Economy
Gold’s safe haven status challenged amid Middle East war
Gold is known as a top safe haven asset in times of volatility, but with the war in the Middle East, this classic standing has been challenged as investment volumes fell in the first quarter, industry data showed Wednesday, as the conflict forced some investors to liquidate holdings to raise cash.
Investment volumes fell by 5% during the quarter, according to the World Gold Council (WGC), despite gold having set a record high in January as investors sought refuge from a weak dollar and U.S. President Donald Trump’s erratic policy shifts.
“Hefty outflows in March reversed much of the sizable January and February inflows” into gold exchange-traded funds (ETFs), an easy means to invest in the precious metal, the council said in its quarterly report.
And that was linked in particular to North American funds.
“Oftentimes, because gold is so widely accepted, it is the first thing that you sell when you need a certain access to cash or to liquidity,” said World Gold Council expert Juan Carlos Artigas.
Following the U.S.-Israeli attacks on Iran at the end of February, Tehran closed traffic through the Strait of Hormuz, through which a fifth of the world’s oil and liquefied natural gas (LNG) normally flows.
That sent oil and gas prices rocketing higher and disrupting markets, forcing many investors to raise cash to settle their positions.
The prospect of the U.S. Federal Reserve (Fed) raising interest rates in response to higher inflation boosted the dollar, making gold more expensive for investors who don’t hold dollars.
If demand for gold dropped by volume, the value of purchases jumped by 62%.
Gold touched a new record just shy of $5,600 per ounce at the end of January, and averaged $4,873 per ounce over the quarter.
High prices, driven largely by investment holdings, hit demand for jewellery, however.
The jewelry market was also disrupted by the war, with the Middle East a key shipping hub.
Tanker traffic through the Strait of Hormuz fell in the past day to a two-month low, according to shipping data Monday, amid heightened safety worries after renewed strikes between the U.S. and Iran and attacks on ships.
Shipping industry sources said vessels were increasingly switching off their public AIS tracking transponders, making it difficult to determine the full number of ships crossing the waterway.
Based on available data, oil and gas tanker traffic fell to its lowest level since May 25, according to analysis from Kpler.
“Should the renewed escalation in the strait lead to another prolonged closure of Hormuz, the world will find itself in a much tougher spot,” ship broker Gibson said in a report.
“With global inventories rapidly depleted in recent months, this is a recipe for much tighter supply, higher prices and significant downside risk for tanker markets.”
The Sea Faith oil products tanker was among the few visible vessels sailing toward the entrance to the Strait of Hormuz near the Iranian side of the waterway, with a destination of Sohar, according to LSEG and MarineTraffic ship-tracking data on Monday.
Commercial traffic through the Strait of Hormuz “continued at reduced levels,” the U.S. Navy-led Joint Maritime Information Center (JMIC) said in an advisory on Sunday.
“Traffic patterns continued to reflect operator caution following recent attacks.”
At least three pairs of tankers were involved in ship-to-ship transfers outside of Hormuz off Oman’s coast in the Gulf of Oman, according to the latest satellite imagery from July 11 reviewed by Reuters.
Ship-to-ship (STS) transfers typically involve the transfer of oil from one vessel to another. Since the conflict began on Feb. 28, STS transfers have enabled faster deliveries of oil onto waiting ships that do not need to sail through Hormuz.
“Some ships are slipping in and out,” one shipping official said on Monday.
“This has to be viewed as a managed conflict now similar to the Houthis in the Red Sea,” the source said, referring to the Yemeni militia, which paralyzed traffic through the Bab al Mandeb waterway for nearly two years before calling a cease-fire in 2026.
Trump, Iran differ over strait status
U.S. forces completed another wave of strikes against Iran on Sunday, hitting dozens of targets at multiple locations with precision munitions, the Central Command said.
U.S. President Donald Trump said on Sunday that the Strait of Hormuz is open to commercial traffic, although Iran declared earlier that it closed the strait after a vessel traveled on an unapproved route and was struck.
Iran’s Revolutionary Guards said on Monday that their navy stopped two ships in the Strait of Hormuz last night by shutting down their systems. They did not name the ships involved.
A container ship sustained damage from an unknown projectile which caused a fire in the engine room on Sunday, JMIC said.
Traffic slowdown
Six vessels transited the strait on Sunday, ship-tracking data from Kpler showed, the lowest number in five weeks.
