Business and Economy

The stock was down more than 13 percent as investors were spooked by the company’s heavy investments.

SpaceX share price has plunged more than 13 percent, a day after the Elon Musk-run company reported its first quarterly earnings as a publicly listed company.

On Wednesday, the stock closed down at $108.10, down 13.6 percent from Tuesday’s close of $125.33.

Investors have been spooked by the increase in the company’s capital expenditure. At $18.37bn, it was a six-fold jump from last year, and much higher than the $13.2bn that analysts had forecast.

The majority of that investment, $15.8bn, is earmarked for artificial intelligence (AI) infrastructure, which includes specialised compute, storage, networking and software systems required to build, train, deploy and operate AI models at scale. SpaceX has said it wants to increase the capacity of its data centres from 1.4GW currently to 2GW by year-end.

Investors across the technology sector are questioning whether the large investments in AI infrastructure will actually yield returns.

“We’ve watched the same scrutiny land on Big Tech this earnings season, where investors have questioned open-ended wallets and started demanding a visible return on them,” said Josh Gilbert, lead analyst at trading platform eToro.

“SpaceX faces that test with an added degree of difficulty because it’s asking shareholders to bankroll data centres in orbit.”

SpaceX has said its computing capacity not only serves its Grok models but is also actively sold, with $14.1bn in cloud-services agreements lined up.

The one area that SpaceX saw some profit was from the “connectivity” business, with revenue jumping 66 percent from a year earlier as the number of subscribers to its Starlink satellite communications service doubled to 12 million, bringing in $1.66bn in operating income.

SpaceX’s share price faces another test on Thursday, when the first tranche of the post-IPO lock-up expires, making up to 911.5 million shares, roughly 20 percent of restricted holdings, eligible for sale.

Melissa Otto, head of Visible Alpha research at S&P Global, told Al Jazeera that the stock is “likely to be volatile” once the lock-up lifts.

SpaceX’s IPO was priced at $135 per share and climbed to $225 within days of its June 12 debut, briefly catapulting Musk as the world’s first trillionaire. The stock has since dropped.

A deal between the US and Iran could be signed within 48 hours, according to US officials. The agreement would reportedly focus on reopening the Strait of Hormuz and could mark a first step towards broader negotiations.

Al Jazeera’s Marah Ryan has the latest.

Oil prices fall as US officials tout progress in talks to reopen critical waterway.

The US stock market has hit an all-time high amid growing hopes for a deal to reopen the Strait of Hormuz and a flurry of bumper corporate earnings results.

The S&P 500, the most popular gauge of US stocks, surged 1.8 percent on Tuesday to top 7,700 for the first time, blasting past its previous record of 7,620.90 set on June 2.

Wall Street’s benchmark index has risen 12.80 percent so far this year, comfortably beating its historical average of about 10.5 percent.

Palantir Technologies, a data analytics company closely tied to the US and Israeli defence sectors, was among the biggest gainers, with its shares soaring 29.5 percent on the back of forecasting-busting second-quarter revenue of $1.94 bn.

The Dow Jones Industrial Average, which tracks 30 blue-chip companies, set a new record for a second straight day, climbing 1.7 percent to 54,085.88.

The rally continued in Asia on Wednesday morning, with key indexes in Japan and South Korea making major gains.

Tokyo’s benchmark Nikkei 225 was up 3 percent as of 01:00 GMT, while the Kospi in Seoul was up 4.6 percent.

Brent crude, the primary international benchmark for oil prices, edged lower after falling about 5 percent overnight on hopes for an end to the months-long disruption to shipping in the Strait of Hormuz, a conduit for about one-fifth of global oil supplies before the start of the US-Israel war on Iran in late February.

Brent futures for October delivery stood at $79.11 per barrel as of 01:00 GMT, down about 13 percent from the previous week.

The growing market optimism came as both US and Iranian officials touted progress in talks between Iran and Oman aimed at restoring shipping in the strait.

US Secretary of State Marco Rubio said on Tuesday that while an agreement had yet to be reached, he hoped that a deal would “happen very ‌shortly”.

US Treasury Secretary Scott Bessent said in an interview with CNBC that an agreement on the strait could be reached as soon as Tuesday or Wednesday.

Iran’s Foreign Ministry spokesperson, Esmaeil Baghaei, said talks with Omani officials on designating safe routes for vessels have been “positive”.

Maritime traffic in the Gulf has been severely constrained since the start of the war amid the threat of Iranian attacks on vessels in and around the strait, as well as a US blockade of Iranian ports.

Just nine vessels transited the critical waterway on Sunday, according to ship-tracking platform MarineTraffic, compared with roughly 130 daily crossings before the start of the war.

The US military said on Tuesday that the strait was “free and open” to all commercial vessels despite Tehran’s repeated insistence that it has the right to control the movement of traffic in the waterway.

“Over the past three months, US forces have assisted more than 1,000 vessels in successfully transiting the strait despite unwarranted Iranian aggression, and these transits continue today,” US Central Command said in a post on social media.

Revenue was up more than 90 percent from the same period a year ago, beating analyst expectations.

SpaceX reported a loss of more than half a billion dollars in its first quarterly statement as a public company, but the loss was less than Wall Street expected and revenue soared.

On Tuesday, the company run by Elon Musk reported a loss of $541m, or 9 cents per share, in the three months through June, less than half what financial analysts had expected.

Revenue jumped to $7.8bn, up more than 90 percent from the year-earlier period, beating analyst expectations. LSEG had forecast revenue growth of more than $6.9bn, and Bloomberg analysts had forecast $6.8bn.

The Starbase, Texas-based giant ended the second quarter with $100bn in cash, according to United States Securities and Exchange Commission filings.

The company touted several achievements in the quarter, including $6bn in new US government contracts for Starshield, its national security-centric satellite system, and two successful launches of its Starship V3 in the last 90 days.

Starlink and SpaceX’s broader connectivity operations remain the company’s primary financial engine, underpinning Musk’s push to build an AI-first business that extends beyond renting compute capacity to developing frontier models, consumer and enterprise software, and, eventually, data centres in space.

The company’s satellite-internet unit has continued to expand its global subscriber base, aided by launches of additional satellites and a growing range of consumer, enterprise, aviation, maritime and government services.

Investors are watching whether SpaceX can maintain growth while improving the economics of its network, particularly as it spends heavily to expand coverage, increase capacity and develop direct-to-device mobile services.

The company said it spent $18.37bn on Starlink and Starship expansion efforts, in addition to building out its AI infrastructure. Musk said the company expects its “Starmind” AI satellites to be launched next year.

In its AI business, the tech giant had an operating loss of $1.2bn, as the company also released its most powerful Grok model yet. This comes as the company faces lawsuits around the globe for Grok being used to generate sexualised images of people without their consent.

Separately, SpaceX said it had partnered with Nvidia to use its chips in the Starmind AI1 orbital compute satellites.

When SpaceX debuted on public markets earlier this year, it was the largest stock market debut in history, cementing Musk as the world’s first trillionaire. However, it was a short-lived title because of a sell-off in the broader AI sector and on investor worries that Musk had oversold them on the company’s future prospects for space travel and colonisation, among other issues.

The company’s stock has tumbled 8 percent since its IPO.

SpaceX surged on Tuesday trading. It finished the day up 9.4 percent, but has since tumbled in after-hours trading and was down 7.2 percent since the market close.

Second-quarter revenue jumped 93 percent but Palantir’s ties to Israel and role in military technology are controversial.

United States artificial intelligence and data analytics giant Palantir Technologies has reported “otherworldly” quarterly results, sending its shares more than 14 percent higher in after-hours trading, as its growth shows no signs of slowing despite mounting criticism over its close ties to the US and Israeli governments and concerns about its growing role in artificial intelligence and warfare.

Palantir Technologies reported a revenue of $1.94bn for the second quarter, up 93 percent from a year earlier, and raised its forecast annual revenue to between $8.15bn and $8.158bn, up from $7.65bn to $7.662bn earlier. It said strong demand from both commercial customers and government agencies drove the surge.

“This quarter was otherworldly: our US commercial revenue grew 149 percent year-over-year, our overall revenue grew 93 percent year-over-year,” Chief Executive Alex Karp said. “Demand for AI sovereignty has now been unleashed.”

In a letter to shareholders, Karp wrote: “Our business is compounding at a rate and scale that we have never before witnessed.”

Palantir holds multibillion-dollar contracts with US government agencies, including the US Army. Revenue from its US government business rose 90 percent year on year to $809m, even as the company has faced growing opposition over its role in President Donald Trump’s immigration crackdown, which critics say has resulted in unlawful deportations and killings.

Founded in 2003 by technology entrepreneurs including Karp and multi-billionaire Peter Thiel, Palantir opened its first office in Israel in 2015 and has since expanded its work with the Israeli military.

Following what Palantir described as a “strategic partnership” with Israel in January 2024, the company significantly expanded its operations supporting Israel’s military campaign in Gaza and operations in the occupied West Bank.

