The euro strengthened against a basket of global currencies during European trading on Wednesday, extending gains against the US dollar for a second consecutive session and moving closer to a two-week high, supported by a weaker US dollar following softer-than-expected US inflation data.

As global oil prices continue to climb, inflationary pressures on European Central Bank policymakers are resurfacing, reinforcing expectations that the ECB could raise interest rates in September.

The Price

• The euro rose about 0.2% against the US dollar to $1.1442, after opening at $1.1420 and touching an intraday low of $1.1417.

• The euro closed Tuesday up 0.35% against the US dollar, recording its first daily gain in three sessions and reaching a two-week high of $1.1462 after weaker-than-expected US inflation data.

US dollar

The US Dollar Index fell 0.15% on Wednesday, extending losses for a second consecutive session as the greenback weakened against a basket of global currencies.

US June inflation data came in below expectations, driven by lower energy prices, signaling easing inflationary pressures on Federal Reserve policymakers.

US Treasury yields declined as expectations for near-term Federal Reserve rate hikes eased, while investors await additional economic data and comments from Fed officials for clearer guidance on the future path of monetary policy.

Later today, the United States will release June Producer Price Index (PPI) data, while Federal Reserve Chair Kevin Warsh will continue his semiannual testimony before the US Congress.

Global oil prices

Oil prices rose more than 0.5% on Wednesday, extending gains for a third consecutive session and approaching the one-month high reached on Tuesday as military clashes between the United States and Iran continued around the Strait of Hormuz.

Iran conflict developments

• The United States officially began enforcing its naval blockade of Iranian ports while monitoring vessels entering and leaving the country.

• US forces carried out fresh strikes targeting Iranian missile systems and air defense positions near the Strait of Hormuz in a further escalation of the conflict.

• Iran announced new drone attacks against US-linked targets and military bases across the region while maintaining a heightened state of military alert.

• Iranian authorities said Washington is mistaken if it believes its actions will force Tehran back to the negotiating table.

• US President Donald Trump issued a public warning to Tehran, threatening to destroy all power stations and key bridges across Iran "next week" unless the country immediately agrees to resume negotiations.

European interest rates

• Amid rising global oil prices, money markets have increased pricing for a 25-basis-point European Central Bank rate hike at the July meeting to above 35%.

• Market pricing for a 25-basis-point ECB rate hike in September has climbed above 95%.

• Investors now await additional eurozone inflation, employment, and wage data to further refine expectations for the ECB's policy outlook.

The Japanese yen strengthened against a basket of major and minor currencies during Asian trading on Wednesday, extending gains against the US dollar for a second consecutive session as the greenback softened following weaker-than-expected US inflation data.

Global oil prices remain close to one-month highs due to ongoing supply disruptions through the Strait of Hormuz, renewing concerns over rising inflationary pressures on the Bank of Japan and reinforcing expectations for further interest rate hikes.

The Price

• The US dollar fell about 0.2% against the Japanese yen to ¥161.96, after opening at ¥162.24 and reaching an intraday high of ¥162.26.

• The yen closed Tuesday up 0.1% against the US dollar, marking its third daily gain in the past four sessions, supported by softer US inflation data.

US dollar

The US Dollar Index fell 0.15% on Wednesday, extending losses for a second consecutive session as the greenback weakened against a basket of global currencies.

US June inflation data came in below expectations, driven by lower energy prices, signaling easing inflationary pressures on Federal Reserve policymakers.

US Treasury yields declined as expectations for near-term Federal Reserve rate hikes eased, while investors await additional economic data and comments from Fed officials for clearer guidance on the future path of monetary policy.

Global oil prices

Oil prices rose more than 0.5% on Wednesday, extending gains for a third straight session and approaching the one-month high reached on Tuesday as military clashes between the United States and Iran continued around the Strait of Hormuz.

