Latest news with #IranConflict
Yahoo
9 hours ago
- Business
- Yahoo
‘Look at history': the economic threat if Israel-Iran conflict escalates
The assassination of the head of Iran's armed forces has raised fears of another wave of rising crude oil jumped by as much as 13pc to more than $78 a barrel on Friday morning after Israel killed military chief Mohammad Bagheri and conducted a 'pre-emptive strike' against the regime's nuclear jump was the biggest increase since the early days of Russia's invasion of Ukraine, with Benjamin Netanyahu, the Israeli prime minister, vowing that the battle will continue for as long as it takes. 'We can't leave these threats for the next generation. If we don't act now, there won't be a next generation,' Netanyahu said on Friday. Rachel Reeves, the Chancellor, is likely to be watching the conflict closely as higher oil prices are felt well beyond the petrol forecourts. Experts warn that if the conflict continues, a fresh wave of tax rises in the autumn are now all but inevitable. Iran is the third-largest oil producer within the Organisation of the Petroleum Exporting Countries (Opec) cartel, behind only Saudi Arabia and Iraq, with output of 3m barrels per day accounting for 3pc of global supply. Callum Macpherson, at Investec, a banking group, notes that concerns about the impact of conflict in the Middle East on oil prices are not new. After all, the assassination of Hezbollah's veteran leader Sayyed Hassan Nasrallah by Israel last October led to a similar spike in oil prices, before concerns eased back and prices fell again. But Macpherson says things may be different this time. 'The market is concerned by comments from Netanyahu that suggest there could be a more protracted campaign than has been the case before,' he notes, adding that Iran is still a big contributor to global supply. 'If Iranian supply were to be significantly disrupted, that could have a big impact on oil prices.' While this is unlikely on its own, the big concern if the conflict escalates is Tehran's ability to block the Strait of Hormuz, a critical shipping route in the Middle East. Ayatollah Ali Khamenei, Iran's supreme leader, warned on Friday that Israel 'should expect severe punishment' for the 20pc of global supply is shipped through the narrow strait. Macpherson says if Hormuz was blocked, prices would surge. He added: 'Let's look at history. When Russia launched its invasion of Ukraine, there were fears over Russian oil supply that sent Brent up to around $140 a barrel. This is an example of an historic precedent of the market's reaction to the potential for a severe supply disruption.' David Oxley, at Capital Economics, says traders remain nervous about what comes next, with any big escalation likely to trigger a surge in prices. 'We're into a world where traders are pricing in the potential for major disruption,' he says. 'And as we've seen in instances like this you could easily get $20, $30, $40 added to the price very quickly.' Macpherson says the implications could be far and wide. 'This doesn't just impact oil markets, but gas markets too,' he says, noting that a significant amount of liquefied natural gas (LNG) from Qatar is also shipped through the narrow strait at the edge of the Persian Gulf. Britain buys some of its gas from Qatar, although its purchases of LNG have fallen dramatically from recent highs. 'That feeds through directly into the inflation basket, through the cost of heating,' says Macpherson. 'And if gas prices go up, there is upward pressure on electricity too. If the situation is prolonged, this could feed through to the cost of manufactured goods, wherever they come from in the world leading to broader implications for inflation.' The International Monetary Fund (IMF) estimates that a 10pc rise in oil prices adds 0.4 percentage points to global inflation and drag down growth by 0.15pc. Consumers will start noticing price rises in the coming days and weeks as they fill up their cars. Oxley, at Capital Economics, estimates that every $10 increase in oil adds 7p at the petrol pump, taking money out of people's pockets. There are also implications for the cost of borrowing. While policymakers at the Bank of England tend to look through one-off price spikes, the prospect of higher-for-longer inflation will be hard to ignore. Traders slightly reduced their bets of two more rate cuts this year to 3.75pc as news of the killing of Bagheri broke. But some fear that the impact of higher oil prices could even force Threadneedle Street to reverse course. Gervais Williams, of Premier Miton, an investment manager, told the BBC: 'It is likely that interest rate cuts will be less, or possibly even interest rate rises to come.' He warns that 'a lot of economic uncertainty ... will lead to a government shortfall, unfortunately, versus their spending review recently. I think that will lead to potentially ... additional UK tax rises later this year'. The combination of weak growth and higher