According to Open Intel, a platform tracking corporate involvement in the genocidal war on Gaza, Palantir has actively recruited former members of Israel’s elite Unit 8200 cyberintelligence division. The group says Palantir’s software integrates intercepted communications, satellite imagery and other datasets to help generate military targeting lists for Israeli forces.

In a statement to Al Jazeera earlier this year, Palantir UK reiterated the company’s support for Israel.

The company has also secured major contracts with the United Kingdom’s government. In January, the UK’s Ministry of Defence awarded Palantir a $323m (240-million-pound) contract. A separate $444m (330-million-pound) NHS contract awarded in November 2023 has also attracted criticism, with campaigners raising concerns about the handling of sensitive health data and the heavy redaction of contract documents.

Palantir has also faced scrutiny over its vision for the future of artificial intelligence. In The Technological Republic, a recent book co-authored by Karp and the company’s head of corporate affairs, Nicholas W Zamiska, the authors argue that technology companies have a responsibility to build advanced military AI capabilities. Critics have described the philosophy as a form of “techno-fascism”.

Al Jazeera has contacted Palantir for comment.

The states claim the new levies are a pretext to re-impose tariffs that were ruled illegal by the US Supreme Court.

A group of 25 Democratic-led states has sued Donald Trump’s administration over its latest tariffs, claiming that the US president has exceeded his legal authority to implement the levies.

The lawsuit, filed in the US Court of International Trade on Monday, targets new double-digit tariffs imposed on 60 trading partners last month over allegations they were not doing enough to stop the importation of goods produced with forced labour.

These latest tariffs took effect just as the clock ran out on temporary tariffs that Trump had turned to after the Supreme Court struck down his flagship “liberation day” levies in a February ruling.

“After losing at the Supreme Court, the administration is once again trying to illegally raise taxes on families and businesses with a new round of tariffs,” said New York Attorney General Letitia James.

The states that sued over the new tariffs, including Oregon and New York, all have Democratic attorneys general or governors.

In response, White House spokesman Kush Desai said the levies were an appropriate and legal response to unfair trade practices in other nations.

“A foreign country’s failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labor is unreasonable and burdens US commerce, including American workers, and must be addressed,” Desai said.

Revive US manufacturing

Trump, who argues that high tariffs will revive US manufacturing, last year overturned decades of Washington policy that favoured lower tariffs and ever-freer trade.

Invoking the 1977 International Emergency Economic Powers Act (IEEPA), he imposed double-digit tariffs on imports from almost every country, saying the US’s longstanding trade deficit amounted to a national emergency.

But the Supreme Court ruled that IEEPA did not authorise tariffs. The decision forced the administration to establish a refund process for importers who had paid the tariffs.

Eager to make up the lost revenue, Trump turned to temporary 10 percent worldwide tariffs, but they expired at midnight on July 24.

The latest round of global tariffs was imposed under Section 301 of the Trade Act of 1974, meant to combat unfair or discriminatory economic practices by other nations. The tariffs imposed in July affect more than 99 percent of US imports.

The states’ complaint, like two previous lawsuits filed by small businesses over the tariffs, argued that the new tariffs used “forced labor” as a pretext to re-impose the tariffs that had already been ruled illegal in court. They said that a sweeping tax on imports would do nothing to address the real problems of forced labour around the world.

United States President Donald Trump has lambasted the nation’s biggest oil and gas giants as Houston, Texas-based Chevron reported record earnings while consumers struggle with soaring petrol prices.

“I don’t like it,” Trump told reporters on Monday in reference to the blockbuster second-quarter earnings, as his war on Iran has kept oil prices high for months.

“Chevron, too much money. ExxonMobil, too much. Too much money.”

Trump’s comments came on the heels of an interview Chevron CEO Mike Wirth gave on the Fox News programme Sunday Morning Futures with Maria Bartiromo. Writing on his Truth Social platform, the US president berated Wirth for not crediting his administration’s efforts to help the oil industry.

“The only thing he [Wirth] conveniently forgot to mention is that, without the genius, foresight, strength, and stability of the TRUMP Administration, the Oil Industry, and our Country itself, would be DEAD!”

Chevron reported its highest quarterly profits in six years on Friday. Adjusted earnings per share came to $6.06, or $12bn, as tensions between the US and Iran strained global oil supply chains in the strategically vital Strait of Hormuz, where roughly one-fifth of the world’s energy supply travelled through before the war, sending prices soaring.

Chevron rewarded its employees. Wirth praised them for their work and said in an email that most workers would receive a bonus equivalent to half their monthly base pay, the Reuters news agency reported, citing an internal email.

Al Jazeera has not been able to independently confirm Reuters’ reporting.

Chevron’s strong earnings come as the company is less reliant on Middle Eastern production operations than its competitors, allowing it to reap the benefits of higher global oil prices during the quarter. Brent crude, the global benchmark for oil prices, was 23 percent higher than in the first three months of the year.

“Being less dependent on the Strait of Hormuz is definitely helping them. It’s also the refining they’re able to do here. The fact that Chevron has less than 5 percent exposure there gives it some protection,” Bill Drolet, executive director, mergers & acquisitions at The Post Oak Group investment bank, told Al Jazeera.

“More than 70 percent of Chevron’s production is concentrated in America, and that’s where it’s making its biggest margins right now.”

Chevron also benefitted from the president’s move to open up oil production in Venezuela after US special forces abducted the country’s president, Nicolas Maduro, in January. Chevron had stayed on in the South American nation even after former President Hugo Chavez nationalised oil production.

Chevron did not respond to Al Jazeera’s request for comment.

Competitors also performed well. ExxonMobil on Friday posted its best quarterly profits in four years, but they fell short of analysts’ expectations. Earnings raked in $9.2bn.

Exxon did not respond to a request for comment.

On Thursday, Valero Energy reported its highest ever second-quarter profit, with net income coming in at $3.7bn as US refiners reap the benefits of tensions choking oil production across the Middle East.

But those benefits have not reached consumers, who are feeling the strain at the petrol pump. Petrol prices are above $4 a gallon (3.78 litres) across the US. The average price for a gallon of petrol is $4.09, down from $4.11 this time last week, but up from $3.82 a month ago, according to the American Automobile Association (AAA), which tracks daily petrol prices.

By comparison, when the US and Israel first struck Iran in late February, the average price was $2.98.

An analysis from Bank of America published in April showed consumers spending as much as 4.2 percent of their income on petrol in March, up from 3.9 percent in 2019. Lower-income earners are hit much harder, with more than 10 percent of households spending more than 10 percent of their monthly income on petrol.

This comes as pressure on the US Strategic Petroleum Reserve continues. The reserves hit their lowest level since 1983 this week, according to the Department of Energy. They fell by 2.8 million barrels over the week to 304.8 million barrels.

Political pushback

The condemnation of the oil industry has come from across the political spectrum.

“A decent industry would say, ‘this was money we didn’t earn, it’s a windfall we get from our cartel pricing scheme.’ Not these corrupt, greedy and grasping rogues,” Democratic Senator Sheldon Whitehouse of Rhode Island wrote in a post on X on Sunday.

But lowering prices might not be as easy. Beyond pressure from consumers, companies across the corporate United States are beholden to a concept called shareholder supremacy. This means that while lowering prices might be in the best interest of pinched consumers, it may not be possible given the legal framework and companies’ fiduciary responsibility to shareholders.

“They’ve [oil companies] got shareholders they’re responsible for. They could reduce share buybacks or dividend payouts, but right now, I don’t see oil companies doing much,” Post Oak Group’s Drolet said.

He said if he were advising a member of Congress or the president, providing relief to consumers might be easiest by suspending the so-called gas tax, which varies by state. In Texas, for example, the gas tax accounts for 20 cents per gallon, while in California, it is 63 cents per gallon.

“From a political standpoint, the best thing our government can do is suspend gas taxes, especially in California. If they put a temporary hold on taxes, that would help everybody get through this challenging time.”

Al Jazeera asked the White House if that policy is on the table, but the press office did not respond.

Heading into the US midterm elections, cost of living remains among the highest concerns for consumers. In a Washington Post/Ipsos poll last month, 54 percent of respondents said that high prices and the economy were a chief concern heading into November.

“They see the price of fuel and net profit for Exxon and Chevron and feel that they are abusing US consumers, especially as US consumers have access to the correct fuel, whereas other areas around the world have shortages [such as Germany, Philippines],” Babak Hafezi, professor of international business at American University, told Al Jazeera.

“The reality is that as the war [On Iran] progresses, the impacts of the lack of supply will create full price and supply shocks.”

Amid Trump’s comments, Chevron’s stock is on the downturn in midday trading, tumbling more than 2 percent from the market open. However, it is up more than 1.1 percent over the last five days.

ExxonMobil is down 0.5 percent for the day and 0.1 percent over the last five days.

