Britain suspends trade talks with Israel

According to Reuters, Britain on Tuesday paused free trade talks with Israel, summoned its ambassador, and announced further sanctions against West Bank settlers as its foreign minister condemned a "monstrous" military escalation in Gaza.

The Israeli military announced the start of a new operation last week and medics in Gaza say Israeli strikes have killed more than 500 people in the past eight days.

Israel has also blocked the entry of medical, food and fuel supplies into Gaza since the start of March, prompting international experts to warn of looming famine, although some trucks were allowed to enter on Monday.

Foreign Minister David Lammy said the offensive was "a dark new phase in this conflict", called for Israel to end the blockade of aid and condemned comments by finance minister Bezalel Smotrich on the possible cleansing and destruction of Gaza and relocation of its residents to third countries.

"It is extremism. It is dangerous. It is repellent. It is monstrous, and I condemn it in the strongest possible terms," a visibly angry Lammy told lawmakers, adding the operation in Gaza was "incompatible with the principles that underpin our bilateral relationship".

"Today, I'm announcing that we have suspended negotiations with this Israeli government on a new free trade agreement."

Israel said Britain had not advanced the trade talks, which started formally in 2022 under a previous Conservative British government, for some time.

"The British Mandate ended exactly 77 years ago," a spokesperson for its foreign ministry said. "External pressure will not divert Israel from its path in defending its existence and security against enemies who seek its destruction."

Lammy said the new offensive would not secure the release of remaining hostages and that January's ceasefire had shown the better path that Israel should follow.

Earlier Prime Minister Keir Starmer said he was "horrified by the escalation" after issuing a joint statement with France and Canada. Lammy said Britain would take further action if Israel pursued its military offensive.

 

 

 

Pakistan: Gen Asim Munir made Field Marshal

The federal cabinet on Tuesday approved the promotion of Chief of Army Staff (COAS) General Asim Munir to Field Marshal for his leadership in Operation Bunyanum Marsoos and the period of conflict against India known as Marka-i-Haq.

The military confrontation between India and Pakistan came as tensions over last month’s Pahalgam attack continued to build up. On the night of May 6-7, New Delhi launched a series of air strikes in Punjab and Azad Kashmir, resulting in civilian casualties. Islamabad responded by downing five Indian jets.

After intercepting drones sent by India and tit-for-tat strikes on each other’s airbases, it took American intervention on May 10, when tensions between the two countries peaked, for both sides to finally drop their guns as a ceasefire was reached.

India has since continued its aggressive posturing even as Pakistan has warned against any further military aggression and offered talks. Officials from both countries confirmed that the ceasefire does not have an expiry date, putting to rest the speculations that the truce would lapse this weekend unless renewed.

The rank of Field Marshal is the highest rank of armies built on the pattern of the British Army. General Mohammad Ayub Khan was conferred the rank by the presidential cabinet.

“The Government of Pakistan has approved the promotion of General Syed Asim Munir (Nishan-i-Imtiaz Military) to the rank of Field Marshal for ensuring the security of the country and defeating the enemy based on the high strategy and courageous leadership during Marka-i-Haq and Operation Bunyanum Marsoos,” the Prime Minister’s Office (PMO) said in a statement after a federal cabinet meeting chaired by Prime Minister Shehbaz Sharif.

Retelling the events of the military conflict with India, the statement further said that COAS Munir led the army “with exemplary courage and determination and coordinated the war strategy and efforts of the armed forces in a comprehensive manner”.

 

 

Houthis announce blockade of Haifa port

Yemen's Iran-aligned Houthis announced on Monday what they called a "maritime blockade" on Israel's Haifa port in response to Israel's ongoing conflict in Gaza, reports Reuters

"All companies with ships present in or heading to this port are hereby notified that, as of the time of this announcement, the aforementioned port has been included in the list of targets," the group's spokesperson Yahya Saree said in a televised address.

The Houthis have continued to fire missiles at Israel including on Ben Gurion Airport near Tel Aviv in what they say is solidarity with Palestinians in Gaza, although they have agreed to halt attacks on US ships.

The missiles launched by the group on Israel were mostly intercepted.

Israel has carried out strikes in response, including one on May 06 that damaged Yemen's main airport in Sanaa and killed several people.

 

 

 

 

 

 

Britain, Canada, France threaten sanctions against Israel

The leaders of Britain, Canada and France threatened sanctions against Israel on Monday if it does not stop a renewed military offensive in Gaza and lift aid restrictions, piling further pressure on Prime Minister Benjamin Netanyahu, reports Reuters.

