Iran’s foreign minister responds to Trump and attacks the US
Iran’s foreign minister Abbas Aragchi said at a press conference that the US had “crossed the very big red line” in the airstrikes.
The US attack on Iran’s nuclear presence over the weekend could raise pressure on the US economy, which has become increasingly vulnerable as weeks of global trade war falls at the expense of its weeks.
The US entry into what was in the attack between Israel and Iran is most likely to affect oil prices, investors said.
Energy analyst Rachel Ziemba told USA Today on June 22 that it could not trade that high until the supply shock lasts, as he decided to block the key straits of Halmus. On June 22, Iranian parliament reportedly approved a measure that would approve exactly whether or not it would result in its highest national security council.
Ziemba calls risks “low probability and high impact” and calls commodity traders more likely to struggle with prices. This means that even though summer holidays are in full swing and a massive heat wave knows the central and eastern part of the country, energy prices can become unstable until conditions settle.
The shock on financial markets and the disruption in American consumer expectations for summer months is due to the rapid weakening of the economy as a whole.
“The global economy is not in a strong position to absorb another energy shock,” warned Nigel Green, chief executive of financial advisory firm Devere Group. The US joining the conflict between Israel and Iran raises the risk of a “sharp, global response,” Green added.
“Currently, investors are positioned against interest rate cuts, stable energy prices and an orderly global outlook,” he said in a note on June 18th. “The sudden and serious spread of this conflict will force a severely re-rick of risk across all major asset classes.”
On June 18, the Labor Bureau reported that unemployment insurance claims continue to rise.
“Uncertainty is leading businesses to mow staff ahead of the economic downturn. What has gone down to hatch is what company executives are saying as rumors of trade wars and real-life wars are beginning to hit the business outlook.”
Oxford Economics analysts have a more benign view.
“The rising tensions in the Middle East represent another unfavorable shock to an already weak economy,” they wrote on June 18th. Their model suggests that oil prices of around $130 per barrel pressure inflation to 6%. Post-pandemic inflation peaked at 9.1% in June 2022.
It would put the Federal Reserve in a difficult position. The Fed will raise interest rates to tame inflation and cut them to support borrowing and economic growth. So far, central banks are stable as they are waiting to see more details about how tariffs are being developed in the economy, but that can change.
Federal Reserve Chairman Jerome Powell told reporters that the Fed is looking at the situation in the Middle East “just like everyone else” after the central bank held interest rates steadily for its fourth consecutive meeting on June 18th.
“What tends to happen is that when there is chaos in the Middle East, we may see a surge in energy prices,” Powell said before the US strike. “These things don’t tend to have a lasting effect on inflation in general, but of course, in the 1970s, you were in such a huge shock that they made them famous. But we don’t see anything like that now.”
The US economy is less dependent on foreign oil than it had returned to the 1970s, Powell added.
