Introduction:

Global financial markets are currently influenced by a shaky Middle East truce between Israel and Iran, with investors largely shrugging off limited conflict but remaining vigilant for broader escalation. Simultaneously, South Africa is on the verge of exiting the FATF greylist after completing all 22 required actions, even as it faces critical, eleventh-hour negotiations to avert punitive U.S. trade tariffs set to expire on July 9, 2025.

Key takeaways from sources:

Middle East Tensions and Market Resilience:
- Despite a “shaky Middle East truce” announced by U.S. President Donald Trump, which was disturbed by some Iranian rocket fire and an Israeli vow to respond, investors largely maintained faith that the worst was over.
- The market’s muted reaction is primarily because the security of Iran’s oil infrastructure and the vital Strait of Hormuz was “never seriously in doubt,” even at the height of hostilities. This significantly reduced concerns about a major energy shock or supply disruption.
- Markets are “shrugging off” limited conflict and are more concerned about the prospect of a “broader war, with deeper U.S. intervention and an Iranian blockade of the Strait of Hormuz”.
- There have been contradictory statements from the U.S. administration: President Trump claimed U.S. strikes “obliterated” Iran’s nuclear program, but the U.S. Defense Intelligence Agency (DIA) reported they only set back capabilities by a month or two. Additionally, Trump’s social media post stating China could purchase Iranian oil again was swiftly clarified by the White House as no change in U.S. sanctions.
- Crude oil prices, after initial volatility and a significant two-day decline, have found a floor and edged higher, with Brent crude near $68 a barrel and WTI above $65. This is also supported by a reported drop in U.S. crude stockpiles.
- The Middle East ceasefire and lower oil prices have reduced inflation concerns, leading to U.S. Treasury yields sagging to multi-week lows and the dollar languishing against currencies like the euro.
South Africa’s FATF Greylist Status:
- South Africa is “very close” to being removed from the Financial Action Task Force (FATF) greylist, having completed all 22 required actions related to anti-money laundering (AML) and counter-terrorism financing (CTF) measures by June 2025.
- The final step is a “two-day on-site assessment” by FATF, which is described as a “very quick scan,” to verify the sustained implementation of these reforms.
- Removal from the greylist is anticipated at FATF’s next plenary meeting in October 2025.
- South Africa was placed on the greylist in February 2023 due to an inadequate AML/CTF regime, stemming from deficiencies identified as far back as 2021, including weak enforcement and limited convictions in high-profile corruption cases linked to state capture. The country had failed on all eleven effectiveness measures (implementation) and was deficient in 20 of FATF’s 40 legal framework recommendations.
- The reforms involved “major adjustments to its legislative framework” and demonstrated a “sustained increase in investigations and prosecutions of serious financial crimes,” requiring significant improvements within the South African Police Service (SAPS), State Security Agency (SSA), and National Prosecuting Authority (NPA).
- While remaining on the greylist posed risks of increased scrutiny and costs for financial institutions, its impact on South Africa’s financial markets has been limited so far. However, the OECD warned that staying on the list past October 2025 could pose a “significant risk to financial stability”.
Potential U.S. Tariffs on South Africa:
- South Africa faces a “critical deadline” of July 9, 2025, marking the end of a 90-day pause on 30% “punitive reciprocal trade tariffs” announced by U.S. President Donald Trump. Nations without a trade accord in place by this date will face these “Liberation Day” tariffs.
- South Africa’s Trade, Industry and Competition Minister Parks Tau is currently meeting with U.S. officials in Washington in “eleventh-hour negotiations” to avert these tariffs, aiming for an extension of the pause or a full tariff freeze.
- Previous trade proposals from South Africa, including mineral access and U.S. liquefied natural gas acquisitions, have seen “zero progress,” with the U.S. having not provided formal feedback.
- Failure to secure a trade deal and avoid tariffs could be a “crippling blow to the economy” and risks the “potential loss of the African Growth and Opportunity Act (AGOA),” a key part of the negotiations.
- Business Leadership South Africa (BLSA) emphasizes Africa’s “strategic importance” as a critical source of minerals and a “key long-term manufacturing hub” for the U.S., warning that a “Trump tariff disaster risks ceding this strategic advantage to China”.

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Sources referenced:

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