International News 28 May 2025
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Oil prices slip, fuelled by expectations of higher OPEC+ output
Oil prices experienced a decline for a second consecutive session as OPEC+ members are anticipated to raise their output in an upcoming meeting. Brent oil futures slightly rose while US Texas Intermediate (WTI) crude oil saw a decrease. The market responded to the expectations of increased OPEC supply, with OPEC sources indicating a potential 411,000 barrel per day production increase. Although Russian Prime Minister Alexander Novak mentioned that output raise discussions have not taken place, OPEC+ is likely to finalize output quotas in an upcoming online ministerial meeting. The group of eight OPEC+ members who committed to further voluntary cuts is expected to convene earlier than planned. Despite the agreement to accelerate oil output increases for June, the decision on the extension of the output hike initiated by U.S. President Donald Trump remains pending.
Bank of Japan Governor Calls for Vigilance on Food Inflation Risk
Bank of Japan Governor Kazuo Ueda emphasised the need for vigilance regarding the risk of rising food prices, which could potentially lead to an underlying inflation rate approaching the 2% target. He emphasised the central bank's commitment to continue implementing a tightening monetary policy in response to these inflationary pressures. Ueda observed that while inflation expectations were at 1.5-2%, they nevertheless fell short of the 2% target. The recent surge in food prices, particularly the substantial increase in rice costs, has had an impact on both headline inflation and underlying inflation, which is typically driven by a growing economy and a tight labour market. Despite expectations that the effects of food price inflation will lessen, Ueda stressed the need for caution regarding its impact on underlying inflation, given its proximity to the 2% target. These comments follow the Bank of Japan's close monitoring of economic risks from increased US tariffs and domestic inflationary forces, which inform decisions on the timing of future rate hikes.
Gold prices rise near a two-week high, fuelled by dollar weakness
On Tuesday, gold prices remained close to their highest point in a fortnight. This was due to a weaker dollar and concerns about the US fiscal outlook. Spot gold prices remained stable at approximately US$3,339.99 per troy ounce, despite a lull in the US and London markets due to holiday periods. Analysts, including Kelvin Wong from OANDA, have noted a consolidation phase in gold prices and are anticipating upcoming market catalysts. Investors are concerned about the expanding US budget deficit, which is supporting gold prices and putting pressure on the US dollar. The dollar index fell by 0.3%, reaching a one-month low against other currencies, thereby increasing the appeal of gold in non-US dollar terms. The recent approval by the US House of Representatives of a tax cut bill, which could potentially increase the federal debt by US$3.8 trillion over ten years, has further strengthened the positive outlook for gold.