Author: Fiona Craig

Whenever tensions in the Middle East flare up, one of the first things that comes to mind is the 1973 oil embargo. Back then, all Arab members of OAPEC, along with Egypt and Syria, announced that they would stop supplying oil to countries that supported Israel during the Yom Kippur War.

Now, with the Iran-Israel missile exchange, the primary concern in the media coverage is again how much the oil market might suffer. But this time, the fear is slightly different: instead of an export embargo, Tehran could try to blockade the Persian Gulf, perhaps by laying mines. 

To put it in context, around 20 million barrels of oil and oil products pass through the Strait of Hormuz every day—about a fifth of the world’s supply. Therefore, if tensions escalate and Iran mines the strait, energy prices could skyrocket, causing global inflation to rise and, consequently, the S&P 500 to fall.

The good news is that the scenario is unlikely. Much of the oil flowing through the strait heads to China, a supporter of Iran, and neutral countries like India. Blocking the passage would mainly hurt allies and neutral partners, not Israel or its key backer, the United States.

Furthermore, such a move would backfire on Iran itself. Its major ports are in the Gulf, so closing the strait would cut off crucial export revenues. And let’s not forget: a global oil crisis could drag the U.S. into direct military involvement. Gulf states would likely step up, siding more openly with the U.S. 

In short, although Iran could disrupt maritime traffic through the Strait of Hormuz, the chances of that happening are slim. The markets seem to agree: oil, together with gold (XAUUSD) and the dollar – both considered safe havens and risk-off benefactors – have already begun to retreat.

China has recently granted rare earth export licenses to GM (NYSE:GM), Ford (NYSE:F), and Stellantis (BIT:STLAM) but notably excluded Tesla (NASDAQ:TSLA), raising concerns that Tesla may be deliberately targeted amid ongoing trade tensions and CEO Elon Musk’s outspoken foreign policy views.

According to Wells Fargo, citing expert Dr. Gracelin Baskaran, Tesla and Rivian are still awaiting export licenses. This may reflect China’s strategy to support domestic EV manufacturers while limiting access for foreign rivals.

China dominates nearly 100% of the global supply of seven critical heavy rare earth elements (REEs), essential for electric vehicle engines and advanced manufacturing. Although the U.S. auto sector is the largest consumer, its usage is only a small fraction of global production—about 6,600 tons out of 390,000 tons produced last year.

China’s April restrictions left automakers with just 2–3 months of buffer stocks, which are now running low. While some U.S. automakers have managed to continue operations through furloughs, Wells Fargo warns this is “a Band-Aid, not a solution.” Supply risks may persist for two to five years as new production capacity outside China develops.

For now, China’s selective licensing and monitoring of end-use means Tesla and other manufacturers still waiting for access could face ongoing pressure until global rare earth supply chains become more diversified.

European equities nudged higher on Monday as investors weighed the ongoing Middle East conflict alongside a busy week of central bank meetings and the upcoming Group of Seven summit in Canada.

By 03:05 ET, Germany’s DAX index was up 0.4%, France’s CAC 40 also gained 0.4%, and the U.K.’s FTSE 100 increased 0.2%.

Middle East Tensions Persist

Israel and Iran continued exchanging missile strikes and air raids over the weekend, following Israel’s large-scale airstrikes targeting Iranian military and nuclear sites on Friday.

While the conflict has unsettled markets and pushed oil prices higher, investors generally do not expect the fighting to spread regionally. Notably, concerns about Iran closing the Strait of Hormuz—a vital shipping lane—remain low, as such a move could escalate U.S. involvement.

Central Banks in Focus

Rising energy prices add complexity to the Federal Reserve’s policy decisions this week, as it balances a cooling labor market against persistent inflation above target levels.

Since easing last December, the Fed has kept rates at 4.25%-4.50% and is widely expected to maintain this range in Wednesday’s announcement. Market participants will closely watch for any signals on potential rate cuts or the impact of ongoing U.S. trade policy uncertainties under the Trump administration.

It’s a busy week globally: the Bank of Japan is expected to hold rates steady Tuesday, with the Bank of England and Norway’s Norges Bank likely to follow later in the week. Meanwhile, Sweden’s Riksbank is forecast to cut rates, and the Swiss National Bank may return to negative rates amid a strong franc.