Japan and the United States have confirmed a rare, coordinated yen-buying intervention to halt the Japanese currency’s slide to 40-year lows, with Tokyo signalling it is willing to take further action if needed.

The Japanese Ministry of Finance confirmed the joint intervention after a statement by US President Donald Trump on Sunday announced that Washington was helping to prop up the yen as a sign of friendship and to support the global economy.

“They have a weakening yen, and they wanted a little bit of help. And we’re always there for Japan,” Trump said in response to a reporter’s query about why the US is helping to support the currency.

The yen leapt after the announcement, leaving traders on high alert for further intervention from authorities. The Japanese currency gained as much as 1.4 percent to hit a nearly three-month high of 155.20 per US dollar, compounding a 3.8 percent surge over the previous two sessions. The yen also advanced broadly against other major currencies, including the euro and sterling.

The latest bout of aggressive yen-buying heavily pressured the US dollar. In early Asian trading on Monday, the euro climbed to a 1.5-month high of $1.1559, while sterling hovered near a two-week top at $1.3476.

However, the rapid appreciation of the currency immediately weighed on the equity market. The Nikkei share average tumbled, reversing course from the one-week high it had achieved in the previous session.

Analysts say the intervention underscores both countries’ resolve to prevent global spillovers from a sell-off in the yen and Japanese government bonds, including by adding pressure on already rising US Treasury yields.

Japan has been struggling to curb a relentless drop in its currency that has pushed up import prices and stoked broader inflation, hitting household wallets and Prime Minister Sanae Takaichi’s approval ratings.

In its statement, Japan’s Finance Ministry said Friday’s yen-buying intervention with the US Treasury Department “countered excessive volatility and disorderly movements in the Japanese yen in recent months”.

“The Japanese Ministry of Finance remains attentive and in close communication with our counterparts at the U.S. Treasury,” it added. “We will not hesitate to conduct further joint intervention.”

The joint intervention is the first since a 2011 coordinated action to weaken the yen after the devastating earthquake in eastern Japan.

Tokyo may have sold as much as $58.97bn to buy yen when it intervened in New York markets on Thursday, Bank of Japan data indicated, before Friday’s confirmed joint intervention with Washington.

US Treasury Secretary Scott Bessent also confirmed Friday’s effort, noting on Sunday that Washington “will not hesitate to participate in further joint intervention”.

“We strongly support Japan’s decisive market and monetary steps to correct the substantial undervaluation of the yen,” Bessent said in a separate statement on X, repeating his calls for further interest rate hikes by the Bank of Japan.

In line with Bessent’s repeated calls for higher Japanese interest rates, the Bank of Japan on Friday offered its most explicit signal to date of an early rate hike, even as it kept monetary policy steady.

In a sign of broader policy coordination, South Korea also stepped in to buy its won currency on Thursday.

Japan intervened in April and May, buying yen, but the move triggered only a brief rebound. The Bank of Japan’s June rate hike to a 31-year high of 1 percent also gave the struggling currency little lasting boost.

A Pacific island has become one of the biggest economic success stories of the year so far.

Taiwan has witnessed a dramatic boom in recent months driven by the mania for artificial intelligence (AI). Earlier this year, its stock exchange soared to become the fifth largest in the world based on market capitalisation, the value of its publicly traded shares, overtaking the United Kingdom, Canada and India.

Much of that upward momentum has been driven by AI and other technology exports highly sought after by the United States.

Last year, the US imported $201bn worth of goods from Taiwan, nearly double its rate from 2024, when it acquired $116bn in imports. In May, Taiwan eclipsed China to become the third-largest source of US imports, after Mexico and Canada.

Experts have described Taiwan’s market acceleration as a return to its status as a “tiger economy” — a term used to capture surging growth in East Asia. Much of the credit, they say, falls to its flourishing technology sector.

“Artificial intelligence helps explain the rising importance of Taiwan,” said Chad Bown, a senior fellow at the Peterson Institute for International Economics.

But critics warn that, while Taiwan’s market remains strong, factors like tumultuous international relations, as well as demographic concerns, could complicate the island’s long-term outlook.

“It seems to be a win-win for now,” said Reza Hasmath, an academic faculty adviser at The China Institute at the University of Alberta. “But Taiwan is just postponing a reality that’s not sustainable.”

An economic boom

Taiwan’s thriving export market helped boost its gross domestic product (GDP) to 8.63 percent in 2025.

That rocket-ship trajectory continued into the first quarter of this year, when the GDP saw an exhilarating 13.69 percent rise.

Government data released on Friday showed that the island is continuing that momentum, with its economy growing an impressive 12.92 percent in the second quarter of the year, which ended in June.

“The GDP growth is going like gangbusters,” said Dexter Tiff Roberts, nonresident senior fellow at the Atlantic Council’s Global China Hub.

Roberts expects the trend to be “long term”, as Taiwan produces about 90 percent of the advanced chips used to power leading AI models.

“That’s not going to go away. We know the world, and the US, needs this,” he added.

While the AI boom is a global phenomenon, the US has become a major market for such chips, with billions of dollars flowing into the industry each year.

US President Donald Trump, meanwhile, has pledged to bolster his country’s status as “the world leader in artificial intelligence”. His administration has claimed to attract more than $2.7 trillion in tech and AI investments since the start of his second term.

To secure US access to Taiwan’s cutting-edge semiconductor technology, the Trump administration signed an agreement under which Taiwan will invest $500bn in the US.

Half of that amount is expected to come in the form of direct investments by Taiwanese semiconductor and tech firms, including through the development of onshore tech manufacturing.

The rest is largely comprised of credit guarantees for additional investments from Taiwan in the US.

Under the agreement, Taiwanese firms would be allowed to import 2.5 times the capacity of their US factories, without fear of steep tariffs.

In a subsequent trade agreement, Taiwan agreed to reduce its tariffs on 99 percent of US exports.

Taiwan has also boosted its tech exports to the US through investments in nearby Mexico, with cross-border plants manufacturing inputs for data centres in Texas.

‘Unbalanced relationship’

But Hasmath, the faculty adviser at the University of Alberta, warns that there are troubling signs on the horizon for Taiwan-US relations.

Trump has long sought to eliminate trade deficits with US economic allies, and he has lashed out at countries that export more to the US than they import.

Hasmath pointed out that Taiwan is building a robust trade surplus with the US, close to $200bn and counting. That could spark a backlash.

“This is an unbalanced relationship and not conducive to Taiwan in the long term,” Hasmath warned.

Trump will not tolerate a hefty trade surplus for long, he added. Hasmath believes the US president will soon look to renegotiate his country’s deals with Taipei.

Roberts at the Atlantic Council, meanwhile, warned that Trump is “mercurial” — and with such a temperament comes “uncertainty”.

Then there’s the question of political upheaval in the US. Trump’s approval ratings are low, and he is ineligible under US law to run for a third term as president.

Demographic problems

While Taiwan’s economic boom is “very real” and “very obvious”, Roberts said there are clear vulnerabilities even on the domestic front.

Taiwan’s traditional export sectors like plastics and textiles are underperforming. Plus, Roberts pointed out that only a small fraction of the Taiwanese population is involved in the AI sector.

“A majority of the younger population is not in hi tech, so that’s a real problem,” he said.

While the booming stock market has sparked a “wealth effect” — those with rising portfolios feel richer and are more inclined to spend — that helps the wider population only to an extent.

With most of Taiwan’s employment concentrated outside of the AI sector, economists have warned that the island could develop what’s called a K-shaped economy, where the wealthy see growth, while the poorer segments of society stagnate or decline.

The chip industry employs up to 350,000 people at most, experts say.

Meanwhile, TSMC, Taiwan’s biggest chip company, makes up to 40 percent of the stock market and provides four percent of the island’s GDP growth. That lopsided proportion is “unsustainable”, according to Hasmath.

Plus, Taiwan has a rapidly ageing population, with roughly a fifth of its population over the age of 65.

The island also has other vulnerabilities. For example, it relies heavily on foreign imports of energy products, particularly oil, and has struggled with water scarcity.

Then, there’s the superpower next door: China. The government in Beijing considers Taiwan, a self-governing island, as its own territory, and it has taken aggressive measures to limit the island’s ability to establish diplomatic relations of its own.

That conflict has added fuel to the debate around Taiwan’s growth, with a spokesperson for the Chinese government reportedly saying the island’s growing proximity to the US tech sector will “drain Taiwan’s economic interests” and “hollow out” the country’s major industry.

Hasmath said that, if the AI boom backfires on Taiwan, all of that ultimately adds up to a “recipe for electoral change, a shift in government” in Taipei.

United States economic growth slowed in the second quarter of 2026 amid a growing deficit and increasing inflationary pressures.

US gross domestic product (GDP) grew by 1.5 percent between April and June. That is a sharp decline from 2.1 percent growth in the first quarter of the year, according to a Bureau of Economic Analysis (BEA) report released on Thursday.

A widening trade deficit is a key reason why GDP is slowing, as is a jump in petrol prices, experts say.

