In this week's Letter, we explore the significant pullback in oil prices that followed the US-Iran memorandum of understanding and consider its broader economic implications. The agreement saw a fragile ceasefire ensue and a gradual resumption of shipping flows through the Strait of Hormuz (chart 1). We acknowledge that this major pullback will certainly be welcome to policymakers across the region and beyond. Previously elevated energy prices had added to the fiscal burdens of governments and sharpened the dilemma facing central banks (chart 2). That dilemma pits the need to rein in inflation against the risk of choking off economic growth. That said, while one source of inflationary pressure seems to be ebbing, another looks to be emerging on the horizon. It stems from a potential "Super El Niño" event, which meteorologists have been warning about for some time now. Asia sits at the centre of such risks, as past strong El Niño events have directly and adversely affected crop production (chart 3). The impact is not limited to potential surges in headline inflation via food supply shocks, especially in Asia. It extends directly to growth as well (chart 4), given the nontrivial share of GDP that agriculture still commands in many Asian economies (chart 5). Should price pressures simply rotate from energy to food, government subsidies may follow suit (chart 6). Central bankers, for their part, may find themselves unable to ease off the tightening pedal just yet. Some Asian economies, however, would still manage to offset such a growth shock through other engines. Electronics and semiconductors, buoyed by the current AI upcycle, offer one such cushion for the more fortunate. For others, lacking such offsets, the agricultural hit may simply have to be borne in full.
The US-Iran conflict and oil prices
The recent memorandum of understanding between the US and Iran, aimed at working towards a final deal, has already brought visible relief to crude oil markets (chart 1). This relief has held despite the renewed tensions that have followed the agreement, which markets seem to have largely looked past. The easing in prices should go a long way towards unwinding the inflation concerns that elevated oil prices had previously stoked. Much of the pullback reflects anticipation of the substantial supply now expected to return to global markets. Yet some shipping trackers, such as the IMF's, already point to a marked pickup in traffic through the Strait of Hormuz. Even so, those volumes still remain well below the levels seen before the conflict began in the region.
Chart 1: Brent crude oil price and Strait of Hormuz shipping volume
https://www.haver.com/articles/economic-letter-from-asia-oil-down-emerging-risks
The study call for global coordination to manage competition for critical minerals.
Polymetallic ore containing copper, lead, zinc, nickel and cobalt © BJP7images/Shutterstock
London School of Economics study Collective security in a fragmented world, by Hugh Miller and Pau Morandi warns that ‘without coordination, stockpiling programmes will intensify competition for minerals, heighten price volatility and induce the shocks these strategies are designed to mitigate.’
The report states, ‘The build-out phase of the energy transition requires a sharp, front-loaded increase in mineral-intensive infrastructure, generating demand that substantially exceeds what current supply chains were designed to accommodate.
‘Aggregate stockpile demand from seven economies alone could represent up to 34% of global annual cobalt supply and over 10% of global lithium, graphite and copper supply, risking the simultaneous scramble that would amplify precisely the price volatility stockpiling is designed to hedge against.’
The rapid expansion of data centres, artificial intelligence and next-generation semiconductor technologies are also intensifying demand for high-purity metals and rare-earth elements.
New defence spending commitments across NATO member states are reportedly putting additional pressure on markets for specialised alloys, magnet materials and battery chemicals. The study also points out that with the US-China rare-earth truce expiring in November 2026, the window to coordinate before the next supply shock is closing.
The authors believe that coordination offers three advantages: staggered build-up schedules that can reduce simultaneous demand shocks; pre-agreed release conditions to improve market predictability; and an integrated framework connecting short-term stockpiling to longer-term supply diversification.
They also say that any successful mechanism would need to combine enforcement capacity, technical expertise, transparency and strong governance.
The International Energy Agency, with its existing oil reserve programme and growing critical minerals work, emerges in the report as the most fit-for-purpose institution to lead international coordination of critical mineral stockpiling.
The study also sets out a broader institutional assessment, exploring the arrangements and considerations that any effective regime would need to address.
