Good morning, folks. We have a busy newscyle today as the world and region brace for the fallout of the US strikes on Iran. The possibility of a Hormuz Strait closure, and its impact on oil flows, leads the pack today, followed by projects and debt updates from Oman. Let’s get the ball rolling.

THE BIG LOGISTICS STORY- The world is bracing for the fallout of the Iran-US confrontation: All eyes are on Iran’s next move as the country mulls its next move. Whether Iran chooses to shut down the Strait of Hormuz or target US assets and personnel already, the speculations sent diplomatic efforts and energy markets into a spin — although not by as much as some had feared.

So far, Iran’s response has been limited to exchanging missiles with Israel, with reports suggesting that the Iranian Supreme Leader Ayatollah Ali Khamenei has decided not to retaliate against the US directly and “risk a harsher response that wreaks more destruction on the republic,” Iranian government insiders told the Financial Times .

But if Iran does decide to close the Strait of Hormuz, crude oil prices could soar past USD 130 per barrel, with the cutting off about 30% of the world’s daily oil supply and 20% of global LNG trade violently ramping up energy costs across the globe, according to Bloomberg analysts. In response to Iranian state TV reports that the country’s parliament had voted to approve the closing of the energy corridor, US Secretary of State Marco Rubio urged Beijing to pressure Iran to keep the passage open.

The story is all over the int’l press: Reuters | Financial Times | Wall Street Journal | Bloomberg | | New York Times | Guardian

HAPPENING THIS WEEK-

Mobility Live Middle East returns to Dubai on Tuesday and Wednesday at the Dubai World Trade Center, spotlighting future transport. The trade event will bring together regional mobility leaders for keynotes, panel sessions, and an expo featuring autonomous tech, smart cities, and public transport.

Middle East Rail will run in parallel on Tuesday and Wednesday at Dubai World Trade Center, bringing together transport ministries, rail operators, and tech firms for discussions and exhibitions on high-speed networks, digitalisation, and transit infrastructure.

Global Transport Connectivity Forum will kick off in Istanbul, Turkey, on Friday, 27 June and run to Sunday, 29 June. The forum will address climate change, transport connectivity, and global transport corridors. It will host ministers, industry leaders, and executives of financial institutions and organizations.

WATCH THIS SPACE-

#1- Yemen’s Houthis are poised to resume attacks on US ships in the Red Sea, after the group threatened to attack US ships if the latter strikes Iran, a Houthi spokesperson said on Saturday before the US strike on Iran’s nuclear facilities. If the Houthis follow through, this will put an end to a ceasefire agreement announced back in May that saw the US suspend its airstrikes on Houthi-controlled areas in Yemen in exchange for the Yemeni group’s vow to stop attacking US shipping vessels in the region.

IN OTHER RELATED MARITIME UPDATES- Arabian Gulf maritime ins. costs see uptick: Ins. costs of ships transiting the Arabian Gulf have risen from an average of 0.125% to 0.2% of the value of the vessel per voyage, global head of marine and cargo ins. at Marsh McClellan Marcus Fisher told BBC last week (listen, runtime 26:28). This uptick coincides with Israel-Iran flare ups in the region, including around the Strait of Hormuz, which is responsible for the passage of around a fifth of global oil consumption.

#2- Israel once again put a halt to Egypt-bound natural gas exports yesterday morning, coinciding with the US’ strikes on Iranian nuclear sites only a few hours before, Asharq Business reports, citing an unnamed government source.

Israel had only just resumed gas exports on Thursday after a six-day pause, although most of this made its way to Jordan, with Egypt receiving only “tiny volumes,” an Israeli Energy Ministry source told Reuters last week.

The initial halt in flows followed Tel Aviv’s decision to start bombing Iran earlier in the month, which led to the shuttering of its Leviathan field as well as the Karish field, taking away 800 mcf/d from our national gas grid. Reduced gas flows from Israel not only mean an increased reliance on significantly more expensive LNG or mazut imports, but also put a significant strain on Egypt’s efforts to keep the lights on ahead of high-demand summer months.

