EU Pledges Billions of Euros for Egypt

File photo: Egyptian President Abdel Fattah Al-Sisi meets with European Commission President Ursula von der Leyen at the Ittihadiya presidential palace in Cairo, Egypt. (Reuters/File)
File photo: Egyptian President Abdel Fattah Al-Sisi meets with European Commission President Ursula von der Leyen at the Ittihadiya presidential palace in Cairo, Egypt. (Reuters/File)
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EU Pledges Billions of Euros for Egypt

File photo: Egyptian President Abdel Fattah Al-Sisi meets with European Commission President Ursula von der Leyen at the Ittihadiya presidential palace in Cairo, Egypt. (Reuters/File)
File photo: Egyptian President Abdel Fattah Al-Sisi meets with European Commission President Ursula von der Leyen at the Ittihadiya presidential palace in Cairo, Egypt. (Reuters/File)

The European Union announced a 7.4 billion euro ($8.1 billion) funding package and an upgraded relationship with Egypt on Sunday.

The agreement lifts the EU's relationship with Egypt to a "strategic partnership" and was unveiled as a delegation of leaders visited Cairo. It is designed to boost cooperation in areas including renewable energy, trade and security, while delivering grants, loans and other funding over the next three years to support Egypt's faltering economy.

The proposed funding includes 5 billion euros in concessional loans and 1.8 billion euros of investments, according to a summary published by the EU. Another 600 million euros would be provided in grants, including 200 million euros for managing migration.

Such deals were "the best way to address migratory flows", said Italian Prime Minister Giorgia Meloni, who travelled to Cairo alongside EU Commission President Ursula von der Leyen, the Greek, Austrian and Belgian prime ministers, and the Cypriot president.

Inflation is running close to record highs and many Egyptians say they struggle to get by. Over the past month, however, financial pressure has eased as Egypt struck a record deal for Emirati investment, expanded its program with the IMF, and sharply devalued its currency.

Diplomats say Egypt's strategic importance has been underscored by the war in Gaza, where Egypt is trying to mediate between Israel and Hamas and increase deliveries of humanitarian aid; and by the conflict in neighboring Sudan, which has created the world's biggest displacement crisis.

Speaking alongside Egyptian President Abdel Fattah al-Sisi, von der Leyen said it was critical to rapidly reach a Gaza ceasefire deal. Both leaders warned against an Israeli incursion into Rafah, where much of Gaza's population has been displaced.

Egypt says it has lined up a total of $20 billion in multilateral support after increasing its loan and economic reform program with the IMF.

Most of the EU funding is newly allocated and was drawn up in close cooperation with the IMF, with 1 billion euros of the "macro-financial" loan funding to be delivered this year, a senior EU official said.

The remaining 4 billion euros are subject to approval by the European parliament, the official added.

Egypt largely shut off irregular migration from its north coast in 2016, but more recently there has been a surge in Egyptians trying to cross to Europe via Libya, and the EU is already providing support aimed at reducing those flows.

In recent months, the Greek islands of Crete and Gavdos have seen a steep rise in migrant arrivals, mostly from Egypt, Bangladesh and Pakistan.

"We must prevent the opening of new migration routes and we will work very closely with Egypt to ensure that this will be achieved," said Greek Prime Minister Kyriakos Mitsotakis, adding that both countries would try to open up legal pathways on migration.



US Goods Trade Deficit Hits 14-month High in May as Imports Surge

APM Terminals' facility at the Port of Los Angeles in California. (Reuters)
APM Terminals' facility at the Port of Los Angeles in California. (Reuters)
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US Goods Trade Deficit Hits 14-month High in May as Imports Surge

APM Terminals' facility at the Port of Los Angeles in California. (Reuters)
APM Terminals' facility at the Port of Los Angeles in California. (Reuters)

The US trade deficit in goods swelled to a 14-month high in May as businesses boosted imports, likely to avoid shortages and higher prices related to the Middle East conflict, suggesting trade remained a drag on economic growth in the second quarter.

The sharp deterioration in the goods trade deficit reported by the Commerce Department on Friday also reflected a decline in exports.

Recent business surveys have shown front-loading of orders by firms. Sponsors of the surveys attributed the behavior to the US-led war against Iran, which raised commodity prices, including for oil and fertilizers, and disrupted shipping in the Strait of Hormuz.

But after the United States and Iran last week signed a preliminary peace deal, shipments through the strait have picked up, driving oil prices sharply lower. Even if supply chains returned to normal, economists warned that the trade deficit would likely remain elevated because of an artificial intelligence investment boom that is largely reliant on imports.

"The widening trade deficit is bad news for national income growth, and it suggests that net exports might drag down real GDP growth too," said Carl Weinberg, chief economist at High Frequency Economics. "The AI boom had better generate a corresponding increase in services exports to offset the influx of equipment. If it doesn't, then this AI bubble is a losing proposition for the economy."

The goods trade gap increased 27.4% to $105.8 billion last month, the highest level since March 2025, the Commerce Department's Census Bureau said. Economists polled by Reuters had forecast the deficit at $85.0 billion.

Imports of goods increased $10.9 billion, or 3.6% to $313.4 billion, also a 14-month high. They were driven by a 6.3% surge in imports of automotive vehicles. Imports of consumer goods soared 5.7%. Despite high inflation, mostly stemming from the Iran war, consumer spending has remained strong, thanks to large tax refunds this year and a stock market rally.

BROAD INCREASE IN IMPORTS

Imports of industrial supplies, which include petroleum, increased 4.8%. Capital goods imports rose 0.4%. They surged 41.9% on a year-on-year basis, reflecting the AI spending spree.

Imports of foods, feeds and beverages increased 4.3%, while those of other goods advanced 11.5%. Overall imports have remained high despite tariffs imposed by the Trump administration.