Tankers that exited the strait included the Very Large Crude Carrier Humanity, laden with 2 million barrels of Iranian oil, and another tanker, Capetan Andreas, carrying about 500,000 barrels of Kuwaiti oil products, the data showed, while three empty tankers entered the Gulf to load oil.
Most of the tankers switched off their transponders when crossing the strait.
There were no liquefied natural gas tankers that entered the strait over the weekend that were visible on ship-tracking data.
One tanker controlled by the Abu Dhabi National Oil Co exited the strait between July 10 and July 12, Kpler data showed. The vessel was heading for Dahej port in India.
State energy company BOTAŞ on Monday started construction of a fourth storage tank at its terminal in northwestern Türkiye, a move that will increase the facility’s LNG storage capacity by nearly 60%.
The new 160,000-cubic-meter storage tank will raise the Marmaraereğlisi LNG Terminal’s total storage capacity to 415,000 cubic meters from the current 255,000 cubic meters, Energy and Natural Resources Minister Alparslan Bayraktar said.
The investment is expected to improve Türkiye’s flexibility in managing natural gas supplies by expanding its ability to store LNG delivered by ships, regasify it when needed and transport it via road tankers while maintaining it in liquid form.
Located in Tekirdağ province, the Marmaraereğlisi LNG Terminal plays a strategic role during periods of high natural gas demand, particularly in winter months, with a daily regasification capacity of 37 million cubic meters.
The terminal can accommodate conventional LNG carriers as well as large-capacity Q-Flex and Q-Max vessels, which are among the world’s largest LNG carriers.
Around 65 LNG vessels dock at the facility annually, with the terminal meeting approximately 15% of Türkiye’s annual natural gas demand.
In addition to LNG storage and regasification operations, the facility carries out road tanker loading, fuel supply and reload operations.
Strengthening resilience against energy shocks
Bayraktar said the terminal’s ability to source gas from multiple markets, combined with its storage capacity and regasification infrastructure, makes it a key component of Türkiye’s energy security strategy.
The minister noted that fluctuations in global energy markets have demonstrated the importance of having strong infrastructure.
Bayraktar said the new investment will “strengthen our natural gas infrastructure” and will “increase our resilience against crises.”
Türkiye currently has five LNG entry points, including two LNG terminals and three floating storage and regasification units (FSRUs).
Alongside the Marmaraereğlisi LNG Terminal, BOTAŞ operates the Dörtyol and Saros FSRU facilities.
As part of Türkiye’s National Energy and Mining Policy, LNG regasification capacity has increased nearly fivefold since 2016, rising from 34 million cubic meters per day to around 161 million cubic meters per day.
The government aims to raise total LNG regasification capacity to 200 million cubic meters per day with the addition of two new FSRU facilities.
Türkiye has informed Canada that it will participate in the Defense Security and Resilience Bank (DSRB) as a founding member, a report said on Monday
Canadian Prime Minister Mark Carney said at a NATO summit in Ankara last week that nine countries, including Türkiye, had committed to the bank, in what was seen as a boost for the multilateral drive to help rearm allied nations.
Defense Ministry sources said over the weekend that Türkiye was still evaluating possible participation.
“Türkiye has informed Canada that it will participate in the bank,” a Turkish official told Reuters on Monday.
According to Carney’s statement last week, Albania, Belgium, Greece, Latvia, Luxembourg, Romania, Türkiye and Ukraine had all pledged their support to the bank, which will be based in Canada.
The roster contained no heavyweight G-7 nations other than Canada, potentially limiting the bank’s financial firepower, although Canada’s foreign minister, Anita Anand, told Reuters it would remain open to new members.
The bank’s purpose is to bolster the defense of like-minded allied nations by raising up to 100 billion pounds ($134 billion) in cheap financing.
Carney is promoting the DSRB as part of his call this year for an alliance of “middle powers” to combat what he sees as the fracturing of the traditional U.S.-led world order.
A group of former NATO security advisers, senior ex-military personnel and bankers proposed the bank in 2024.
NATO nations and their allies are grappling with rising defense demands linked to the war in Ukraine, growing tensions with Russia and concerns about China’s military expansion.
NATO leaders agreed in June 2025 to spend 5% of GDP on defense and security-related investments by 2035.
Top banks, including JPMorgan, Deutsche Bank, Commerzbank and ING, have joined the project alongside Canada’s RBC, BMO, CIBC, National Bank of Canada, Scotiabank and TD Bank.