Meanwhile, Egypt is working quickly to secure backup infrastructure and is set to receive a fourth LNG regasification vessel in August — which we understand will be the vessel booked from Turkish state-owned energy firm BOTAS — to help stabilize and diversify energy supplies amid current global challenges, according to a cabinet statement. The awaited unit will be deployed in Damietta, Oil Minister Karim Badawi said.

#3- Qatar sweats over Iran-Israel war risks: Qatar held urgent talks with energy majors after an Israeli airstrike on Iran’s portion of the giant gas field it shares with Doha raised fears of regional escalations threatening its gas infrastructure, Reuters reported on Friday, citing an industry source and a diplomat. The strike landed roughly 200 km from QatarEnergy’s offshore platforms at the North Field — the centerpiece of a massive expansion project that will ramp up Qatar’s LNG output by 82%. The project includes stakes from ExxonMobil, ConocoPhillips, Shell, Eni, and TotalEnergies.

QatarEnergy has instructed tankers to stay out of the Strait of Hormuz until just before loading, amid fears that Iran could retaliate by disrupting traffic through the strategic chokepoint, sources told Reuters. A closure of Hormuz would choke off nearly all Qatari LNG exports, with East Asia and Europe likely to face the brunt of the supply shortfall. Asian buyers in particular are already responding to the threat, pushing spot LNG prices up 11% week-on-week to USD 14 per mmBtu on Friday.

While energy exports remain uninterrupted for now, the Qatari government has warned that any further Israeli action near Iran’s gas field could force a shutdown of offshore operations due to safety concerns for workers. Qatar also flagged the risk of radioactive contamination if Israel strikes Iran’s nuclear facility at Bushehr, which could render offshore platforms inaccessible. Most of Qatar’s LNG infrastructure is offshore and would be affected by any fallout reaching Gulf waters.

#4- Airlines are increasingly flying through Afghanistan to avoid airspaces affected by the Israel-Iran conflict, Bloomberg reported last week. Carriers seeking to connect Asia with Europe and the US have caused a 500% surge in flights through the country’s airspace, averaging 280 flights per day since Israel’s strikes on 13 June. This is a significant increase from the roughly 50 flights per day that passed through the Afghan airspace in May, with the flight uptick triggering unexpected revenues for the Taliban, which charges USD 700 per flight — roughly USD 1 mn per week.

Airspace closures push airlines towards more expensive routes: Airlines are continuing to avoid airspaces above Iran, Iraq, Syria, and Israel, opting for longer and more costly routes over the Caspian Sea, Egypt, and Saudi Arabia, Reuters reports, citing data from flight tracking website FlightRadar24.

#5- GulfNav readies convertible bond raise to fund Brooge acquisition: DFM-listed Gulf Navigation (GulfNav) is gearing up to raise AED 500 mn via mandatory convertible bonds as it pushes ahead with its AED 3.2 bn acquisition of Nasdaq-listed Brooge Energy’s oil storage businesses, according to a shareholders’ circular (pdf) filed to the Dubai bourse last week.

The details: Some 454.5 mn convertible bonds will be offered exclusively to GulfNav’s minority shareholders at AED 1.10 apiece from Monday, 30 June to Tuesday, 15 July. Majority shareholders will only have two days (14 and 15 July) to subscribe to the rump offering, if any. Final allocations will take place on Tuesday, 22 July, with the debt due to convert into equity at a 1:1 ratio on or before Wednesday, 29 October, carrying a one-year lockup.

Priming the cap table for a Brooge majority: The move hikes GulfNav’s capital base in preparation for the dilution that will come when Brooge is folded in. The transaction is part of a broader cash-and-shares swap that will eventually give Brooge shareholders a 63% stake in GulfNav. Net proceeds from the sale (92%) will go toward financing the cash-portion of the transaction, with the remainder earmarked for general corporate purposes.