By Leonard Hyman & William Tilles - Jun 29, 2026, 2:00 PM CDT
Following the June 2026 primary elections in NYC, in which democratic socialist Mayor Mamdani’s preferred slate enjoyed considerable electoral success, much has been written about the political implications. Our take is really simple. The last time the democratic socialists gained power, especially in major US cities, many of their policies were adopted by Progressives or New Dealers. In either case, that meant a far more intrusive regulatory environment for utilities. The Progressives laid the foundation for our existing regulatory apparatus with scrutiny over operations and capital funding, while the New Deal experimented with outright public ownership as a means of reducing the influence of investor-owned monopolies such as the Southern Company. And now we’ve had roughly 100 years of experience with Progressive administrative reforms and 80-plus years with New Deal-inspired public ownership of utility assets. To us the results are pretty clear. Regulatory agencies were initially created, with the best of intentions, to represent the public’s interest versus powerful monopolies. Due to regulatory capture (i.e. domination of administrative proceedings by wealthy corporate interests), these once Progressive-inspired entities have been hollowed out like a cheap chocolate easter bunny.
But the main issue for us today is that leftist political movements always ask very unpleasant questions from an investor’s perspective. For instance, why do we need equity investors at all in a low-risk, monopoly business like electricity? Critics claim, not without some justice, that utility equity investors provide higher cost risk capital for a low-risk monopoly that does not require it. Stated simply, they ask whether equity investors are being paid too much for, in essence, doing too little. If we look around the world, we can see the difference and it’s not simply how generously equity investors are rewarded in other places, but rather how differently US utilities are capitalized. Comparatively speaking, we allow our utilities to employ an enormous amount of equity financing, around 50% of capital structures currently, in an extremely low risk monopoly business, which makes absolutely no sense. Why? Because business risk (potential revenue volatility) and financial risk (the percent of debt in the capital structure) are supposed to be inversely correlated. Meaning low business risk utilities with extremely stable revenue streams can tolerate the highest levels of (much cheaper) debt in their capital structures. And instead we do the opposite, which increases power costs dramatically. By contrast, the comparable percentage of equity in the capitalization of a typical French utility is zero because it is government-owned. In Japan, in the pre-Fukushima-Daiichi days, the utilities only had 20% equity layers and were highly regarded by investors. And when Bonbright published his seminal work on US utilities in the 1930s, he thought a 30% equity layer was just about right. This is our best evidence of regulatory capture in the US. From a comparable perspective, our regulators permit way too much equity in a low risk, monopoly business (thereby unnecessarily imposing higher costs on all energy consumers) and that equity is also being compensated at a historically relatively high rate as well.
To quantify the analysis, electricity consumers might easily pay 10-15% less if the industry paid no taxes and it were financed wholly by government-backed debt.
From a longer-term perspective, we have to admit that utility equity investors have had precarious moments. Greedy politicians in the Insull days, wildfires, economic depressions, war, oil embargoes, new technologies, nuclear meltdowns, and the like have all threatened what seems in good times like an easy, albeit capital-intensive business. The bigger question to us, which we think democratic socialists will ultimately ask, is: should electricity be treated as a business at all, given how essential it is to our survival? Instead, should it be treated like a human right, like access to food or health care? If it’s 120 degrees outside, having A/C is a matter of survival, not luxury. Ditto if it’s fifty below in winter. In extreme circumstances, consumers don’t have a lot of choice about electricity usage. These questions or issues lead to bigger questions of government ownership versus continuing private sector control.
Franklin Roosevelt’s New Deal likened government ownership of utility assets to a “yardstick” by which to measure the performance of the private sector and, in that way, ensure fair prices. But these new government entities had two huge advantages over their private sector brethren. Their financing costs were extremely low (because they were backed by the federal government) and they paid no taxes. The TVA seems to have worked just fine for about 75 years without a penny of shareholder equity in its capital structure. The New Deal’s solution was to provide people with one of the benefits of modern technology, but without the higher cost levels imposed by the equity investors themselves. Just government debt is financed at the lowest possible interest rates.
