Geopolitics

Saipem reported first-half 2026 revenue of €7.35 billion, up 1.9% year on year, and adjusted EBITDA of €836 million, up 9.4%. The company said it absorbed about €70 million in additional security, logistics and operational costs tied to the Middle East conflict in the first six months. It lowered its full-year adjusted EBITDA outlook while keeping its revenue and cash flow forecasts unchanged. The update underscores how geopolitical risk can weigh on profitability for oil-and-gas engineering contractors.

Brookfield said it raised US$2billion in a first close for its Brookfield Middle East Partners (BMEP) private equity fund, with Saudi Arabia’s Public Investment Fund (PIF) as the anchor investor. The company is also participating alongside Blackstone and KKR in a US$16billion lease-and-leaseback deal covering Kuwait Oil Company’s 13 pipelines, providing US$7.85billion in upfront proceeds to Kuwait. The report notes that the Iran attack on Qatar’s Ras Laffan LNG complex was a prior event and that the conflict has not seen a new escalation, with investment activity in the region continuing.

Iranian officials have acknowledged major failures in the “trustee company” network used to route oil revenues outside the formal banking system, including at least one intermediary who fled without returning $200 million. Authorities have opened 59 criminal cases and asked Interpol to issue Red Notices for 15 people tied to the scheme. The network has long moved crude-sale proceeds through accounts in countries including the UAE, Turkey and Oman, and its unraveling has highlighted vulnerabilities in Iran’s repatriation chain.

A lull in US-Iran airstrikes has failed to ease pressure on key shipping lanes, as Iran-backed Houthi forces attacked Saudi-linked tankers in the Red Sea and threatened to blockade the Bab al-Mandeb Strait. Commercial traffic through the Strait of Hormuz fell to fewer than 10 ships over the weekend, down from more than 100 a day before the war, according to shipping data tracked by CNN. Brent and WTI each fell more than 6% in a single session even as US equity index futures pointed higher. The moves underscored market concern that supply risks are shifting from a tactical pause in fighting to broader, longer-lasting disruptions.

China imposed an export ban on dual-use materials such as rare earths and permanent magnets to Japan from January 2026, and expanded the measures in June by blacklisting or watchlisting 80 Japanese companies. The controls have effectively disrupted Japan’s critical-minerals supply chain, with shipments stalling under the new rules, according to estimates by the Daiwa Institute. Daiwa’s analysis indicates a year-long disruption could cut Japan’s real GDP by 1.3%, or about 7 trillion yen. The episode underscores that while Japan diversified upstream supplies, it remains heavily dependent on China for midstream separation and magnet production.

Middle East tensions remain elevated, with no formally announced ceasefire between the U.S. and Iran and a dispute over control of the Strait of Hormuz still unresolved. Fuel prices are up 15.7% from a year ago and, despite a modest pullback in May–June, remain at high levels. Markets have priced in 10bp of July FOMC tightening, while Bank of America expects three consecutive hikes from September through December. EY-Parthenon says if inflation cannot return to 2% because supply shocks such as the Middle East conflict keep pressure on prices, further monetary tightening would be unavoidable.

The OECD and the ECB warn that a sustained escalation in the Persian Gulf could trigger a prolonged disruption in the Strait of Hormuz, sharply slowing global growth to 2.1%–1.8% in 2026–2027 and pushing inflation higher. The ECB raised rates by 25 basis points to 2.25% on June 11, citing Middle East risks. US inflation rose to 4.2% in May, the highest level since April 2023. The shock is pressuring crude supply and pricing while weighing on rate-sensitive bonds (BE), US dollar assets (ONUS) and growth-focused equity indices (SUS).

A $55 billion takeover of Electronic Arts led by Saudi Arabia’s Public Investment Fund (PIF) has won initial EU antitrust clearance, moving the deal to the next stage of regulatory review. The transaction still faces scrutiny under the EU’s foreign-subsidies regime and U.S. reviews focused on foreign investment and national security issues. The move fits Saudi Arabia’s Vision 2030 push into global gaming and digital entertainment, with PIF also holding stakes in companies including Nintendo and Take-Two Interactive. The development does not involve a direct price-moving mechanism for traditional stocks, commodities or indices.

The U.S. and Iran said they would pause military strikes against each other, with Washington citing a review of munitions stocks and a push for diplomacy, while Tehran said it would suspend retaliatory attacks as long as the U.S. pause continues. The development eased Middle East geopolitical tensions. U.S. equity index futures climbed, while WTI crude futures fell 6.73% and gold and the U.S. Dollar Index also moved.

Germany’s Ifo business climate index rose to 86.6 in July, extending its climb to a third consecutive month, with the expectations sub-index jumping 2.6 points to 86.7. The current assessment component edged lower, and the headline level remains below its five-year average. The reading is described as reflecting a short-lived lift from the earlier US-Iran memorandum of understanding, while a renewed surge in energy prices, rising Middle East conflict risks and record-low Rhine water levels are weighing on industrial supply chains and the growth outlook.