Europe has relied on jet fuel imports from the U.S. and Asia, boosted refinery output and tapped stockpiles to keep aircraft in the air. And yet it remains the region most vulnerable as renewed tensions in the Middle East increase the risk of further supply disruptions.
Britain, France and Germany are particularly exposed in a continent where decades of refinery closures left it more reliant than most on Middle Eastern shipments via the Strait of Hormuz.
The Strait, conduit for around a fifth of the world’s seaborne oil and liquefied natural gas until U.S.-Israeli airstrikes unleashed a war on Iran at the end of February, partly reopened in June.
In July, however, a fragile truce has come under threat from strikes by both sides.
Data from consultancy Energy Aspects dated June 18 already anticipates a supply deficit across Europe of nearly 600,000 barrels per day in the third quarter, against surpluses of 116,000 bpd in the United States and 425,000 bpd in Asia-Pacific.
Inventories stood at 38 million barrels at the start of June, compared with 99 million in the United States, Energy Aspects said. That leaves Europe with less than 30 days of demand cover, Reuters calculations show – the tightest of the major jet fuel markets.
The most recent data available from the International Energy Agency’s (IEA) latest monthly report, showed provisionally jet fuel stocks were 10% higher year-over-year at the end of May, while refinery output rose 30%. The figures also implied only a month of leeway.
“We still do expect some tightness through August at this rate,” said Janiv Shah, analyst at Rystad.
The European Commission has also acknowledged the situation could get worse.
EU Energy Commissioner Dan Jorgensen said in June the bloc faced tighter jet fuel stocks toward the end of the summer holiday season and that Brussels would coordinate releases of national reserves if needed.
Cargo from Canada to South Korea
Until war broke out at the end of February, Europe had relied on the Middle East for around half of its jet fuel imports.
In March, analysts had expected African countries, which sourced nearly all their jet fuel from the Middle East, to be the hardest hit.
However, they have managed to increased imports from Nigeria’s Dangote refinery, as well as India and Oman, according to data from commodities intelligence firm Kpler.
Europe, meanwhile, has so far prevented supplies running out by turning to new sellers, such as Canada.
In June, Europe overall imported 673,000 bpd of jet fuel, its highest since October 2025, Kpler data showed.
The U.S. and Nigeria were the biggest exporters to Europe, but Kuwait, Canada, India and South Korea also provided cargoes.
Imports from India in June reached their highest since February and nearly 25,000 bpd Kuwaiti barrels are due to arrive in August for the first time since early March through a ship-to-ship transfer on the ship Proteus Harvonne.
Before flows were interrupted, Kuwait was one of the biggest suppliers of jet fuel to the region.
Among those who increased production to ease the strain, Italian refiners increased jet fuel production by 10% in the first four months of the year.
The countries’ imports fell 6%, enabling domestic production to meet nearly 70% of demand in March and April, according to UNEM, Italy’s fuel producers’ association.
Eni, which accounts for around half of Italy’s jet fuel production capacity, boosted output by importing semifinished products from outside Europe, industry sources said.
Jet fuel prices in northwest Europe, meanwhile, have fallen to around $133.27 a barrel from a record $215.32 at the end of March, easing pressure on airlines. Fuel typically accounts for between 20% and 25% of operating costs.
Immediate discounts to air ticket prices are unlikely, analysts say, as demand is strong and capacity is limited, especially after many carriers cut flights to maximize fuel supplies.
Türkiye’s southeastern Diyarbakır Basin has the long-term potential to produce up to 250,000 barrels of oil per day (bpd), the chair of U.S. energy company TransAtlantic Petroleum said on Monday.
Türkiye currently consumes about 1 million barrels of oil per day, meaning the projected production from the Diyarbakır Basin could cover roughly one-quarter of national demand.
Potential daily gas production from the basin could be around 25 million cubic meters, TransAtlantic Petroleum CEO Malone Mitchell III told Anadolu Agency (AA) on the sidelines of an energy conference in Istanbul.
“Quite nice production, 25 to 50 million. That would be a substantial portion of Türkiye’s internal demand,” Mitchell said.
He said the full potential of the Diyarbakır Basin is difficult to quantify precisely as productivity is expected to vary across different parts of the play, but added that it could ultimately host more wells than all those currently operating across Türkiye.
“It certainly might represent more wells than all of the current wells that are in the country of Türkiye,” Mitchell said, noting that such a scenario would likely unfold over around 20 years.