We think the investor risks from today's political developments have to do with a changing mindset. The traditional left called shareholders financial predators, parasites, or people who take unfair advantage. Said differently there was a moral component implicit in how corporations should treat the working and middle classes. It is possible that we are beginning to see a resurgence of these themes today. But there is one big difference versus, say, 1935. Roosevelt’s people had two advantages in establishing a publicly owned utility: low-cost government financing and tax breaks. Today’s public power advocates or new New Dealers can also encourage investment with tax breaks and low-cost financing. However, as we enter this new build cycle for power generation with all its potential for data center-driven excess, they can also encourage greater use of lower-cost power-generating technologies such as renewables. Outside the US, electric utilities with heavy solar penetration are already offering free electricity to customers for several hours a day. We expect to see much more of this. It adds a whole new meaning to the phrase power to the people.
Vessels at the Strait of Hormuz, as seen from Musandam, Oman, June 26, 2026. (Reuters)
Pakistan, which is among the hardest-hit countries by the conflict in the Middle East, is urgently seeking to buy liquefied natural gas (LNG) for delivery this week, as a string of attacks in the Strait of Hormuz has disrupted flows, Bloomberg reported. According to the report, state-owned Pakistan LNG has issued a tender to procure shipments for delivery between 30 June and 4 July, with offers due on Monday. About a fifth of global LNG supply remains stuck behind the narrow waterway blockaded by Iran and the US.
It may be recalled that earlier this month, Pakistan purchased its most expensive LNG shipment in about four years. Pakistan LNG Ltd bought a cargo for delivery on 6-7 June from BP Plc at $19.1337 per million British thermal units, making it the priciest LNG purchase for the South Asian country since 2022, according to Bloomberg.
Energy Shortfall
Pakistan has been grappling with an energy shortfall since the war disrupted shipments from its top supplier, Qatar, forcing it to purchase pricier fuel from the spot market over the past few months.
At the start of this year, Pakistan had more imported LNG than it could use, Al Jazeera reported. Demand had been falling for three straight years, from a peak of 8.2 million tonnes in 2021 to 6.1 million tonnes by late 2025, as cheap solar panels flooded the market and factories cut back. Then the war came.
In March, as the Iran conflict disrupted regional energy trade, Pakistan could only import $70.2 million worth of LNG, 69% down from $226 million last year, the report said, quoting the Pakistan Bureau of Statistics.
Pakistan depends on Qatar for nearly all its LNG and has been experiencing rolling blackouts due to severe fuel shortages since the war began in late February.
A Qatari Oil ship was attacked in the Strait of Hormuz on Saturday, days after a Singapore-flagged container ship was hit. Following the strikes, the Joint Maritime Information Center (JMIC), which coordinates between naval and commercial shipping, raised its threat level in the region to substantial. Transits of inbound and outbound LNG carriers through the waterway have paused since then, ship-tracking data show. That includes an empty LNG tanker that was heading into the Persian Gulf via the Strait before U-turning on Friday. It has remained in the Gulf of Oman.
Russia introduced restrictions on fuel sales in the Irkutsk region on Sunday as authorities responded to a shortage of motor fuel, News.Az reports, citing Anadolu.
Regional Governor Igor Kobzev announced that a state of high alert had been declared due to the fuel shortage. Under the new measures, purchases at Rosneft gas stations are limited to 50 liters per vehicle, while other filling stations may introduce even lower purchase limits.
“The sale of fuel in any container other than a vehicle's fuel tank is prohibited. This recommendation does not apply to emergency services, fire departments, ambulances, municipal and agricultural equipment,” Kobzev wrote on the Russian social media platform Max.
He also urged organizations that are not involved in essential services to switch their employees to remote work.
“Our main goal is to alleviate the issue related to insufficient fuel shipments to the region, reduce the rush at gas stations, and ensure the smooth operation of all services in these difficult conditions,” he said.
The restrictions come after recent Ukrainian drone attacks on Russian oil refineries forced several facilities to suspend operations for maintenance, prompting Moscow to periodically introduce measures aimed at stabilizing the domestic fuel market.