Iran conflict developments

• The United States officially began enforcing its naval blockade of Iranian ports and monitoring vessels entering and leaving the country.

• US forces carried out fresh strikes targeting Iranian missile systems and air defense positions near the Strait of Hormuz in a further escalation of the conflict.

• Iran announced new drone attacks against US-linked targets and military bases across the region while maintaining a heightened state of military alert.

• Iranian authorities said Washington is mistaken if it believes these actions will force Tehran back to the negotiating table.

• US President Donald Trump issued a public warning to Tehran, threatening to destroy all power stations and key bridges across Iran "next week" unless the country agrees to immediately resume negotiations.

Japanese interest rates

• Amid higher global oil prices, market pricing for a 25-basis-point Bank of Japan rate hike at the July meeting has risen above 30%.

• Pricing for a 25-basis-point rate hike at the October meeting has climbed above 85%.

• Investors now await additional Japanese inflation, employment, and wage data to further refine expectations for the Bank of Japan's policy path.

Oil prices rose on Tuesday after the United States launched new airstrikes on Iran ahead of the reimposition of a naval blockade, while President Donald Trump abandoned his proposal to charge vessels transiting the Strait of Hormuz in exchange for US military protection.

US West Texas Intermediate (WTI) crude settled 1.5% higher at $79.34 per barrel, while global benchmark Brent crude climbed 1.72% to close at $84.73 per barrel.

In a post on social media, US Central Command (CENTCOM) said American forces had carried out fresh airstrikes against targets inside Iran as Washington prepared to reinstate a naval blockade on Iranian ports and coastal areas beginning at 4:00 p.m. Eastern Time.

Meanwhile, Trump backed away from his plan to impose a 20% transit fee on cargo passing through the Strait of Hormuz under US military protection, saying Gulf countries would instead compensate the United States through increased investment in the American economy.

The president's reversal followed strong opposition from the global shipping industry, while the International Maritime Organization (IMO) said mandatory transit fees in the strait would violate international law.

Escalating Hormuz confrontation and attacks on oil tankers

Iran has sought for years to impose transit charges for safe passage through the Strait of Hormuz, but the United States has consistently opposed any such fees. Under the temporary agreement signed between Washington and Tehran on June 17, Iran agreed not to levy transit charges for a period of 60 days.

During the session, US crude briefly traded above $80 per barrel as the confrontation between the United States and Iran over control of the Strait of Hormuz continued.

CENTCOM said US forces struck targets along Iran's coastline on Monday night for a third consecutive night as part of operations aimed at degrading Tehran's ability to attack commercial shipping.

Iran's Islamic Revolutionary Guard Corps (IRGC), meanwhile, said it had targeted two supertankers transiting the Strait of Hormuz after they switched off their identification systems.

Abu Dhabi National Oil Company (ADNOC) also reported that two of its tankers were hit by projectiles while passing through the strait, leaving one sailor dead and several others injured.

Ship-tracking companies reported a sharp decline in vessel traffic through the Strait of Hormuz since fighting resumed last week following Iranian attacks on several oil tankers.

Despite the hostilities, the US Department of Energy told CNBC that approximately 8.5 million barrels of oil passed through the Strait of Hormuz on Sunday.

Before the United States and Israel launched strikes against Iran on February 28, roughly one-fifth of global oil supplies flowed through the Strait of Hormuz. Shipping traffic fell sharply after Iran began targeting vessels in the waterway in early March, before gradually recovering following the temporary agreement reached between Washington and Tehran.

Venezuela's oil and gas industry has entered a new phase. Following sweeping reforms in the hydrocarbons sector and the geopolitical developments that emerged in early 2026, the central question is no longer whether the industry can be reopened to investment, but whether the country can deliver a genuine and sustainable recovery in production.

While Venezuela's vast oil resources have never been in doubt, the biggest challenge now lies in translating political momentum and regulatory reforms into lasting operational growth.