He added that output is expected to build gradually over the first five years before reaching what he described as “a mature running level.”
The projection highlights the scale of unconventional oil and gas resources that industry players believe could be unlocked in the basin, one of Türkiye’s key exploration areas alongside the Thrace Basin in the country’s northwest.
Last year, Mitchell’s Texas-based oil and gas company entered into a joint venture with state-run Turkish Petroleum Corporation (TPAO) and Oklahoma-based Continental Resources to pursue unconventional opportunities in the Diyarbakır Basin.
Preliminary assessments by the Energy and Natural Resources Ministry and Continental Resources indicate the basin could hold 6.1 billion barrels of oil.
Energy and Natural Resources Minister Alparslan Bayraktar last year said they estimate the Diyarbakır Basin spans around 7,000 square kilometers and noted that they plan to drill 24 wells over three years as part of a horizontal drilling program.
Mitchell said the partnership aims to transfer the know-how, capital and operational experience gained from nearly two decades of unconventional production growth in North America to Türkiye, noting that such developments remain relatively rare outside those markets.
If development proceeds as expected, activity in the Diyarbakır Basin is set to ramp up significantly over the next several years.
“Probably five years from now, we will see 25 rigs drilling in the unconventional,” Mitchell said.
He said horizontal drilling techniques would allow operators to access large underground areas while minimizing the footprint on agricultural land.
“Each rig, because it would be drilling horizontally, would be as productive as four or five vertical wells,” he said.
Türkiye becoming increasingly important
Mitchell said that Türkiye’s strategic location and stability are becoming increasingly important as geopolitical tensions reshape global energy markets.
“It is the crossroads of energy, and it has become more important as the conflict in Ukraine and the area cut off part of the northern hub. Then the southern hub became more important,” he said.
He added that ongoing energy crises are fragmenting global energy flows, putting Türkiye in a position to exhibit stability in an increasingly unstable world.
Drawing on nearly two decades of experience in the country, Mitchell said Türkiye offers a reliable environment for international investors.
“What we have learned over 18 years is that the legal system works, the regulatory system works, we can rely on the banking system to be able to transfer money to make payments,” he said.
The CEO said he has advised U.S. policymakers and energy executives that while Türkiye may not have the largest resource base, its stability makes it an attractive hub for regional energy operations.
He added that the company’s operations in Türkiye have helped establish its credibility as it expands into new markets, with potential partners often encouraged to seek references from Turkish authorities.
Mitchell pointed to Uzbekistan as one of the countries the company has moved into, noting that Turkish contractors already play a key role in the country’s economic development, creating opportunities for its services.
Partnership with TPAO top priority
Although the company is exploring opportunities elsewhere, Mitchell said its partnership with TPAO remains its top priority.
He said the joint venture represents the company’s largest global opportunity, prompting it to scale back other activities to focus on the fastest path to success.
“To a certain degree, we are limiting the other things we do so that we can make sure there is the greatest, fastest path to success,” Mitchell said.
“Right now, probably the No. 1 opportunity set we have, maybe worldwide, is our joint venture with Turkish Petroleum,” he said, adding that success could pave the way for further collaboration.
“That is probably the most important relationship that we have and what we see as an opportunity set worldwide for our company right now,” Mitchell added.
Retail sales growth in Türkiye accelerated in May after slowing in April, official data showed on Monday.
Retail sales volume rose 13.7% year-over-year in May, supported by strong growth in non-food purchases, the Turkish Statistical Institute (TurkStat) said.
The volume had jumped 11.7% in April, its weakest pace since March 2025.
Growth in sales of non-food products, excluding fuel, accelerated to 17.5% from 14.8%, the data showed.
Food sales growth picked up to 9.1% from 7.8%. Sales of automotive fuel increased 3.2% from a year earlier.
Sales of computers, books and telecommunications equipment recorded the strongest increase, climbing 23.5%, followed by a 17.6% rise in textiles, clothing and footwear.
Online retail sales rose 16.2% year-over-year, although that was slower than April’s 18.8% increase.
On a monthly basis, retail sales increased 2.4% in May, rebounding from a 1.6% decline in April.
Sales of computers, books and telecommunications equipment rose 3.7%, while textiles, clothing and footwear increased 2.9%.
Despite the strength in retail activity, overall trade sales volume declined 1.4% annually, mainly due to a 7.8% fall in wholesale trade.
Total trade sales increased 0.7% month-over-month, while wholesale trade sales fell 0.6%.
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