Fuel sales restrictions have recently been introduced in several other Russian regions, including Saratov, Tver, Omsk, and the Republic of Tatarstan.
Moscow has also imposed limits on fuel sales at Gazpromneft gas stations in the Tyumen region and at Lukoil gas stations in the Voronezh region.
On Friday, Russia-installed authorities in Crimea and the port city of Sevastopol, territories annexed by Russia in 2014, declared a regional state of emergency to address economic issues.
During the weekend, Russian-installed officials in Crimea announced that fuel sales to individuals and businesses had been suspended entirely, with available supplies reserved exclusively for essential public services.
Earlier this month, Ukraine's General Staff said its forces had struck 16 major Russian oil refineries and fuel terminals, putting more than 30% of the country's refining capacity offline.
https://news.az/news/russia-limits-fuel-sales-in-irkutsk-amid-supply-shortage
Oil prices were climbing early on Monday morning after a fresh escalation between the U.S. and Iran over the weekend. The price rise was relatively delayed, as markets continue to price in a potential peace deal while discounting more bullish geopolitical catalysts.
A growing number of analysts have been arguing that markets are being too optimistic about a quick return of Hormuz traffic and too complacent about the continued drawdown in global inventories to multi-decade lows.
At the time of writing, Brent Crude prices were up by 1.18% at $72.84 per barrel, while the U.S. benchmark, WTI Crude, was up 1.73% at $70.43.
The latest price movement appears to suggest that the market is concerned about a reduction in tanker traffic through Hormuz following attacks on two commercial vessels on Thursday and Friday last week, and a further flare-up over the weekend.
The Thursday attack on the container ship Ever Lovely prompted some shipowners to pull back and wait for additional information about how safe transiting the Strait is. The U.S. military on Friday carried out strikes on Iran in response to the attack on the vessel.
On Saturday, an Iranian attack on a Panama-flagged oil tanker, Kiku, while it was transiting the Strait of Hormuz prompted additional strikes by the U.S. forces.
After the flare-up this weekend, the U.S. and Iran appear to have agreed to cease attacks ahead of tentatively planned new talks this week.
“Participants appear to be shrugging off these developments, instead focusing on what a continued recovery in oil flows would mean for the global balance,” ING’s commodities strategists Warren Patterson and Ewa Manthey warned in a note on Monday.
“This complacency is odd and clearly leaves significant upside risk if the supply recovery proves slow – or if we see significant re-escalation. While the oil market is technically in oversold territory, momentum appears to still be to the downside,” they added.
ING’s strategists continue to believe “the market is too optimistic about the timeline for a recovery in Persian Gulf supplies.”
The recent price movement suggests that reality might be setting in at last.
By Tsvetana Paraskova for Oilprice.com
Ghana risks wasting its coming lithium wealth as it did with gold, a transparency expert warned, unless it fixes how mining money is spent and why supply contracts leak abroad.
Dr. Steve Manteaw, a co chair of the Ghana Extractive Industries Transparency Initiative (GHEITI), spoke at a media and civil society workshop on corruption risks in Ghana’s lithium sector, organised by the Natural Resource Governance Institute. With Ghana preparing to mine lithium at Ewoyaa, he said the gold sector’s record should serve as a warning.
Successive GHEITI reports, he said, show royalties meant for local development being spent on recurrent costs that leave little behind. In the Wassa area, he added, community royalty shares went towards funeral donations, while assemblies elsewhere put the money into canopies and event logistics ahead of elections and presidential visits.
Sanitation swallows much of the rest, he argued, even though assemblies are meant to fund it from property rates. He called the pattern an abuse and pressed for binding rules that would steer royalties into lasting projects rather than day to day spending.
His sharper point concerned procurement, which he called the largest share of mining’s value, about a third of a company’s spending and far bigger than taxes. Ghana lists 56 categories of goods and services miners should buy locally, he said, yet the policy is hollow in practice. “When Ghanaians get the contract, they go to China,” he said, importing the goods and pocketing the margin instead of building local industry.