“It’s a classic supply shock. The combination of tariffs and oil price spikes is exactly what a macroeconomist would expect to happen,” Michael Klein, professor of international economic affairs at The Fletcher School at Tufts University, told Al Jazeera.

The US has increased purchases of goods like semiconductors, telecommunications equipment, and industrial equipment, according to BEA data. Business investment in equipment rose by more than 15 percent in the second quarter. Those are essentially the elements needed for the ongoing investment boom to support the growth of artificial intelligence (AI).

“Imports rose due to the investment and consumption driver, and so net exports were a drag on overall growth. Overall, the US is investing and consuming more but not producing more,” Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, told Al Jazeera.

Exports have not kept pace. The trade deficit in May grew to $77.6bn, a 42 percent increase from the month before, according to BEA data.

Exports tumbled by 3.2 percent to $317.7bn, and imports rose by 3.3 percent to $395.3bn.

This comes as countries around the globe seek to reduce their dependence on the US due to President Donald Trump’s tariff policies.

Among them is Canada, historically one of the US’s biggest trading partners. Canadian Prime Minister Mark Carney has pursued new trade deals with China and Saudi Arabia in recent months, for example, as Trump has slapped steep tariffs on the country, threatened to annex it and called it the 51st state, and refused to renew a trade deal with Canada and Mexico.

Are US tensions with Iran a factor?

In the second quarter, energy prices fluctuated greatly over the past few months. For US consumers, that was mostly reflected in petrol prices. During the second quarter, US petrol prices hit $4.48 per gallon (3.78 litres) in May.

They later retreated to $3.96 per gallon by the end of June. But the reprieve was short-lived as a fragile peace deal failed to take hold, with petrol prices increasing throughout July after the deadline for data to be included in second-quarter GDP had passed. Prices have since moved back above the $4 mark.

Petrol prices drove inflation for much of the second quarter. Between March and April, petrol prices jumped 5.4 percent. The next month, they jumped another 7 percent. They eased between May and June, falling 9.7 percent as global benchmark prices pulled back.

According to analysis from Bank of America, discretionary spending surged in June, the final month of the second quarter, as spending on products outside of petrol jumped while fuel prices temporarily eased.

“With gasoline prices easing in June, total card spending excluding gas surged 5.6% YoY [year over year] – also the strongest growth since April 2022,” the report said.

How can the GDP recover?

US consumers have ramped up spending on prescription drugs, automobiles like light trucks, and new furniture. There was also increased spending in areas like restaurants and hotels, suggesting that consumers remain somewhat resilient.

But, says Fletcher School’s Klein, that spending is by high-income earners, a trend that indicates a K-shaped economy, which is when the wealthy thrive, while lower-income consumers and small businesses face tougher economic conditions.

“The continued consumption growth of those who are better off depends upon things like the stock market staying strong and housing prices staying strong, because people feel wealthier through the value of their house or their stock portfolios, so they’ll spend more. But by a number of measures, the stock market seems to be very highly valued,” Klein, who also authors the EconoFact economic analysis website, told Al Jazeera.

Overall, consumer confidence fell for the third straight month in July, according to a Conference Board report released on Tuesday. Consumers attributed the decline to “current business conditions”, and the organisation expects “little improvement” for the remainder of the year.

Business investment would also need to surge more broadly to lift the wider economy. While there has been a boom in the AI sector, other industries have not been as eager to keep their inventories stocked.

Klein says consistent trade policies would change that.

“The pervasive uncertainty in the economy will affect businesses’ decisions on hiring and investing. That can also contribute to the slowdown, because, in an uncertain environment, businesses don’t want to make decisions that have long-lasting consequences when they have little idea of what the future will look like,” Klein said.

Creating economic conditions that encourage consumers and businesses to spend would help drive up GDP in the coming quarters. However, uncertain trade policies and concerns about widespread layoffs, as has been the case in several tech companies, have made consumers more cautious with the pocket books.

“If people were more secure and felt that their jobs would be there next year; if they felt that things weren’t more expensive and they could afford to spend more. But those are not easy fixes, right? And talk is not going to change what people rightly perceive as a fraught situation,” Klein added.

GDP grew by 1.5 percent in the second quarter following a 2.1 percent increase in first quarter.

Economic growth in the United States slowed in the second quarter amid a growing trade deficit and tensions between the US and Iran which weighed on global fuel prices.

The US Gross Domestic Product (GDP), a measure of goods and services, grew by 1.5 percent between April and June, marking a slowdown from 2.1 percent growth in the first quarter of 2026, according to the Commerce Department’s Bureau of Economic Analysis report released on Thursday.

Consumer spending saw a bump of 3.2 percent for the quarter, both on the back of generous tax refunds from US President Donald Trump’s ‘One Big Beautiful Bill Act’ as well as heightened petrol prices that cost consumers.

Fuel prices are on the upswing after a brief reprieve. The average price for a gallon of petrol (3.78 litres) is $4.09, up from $3.84 this time last month, according to the American Automobile Association (AAA), which tracks daily petrol prices. By comparison, the average price was $2.98 when the US and Israel first struck Iran on February 28 .

Analysts also point to the artificial intelligence spending boom as a reason for the surge, even as those are heavily import reliant and contributing to trade deficits.

“Overall, the economy continues to rely on technology investment,” Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, told Al Jazeera.

That will likely continue into third-quarter reports, which will take into account the month of July. On Monday, it was reported that Nvidia is in talks to make a $250m investment in OpenAI.

However, there are concerns about how long such investments will last amid questions over circular financing propping up the sector.

“Data centres continue to drive investment and economic growth, increasing the sector’s role in the economy while raising questions about its sustainability,” Ziemba said.

Meanwhile, the Personal Consumption Expenditure Price (PCE) Index report, one of the US Federal Reserve’s key metrics for gauging the rate of inflation, increased 3.7 percent on an annual basis for the month of June after a 4.1 percent surge in May.

The slowdown was marked by a brief retreat in petrol prices last month before they climbed higher again over the past month.

“Today’s report is a snapshot of an economy under a ceasefire that no longer exists. Even with last month’s temporary inflation relief, prices are still elevated and families are saving less as they try to keep up,” Alex Jacquez, a member of the National Economic Council under former US President Joe Biden, said in a note provided to Al Jazeera.

On Wednesday, the US Federal Reserve opted to maintain interest rates at 3.5-3.75 percent.

US markets are on the upswing in midday trading, largely driven by an increase in Microsoft stock amid better-than-expected sales and growth in cloud services. Markets have also risen following the PCE and GDP reports.

The tech-heavy Nasdaq is up 2.6 percent, with the S&P 500 following at 1.2 percent and the Dow Jones Industrial Average up 0.5 percent.

Gold prices, which are typically considered a safe investment during economic uncertainty, extended their gains by 1.9 percent to $4,108.30 per ounce after rising 2 percent on Wednesday.

OpenAI CEO Sam Altman has met with US senators to discuss his company’s upcoming models, as President Donald Trump said he is considering AI “controls” following OpenAI’s disclosure that one of its AI systems escaped containment during a security test.

“We’re looking at controls,” Trump told reporters in the Oval Office in response to a question about OpenAI’s rogue agent, adding that he did not want to “restrict” AI developers from building new products.

A rogue agent escaped the handling of ChatGPT maker OpenAI and hacked the AI firm Hugging Face last week. Then, on Tuesday, it was revealed that a second company had been a target, too – Modal Labs, a New York City-based AI infrastructure firm.

The company itself was not hacked but an account of a customer hosted on Modal’s infrastructure. Modal’s chief technology officer, Akshat Bubna, did not confirm which customer was the target. The hack escaped a contained environment during a security test.

“We’re aware a Modal customer published an unauthenticated endpoint that allowed anyone on the internet to use their sandboxes for code execution,” Bubna said in a statement. “This was used by the rogue agent. Modal’s platform or isolation were not compromised in any way.”

Altman has long been accused of dismissing concerns that his products and the AI industry impact society at large, including in a recent lawsuit brought by the State of Florida that alleged the company put profits ahead of user safety.

Now, he appears to be walking back some of his past enthusiasm around AI’s pace of growth.

In a podcast called Invest Like the Best, Altman called the Hugging Face hack an “extremely sci-fi cyber incident” and later said that it was the “first security incident that I have felt very viscerally”.

“We may have to pace the rate of AI development to give ourselves enough time for society to harden around some of these new capability levels,” he said on the podcast.

On Saturday, Altman said that AI has reached “the singularity”, when AI surpasses human intelligence and becomes harder to control. He had previously said this would not be reached by 2030.

Washington meetings

Altman was in Washington, DC, this week, meeting with US Senators Raphael Warnock, a Democrat from Georgia, and Bernie Moreno, a Republican from Ohio on Wednesday. Altman told reporters that the hacking was discussed but was not the focus of the meeting.

Altman is also set to meet with Democratic Senator Mark Warner of Virginia, the top Democrat on the chamber’s Intelligence Committee.

