Gulf tensions continue, Saudis hope to see extension in OPEC cut policy, gloomy forecast for the UK: Your Monday briefing

US Secretary of State Mike Pompeo said that Washington did not want war with Iran but insisted that they will take every action to ensure the freedom of navigation in the Persian Gulf and Strait of Hormuz.

Pompeo’s warning

“The Iranians should understand very clearly that we will continue to take actions that deter Iran from engaging in this kind of behavior,” Pompeo said about last week’s attacks on two oil tankers. Iran denies responsibility.

The US-Iran tensions and a potential military standoff continue to hold up prices in global energy markets.

Meanwhile, Saudi Energy Minister Khalid al-Falih said he hoped the next OPEC meeting in July would reach consensus to extend their output cut policy. The meeting early next month will be held in Vienna.

Chinese stimulus

The Chinese central bank Monday injected some 150 billion yuan (21 billion US Dollars) via fortnight reverse repos to “keep liquidity level stable at end-June,” amid a protracted trade war with the US that is constraining Chinese production and industries.

The bank also freed some 100 billion yuan (14 billion US dollars) in long-term funds as cut in its reserve requirement ratio program.

Gloomy forecast in the UK

The British Chambers of Commerce (BCC) on Monday released its latest economic forecast, upgrading its growth expectations for the UK in 2019 from 1.2% to 1.3%. However, the leading business group has downgraded its growth forecast for next year from 1.3% to 1.0% and in 2021 to from 1.4% to 1.2%.

“Business investment is forecast to contract at a faster rate in 2019 and recover more slowly in 2020 than expected in our previous forecast. The continued Brexit impasse, including the growing possibility of a no-deal exit, together with the high upfront cost of doing business in the UK and the running down of excess stock, is expected to suffocate investment activity over the near term,” a BCC statement online read.


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