G7 Summit Outlook

Leaders of the Group of Seven nations gather in Canada this week amid heightened tensions due to U.S. tariffs on allies. Canadian Prime Minister Mark Carney, chairing the summit, emphasized priorities including peace and security, strengthening critical mineral supply chains, and job creation. Key topics will likely include the Middle East conflict, Ukraine, and trade tensions.

Corporate Highlights

Luxury goods group Kering (EU:KER) is reportedly appointing Luca de Meo as its new CEO, following his five-year tenure leading Renault (EU:RNO), according to French newspaper Le Figaro.

In the gaming sector, Entain plc (LSE:ENT) announced that its U.S. sports betting joint venture BetMGM has raised its revenue and earnings forecasts for the year, buoyed by strong growth in iGaming and online sports betting.

Oil Prices Rise on Middle East Risks

Oil prices continued to climb Monday amid concerns over potential supply disruptions linked to the Israel-Iran conflict.

At 03:05 ET, Brent crude futures gained 1% to $74.97 per barrel, while U.S. West Texas Intermediate crude increased 1.1% to $72.05 per barrel. Both benchmarks surged more than 7% on Friday, reaching their highest levels since January, as fears of broader regional conflict grew.

Oil prices gained ground in Asian trading on Monday, continuing a recent upward trend fueled by rising fears of supply interruptions amid escalating hostilities between Israel and Iran in the Middle East.

Despite the gains, prices remained below the 4½-month peak reached on Friday, following Israel’s initial strikes against Iranian targets. Tehran responded over the weekend with missile attacks on Israeli cities.

By 21:01 ET (01:01 GMT), Brent crude futures for August delivery had risen 0.5% to $74.59 per barrel, while West Texas Intermediate (WTI) crude climbed 0.6% to $71.66 per barrel.

Conflict Intensifies; U.S. Role Under Scrutiny

The weekend saw a rapid exchange of strikes between Israel and Iran, with both sides showing little willingness to de-escalate. Israel’s Friday attacks included strikes on Iran’s nuclear facilities, prompting retaliatory missile launches targeting major urban centers in Israel, including Tel Aviv.

The flare-up has heightened expectations of tougher sanctions on Iranian oil exports and raised concerns about potential disruptions in the Strait of Hormuz—a critical shipping route for oil shipments to Asia and Europe.

Attention is now turning to the potential for U.S. involvement. President Donald Trump indicated ongoing efforts toward a ceasefire but suggested the two nations might need to “fight it out” before any resolution is reached. He also issued warnings to Iran against targeting American assets in the region.

The conflict caused Iran to pull out of nuclear negotiations with the U.S., which were slated for the weekend.

Central Banks in Focus Amid Geopolitical Risks

While the Middle East tensions are dominating near-term oil market dynamics, the week also features a series of key central bank meetings globally.

The Bank of Japan will announce its decision on Tuesday, expected to hold interest rates steady, with investors watching closely for any new economic guidance.

The U.S. Federal Reserve is set to maintain current rates on Wednesday, with market participants eager to hear if the Fed signals further rate cuts amid signs of easing inflation and a slowing economy.

Later in the week, China’s central bank will set its benchmark lending rate, while the Swiss National Bank and Bank of England also prepare to announce their monetary policy decisions.

Stocks in the energy, defense, shipping, and travel sectors are expected to see heightened activity on Monday as tensions between Israel and Iran persist for a fourth day without signs of easing.

Brent crude oil prices surged early in the session, rising as much as 5.5% to reach $78.32 per barrel, before giving back most of those gains. This volatility is likely to influence energy sector stocks such as Exxon Mobil (NYSE:XOM), Chevron (NYSE:CVX), ConocoPhillips (NYSE:COP), Occidental Petroleum (NYSE OXY), and EOG Resources (NYSE EOG).

Shipping companies are also positioned for movement amid the conflict. In European trading, AP Moller-Maersk shares edged up 0.6%, while Hapag-Lloyd AG climbed 1.8%. U.S.-listed shipping firms potentially impacted include ZIM Integrated Shipping Services (NYSE:ZIM), Star Bulk Carriers (NASDAQ:SBLK), and Matson (NYSE:MATX).