borrowing costs is toxic for the public finances. Analysis cited by the Office for Budget Responsibility (OBR) of 20 years of data from 1984 suggests that a 10pc rise in oil price reduces UK output by around 0.5pc, although the UK is now far less reliant on oil and gas than it was in the past as the economy pivots towards services. In 2010, the OBR said a permanent 20pc rise in the real oil price would reduce GDP by around half a percent. Lower growth means less money to fund the spending boost for the NHS that Reeves lauded this week. Higher oil prices also makes it more likely that she will have to maintain fuel duty cuts for another year at a cost of £3bn. She has to fund that by cutting spending or taxing something else. JP Morgan and Capital Economics both believe that higher borrowing costs and a weaker economy will force Reeves to raise taxes by more than £20bn in the autumn. Simon French, chief economist at Panmure Liberum, argues that there may be a silver lining for a Chancellor looking for political cover for another tax raid. 'A sustained rise in oil prices will raise inflation in the second half of the year making it harder for the Bank of England to cut rates,' says French. 'But for the Treasury the challenges are more nuanced. Any hit to growth will make the fiscal challenges more acute, albeit politically it becomes easier to blame external conditions for tough fiscal choices in the autumn.' Of course, there are factors pulling in the opposite direction, including a decision by Opec in March to pump more than 2m barrels of oil back into the market over the next 18 months. Oxley at Capital Economics says this should provide some relief, with faster supply increases in May and June suggesting 'more supply is likely to be forthcoming' in the coming months. However, he warns the outlook remains bleak. 'To the extent to which oil prices remain elevated, this adds to inflationary pressures and headwinds for the economy,' adds Oxley. 'That's the last thing Reeves wants. She was hoping that growth could help the fiscal situation look better. But any volatility or uncertainty will be the opposite of that. 'But at least she is by no means alone. The world depends on oil. So this isn't necessarily just a problem for Rachel Reeves.' That is likely to offer little comfort for a Chancellor already under fire for her political choices, or the households who will bear the brunt of what looks like another inevitable tax raid. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Telegraph
9 hours ago
- Business
- Telegraph
‘Look at history': the economic threat if Israel-Iran conflict escalates
The assassination of the head of Iran's armed forces has raised fears of another wave of rising prices. Brent crude oil jumped by as much as 13pc to more than $78 a barrel on Friday morning after Israel killed military chief Mohammad Bagheri and conducted a 'pre-emptive strike' against the regime's nuclear facilities. The jump was the biggest increase since the early days of Russia's invasion of Ukraine, with Benjamin Netanyahu, the Israeli prime minister, vowing that the battle will continue for as long as it takes. 'We can't leave these threats for the next generation. If we don't act now, there won't be a next generation,' Netanyahu said on Friday. Rachel Reeves, the Chancellor, is likely to be watching the conflict closely as higher oil prices are felt well beyond the petrol forecourts. Experts warn that if the conflict continues, a fresh wave of tax rises in the autumn are now all but inevitable. Iran is the third-largest oil producer within the Organisation of the Petroleum Exporting Countries (Opec) cartel, behind only Saudi Arabia and Iraq, with output of 3m barrels per day accounting for 3pc of global supply. Callum Macpherson, at Investec, a banking group, notes that concerns about the impact of conflict in the Middle East on oil prices are not new. After all, the assassination of Hezbollah's veteran leader Sayyed Hassan Nasrallah by Israel last October led to a similar spike in oil prices, before concerns eased back and prices fell again. But Macpherson says things may be different this time. 'The market is concerned by comments from Netanyahu that suggest there could be a more protracted campaign than has been the case before,' he notes, adding that Iran is still a big contributor to global supply. 'If Iranian supply were to be significantly disrupted, that could have a big impact on oil prices.' While this is unlikely on its own, the big concern if the conflict escalates is Tehran's ability to block the Strait of Hormuz, a critical shipping route in the Middle East. Ayatollah Ali Khamenei, Iran's supreme leader, warned on Friday that Israel 'should expect severe punishment' for the attacks. Roughly 20pc of global supply is shipped through the narrow strait. Macpherson says if Hormuz was blocked, prices would surge. He added: 'Let's look at history. When Russia launched its invasion of Ukraine, there were fears over Russian oil supply that sent Brent up to around $140 a barrel. This is an example of an historic precedent of the market's reaction to the potential for a severe supply disruption.' David Oxley, at Capital Economics, says traders remain nervous about what comes next, with any big escalation likely to trigger a surge in prices. ' We're into a world where traders are pricing in the potential for major disruption,' he says. 