The result, he said, is a mining sector barely connected to the rest of the economy. Lithium would change nothing, he warned, if Ghana carried the same habits into Ewoyaa, and success should be judged by the jobs, businesses and infrastructure mining leaves behind, not by export earnings alone.
He drew a contrast with what mining firms spend themselves, noting that Gold Fields built the road from Damang to Tarkwa after paying its taxes, while the public share of benefits showed less to point to. Manteaw urged journalists and civil society groups to probe how resource revenues are used, rather than stopping at contracts and royalty figures. He wanted to open a newspaper one day, he said, and read about why Ghana has not built a Johannesburg of its own.
https://www.newsghana.com.gh/ghana-risks-repeating-gold-failures-with-lithium-expert-warns/
Mining company Rosh Pinah Zinc (RPZ) and investment adviser Appian Capital Advisory have announced the commissioning of the new semi-autogenous grinding (SAG) mill at the miner’s underground zinc/lead mine, in south-western Namibia.
Replacing the existing ball mill, the SAG mill is the final major processing component of the RP2.0 expansion project.
It will double RPZ’s processing throughput to 1.4-million tonnes of ore a year following mine ramp-up, delivering a step-change in yearly zinc and lead concentrate production.
The mill’s commissioning brings the full RP2.0 circuit into operation as an integrated system, incorporating the paste fill and water treatment plants and expanded flotation, thickening and filtration capacity.
The revised flowsheet is said to enhance comminution efficiency and resilience, delivering improved grind size control and metallurgical recovery while lowering unit operating costs.
Ore is crushed to a coarser product size ahead of the SAG mill, reducing dust generation throughout the crushing circuit and improving working conditions, environmental performance and on-site materials handling.
The SAG mill increases RPZ’s processing capacity and enhances the plant’s ability to treat harder ore types, which become more prevalent as mining progresses.
Moreover, the SAG mill has been designed with excess capacity, providing the potential for future production increases.
The expanded processing capacity extends the operation’s economic life and improves resource use across the orebody, strengthening RPZ as a long-life base metals project in Namibia.
RP2.0 comprises further development of the underground mine, including the newly developed WF3 portal and decline, as well as the construction of new surface facilities.
The project continues to advance on schedule and on budget, with overall construction progress now surpassing 95%.
The project has been executed with over two-million lost-time injury-free hours to date.
“Commissioning the SAG mill marks the completion of our core processing infrastructure and reflects the quality of execution by the RPZ team throughout the RP2.0 programme,” says Appian base metals head Ignacio Bustamante.
“With the full circuit now operational, the project is positioned to achieve a step-change in production output. This milestone demonstrates Appian and RPZ’s commitment to value-accretive, operationally rigorous project delivery and we look forward to realising the full benefits of RP2.0 as throughput ramps up,” he adds.
https://www.miningweekly.com/article/rpz-appian-commission-sag-mill-for-namibia-project-2026-06-29
In the January-May period this year, the ferrous metal smelting and rolling sector in China recorded a gross profit of RMB 18.17 billion ($2.7 billion), down 37.4 percent year on year, as announced by China's National Bureau of Statistics (NBS) on June 27.
The automotive sector recorded a gross profit of RMB 143.95 billion ($21.1 billion) in the first five months, down 19.8 percent year on year.
At the same time, the ferrous metals mining and dressing sector, the metal manufacturing sector and the railway, shipping, aerospace and other transportation equipment manufacturing sector recorded gross profits of RMB 20.83 billion ($3.1 billion), RMB 49.6 billion ($7.3 billion) and RMB 54.92 billion ($8.1 billion) in the January-May period this year, up 15.9 percent, down 12.4 percent and up 5.2 percent year on year, respectively.
In the first four months this year, the ferrous metal smelting and rolling sector in China had recorded a gross profit of RMB 7.58 billion ($1.1 billion), compared to RMB 18.17 billion in the first five months, indicating an improvement in the operating performance of the steel industry. However, the ferrous metal smelting and rolling sector in China still saw a year-on-year decline of 37.4 percent in the first five months.