The Israeli military announced the start of a new operation on Friday, and earlier on Monday Netanyahu said Israel would take control of the whole of Gaza. International experts already have warned of looming famine.

"The Israeli Government's denial of essential humanitarian assistance to the civilian population is unacceptable and risks breaching International Humanitarian Law," a joint statement released by the British government said.

"We oppose any attempt to expand settlements in the West Bank ... We will not hesitate to take further action, including targeted sanctions."

In response, Netanyahu said, "The leaders in London, Ottawa and Paris are offering a huge prize for the genocidal attack on Israel on October 7 while inviting more such atrocities".

He said Israel will defend itself by just means until total victory is achieved, reiterating Israel's conditions to end the war which include the release of the remaining hostages and the demilitarization of the Gaza strip.

Israel has blocked the entry of medical, food and fuel supplies into Gaza since the start of March to try to pressure Hamas into freeing the hostages the Palestinian militant group took on October 07, 2023, when it attacked Israeli communities.

"We have always supported Israel's right to defend Israelis against terrorism. But this escalation is wholly disproportionate," the three Western leaders said in the joint statement. They said they would not stand by while Netanyahu's government pursued "these egregious actions."

They stated their support for efforts led by the United States, Qatar and Egypt for an immediate ceasefire in Gaza, and said they were committed to recognising a Palestinian state as part of a two-state solution to the conflict.

Hamas welcomed the joint statement describing the stance as "an important step" in the right direction toward restoring the principles of international law.

Israel's ground and air war has devastated Gaza, displacing nearly all its residents and killing more than 53,000 people, many of them civilians, according to Gaza health authorities.

The war began with the October 07, 2023, Hamas-led attack in which the militants killed about 1,200 people, mostly civilians, and seized 251 hostages, according to Israeli tallies.

 

Lifting US sanctions on Iran could crush Chinese teapot oil refineries

The possible lifting of US sanctions on Iran's oil exports could deal a fatal blow to independent Chinese refineries that have thrived by processing Tehran’s discounted crude, while also putting further downward pressure on oil prices, reports Reuters.

President Donald Trump has taken a dual-track strategy with Iran, applying a "maximum pressure" campaign of tightening economic sanctions, while simultaneously engaging in direct high-level talks over Tehran’s nuclear program. Last week, Trump indicated the sides were getting very close to a deal.

Of course, nuclear talks between Iran and Western powers have always been extremely complex – full of stops and starts – and Trump’s recent statements surrounding a potential deal include much hedging.

If there is a breakthrough deal, it would almost certainly include a repeal of many US economic restrictions on Iran’s oil industry, which would have a profound impact on global energy markets.

Strict US sanctions on Iran’s oil industry have been in place since Trump pulled out of an UN-backed nuclear deal in 2018. While sanctions have dented Tehran’s exports – the country’s major source of revenue – they have never succeeded in reducing exports to zero, as Trump vowed seven years ago.

Iranian exports reached 2.8 million barrels per day (bpd) in May 2018 and hit a low of just 150,000 bpd in May 2020, before steadily recovering to an average of around 1.65 million bpd so far in 2025, according to analytics firm Kpler.

Chinese privately owned refineries, commonly known as teapots, have been the main buyers of Iranian crude in recent years, attracted by the heavy discounts. Concentrated in the eastern Shandong province, these small independent refineries have capacity of around 4 million bpd, or roughly one-fifth of China’s total refining capacity.

Large volumes of sanctioned crude have made their way into China in recent years through a complex web of shell companies and a so-called "dark fleet" of tankers that transfer oil between different vessels to obscure the origin.

The precise total volumes involved in this trade are unclear as official Chinese customs data suggests the country does not import any Iranian oil. However, Kpler, using ship tracking and satellite technology, estimates that China imported 77% of Iran’s 1.6 million bpd of exports last year.

Iranian production could also likely be ramped up quickly.

Its oil sector has proven surprisingly resilient in the face of mounting Western sanctions, with crude oil production averaging 3.3 million bpd in 2024, according to OPEC data. Production could be ramped up by 500,000 bpd within six months of lifting sanctions.

Not only would the rapid return of Iranian crude to global markets likely put further downward pressure on oil prices that have fallen from a high of US$82 a barrel in January to around US$65 today, but it would also deal a heavy blow to China’s teapot refineries.