'And as we've seen in instances like this you could easily get $20, $30, $40 added to the price very quickly.' Macpherson says the implications could be far and wide. 'This doesn't just impact oil markets, but gas markets too,' he says, noting that a significant amount of liquefied natural gas (LNG) from Qatar is also shipped through the narrow strait at the edge of the Persian Gulf. Britain buys some of its gas from Qatar, although its purchases of LNG have fallen dramatically from recent highs. 'That feeds through directly into the inflation basket, through the cost of heating,' says Macpherson. 'And if gas prices go up, there is upward pressure on electricity too. If the situation is prolonged, this could feed through to the cost of manufactured goods, wherever they come from in the world leading to broader implications for inflation.' The International Monetary Fund (IMF) estimates that a 10pc rise in oil prices adds 0.4 percentage points to global inflation and drag down growth by 0.15pc. Consumers will start noticing price rises in the coming days and weeks as they fill up their cars. Oxley, at Capital Economics, estimates that every $10 increase in oil adds 7p at the petrol pump, taking money out of people's pockets. There are also implications for the cost of borrowing. While policymakers at the Bank of England tend to look through one-off price spikes, the prospect of higher-for-longer inflation will be hard to ignore. Traders slightly reduced their bets of two more rate cuts this year to 3.75pc as news of the killing of Bagheri broke. But some fear that the impact of higher oil prices could even force Threadneedle Street to reverse course. Gervais Williams, of Premier Miton, an investment manager, told the BBC: 'It is likely that interest rate cuts will be less, or possibly even interest rate rises to come.' He warns that 'a lot of economic uncertainty ... will lead to a government shortfall, unfortunately, versus their spending review recently. I think that will lead to potentially ... additional UK tax rises later this year'. The combination of weak growth and higher borrowing costs is toxic for the public finances. Analysis cited by the Office for Budget Responsibility (OBR) of 20 years of data from 1984 suggests that a 10pc rise in oil price reduces UK output by around 0.5pc, although the UK is now far less reliant on oil and gas than it was in the past as the economy pivots towards services. In 2010, the OBR said a permanent 20pc rise in the real oil price would reduce GDP by around half a percent. Lower growth means less money to fund the spending boost for the NHS that Reeves lauded this week. Higher oil prices also makes it more likely that she will have to maintain fuel duty cuts for another year at a cost of £3bn. She has to fund that by cutting spending or taxing something else. JP Morgan and Capital Economics both believe that higher borrowing costs and a weaker economy will force Reeves to raise taxes by more than £20bn in the autumn. Simon French, chief economist at Panmure Liberum, argues that there may be a silver lining for a Chancellor looking for political cover for another tax raid. 'A sustained rise in oil prices will raise inflation in the second half of the year making it harder for the Bank of England to cut rates,' says French. 'But for the Treasury the challenges are more nuanced. Any hit to growth will make the fiscal challenges more acute, albeit politically it becomes easier to blame external conditions for tough fiscal choices in the autumn.' Of course, there are factors pulling in the opposite direction, including a decision by Opec in March to pump more than 2m barrels of oil back into the market over the next 18 months. Oxley at Capital Economics says this should provide some relief, with faster supply increases in May and June suggesting 'more supply is likely to be forthcoming' in the coming months. However, he warns the outlook remains bleak. 'To the extent to which oil prices remain elevated, this adds to inflationary pressures and headwinds for the economy,' adds Oxley. 'That's the last thing Reeves wants. She was hoping that growth could help the fiscal situation look better. But any volatility or uncertainty will be the opposite of that. 'But at least she is by no means alone. The world depends on oil. So this isn't necessarily just a problem for Rachel Reeves.' That is likely to offer little comfort for a Chancellor already under fire for her political choices, or the households who will bear the brunt of what looks like another inevitable tax raid.