The slowdown in the year-on-year decline of the ferrous metal smelting and rolling sector in China in the first five months marked a certain improvement in demand for steel and in the operating performance of the steel industry in May. However, against the background of slackening demand for steel, especially in the real estate industry, the steel industry is adapting to the “new normal” of meager profits.
In the given period, the aggregate gross profit of large and medium-sized industrial enterprises in China amounted to RMB 3.14396 trillion ($0.46 trillion), up 18.8 percent year on year.
Feasibility work on the McPhee Creek site began in early 2019. Credit: Hancock Prospecting.
Hancock Iron Ore has commenced production at the A$840m ($579m) McPhee Creek mine in Western Australia’s (WA) Pilbara region, delivering its first ore after nearly 19 months of development.
The mine is located approximately 100km north of the Roy Hill Mine and 30km north of Nullagine.
The project had initially been scheduled to open in 2023, but progress was delayed due to environmental and regulatory approvals, with the federal government granting final clearance in September 2024.
Feasibility work on the McPhee Creek site began in early 2019 following Hancock Prospecting’s acquisition of Atlas Iron.
The company’s board gave formal approval for development in 2021.
According to Hancock, development included upgrading and sealing 100km of roads in partnership with the state government.
The work also involved moving one million cubic metres of earth and constructing mine facilities, workshops and a 220-room accommodation camp.
The company reported that the transition from construction to operational readiness had progressed without disruption.
Once fully operational, primary crushed ore will be hauled by road train from the McPhee Creek site to the Roy Hill facility for processing.
The processed iron ore will then be transported for export via port facilities.
Hancock Iron Ore said in a statement: “McPhee Creek is a testament to the collaboration across engineering, construction, approvals, safety, environment and stakeholder teams – all working with a relentless ‘solve it’ mindset.
“The vision and drive of our executive chairman, Mrs Gina Rinehart AO, continues to shape Australia’s resources sector. Her leadership has been instrumental in bringing McPhee from concept to reality.
“To everyone involved, this is an achievement to be proud of.”
https://www.mining-technology.com/news/hancock-production-mcphee-creek-mine/
The downward trend in the market has continued since mid-May, leading to an 8% fall in prices
Iron ore prices (KORE 62% Fe/Qingdao) had fallen to $99.2/t as of 26 June 2026 – their lowest level since August 2025. This is 7.9% lower than on 29 May, whilst the average price in June stood at $101.7/t following a peak of $111.2/t in May (-8.5% month-on-month).
In June, the iron ore market came under pressure from several negative factors simultaneously. The main driver of the decline was the expectation of weaker demand from Chinese steelmakers against the backdrop of a seasonal slowdown in construction, deteriorating steel production margins and a cautious procurement policy on the part of steelworks. Most mills operated under a low-stock strategy, purchasing only small batches and showing interest mainly during sharp price dips.
Additional pressure came from rising supply. Market participants noted more active shipments from Australia and Brazil, as well as a gradual build-up of stocks in Chinese ports. This heightened concerns about an imbalance between supply and actual demand, particularly given signs of a decline in pig iron production following peak levels.
Short-term support for prices came from isolated supply-side risks. In particular, the market reacted to a labour dispute at BHP’s facilities near Port Hedland, and towards the end of the month to unconfirmed reports of a possible reduction in supplies from Simandou. However, these factors were largely speculative in nature and failed to alter the overall downward trend.
Temporary support was also provided by higher freight and logistics costs linked to geopolitical tensions and more expensive fuel. It was this factor that prompted Fitch to raise its short-term forecasts for iron ore prices. At the same time, in the second half of the month, the easing of tensions in the Middle East and falling energy prices reduced the support provided by transport costs.
A separate trend was the growing interest among Chinese steel mills in lower-grade ore. Against a backdrop of pressure on margins, mills sought to optimise raw material costs, which limited premiums on high-quality products.
In the short term, the market will remain vulnerable to news regarding Chinese demand, port stocks and political signals following the Politburo meeting at the end of July. Without a noticeable improvement in demand or genuine supply disruptions, prices may remain around $98–102/t, with the risk of a further decline.
https://gmk.center/en/news/iron-ore-prices-fell-below-99-t-in-june/
