Iran Responds Forcefully to U.S.-Israeli Actions as U.S. Manufacturing Activity Expands Unexpectedly

Summary:

Iran reportedly suspends communications with the United States, threatens to fully close the Strait of Hormuz and strike Israel; U.S. manufacturing activity expands for a fifth consecutive month, posting its strongest increase in four years...

Key Headlines

1. U.S. Strategic Petroleum Reserve Falls to Its Lowest Level in More Than Two Years

2. Iran's Islamic Revolutionary Guard Corps Claims Attacks on U.S.- and Israel-Linked Vesse

3. lsIran Reportedly Suspends Communications with the U.S., Threatens Full Closure of the Strait of Hormuz and Strikes on Israel

4. Trump Says He Has Not Received Any Notice from Iran Regarding a Suspension of Talks

5. Trump: All Hostilities Between Israel and Hezbollah Will Cease Immediately

6. OPEC+ to Increase Output by Approximately 188,000 Barrels per Day in July

7. U.S. Manufacturing Activity Expands for a Fifth Straight Month, Posting the Largest Gain in Four Years in May

Details

U.S. Strategic Petroleum Reserve Falls to Its Lowest Level in More Than Two Years

According to U.S. sources, the Trump administration continues to release large volumes of crude oil from the U.S. Strategic Petroleum Reserve (SPR) to ease the energy supply crisis caused by the U.S.-Iran conflict and the closure of the Strait of Hormuz.

Data released by the U.S. Department of Energy showed that the SPR declined by 8 million barrels last week, following drawdowns of 9.1 million barrels and a record 9.9 million barrels in the previous two weeks. As a result, SPR inventories have fallen to 357.1 million barrels, their lowest level since January 2024.

Iran's Islamic Revolutionary Guard Corps Claims Attacks on U.S.- and Israel-Linked Vessels

On the evening of June 1 local time, Iran's Islamic Revolutionary Guard Corps (IRGC) announced that, following what it described as an aggressive U.S. military attack on Iranian vessels in the Gulf of Oman, the IRGC Navy carried out a retaliatory strike using cruise missiles against the Sariska, a vessel allegedly linked to U.S. and Israeli interests.

The IRGC Navy emphasized that any act of aggression by U.S. forces in the region would be met with a decisive response. The statement did not specify when the operation took place.

Meanwhile, the United Kingdom Maritime Trade Operations (UKMTO) reported on June 1 that a merchant vessel sailing in the Persian Gulf near southern Iraq was struck by an unidentified projectile, resulting in a powerful explosion.

Iran Reportedly Suspends Communications with the U.S., Threatens Full Closure of the Strait of Hormuz and Strikes on Israel

According to Iranian media reports, Iran's negotiating team has suspended indirect communications with the United States in response to Israel's ongoing military operations in Lebanon.

Iranian officials stressed that no form of negotiations would resume until Israel halts its military actions in Gaza and Lebanon and fully withdraws from occupied areas in Lebanon. At the same time, Iran and the so-called "Axis of Resistance" are reportedly planning a complete closure of the Strait of Hormuz and actions on other fronts, including the Bab el-Mandeb Strait.

According to Iran's Tasnim News Agency, Iranian officials stated that Israel must immediately cease military operations in Lebanon and Gaza and withdraw from Lebanese territory. Until these conditions are met, Iran will not engage in negotiations.

On Monday, Abdolrahim Mousavi, commander of Iran's Khatam al-Anbiya Central Headquarters, warned that if Israel attacks Beirut, residents of northern Israel should evacuate to avoid harm.

Trump Says He Has Not Received Any Notice from Iran Regarding a Suspension of Talks

On June 1 local time, U.S. President Donald Trump said that he had not received any notification from Iran regarding a suspension of negotiations.

Earlier that day, reports from Iran indicated that Tehran had paused indirect talks and document exchanges with Washington through intermediaries, citing Israel's continued military operations in Lebanon and arguing that a ceasefire in Lebanon is a prerequisite for any U.S.-Iran ceasefire arrangement.

Iranian officials and negotiators reportedly stated that Israel must immediately end what they described as aggressive military actions in Gaza and Lebanon and fully withdraw from Lebanon before any negotiations can take place.

Trump: All Hostilities Between Israel and Hezbollah Will Cease Immediately

In a post on social media, Trump stated that he had a highly productive conversation with Israeli Prime Minister Benjamin Netanyahu. He said that no troops would be sent to Beirut and that any forces already en route had been recalled.

Trump also said that, through senior representatives, he had held constructive discussions with Hezbollah, and that both sides had agreed to cease all hostilities. According to Trump, Israel would not attack Hezbollah, and Hezbollah would not attack Israel.

OPEC+ to Increase Output by Approximately 188,000 Barrels per Day in July

According to three sources, OPEC+ producers are likely to approve another increase in crude oil production quotas at their Sunday meeting, with output expected to rise by approximately 188,000 barrels per day in July.

However, the conflict involving Iran has prevented some countries from achieving previously agreed production increases. A further quota increase would signal a gradual return to normal operations despite disruptions caused by the closure of the Strait of Hormuz and the United Arab Emirates' unexpected withdrawal from the group in May.

The expected July increase matches the output hike agreed for June, which had been reduced from 206,000 barrels per day following the UAE's departure.

U.S. Manufacturing Activity Expands for a Fifth Consecutive Month, Posting the Largest Increase in Four Years

U.S. manufacturing activity expanded in May at its fastest pace in four years, supported by stronger new orders and increased production.

Data released on Monday showed that the Institute for Supply Management (ISM) Manufacturing Index rose by 1.3 points to 54. A reading above 50 indicates expansion.

The index has now remained in expansion territory for five consecutive months, suggesting renewed momentum in the manufacturing sector amid surging investment in artificial intelligence, more favorable tax policies, and reduced uncertainty surrounding trade policy.

Nearly all manufacturing industries reported growth during the month, including printing, textiles, electrical equipment, and plastics. Wood products was the only sector to report contraction.

New orders accelerated to a four-month high, while factory output also strengthened. Part of this momentum may reflect customers stockpiling goods ahead of anticipated price increases. Meanwhile, the Middle East conflict and the effective closure of the Strait of Hormuz have pushed up the costs of oil and other raw materials.

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