Goods exports dropped $11.8 billion, or 5.4%, to $207.7 billion in May. They were weighed down by a 9.2% plunge in exports of consumer goods. Industrial supplies exports tumbled 7.0%, while those of capital goods dropped 5.0%. Exports of other goods decreased 6.8%. But food, feed and beverage exports increased 3.9%. Automotive vehicle exports rose 0.5%.

"Imports are moving sharply higher and this will subtract from GDP growth this quarter," said Christopher Rupkey, chief economist at FWDBONDS. "The import drag on domestic economic growth is back because factories here cannot make it here no matter how Washington economic officials try to spin it."

Trade had been a drag on gross domestic product for two straight quarters. Growth estimates for the second quarter were converging around a 2.5% annualized rate before the trade data.

The economy grew at a 2.1% annualized rate last quarter after expanding at a 0.5% pace in the October-December quarter.


Gold Gains as Dollar Weakens; Still on Track for Fourth Straight Weekly Loss

British gold bars and sovereign coins on display in a London shop. (Reuters)
British gold bars and sovereign coins on display in a London shop. (Reuters)
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Gold Gains as Dollar Weakens; Still on Track for Fourth Straight Weekly Loss

British gold bars and sovereign coins on display in a London shop. (Reuters)
British gold bars and sovereign coins on display in a London shop. (Reuters)

Gold edged higher on Friday as the dollar weakened and expectations of US interest rate hikes eased slightly following inflation data, though prices were still on track for a fourth consecutive weekly decline. Spot gold was up 0.51% to $4,046.70 per ounce by 9:39 a.m. EDT (1339 GMT).

US gold futures for August delivery rose 0.35% to $4,061.40 per ounce.

The US dollar eased from recent highs after the release of the Fed's preferred inflation gauge on Thursday. The US Personal Consumption Expenditures Price Index surged 4.1% in the 12 months through May, matching economists' forecasts in a Reuters poll. Traders are pricing in about a 60% chance of a US rate hike in September, lower than an earlier expectation of 64%, according to CME Group's FedWatch Tool.

Gold is seeing a modest rebound after coming under selling pressure earlier this week, said Jim Wyckoff, a market analyst at American Gold Exchange. Higher interest rates and tighter monetary policy reduce the appeal of non-yielding bullion, as they tend to boost bond yields and increase returns on interest-bearing assets. Spot gold hit more than a seven-month low earlier this week and prices were down 2.6% for the week.

TD Securities said in a note that, given gold's inverse relationship with both higher oil prices and a stronger US dollar, sustained strength in energy markets could put further downward pressure on the precious metal in the months ahead. Gold started trading at a premium in India this week for the first time in a month and a half, as a price correction lifted buying, while demand stayed subdued in China, the top consumer. Among other precious metals, spot silver rose 0.42% to $58.1109 per ounce.

Platinum gained 0.21% to $1,604.45 and palladium jumped 1.25% to $1,199.25.


Oil Set for Big Weekly Losses as Tankers Exit Strait of Hormuz

Crude oil storage tanks at the Cushing hub in Oklahoma, USA (Reuters)
Crude oil storage tanks at the Cushing hub in Oklahoma, USA (Reuters)
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Oil Set for Big Weekly Losses as Tankers Exit Strait of Hormuz

Crude oil storage tanks at the Cushing hub in Oklahoma, USA (Reuters)
Crude oil storage tanks at the Cushing hub in Oklahoma, USA (Reuters)

Crude prices plunged by about 3% on Friday, on course for steep weekly losses, as more oil tankers exited the Strait of Hormuz, easing supply concerns, even though a cargo vessel was hit near Oman on Thursday.

Brent crude futures fell $2.42, or 3.2%, to $72.84 a barrel by 1323 GMT. US West Texas Intermediate lost $1.97, or 2.7%, to $69.95.

The Brent benchmark was heading for a weekly decline of about 9.7%, while WTI traded around 8.8% lower than its close last Thursday before the market closed for a public holiday last Friday, Reuters reported.

"The predominant view, it appears, remains one of imminent oversupply," said PVM analyst Tamas Varga.
Refining giant Saudi Aramco resumed oil loading on Friday at its Ras Tanura terminal in the Gulf after a nearly four-month halt, shipping data from LSEG showed.

Two Very Large Crude Carriers, which can load cargoes of 2 million barrels, loaded crude at the terminal while another waited nearby, the data showed.

"There is a general selloff as the market reacts to the increased flows exiting the Strait of Hormuz and China not yet picking up crude demand," said June Goh, senior oil market analyst at Sparta Commodities.

UNKNOWN PROJECTILE HITS VESSEL

Both benchmark contracts jumped more than 2% on Thursday after a cargo vessel was hit by an unknown projectile near Oman, prompting the UN's shipping agency to suspend its voluntary evacuation scheme.

Two US officials told Reuters that Iran fired on the cargo ship as it attempted to pass through the strait. Iranian authorities said the security of vessels passing outside designated Hormuz routes is not guaranteed. Iran on Friday reasserted its right to control shipping through the Strait of Hormuz. Data on Thursday showed that crude shipments through the strait rose this week to their highest since the US-Israeli conflict with Iran began at the end of February.

Despite the ceasefire deal that reopened the waterway, overall traffic is far below the pre-war daily average.

"If the number of transits does not increase more strongly next week either, scepticism in the market is likely to grow, so that the oil price is likely to rise again," Commerzbank analysts said on Friday. Meanwhile, Russian authorities are considering a diesel export ban for several months, state news agency TASS said on Friday. Although a major diesel exporter, Russia faces fuel supply issues after Ukrainian drone attacks have caused extensive damage to its oil refineries and other energy infrastructure.