now questions being asked as to how much longer the world can continue to deplete inventories before refiners are forced to significantly cut back throughput amid crude shortages.

There is an emerging consensus among most analysts and oil executives that the clock is ticking louder.

It’s likely that the process won’t be spread evenly across the world, with some regions likely ​to be able to continue producing and ​refining oil at usual rates, but others struggling to secure supply.

Ultimately, if the Strait of Hormuz doesn’t reopen within the coming weeks and doesn’t remain open on a sustainable basis, it’s likely that prices for refined fuels will have to increase in order to force a reduction ​in demand.

Asia, which took about 80 percent of the usual volumes through the Strait of Hormuz, is the most exposed and ​it’s likely that less well-developed, fuel-importing countries such as Bangladesh, the Philippines and Pakistan will experience the pain soonest.

There are also likely to be increasing questions asked in the United States about the rapid depletion of inventories amid record crude and product exports.

US politicians from both major parties tend to focus heavily on domestic issues and it isn’t hard to see them increasingly opposing oil ​and fuel exports in the mistaken belief that this will somehow lower retail prices at home.