CNBC reported that Altman is also to make a trip to the White House to meet with Trump’s chief of staff, Susie Wiles. Last month, the president signed an executive order requesting that AI companies assess their models before full release.

Financing concerns

The hacking and meetings come alongside pressure from Wall Street amid renewed concerns about potential circular financing, following reports that semiconductor chip giant Nvidia is undergoing talks with OpenAI to provide funding guarantees for a data centre in Ohio.

The $250bn deal would help the ChatGPT owner lease a 10-gigawatt project that SB Energy, a subsidiary of SoftBank, is building in Piketon, Ohio, 109km (68 miles) south of Columbus, Ohio. It is part of a public-private partnership that allowed SoftBank to build the world’s largest AI data centre on government land owned by the US Department of Energy.

“The demand is not as big as it appears to be because, again, the companies are buying from each other using their own money to some degree, as opposed to, say, OpenAI having such tremendous demand from customers, monetising it properly, and then using customers’ money to buy Nvidia chips. They’re essentially using Nvidia’s money to buy Nvidia chips,” said Aleksandar Tomic, associate dean at Boston College.

The development comes as the Altman-led company is leaning towards an initial public offering, which, according to reporting from The New York Times last month, could be in 2027.

The United States Federal Reserve is set to hold interest rates steady as inflationary pressures mount, driven by heightened fuel prices as tensions between the US and Iran continue.

The central bank said on Wednesday that it will maintain rates at 350-375 basis points during the second monetary policy decision under new Chairman Kevin Warsh.

“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability,” the central bank said in a statement upon the release of its decision.

CME FedWatch, which tracks the likelihood of monetary policy decisions, forecast a 66.3 percent chance of maintaining rates, while there was a 33.7 percent chance that rates would increase to 375-400 basis points.

Of the 12, three members, Beth M Hammack, Neel Kashkari, and Lorie K Logan, voted to raise rates by 25 basis points.

“My colleagues and I considered the economic shocks of recent years, strained supply chains arising from the pandemic, military conflicts, energy supply disruptions, substantial increases in tariff rates, and yes, the surge in AI-related investment,” Warsh told reporters.

“We are not relying on any one individual piece of data as cover or as an excuse, or as validation. What I care about and what I think the Committee cares about is trends on the data.”

Monetary policy decisions have become more uncertain as Warsh has scrapped forward guidance, which typically helps financial institutions and journalists better understand upcoming policy choices.

Flying blind

That is putting pressure on analysts.

“With little guidance on the reaction function under the new chairman, markets are filling the void with speculation that Warsh may be eyeing a surprise hike to reinforce anti-inflation credibility,” Barclays economists said in a note.

Citadel Securities earlier this week forecast a rate hike. Meanwhile, analysts at S&P Global forecast that rates would hold steady.

At the last meeting, the central bank’s governors were evenly split on whether to raise interest rates this year, as the central bank maintained rates during its first meeting under Warsh.

Warsh had previously said that there was “no tolerance” for inflation as the central bank pushes to reach the Fed’s 2 percent target.

Market shifts

Financial pressures on the broader market eased last month, with consumer inflation moderating. The Consumer Price Index report released in July for the month of June by the US Labor Department’s Bureau of Labor Statistics showed a 0.4 percent decline in consumer inflation, marking the first monthly decline since April 2020 in the early days of the COVID-19 pandemic. However, that was a correction from the previous month, when the CPI rose by 0.5 percent.

The CPI remains elevated at 3.5 percent on an annual basis, according to the report, though that is still a slowdown from 4.2 percent in May. However, consumers are still feeling the pinch, especially at the petrol pump.

Prices are on the upswing. The average price for a gallon of petrol is $4.09 ($1.08 per litre), up 3 cents from this time last week, and up from $3.86 ($1.02 per litre) this time last month, according to the American Automobile Association (AAA), which tracks daily petrol prices. By comparison, daily petrol prices were $2.98 ($0.78 per litre) when the US and Israel first struck Iran on February 28.

Those pressures are echoed by a slump in consumer confidence for the third straight month, according to The Conference Board, which released its report on Tuesday.

“Consumers anticipate little improvement in business conditions over the next six months,” Dana M Peterson, chief economist at The Conference Board, said upon the report’s release.

Political flashpoint

The decision is overshadowed by pressure from the White House. Interest rates have been a point of contention between Trump and the central bank. Trump has long pushed the Fed to cut rates, putting former Chair Jerome Powell in the crosshairs and making him the subject of investigations by the US Department of Justice.

But Warsh has yet to become a target of Trump’s scorn. “Kevin is fantastic,” he told reporters on Monday on board Air Force One. “He’s got a board, and the board members are very political.”

Trump made those claims despite the central bank’s longstanding commitment to maintaining its independence from political pressure.

Taiz, Yemen – Fuad Mohammed has been working as a construction labourer for more than 25 years. The 46-year-old has seen things get progressively worse in Yemen’s construction industry since the war in the country started more than a decade ago, and then further deteriorate after the US-Israel war on Iran began in late February, with its devastating economic impact on the wider region.

“We can barely eke out a living for our families,” Fuad told Al Jazeera.

The ongoing regional war has damaged economies across the Middle East, with government-controlled areas of Yemen bearing a heavy burden as commodity prices soar. Among the hardest-hit sectors is fuel: in January, 20 litres (5.3 gallons) of diesel cost 25,000 Yemeni riyals ($17), but today that price has skyrocketed to 45,000 riyals ($30). That massive spike has triggered a domino effect, driving up the costs of all goods and services dependent on fuel and transportation – including construction.

As a result, countless construction projects across those areas – in Yemen’s east and southwest – have ground to a halt.

Pausing construction

Fuad explained that, before the US-Israel-Iran war, he was able to find work for around two weeks every month. But this year, he has now gone several months with barely any work.

“The price hikes in building materials have frustrated both homeowners and construction labourers,” Fuad said. “Those who want to build find that their budgets are no longer enough, and we are left with no work.”

Fuad recalled that he briefly found work in May for a woman who had saved money to build a home for her family. However, when a fresh wave of price increases hit the market, she paused construction to wait for prices to drop.

“I also work with construction contractors, but most of them have paused their projects at the request of homeowners,” he added. “When I call them, they tell me they are waiting for regional conditions to improve.”

As an example of the rising costs, the price of a truckload of sand increased from 130,000 Yemeni riyals ($87) to 190,000 riyals ($127), while the average cost of one metre of window glass rose from 90,000 riyals ($60) to 130,000 riyals ($87).

Fuad’s situation at home is desperate. Relying entirely on daily wages but having no work, he can not provide basic essentials for his family. He has considered finding another job, but he lacks professional experience in other fields.

In a desperate attempt to find work, he has lowered his daily wage from 25,000 Yemeni riyals ($17) to 20,000 riyals ($13).

“My situation is getting worse every day,” he said.

Economic division

An official from the Yemen Petroleum Company in Aden told the Reuters news agency in May that the increase in the price of diesel was caused by the worsening supply crisis and rising global fuel prices, driven by regional tensions and the closure of the Strait of Hormuz, alongside increased transportation and marine insurance costs. The official noted that the measure was temporary and would remain in place until the end of the crisis and conditions returned to normal.

Wafeeq Saleh, executive director of the Taiz Center for Yemeni-Gulf Studies, explained that the Yemeni economy was particularly susceptible to external economic shocks.

“Any disruptions in global commodity markets directly affect the local market because [Yemen] imports nearly 90 percent of its needs,” Saleh told Al Jazeera. “Consequently, the local rise in commodity and fuel prices is a natural outcome of surging global prices, shipping tensions in the Strait of Hormuz, as well as increased maritime insurance and freight fees.”

In areas controlled by Yemen’s Houthi rebels, however, including the capital Sanaa, there has not yet been a sharp increase in fuel prices, and therefore no impact on the construction industry – yet.

Yemen’s war has entrenched two separate economic structures in the country, with the central bank bifurcated between Aden and Sanaa, and two different exchange rates operating for the Yemeni riyal.

The Houthi group is already facing popular anger over a weak economy, as it grows increasingly isolated regionally and internationally. The group has so far avoided an increase in the price of fuel, with 20 litres (5.3 gallons) of diesel costing 9,500 Yemeni riyals, which at the exchange rate set in Sanaa is the equivalent of roughly $18.

“[The Houthis] may have sufficient inventory from previous months, which is why the local market hasn’t been affected,” Saleh said. “However, the impact will appear in the coming period when imports are made at the new price.”

The actions of the pro-Iranian Houthis themselves have contributed to the increase in global oil prices. Having sat out the Iran war for its first few months, the Houthis recently began attacks against Saudi ships passing through the Red Sea, after the Yemeni government and the Saudi-led coalition that backs it refused to allow a plane from Iran to land in Sanaa. The Houthi attacks mean that the transportation of oil from the Gulf is now disrupted in both the Strait of Hormuz and the Red Sea, and has contributed to oil prices going past $100 a barrel for the first time since May.