These independent outfits typically have very slim profit margins because most run at utilization rates of around 50% or less due to overcapacity in the sector and restrictions on exporting fuels overseas.

Plants have faced fierce competition in recent years, and those that have survived have done so largely because they have been able to generate lucrative profits by processing cheap Iranian as well as Venezuelan feedstock.

The removal of US sanctions on Iranian crude could therefore undermine their business models, meaning many plants would likely have to sharply pare back operations or, in some cases, shut down entirely.

A drop in output from Chinese teapots, in turn, could provide a boost to large state-owned Chinese refineries that will pick up the slack in the domestic market.

More broadly, a decline in global refining capacity should boost the sector at a time of increasing uncertainty over demand for fuels such as gasoline and diesel due to the ongoing trade war and energy transition.

The return of Iran into global oil markets would create headaches for many – not least Saudi Arabia, which is in the middle of a price war – but the biggest losers would likely be the independent Chinese refiners. And the biggest beneficiary, outside of Iran itself, would be the refining industry – whether or not that’s what Trump has in mind.

 

 

Pakistan: Encouraging IMF Staff Level Report

The recently released IMF staff level report praises Pakistan’s strong program implementation and stresses the need to prioritize reforms going forward.

These include reforms to strengthen competition and productivity, improve SOEs and public services, increase energy sector viability, broaden the tax base, and build climate resilience.

Several new structural benchmarks have been introduced, which will impact multiple sectors such as Energy and Autos, and these may be part of the upcoming FY26 Budget.

Pakistan’s macroeconomic recovery has been cemented by growing foreign exchange reserves and sharply lower inflation, enabling the State Bank of Pakistan (SBP) to halve the policy rate to 11.0%.

GDP growth in FY26 is expected to reach the long-term average, and modestly accelerate thereafter. The current account is expected to remain in control, aided by lower oil prices and strong remittances.

This may limit pressure on the PKR, even as the IMF has encouraged a more flexible exchange rate.

Containing the fiscal deficit, as ever, will likely prove to be the most challenging. The projected improvement on the fiscal deficit is contingent on tax collection, including the effective implementation of the newly introduced Agriculture Income Tax laws.

That said, climate-related funding by the IMF (US$1.4 billion over the course of the program) can be used for budgetary support, which is a positive. 

As of December 2024, Pakistan had met all seven quantitative performance criteria and five of eight indicative targets. Compliance with structural benchmarks was also generally strong.

Important structural benchmarks that have already been met include approval of the National Fiscal Pact, and introduction of Agriculture Income Tax laws at the provincial level. However, others are still pending including eliminating captive power use in the gas sector. The IMF has now introduced additional structural benchmarks.

Chinese economy remains resilient in April

Chinese economy mostly remained resilient in April, despite feeling the effects of the astronomical tariffs in effect before last week, when Washington and Beijing agreed to remove or pause most of the duties imposed as part of their tempestuous trade war, reports South China Morning Post.

With the new agreement providing a 90-day reprieve in the conflict, last month was the only period where the full force of the triple-digit tariffs could be observed in economic data – at least for now,

Last month, China’s industrial output grew by 6.1% from a year earlier, compared to 7.7% growth in March, according to data released by the National Bureau of Statistics on Monday, higher than the 5.21% growth estimate from a poll of economists by financial data provider Wind.

At a meeting of the country’s Politburo in late April – a Communist Party conclave which typically sets the tone for the country’s economic work in the second quarter – the high-level political body vowed to “resolutely focus on doing our business, steadfastly expand high-level opening up and focus on stabilizing employment, businesses, markets, and expectations” in a statement.

The rhetoric was seen as affirmation of the need to shore up domestic consumption in an environment where the future of global trade is less than certain.

In a research note previewing the data release, investment bank Goldman Sachs said retail growth was driven by strong home appliance and automobile sales, boosted by an ongoing consumer goods trade-in program.

Automobile retail sales volume grew by 14.5%YoY in April, according to data from the China Passenger Car Association.

Official data also showed that during the three-day Ching Ming Festival holiday period, the number of domestic travellers nationwide and domestic tourism revenue were 6.3% and 6.7% higher, respectively, than the same period last year.

China’s overall fixed-asset investment rose by 4% in the first four months of 2025, falling short of Wind’s estimate of 4.26%, following a rise of 4.2% for the period from January to March.

The overall urban unemployment rate for April, meanwhile, stood at 5.1%, compared with 5.2% a month earlier.