Defense contractors, which rallied on Friday due to expectations of increased military expenditure triggered by the conflict, are likely to remain in focus today. Key names to watch include Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), RTX, General Dynamics (NYSE:GD), and L3Harris Technologies (NYSE:LHX).

Conversely, airline stocks may experience downward pressure as rising oil prices typically translate into higher jet fuel costs, squeezing carriers’ profit margins. Companies such as Delta Air Lines (NYSE:DAL), United Airlines, American Airlines (NASDAQ:AAL), and Southwest Airlines (NYSE:LUV) could be affected.

On Friday, travel shares fell while energy stocks gained ground following Israel’s military strikes against Iran.

U.S. stock futures edged higher Monday, showing resilience amid escalating tensions between Israel and Iran and ongoing economic uncertainty. Meanwhile, oil prices climbed again following a series of weekend attacks, as the Middle East conflict takes center stage ahead of this week’s Group of Seven (G7) summit in Canada. In other news, activist investor Barington Capital Group plans to push for major changes at Victoria’s Secret, aiming to shake up the lingerie brand’s board.

Futures Show Gains

Investors were cautiously optimistic early Monday, digesting the recent flare-up in the Middle East and awaiting the Federal Reserve’s interest rate decision scheduled for later this week. By 3:36 a.m. ET, Dow futures were up 181 points (0.4%), S&P 500 futures had gained 29 points (0.5%), and Nasdaq 100 futures rose 113 points (0.5%).

Last Friday, Wall Street closed lower after a wave of airstrikes between Israel and Iran raised geopolitical risks and dampened market confidence. Defense stocks rallied in response, while energy shares benefited from soaring oil prices. Airline stocks, however, fell as higher fuel costs loomed.

Investors found some relief from recent inflation data and steady weekly jobless claims, which lessened concerns about the economic impact of U.S. tariffs. Attention now turns to the Federal Reserve’s Wednesday announcement, with expectations leaning toward maintaining current interest rates and adopting a cautious stance on future hikes.

Renewed Iran-Israel Hostilities Drive Oil Higher

Oil prices extended gains Monday amid continuing conflict in the Middle East. Brent crude futures rose 0.4% to $74.53 per barrel, while U.S. West Texas Intermediate crude climbed 0.5% to $71.64 per barrel, after earlier surges of more than $4.

Over the weekend, Israel and Iran exchanged attacks that resulted in civilian casualties and raised fears of a broader regional war. Reports indicate Iran has refused to enter U.S.-mediated ceasefire talks while Israeli strikes continue. Meanwhile, Israel warned Iranians near nuclear sites to evacuate, targeting missile facilities in ongoing military operations.

G7 Leaders to Address Middle East Crisis

The escalating conflict is expected to dominate discussions at the G7 summit this week in Canada. Leaders are reportedly preparing a joint statement calling for de-escalation. German Chancellor Friedrich Merz emphasized balancing Iran’s nuclear ambitions with Israel’s right to self-defense while keeping diplomatic options open.

At the same time, officials are cautious to avoid clashes with U.S. President Donald Trump amid ongoing negotiations around his administration’s controversial tariffs. Canadian Prime Minister Mark Carney stressed the summit’s focus on peace and security but hinted Ottawa could retaliate if the U.S. maintains tariffs on steel and aluminum.

Victoria’s Secret Faces Boardroom Challenge

Activist investor Barington Capital Group is reportedly gearing up to challenge Victoria’s Secret’s (NYSE:VSCO)board of directors and seek to dismantle its shareholder rights “poison pill” plan, according to Reuters. Holding over a 1% stake, Barington views the lingerie brand as underperforming since its 2021 spin-off from L Brands (NYSE:BBWI), with shares down roughly 55% this year.

The investor aims to replace much of Victoria’s Secret’s leadership to boost shareholder value and counter recent weak demand trends.

Falcon Oil & Gas Ltd (LSE:FOG) has announced a landmark achievement at its Shenandoah S2-2H ST1 well, located in Australia’s Beetaloo Sub-basin, Northern Territory. The well recorded the highest initial 30-day (IP30) flow rate ever seen in the region, underscoring the commercial potential of the Amungee Member B-Shale gas formation.