Will prices come down?

Lutf Zuraiqi, 58, had saved some money to build a home, but the dramatic increase in the cost of building materials forced him to pause the project until “things get better”.

“Price increases aren’t new in Yemen, but I believe this current surge is regional. I believe as soon as the regional war ends, building materials will return to their old prices,” Zuraiqi told Al Jazeera.

Zuraiqi has been following news of the Iran war on a daily basis because its end would mean lower material costs for him and the chance to resume building his planned home.

“The government promised that prices will go back down after the [US-Iran] war ends,” he said. “So this time I’m choosing to believe them and hope I will manage to finish my home.”

Mohammed Jameel, on the other hand, hasn’t been following the news – but the building contractor has been tracking prices of building materials instead. The 59-year-old believes that, based on his experience, once the price of the materials goes up, they never come down.

“I have worked in construction for more than four decades now, and throughout this entire period, building material prices have consistently risen,” Jameel said. “We have never witnessed a price drop. So, I advise those who have paused their construction to resume, as today is always better than tomorrow.”

Jameel said that he has been forced to reduce his rates and cut profit margins on major contracts to keep some work.

“My experience tells me it is normal for owners of homes and projects to pause work until they adapt to the new prices,” he added. “But eventually, construction labourers’ wages will rise, and the total cost of building will increase.”

Jameel feels for the plight of construction labourers, but he views this as a temporary phase and believes the suffering will ease once work picks up again. “We are all in the same boat, not just the daily wage labourers,” he said. “But we hope things will get better.”

Shipping through the Strait of Hormuz remains in effect halted.
Tankers are now avoiding another critical waterway – Bab al-Mandeb – as Yemen’s Houthi forces threaten Saudi-linked vessels. Ukrainian strikes have hit Russian export infrastructure.
Three major routes are now disrupted at once: the Gulf, the Red Sea and the Black Sea.

Together, they threaten trade flows equivalent to nearly a quarter of global oil supplies just as reserves sit at multiyear lows.
Goldman Sachs says oil could rise above $120 a barrel by the fourth quarter if disruptions in the Strait of Hormuz alone persist.
Economies worldwide are bracing for another energy shock.

Iraqi Prime Minister Ali al-Zaidi is leading a high-level delegation to Turkiye, in his first visit to the neighbouring country since taking office in May.

Accompanied by ministers and senior officials, al-Zaidi’s visit on Tuesday will focus on “strategic cooperation” between the two countries, as well as issues related to security, water and the economy, according to government spokesman Haider al-Aboudi.

Relations between Iraq and Turkiye have fluctuated over the past decade but remained a priority for both sides, particularly for Iraq in relation to oil and water resources.

And the launch of the US-Israel war on Iran in February and the subsequent closure of the Strait of Hormuz have elevated Ankara’s importance for Baghdad, prompting it to press Turkish authorities to resume and increase the exporting of oil through the Iraqi-Turkiye pipeline after years of suspension.

New oil agreement

The two countries are seeking to sign an oil pipeline agreement that governs the export of Iraqi oil after the expiration of the previous deal on Monday.

A source from Iraq’s Ministry of Oil told Al Jazeera that a technical delegation arrived in Ankara late last week to finalise a one-year extension of the old oil-exporting agreement until a new deal is concluded.

“The new Turkish terms regarding a new agreement are very difficult to be accepted by Iraq. For this reason, no one other than the Iraqi council of ministers is to take such a decision regarding this issue,” said the official on condition of anonymity.

”Turkiye wants to increase the interest from $1.35 for each barrel to $7, and the export capacity must not be less than 1.5 million bpd [barrels per day], whether Iraq can reach this level or not,” the source added.

Part of al-Zaidi’s plan is to find new energy deals and secure alternate routes to export Iraqi crude via Turkiye and Syria and to the Mediterranean Sea.

Iraq signed energy deals estimated at $200bn with US companies during al-Zaidi’s visit to the United States earlier this month, and the government aims to increase its oil and gas production, as well as to diversify exporting options.

“There is an urgent need to find new export outlets away from the Strait of Hormuz, which no longer meets Iraq’s requirements. We must expedite and shorten the timeframe for negotiations and contracting in order to establish new export routes,” said Iraqi Oil Minister Basim Khudair.

Development Route 

During his visit, al-Zaidi is also expected to pursue the establishment of strong trade, development and economic ties while seeking to draw from Turkiye’s experience across different industries.

A government source told Al Jazeera that the prime minister will highlight the importance of utilising Turkish expertise in the energy, infrastructure and transport sectors to boost Iraq’s development initiatives.

Among the main projects is the so-called Development Route – a vital transport project that connects Iraq’s al-Fao port in the south all the way north to the Iraq-Turkiye-Syria border triangle through a 1,200km (746-mile) rail and a highway network that passes through 10 Iraqi provinces.

Abd al-Jabar Ahmad, a professor of political science, said continued attacks by armed groups “have effectively derailed” the project.

He also cast doubt al-Zaidi visit’s will yield major results in relation to it, pointing to Ankara’s involvement in a transport corridor seeking to link Turkiye to Jordan through Syria and then Saudi Arabia.

“In my view, the Saudi project stripped Iraq’s Development Road Project of much of its economic and investment appeal,” he added.

Water and security   

Water management is also expected to be prioritised during al-Zaidi’s discussions in Turkiye.

Iraq blames Turkiye for building dams that have affected the flow of water from its two main rivers – the Tigris and the Euphrates – which originate in Turkish territory.

“Iraq views it as an issue that impacts the future of millions of Iraqis,” said the government source.

But the most complicated and sensitive issue concerns security – particularly, the presence of Turkish forces on Iraqi soil to fight the Kurdistan Workers’ Party, or PKK, which Turkiye, the US and European Union have designated as a “terrorist” group.

Military estimates suggest that Turkiye has about 50 small and big bases in three Iraqi provinces – Erbil, Duhok and Nineveh – hosting some 5,000 soldiers and weaponry, including artillery and armoured vehicles, as well as heavy and medium arms.

In mid-2025, the PKK announced it had taken its first steps towards disarmament as part of a wider peace deal with Ankara to end 40 years of war against the Turkish state in a conflict that has killed more than 40,000 people. Still, Turkiye continues to view the armed group’s presence in different mountainous areas in northern Iraq as a national security threat.

But despite the challenges, there is wide support in Iraq to strengthen relations with Turkiye, driven by the belief that ties with the neighbouring country remain important and serve Iraq’s national interests.

“There is a strong Iraqi desire to deepen relations with Turkiye in many aspects, especially in oil as Turkiye becomes one of the most important countries in the region in terms of transit routes for exporting oil to Europe and the rest of the world,” said Issam al-Faily, a political science professor.

“The problem lies in the nature of the Iraqi political climate, which is affected by the ongoing power struggles. The covert Turkish–Iranian rivalry may be one of the reasons that could prevent al-Zaidi from achieving his aspirations in relations with Turkiye. He should balance these very critical issues, if he wants this visit to be successful,” added al-Faily.

Tehran, Iran – Iran and the United States have returned to mediated talks, and their military action is temporarily suspended, but the war continues to impact international maritime corridors beyond the Strait of Hormuz as well as domestic markets.

The near-total closure of the strategic waterway, disruptions in the Red Sea by the Iran-aligned Houthis in Yemen and Ukraine attacking an Iranian vessel in the Caspian Sea have all kept tensions high.

Iran’s government is also facing more tough choices, including a potential fuel price hike amid high social and economic discontent, as the US military enforces a naval blockade of the country’s southern ports for a second time.

The Ministry of Petroleum said on Saturday that Iran has sold $11.5bn of crude oil during the war without specifying the exact dates and $6.5bn during the period of the now-suspended memorandum of understanding (MoU) signed with the US last month. It said the combined figure represented 60 percent of the full-year oil revenue target in the budget.

The signing of the June 17 MoU led to the partial reopening of the Strait of Hormuz and lifting of the US naval blockade on Iran, which eased some of the pressure on global oil markets and allowed Iran to export oil stored on supertankers waiting to sail from its territorial waters. Iran’s Petroleum Ministry said increased oil prices generated about $3bn in additional value in the first half of the year and $11bn from the yields has so far been transferred to government coffers despite US embargoes.

During the previous blockade that was imposed on April 13 and lasted a little over two months, Iranian authorities attested to near-zero crude exports. A prolonged second blockade risks further reducing Iran’s export revenues and piling pressure on Kharg Island, through which about 90 percent of Iran’s crude oil exports pass, and other Iranian storage and export sites, which could in turn affect production at petrochemical plants and make an eventual restart costlier and slower.

The US military’s Central Command (CENTCOM) said that as of Saturday, soldiers had redirected 12 commercial vessels trying to run the blockade that has been in place since mid-July, disabled two that did not comply and boarded two “to ensure total compliance”.