ADVISORS- Gulf Navigation appointed Trussbridge Advisory (DIFC) as its exclusive financial advisor, and Pinsent Masons as its lead counsel. Ibrahim & Partners Law Firm provided legal advice on the transaction structuring and related regulatory aspects.

#6- Turkish Airlines mulls minority stake in Air Europa: Turkish Airlines is looking to purchase a minority stake in Spanish carrier Air Europa, with binding bids from suitors expected by early July, Reuters reported last week, citing two unnamed sources. Prospective bidders are reportedly aiming for a 20% stake, which could open the door for a future takeover, the sources added.

The rationale: The privately held airline is reportedly looking to raise funds via a stake sale to repay a loan granted by the Spanish government during the Covid-19 pandemic, the two unnamed sources told Reuters.

Prospective bidders: Among interested bidders were Air France-KLM and Lufthansa, Reuters reported back in March, citing news outlet El Confidencial. British Airways’ owner IAG — which currently holds a 20% stake in the airline — was also mulling a takeover bid but ditched the plans last year over regulatory concerns. IAG also owns Spain’s Iberia airline.

IN CONTEXT- European airlines need to consolidate to survive, CEOs say: Chief executives of EU-based airlines have been pushing for the EU to approve more mergers to allow for industry-wide consolidation efforts in the continent, Reuters reported last year. The push comes as more players make the case that major mergers involving struggling, small-scale airlines would bolster the continent’s competitiveness against state-backed giants in the Middle East and US firms. “If we don’t allow consolidation in Europe, we will destroy airlines in Europe,” International Airlines Group CEO Luis Gallego was quoted as saying.

DISRUPTION WATCH-

#1- Major shipping players halted their operations in Israel’s Haifa port on the Mediterranean Sea following US strikes on Iranian nuclear facilities. Hapag-Lloyd has temporarily reduced some of its services to Israel’s Haifa port, halting its East Med Shuttle 3 heading to the port, according to a statement published on Friday. Meanwhile, the firm’s Atlantic Loop 7 service will continue to operate. Maersk also temporarily suspended all vessel calls and all cargo reception from Haifa port, according to a statement from Friday. Both firms cited rising regional tensions and crew safety as reasons for halting their services. No timeline was given for when the suspensions will end.

ICYMI- The US has officially joined the Israel-Iran conflict, striking three Iranian nuclear sites on Sunday morning, with US President Donald Trump saying the “successful” attacks have “completely and totally obliterated” the targeted facilities. Israel and Iran have been exchangingmissiles and airstrikes since last week and show little signs of looking for an offramp.

#2- FedEx pauses Iraq, Israel shipments: Logistics giant FedEx has temporarily suspended all flights to and from Iraq and Israel until further notice, according to a statement. The pause comes as the region’s logistics network faces major disruptions caused by the exchange of missiles and air strikes between Iran and Israel.

MARKET WATCH-

#1- Oil prices surged this morning amid increasing concerns over supply disruptions after the US joined Israel in striking Iran, Reuters reports. Brent crude futures rose USD 1.52 to USD 78.53 a barrel by 05.03 GMT, while US West Texas Intermediate (WTI) futures saw an uptick of USD 1.51 to trade at USD 75.35 a barrel.

#2- Baltic index dips once again: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — fell 3.5% to 1,689 points on Friday. The capesize was down 6.5% to 2,879 points, while the panamax index slipped 0.2% to 1,350 points. The small supramax index inched up 10 points to settle at 973.

PSAs-

Shipping giant Hapag-Lloyd will introduce a peak season surcharge (PSS) for shipments from the UAE to Mombasa, Kenya, and to Dar Es Salaam, Tanzania, according to a statement published on Friday. The PSS for shipments from the UAE to Mombasa will be USD 125 for 20ft containers and USD 350 for 40ft containers. For shipments to Dar Es Salaam, the PSS will be USD 225 for 20ft containers and USD 550 for 40ft containers. The PSS will be valid starting 1 July 2025 until further notice.

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