This strong production performance positions Falcon to capitalize on the premium pricing typically available in the Australian East Coast gas market. The company is advancing plans for further development, including drilling additional wells, and aims to fulfill a gas sales agreement of 40 million cubic feet per day (MMcf/d) with the Northern Territory Government by mid-2026, solidifying its competitive standing in the market.

About Falcon Oil & Gas

Falcon Oil & Gas Ltd is an international exploration and development company focused on unconventional oil and gas projects, predominantly in Australia. Incorporated in British Columbia, Canada, with headquarters in Dublin, Ireland, the company operates through its key subsidiary, Falcon Oil & Gas Australia Limited.

Physiomics plc (LSE:PYC) has taken a strategic step forward with the appointment of Jesse Thissen as its new Head of Biometrics and the signing of two initial contracts in this service area. The contracts, worth a combined £111,000, have been secured with a UK-based biopharma company and will see Physiomics deliver biostatistical consulting and statistical programming to support clinical development efforts.

Mr. Thissen brings extensive expertise in biostatistics and is expected to play a key role in driving the growth of Physiomics’ biometrics division. This addition complements the company’s established strengths in modelling and simulation, enabling the company to offer a more comprehensive suite of services to biotech and pharmaceutical clients.

By expanding into biometrics, Physiomics aims to strengthen its competitive positioning and accelerate its ability to scale service delivery across a broader range of clinical programs. The move supports the company’s long-term objective of becoming a fully integrated provider of analytical solutions in drug development.

About Physiomics

Physiomics plc is a UK-based technology-driven consultancy specializing in data science, mathematical modelling, and biostatistics for the pharmaceutical and biotech industries. The company supports clients in optimizing drug development through its expertise in Modelling & Simulation, Bioinformatics, and its proprietary Virtual Tumour™ platform. Physiomics has worked with prominent clients including Merck KGaA, Bicycle Therapeutics, and Astellas.

Entain plc (LSE:ENT) has revised its financial forecast upward for BetMGM, the company’s 50/50 joint venture with MGM Resorts, citing sustained growth in both iGaming and online sports betting. The updated guidance for fiscal year 2025 now projects net revenue of at least $2.6 billion and a minimum EBITDA of $100 million, underscoring increased confidence in the platform’s market traction and profitability.

This upgrade highlights BetMGM’s expanding influence in the U.S. online gaming sector and its growing contribution to Entain’s broader strategic objectives. The enhanced outlook reflects strong momentum across BetMGM’s core operations and aligns with Entain’s ambition to drive long-term shareholder value through performance-led growth in regulated markets.

Despite these promising developments, Entain continues to face financial headwinds. While revenue and cash flow remain solid, the company is contending with profitability pressures and a high debt load. Technical indicators suggest market caution, and valuation metrics remain stretched, although the recent positive trajectory of its joint venture adds a layer of optimism.

About Entain plc

Entain plc is a global leader in sports betting and gaming, operating both online platforms and retail outlets. The company manages a wide-ranging brand portfolio that includes Coral, Ladbrokes, bwin, PartyCasino, and BetCity. Through its partnership with MGM Resorts, Entain jointly operates BetMGM—a major player in the U.S. iGaming and sports betting market. Headquartered in the UK, Entain focuses exclusively on operating in regulated jurisdictions worldwide.

Great Western Mining Corporation (LSE:GWMO) has reported encouraging assay results from its tungsten exploration activities at the Pine Crow and Defender prospects in Nevada. The samples indicate strong potential for high-grade tungsten mineralization, marking a significant step forward in the company’s efforts to tap into the critical minerals market.

These discoveries come at a time when global tungsten prices have surged to their highest level in over a decade, largely driven by Chinese export constraints. This favorable market dynamic could enhance the commercial viability of Great Western’s projects and has prompted the company to consider ramping up its exploration and potentially initiate further drilling campaigns.

About Great Western Mining

Great Western Mining Corporation PLC is a mineral exploration and development company with a focus on critical resources such as tungsten and copper. The company operates primarily in Mineral County, Nevada, within the resource-rich Walker Lane Structural Belt. Its strategic position and asset portfolio are geared toward meeting growing demand for minerals essential to modern technologies and energy transition.