The US military also showed footage of heavily armed soldiers rappelling down from a helicopter onto the deck of the Charminar, an Iran-linked oil tanker subject to US sanctions since last year for allegedly being part of the Shamkhani network. The US says Iranian oil magnate Mohammad Hossein Shamkhani plays a central role in Iranian and Russian shadow fleet operations.

Iran has also said it has been redirecting multiple ships each day to keep the strait closed as its armed forces emphasised that they will not bow to pressure. On Sunday, Iranian media reports said a vessel blew up after hitting a naval mine in the Strait of Hormuz.

Still, CENTCOM has stopped extensive bombing strikes against Iran for two nights with US Ambassador to the United Nations Mike Waltz saying President Donald Trump is giving talks with Tehran “some space”.

Iran has also stopped retaliatory attacks across the region while Ministry of Foreign Affairs spokesman Esmaeil Baghaei said discussions with Oman on reopening the Strait of Hormuz have been productive.

The domestic picture

The oil export constraints, however, are still adding to Iran’s existing economic woes, which are linked to domestic structural issues and mismanagement as well as years of harsh sanctions.

Iran’s infrastructure has also suffered significant damage during the war launched by the US and Israel in late February and may fare worse if the conflict escalates.

The government said last month that about 230 million cubic metres (300 million cubic yards) per day of Iran’s pre-war natural gas output of roughly 650 million cubic metres (850 million cubic yards) was lost due to US and Israeli bombing, worsening electricity and petrochemical shortages.

Sekhavat Asadi, managing director of the Pars Special Economic Energy Zone, said on Sunday that Iran expects to restore more than 100 million cubic metres (130 million cubic yards) per day of that lost production capacity within the coming months.

Authorities are also managing a fuel imbalance as the country faces a deficit of more than 20 million litres (5.3 million gallons) per day of petrol. The shortage is managed through limited but costly imports, blending fuel components, tapping inventories stocked before the war and repeatedly asking citizens to consume less.

The Petroleum Ministry said tighter monthly fuel consumption caps may be imposed if the imbalance persists.

The government said this week that it is seriously considering doubling the price of a third tier of monthly petrol quotas allocated to individuals.

Another petrol price hike was made in December, weeks before the country was swept by a wave of nationwide protests, in which thousands of people were killed in a government crackdown in January. An overnight fuel price increase in November 2019 also triggered deadly nationwide protests.

The capital, Tehran, and cities across the country are facing rolling electricity cuts, which also create water and communications disruptions. President Masoud Pezeshkian said he has ordered industries not to be cut off until late September to avoid further inflaming a bruised jobs market.

The closure of the Strait of Hormuz has also hit Iran’s commerce with China, its largest trading partner and buyer of oil, which has considerably curtailed its overall crude oil imports to adapt to conditions created by the war.

But nonoil trade with China has also deteriorated since the start of the war, falling by 75 percent in March and June when compared with a year before, according to Chinese customs data.

Two near-total internet shutdowns imposed by the authorities, first during the January protests and then during the war, only worsened conditions for Iran’s economy this year as it battles chronic inflation and a rapid dwindling of public purchasing power.

A report last year by the Saba Pension Strategies Institute, a think tank affiliated with Iran’s state-run pension fund, found that while a little more than 30 percent of Iranians lived below the poverty line five years ago, that rate was projected to have reached 45 percent this year – and was still rising.

Spread to Bab al-Mandeb, Caspian Sea

After repeated Iranian threats that escalating the war could spread the scope of maritime disruptions to the Red Sea, the Houthis in Yemen last week declared a blockade against Saudi Arabia, turning back or hitting vessels transiting near the strait of Bab al-Mandeb while also bombing Saudi oil facilities.

Dozens of commodity vessels have still continued their transit through the strait, including Chinese supertankers, but war-risk premiums have increased, raising import and insurance costs for all.

Saudi authorities, who lead a coalition backing Yemen’s internationally recognised government against the Houthis, have responded by launching major air attacks across Yemen.

And farther north, Ukraine has confirmed that it struck a vessel in the Caspian Sea with President Volodymyr Zelenskyy alleging it was carrying Iran-linked military cargo.

Iran’s authorities said it was a commercial vessel importing iron from Astrakhan, a port on the Volga River in Russia, and bound for Bandar Anzali in northern Iran. They said one sailor was killed and three were wounded.

The Iranian Ministry of Foreign Affairs summoned Kyiv’s charge d’affaires in Tehran to deliver a strong protest and a warning that “the act will not go unanswered”.

The incident has raised concerns that the Caspian Sea, a waterway previously used safely for trade, could also become the scene of more military confrontations.

Iran’s Caspian trade is primarily with Russia, Kazakhstan, Turkmenistan and Azerbaijan. It imports essential goods, such as wheat and other grains, corn, barley and animal feed as well as timber and fertiliser.

The country’s exports through the northern maritime route include construction materials, steel products, agricultural goods and some refined petrochemical products.

The war’s expanding disruptions have only prompted hardline state-linked analysts to advocate closer strategic partnerships with China and Russia.

“We can now say that the two war fronts in the Middle East and Ukraine are increasingly intertwined,” Mahdi Kharratiyan, a political analyst linked with Iran’s Islamic Revolutionary Guard Corps, wrote on X on Sunday.

The island has weathered a US oil embargo since January and is enduring one of its worst economic crises ever.

Cuba’s president has accused the United States of carrying out “genocide” against his people and seeking to seize the Caribbean island nation.

President Miguel Diaz-Canel lashed out during a rally on Sunday commemorating the start of the Cuban Revolution in 1953. His anger was a reaction to Washington’s continued pressure, which has included a crippling oil embargo that has produced regular blackouts and economic hardship.

“I denounce that Cuba is the victim of a cold-bloodedly calculated genocide,” Diaz-Canel said in Pinar del Rio at the event marking the 73rd anniversary of the uprising against former dictator Fulgencio Batista.

US relations with the communist-led island have long been tense, but have deteriorated further under US President Donald Trump.

Washington imposed an oil embargo on Cuba on January 29, causing daily blackouts of more than 20 hours.

The US, Diaz-Canel said on Sunday, was engaged in “economic strangulation” through its actions.

Employers have been forced to reduce workdays, industrial production has stopped, and water and medicine shortages are hitting a country already suffering from previous US sanctions and financial reforms that caused inflation.

Payment companies Visa and Mastercard, Spain’s Melia hotel chain, and Air Canada and Air France have all exited the country amid the crisis.

“Cuba is today waging a historic battle … against the walls of a genocidal policy whose objective is to suffocate an entire people in order to appropriate the country,” Diaz-Canel said.

Trump said he would “take over” Cuba, following the US abduction of former Venezuelan president and Cuban ally Nicolas Maduro in January.

Last week, a US State Department report accused Cuba’s government of running an espionage and influence network against Washington and Latin American neighbours.

In May, the US indicted former president and revolution leader Raul Castro – brother of Fidel – of murder and other crimes for his alleged part in the downing of two civilian airplanes operated by Miami-based exiles off the Cuban coast in 1996.

Cuba’s government has rejected the accusations and denounced Trump’s rhetoric. Talks between the two countries have largely stalled, Cuban officials said in June.

The Cuban Revolution, led by brothers and later leaders Fidel and Raul Castro, culminated in the Batista government’s fall in 1959. Former President Raul, 95, was unusually absent at Sunday’s rally.

Five years after Tunisian President Kais Saied suspended parliament and attained sweeping powers, the country remains sharply divided, grappling with a severe economic downturn and a worsening political deadlock.

Saied’s supporters continue to view the measures taken by him in July 2021 – when he suspended parliament and dismissed Prime Minister Hichem Mechichi – as a necessary “correction” to save the country. The opposition says that since then, state institutions have collapsed, promises have gone unfulfilled, and there has been an unprecedented concentration of power in his hands.

Speaking to Al Jazeera’s Ma Waraa al-Khabar (Behind the News) programme, political and economic experts debated the legacy of Saied’s five-year rule, painting a picture of an economy hindered by a poor business climate, populist policies, and a lack of clear vision.

An economy in free fall

Since Saied assumed near-total control of the levers of power five years ago, Tunisia’s economic indicators have largely plummeted.

Ridha Chkoundali, an economics professor at the University of Tunisia, said that the investment rate in the country has dropped from an average of 20 percent of the gross domestic product (GDP) between 2015 and 2019 to just 8 percent in 2023.

Chkoundali attributed this sharp decline to an environment that drives away investment, exacerbated by a significant burden from taxes, which have risen by five percentage points since 2015.

Taxation, he argued, is no longer used to stimulate investment but simply to collect revenues at the expense of economic growth.

The crisis has hit ordinary Tunisians the hardest. Food inflation has reached nearly three times the general average, severely eroding purchasing power. Meanwhile, unemployment has surged, particularly among university graduates, pushing many to leave the country for better economic opportunities abroad.

