Wealthion Macro Bites – Oil Plunges 9.5% as Tensions Ease

Following 13 straight days of attacks on Iranian military infrastructure, the U.S. suspended attacks for a third consecutive night. In response, Iran’s army says it has halted attacks on U.S. bases and troops in the region. U.S. Ambassador to the U.N. Mike Waltz said President Trump is giving diplomacy “some space.” Waltz disputed a New York Times article suggesting the U.S. is suspending attacks due to diminishing stockpiles of air defenses such as Patriot interceptors and stated Trump “prefers a diplomatic solution.” Oil prices plunged on Monday morning on optimism over ratcheting down of hostilities, with brent futures touching $87.55 at 6 am ET (-9.5%).

In retaliation for the EU’s adoption (Thursday) of its 21^st package of sanctions on Russia over its war with Ukraine, China’s Commerce Ministry announced (Friday) that that it is banning export of dual-use items (goods, software or technologies with both civilian and military applications) to 14 additional EU entities, including German automotive and arms manufacturer Rheinmetall and Polish electronics ​company Vigo Photonics. The EU had added 51 new entities (incl. some based in China) to the list ⁠of ​those subject to tighter export curbs on dual-use ​goods and technologies due to their support of Russia's military and industrial complex. The Chinese Ministry noted foreign organizations ​and individuals are also prohibited from transferring or supplying dual-use items originating in China to the entities.

Reuters warns President Trump’s 10%-12.5% blanket tariffs on 60 countries over alleged weak enforcement of forced-labor bans (imposed last week) are just the first of numerous tariffs to be unveiled by the Trump administration in coming months. Additional tariffs are expected following Section 301 probes into excess industrial capacity of 16 big trading partners (incl. China, the EU, Japan, South Korea, Mexico and Vietnam), alleged intellectual property theft (esp. Vietnam), and national security protections for strategic industries from semiconductors to robotics to industrial machinery.

Mining.com reports several export shipments of alumina and nickel pig iron from Indonesia have been held up this month as Indonesia customs has requested additional testing for rare earths and radioactive elements like uranium. It’s unclear how long the disruption will last or how much export volume is affected, and the government is not arbitrarily banning exports of any mineral commodities. However, the customs office is engaging independent surveyors to identify the composition of mineral exports, including the presence of rare earth metals.

Impala Platinum Holdings has suspended mining operations at its Rustenburg complex in South Africa from July 24-28 to “conduct a comprehensive safety reset” following a string of serious safety incidents. Implats had reported four fatalities in the 12-mos. ended June and reported two additional fatalities in July. Rustenburg employs about 51,500 people and accounts for half of Implats total output.

Week ahead: FOMC rate decision on Wednesday (2 pm ET). Fed funds futures are pricing-in a 36% chance of a July hike and a 100% chance of a Sept. hike. MSFT & META earnings on Wed. and AAPL and AMZN earnings on Thursday.