Yahoo
13 hours ago
- Politics
- Yahoo
Voice of America brings back Farsi-speaking staff amid Israel-Iran conflict
Several dozen sidelined Voice of America staffers have suddenly been called back to work as the Israel-Iran conflict escalates. It is a dramatic turn of events for the American government-funded broadcasting system that was shut down by the Trump administration in March. Steve Herman, who has been VOA's chief national correspondent since 2022, said the broadcaster specifically brought back Farsi language speakers who have been on paid administrative leave. The move suggests that the US government wants to bolster its programming into Iran. Before the cutbacks were instituted in March, VOA said that it produced four-plus hours a day of 'Persian-language programming to Iran.' The VOA website said the content 'confronts the disinformation and censorship efforts of the Iranian regime and enhances U.S. efforts to speak directly to the Iranian people and the global Persian-speaking diaspora.' It is unclear how much content VOA has been beaming into Iran in recent weeks. The broadcaster's VOA Farsi channel on YouTube showed eight new videos since Israel struck inside Iran early Friday. Staffers from some other VOA language services have also been called back to work. Brett Bruen, president of the consulting firm Global Situation Room, reacted to Herman's X post about the news by tweeting to Kari Lake, the Trump loyalist who has been tasked with gutting VOA. 'Turns out not having a channel to communicate with the Iranian people was a pretty bad idea, @KariLake,' Bruen wrote. A spokesperson for Lake did not immediately respond to CNN's request for comment. Patsy Widakuswara, one of the sidelined journalists who is suing the Trump administration to salvage the broadcaster, told CNN on Friday that 'VOA's role in providing independent, factual and authoritative news has been proven throughout countless times of crisis. But after months off the air, we've already lost a lot of audience and credibility. They should bring us all back so we can respond to breaking news in all parts of the world.'
CNN
15 hours ago
- Politics
- CNN
Voice of America brings back Farsi-speaking staff amid Israel-Iran conflict
Several dozen sidelined Voice of America staffers have suddenly been called back to work as the Israel-Iran conflict escalates. It is a dramatic turn of events for the American government-funded broadcasting system that was shut down by the Trump administration in March. Steve Herman, who recently retired from VOA, said the broadcaster specifically brought back Farsi language speakers who have been on paid administrative leave. The move suggests that the US government wants to bolster its programming into Iran. Before the cutbacks were instituted in March, VOA said that it produced four-plus hours a day of 'Persian-language programming to Iran.' The VOA website said the content 'confronts the disinformation and censorship efforts of the Iranian regime and enhances U.S. efforts to speak directly to the Iranian people and the global Persian-speaking diaspora.' It is unclear how much content VOA has been beaming into Iran in recent weeks. The broadcaster's VOA Farsi channel on YouTube showed eight new videos since Israel struck inside Iran early Friday. Staffers from some other VOA language services have also been called back to work. Brett Bruen, president of the consulting firm Global Situation Room, reacted to Herman's X post about the news by tweeting to Kari Lake, the Trump loyalist who has been tasked with gutting VOA. 'Turns out not having a channel to communicate with the Iranian people was a pretty bad idea, @KariLake,' Bruen wrote. A spokesperson for Lake did not immediately respond to CNN's request for comment. Patsy Widakuswara, one of the sidelined journalists who is suing the Trump administration to salvage the broadcaster, told CNN on Friday that 'VOA's role in providing independent, factual and authoritative news has been proven throughout countless times of crisis. But after months off the air, we've already lost a lot of audience and credibility. They should bring us all back so we can respond to breaking news in all parts of the world.'
CNN
15 hours ago
- Politics
- CNN
Voice of America brings back Farsi-speaking staff amid Israel-Iran conflict
Several dozen sidelined Voice of America staffers have suddenly been called back to work as the Israel-Iran conflict escalates. It is a dramatic turn of events for the American government-funded broadcasting system that was shut down by the Trump administration in March. Steve Herman, who recently retired from VOA, said the broadcaster specifically brought back Farsi language speakers who have been on paid administrative leave. The move suggests that the US government wants to bolster its programming into Iran. Before the cutbacks were instituted in March, VOA said that it produced four-plus hours a day of 'Persian-language programming to Iran.' The VOA website said the content 'confronts the disinformation and censorship efforts of the Iranian regime and enhances U.S. efforts to speak directly to the Iranian people and the global Persian-speaking diaspora.' It is unclear how much content VOA has been beaming into Iran in recent weeks. The broadcaster's VOA Farsi channel on YouTube showed eight new videos since Israel struck inside Iran early Friday. Staffers from some other VOA language services have also been called back to work. Brett Bruen, president of the consulting firm Global Situation Room, reacted to Herman's X post about the news by tweeting to Kari Lake, the Trump loyalist who has been tasked with gutting VOA. 'Turns out not having a channel to communicate with the Iranian people was a pretty bad idea, @KariLake,' Bruen wrote. A spokesperson for Lake did not immediately respond to CNN's request for comment. Patsy Widakuswara, one of the sidelined journalists who is suing the Trump administration to salvage the broadcaster, told CNN on Friday that 'VOA's role in providing independent, factual and authoritative news has been proven throughout countless times of crisis. But after months off the air, we've already lost a lot of audience and credibility. They should bring us all back so we can respond to breaking news in all parts of the world.'