Mohamed Abbou, a former minister of state and former secretary-general of the Democratic Current party, argued that the crisis is rooted in Saied’s style of governance, adding that the rule of law has been replaced by a climate of intimidation and threats.

“Tunisia has lost all credibility,” Abbou said. “Everyone fears the situation in Tunisia because there is no rationality… there is no stability in laws, taxes, or anything else.”

Abbou particularly criticised Saied’s approach to international finance, pointing out that the president rejected a deal with the International Monetary Fund (IMF) purely to maintain a populist image. At the same time, he quietly implemented many of the IMF’s harsh austerity demands, such as halting public sector hiring and reducing imports.

However, supporters of the current government argue that it is unfair to blame Saied’s administration entirely for an economic crisis that predates his rule.

Political analyst Souhaib Mezrigui says the current situation is the result of an absence of any clear economic or social vision over the past 10 years. He placed blame for the current crisis squarely on the political class that has ruled Tunisia since the 2011 revolution.

Protests and political prisoners

Tunisia’s economic stagnation has manifested into tangible anger on the streets. Coinciding with the five-year anniversary, thousands of Tunisians rallied in the capital’s Habib Bourguiba Avenue on Saturday, protesting against deteriorating living conditions, rolling water and electricity cuts, and a backsliding in democracy.

Organised by a coalition of opposition parties and the “Nafas” civil initiative, the crowds called for Saied to “leave” and revived the 2011 democratic revolution’s rallying cry: “The people want the fall of the regime”.

A central demand of the protests was the release of political prisoners, who have filled Tunisia’s jails since Saied began his crackdown on dissent. Among the most prominent detainees is Rached Ghannouchi, the 85-year-old former parliament speaker and Ennahdha leader, who was recently sentenced to life in prison.

Ghannouchi’s health has rapidly deteriorated in detention. He recently fainted in Mornaguia prison, where temperatures reportedly reached 52 degrees Celsius (126 degrees Fahrenheit). Rights groups and families of detainees, such as opposition politician Ahmed Nejib Chebbi, have repeatedly warned about the dire conditions inside the detention facility and the toll it is taking on elderly inmates.

Imed al-Khamiri, a spokesman for the Ennahdha party, told Al Jazeera that the continued detention of political figures and opposition leaders remains a “disgrace to the Tunisian state”.

US lawmaker calls for sanctions

Saied’s consolidation of power has also drawn renewed international condemnation. Marking the anniversary, US Representative Joe Wilson issued a scathing statement, accusing Saied of transforming the Arab world’s only constitutional democracy into a “one-man dictatorship”.

Wilson accused the Tunisian regime of phenomenally increasing corruption, destroying opportunities for the youth, and shifting its alliances to become a close associate of Russian President Vladimir Putin, Iran, and Hezbollah.

Noting that Saied’s government has even jailed US citizens, Wilson urged the US State Department to issue a “Level 4: Do Not Travel” advisory for Tunisia.

“I will also continue to work to pass the Tunisia Democracy Restoration Act imposing sanctions on Saied and his inner circle,” Wilson stated on the social media platform X, adding: “Democracy in Tunisia will win in the end. Madmen tyrants will not last.”

The delay, filed in court on Friday, can cost Paramount $1.7bn in fees if the deal is not closed by next June.

Paramount Skydance has agreed to pause its $110bn acquisition of Warner Bros Discovery until after a federal judge rules on states’ challenge to the deal, according to court papers.

The delay, filed in court on Friday, could cost Paramount Skydance about $7m a day in fees it agreed to pay Warner Bros shareholders if the merger does not close by September 30.

“We look forward to proving our case at trial,” Paramount’s spokesperson said.

Twelve states, led by California, sued on July 13, arguing the deal would “extinguish competition” in Hollywood and lead to fewer choices for consumers, particularly moviegoers and cable customers. Paramount has called the states’ claims meritless and pledged to “vigorously defend” its merger.

“Halting this merger while our case proceeds is a critical victory in our efforts to uphold the law and protect the film and television industries,” said New York Attorney General Letitia James, who is suing to block the deal.

Friday’s move arrives just days after US District Judge Araceli Martinez-Olguin granted a temporary restraining order requested by the states to freeze the transaction for several weeks.

The companies agreed to pause the deal until five days after the judge rules on the merits of the case, or June 1, 2027, whichever comes first. Paramount could owe as much as $1.7bn in ticking fees to Warner Bros shareholders if the deal is delayed until then.

Similar merger challenges have taken an average of eight months for a judge to rule, a review of recent cases by the Reuters news agency has found.

There have also been concerns over a media stranglehold as the merger would have brought CNN, currently owned by Warner Bros, under the umbrella of Paramount. The latter already owns CBS, which has seen a fair amount of turmoil amid allegations of bias in favour of US President Donald Trump under the leadership of CEO David Ellison, whose father, tech billionaire Larry Ellison, is a Trump ally.

EDITOR’S ANALYSIS

Houthi blockade for now is shaping who moves Saudi crude, not whether it moves, analysts say, even as oil prices soar.

As oil prices hit $100 a barrel on Thursday, experts say they are watching to see which vessels Yemen’s Houthis allow to pass through in the Red Sea as that will indicate how the crude market trends.

Brent futures rose $6.58 or 6.96 percent, to $100.65 a barrel, exceeding $100 for the first time since late May.

That was on the back of the Iran-aligned Houthis saying they were cutting off the passage Riyadh had been using to ship parts of its crude oil once Iran closed the Strait of Hormuz to retaliate against United States and Israel attacks.

On Monday, the Yemeni group declared a naval blockade on shipments from Saudi Arabia and said they would target Saudi, Israeli, and United States-linked tankers in the Bab el-Mandeb, which links the Red sea to the Indian Ocean.

On Thursday, the Houthis attacked two Saudi Arabian oil tankers, the group said, with a Saudi news agency later confirming that one of the two vessels was set ablaze.

It is not clear if the second one was also hit, according to marine analysis firm, Windward.

“The Houthis are quite mercurial and there is no complete clarity on what the blockade means,” said Michelle Bockmann, a senior maritime intelligence analyst at Windward.

“We’re watching now the ability of Chinese-owned tankers at [Saudi port] Yanbu if they are allowed to go through Bab el-Mandeb. Two have gone through but those had been loaded before the blockade was announced.”

The Houthis have previously relied on China for help, including for drone components, and “the Chinese have previously had a free pass”, said Bockmann, including between 2023 and 2025 when the Houthis attacked cargo ships aligned with Israel and the US in the Red Sea in the wake of the war on Gaza.

Windward tracking shows the cargo that moved through the Bab el-Mandeb chokepoint on July 20 was Saudi in origin but Chinese in crew and destination, and it drew no interdiction. The two vessels passed through the same corridor that Western- and Saudi-linked operators were being warned to avoid.

The enforcement is calibrated to affiliation rather than cargo and the blockade is shaping who moves Saudi crude, not whether it moves, Windward said.

“No one has ever been able to predict their actions… but they know you don’t have to do a lot to get the oil markets to react,” said Bockmann referring to the rise in benchmark oil prices on Thursday.

Rachel Ziemba, adjunct senior fellow at the Center for a New American Security, underscored that the standoff in Bab el-Mandeb is happening while crude buffers have nor been replenished after the peak of the Hormuz crisis earlier this year.

“The multiple chokepoints are new and an example of littoral states looking to use their leverage,” Ziemba said.

Diesel also impacted

For now, both the Houthi threats and the continued closure of the Strait of Hormuz through which nearly one-fifth of the world’s oil transited before the US-Israel war on Iran, has sent prices soaring, including at the pump in the US reaching the national average of $4.09 per gallon (3.4 liter).

“Today’s rise in oil prices could cause $0.10 to $0.20 rise over the next week or two per gallon average price in US,” said Patrick De Haan, head of petroleum analysis at GasBuddy.

But De Haan is looking beyond the two straits and says he’s watching the availability of diesel as price per gallon averages $5.34.

“Diesel prices are being impacted more significantly,” he told Al Jazeera.

One reason behind that is that Ukrainian drone attacks have taken offline some of Russia’s oil refineries. The shortages are being felt domestically leading to Russia banning diesel exports, De Haan said.

“Oil exports are one story, but supplies of diesel gasoline, jet fuel is another story,” he said.

Another unknown in the mix is the role of China which, historically has been a major importer but slashed those imports in the past few months, helping stabilise global prices as some pressure on demand eased.

“It’s been one of the reasons that oil prices haven’t gone up dramatically – that china slashed its imports, and no one predicted that,” De Haan said. “For now, we don’t know if china is using its own strategic reserves or if it will start import again.”

Between those geopolitical plays and the upcoming hurricane season in the US, there is “another wildcard ahead for global refining capacity” and prices, De Haan said.

The US says it has spent more than $37.5 billion on the Iran war so far, and the Secretary of Defense is requesting an additional $67 billion more. One analyst tells Al Jazeera’s ‘This is America’ that Congress may face political trouble voting against it.