Rystad Energy expects Venezuela's crude oil production to rise by around 17%, or approximately 194,000 barrels per day, between the fourth quarter of 2025 and the fourth quarter of 2028. Most of that increase is expected to come from fields already in production rather than major new discoveries, highlighting that operational execution, rather than resource availability, will determine the pace of recovery.

Heavy and extra-heavy crude is expected to drive production growth over the coming years. Estimates suggest that around 75% of Venezuela's output through 2028 will come from heavy crude, extra-heavy crude, and bitumen, while the Orinoco Oil Belt will account for roughly 60% of total production.

Given this production mix, securing a reliable supply of diluents, carrying out well maintenance, drilling development wells, and managing mature fields will be more important than adding new reserves in the years ahead.

International oil companies to lead recovery, but cautiously

Rystad Energy expects international oil companies to contribute around two-thirds of the projected increase in Venezuela's production through 2028.

Chevron is expected to lead the recovery, followed by Repsol, Eni, Maha Energy, and Maurel & Prom.

Most of the growth is likely to come from expanding output at existing joint ventures, supported by renewed investment following regulatory reforms and sanctions relief, rather than from developing entirely new fields.

Chevron holds a particularly strategic position after portfolio changes increased its exposure to the Orinoco Oil Belt. Future production growth is expected to depend on improving the performance of existing fields, drilling development wells, and gradually advancing the Ayacucho 8 project.

At the same time, Eni and Repsol continue to play a central role in Venezuela's oil and natural gas sectors through assets including the Cardón IV block and the giant Perla gas field.

Despite the improvement in the investment environment, international participation remains selective, as companies balance the opportunities offered by Venezuela's vast resources against fiscal uncertainty, operational complexity, and long-term investment risks.

Operational execution, not resources, is the real challenge

Although government reforms have improved the industry's investment appeal, they have not eliminated the operational bottlenecks that have constrained production for years.

Sustainable production growth will require a reliable supply of diluents, a faster drilling pace, extensive well-maintenance programs, infrastructure upgrades, and a substantial increase in the number of active drilling rigs.

These requirements represent the critical link between Venezuela's enormous geological potential and actual production on the ground.

The competitiveness of the fiscal and tax framework also remains central to investment decisions. International oil companies have indicated that new capital commitments will depend on further improvements to the fiscal regime, particularly royalty and tax rates, to lower project development costs and improve economic returns.

The oilfield services sector stands out as the biggest obstacle to the industry's recovery. Venezuela's Oil Ministry has identified the need to operate 93 drilling rigs by 2028, requiring a significant increase from current levels.

Meeting that target will require a phased plan involving the reactivation of domestic drilling rigs, the refurbishment of idle equipment, and the eventual import of additional rigs from global markets.

This creates a major opportunity for drilling contractors and oilfield service providers, but it also illustrates the scale of the operational challenge. Companies must weigh equipment transportation costs, contract duration, and the risks associated with operating in Venezuela before committing new capital.

While local companies have already begun reactivating parts of their fleets, international firms remain more cautious, waiting for further evidence that recent reforms will create a stable operating environment capable of attracting long-term investment.

In this context, rebuilding operational capacity may become just as important as attracting investment into exploration and production.

The report said the 2026 Hydrocarbons Law represents one of the most significant structural reforms to Venezuela's oil industry in decades, expanding opportunities for private-sector participation and providing greater flexibility within the fiscal framework.

However, legislative reforms alone will not be enough to restore production. Venezuela's ability to achieve sustainable growth will depend on the speed of implementation, the stability of fiscal policy, continued sanctions relief, and the industry's ability to rebuild its operational infrastructure.

The report concluded that the future of Venezuela's oil sector will be determined less by the size of its vast reserves than by its ability to execute drilling plans, upgrade infrastructure, strengthen oilfield services, and provide a stable investment environment. Those factors will ultimately shape the country's production trajectory through the remainder of the decade.