[NEW YORK] Saudi Arabia wants to contain a renewed conflict with Houthi militants through behind-the-scenes diplomacy, according to people familiar with the matter, in a bid to prevent clashes with the Iran-backed group hurting its oil industry and economy.

The kingdom has held talks with the Yemen-based Houthis via Omani mediators and is still preparing military options in case diplomacy fails, according to the people, who spoke on condition of anonymity so they could discuss sensitive information.

Riyadh conducted limited airstrikes on Houthi positions for two straight days in late July, but is not thought to have done so again as it tries to find a diplomatic resolution with the Islamist organisation, which controls most of Yemen’s population, the people said.

Saudi Arabia has held intermittent Oman-mediated talks with the Houthis since a 2022 ceasefire. Now, Riyadh wants to restrain the Houthis and protect its Red Sea ports, from which it is exporting the bulk of its oil with the Strait of Hormuz effectively closed.

The Saudi and Omani governments did not immediately respond to requests for comment.

The Houthis are pressing for more economic concessions from Riyadh, the people said.

Following the truce four years ago, the group has repeatedly said Saudi Arabia should pay salaries for some Yemeni civil servants and lift all restrictions on goods and people going into Houthi-run areas as part of any lasting peace.

The renewed diplomacy underscores Saudi Crown Prince Mohammed bin Salman’s dilemma after the Houthis opened a new front in the Iran war by threatening any ships calling at the kingdom’s ports.

Saudi Arabia wants to respond to Houthi attacks without being sucked into renewed fighting.

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The 2022 deal followed a years-long and unsuccessful bombing campaign led by the Saudis and United Arab Emirates to oust the Houthis, who captured the Yemeni capital of Sanaa soon after a civil war started in 2014. They also hold the crucial port of Hodeida on the Red Sea.

US officials have privately discouraged a major Saudi military retaliation to Houthi strikes on vessels off its Red Sea coast, regional and western diplomats said.

Washington, they said, fears that worsening Saudi-Houthi hostilities would further disrupt global shipping and energy markets, and possibly close the Bab el-Mandeb strait, another chokepoint vital for flows of energy.

Oil prices have already soared 35 per cent in 2026 so far mainly because of the closure of Hormuz.

A US State Department spokesperson declined to comment on private diplomatic conversations. Washington is committed to supporting Saudi Arabia against the Houthis and is in close consultation with Riyadh, the spokesperson said.

A broader military campaign risks drawing Saudi Arabia even deeper into the regional conflict with Iran.

Riyadh had to defend itself against Iranian missile and drone attacks during the height of the war in March and early April. More recently, the Houthis and Iran-supported militias in Iraq have fired projectiles at its petroleum facilities, including refineries.

The Saudi economy shrank 4.8 per cent year on year in the second quarter – its worst performance since the Covid-19 pandemic – as the Iran war forced it to cut back oil exports.

“The kingdom’s priority is to prevent further escalation while safeguarding regional stability,” said Abdulaziz Al Sager, chairman of the Gulf Research Center, a think tank based in Jeddah, Saudi Arabia.

The government will only resume broader military operations in response to “unjustifiable attacks” such as strikes on critical infrastructure, he said.

Overlapping alliances

The Houthis’ Jul 20 announcement that they would blockade Saudi ports effectively made good on Iran’s longtime threat to expand the war to trade routes beyond the Persian Gulf.

Five days later, the Houthis fired missiles and drones at oil giant Saudi Aramco’s facilities in the Red Sea port towns of Jizan and Yanbu.

The Houthis are part of Iran’s Axis of Resistance, a group of anti-US and anti-Israel militias in the Middle East that includes Hezbollah in Lebanon and Hamas in Gaza.

Soon after the Americans and Israelis started bombing Iran on Feb 28, the Islamic Republic pushed the Houthis to prepare for a possible campaign on ships near the southern Red Sea, Bloomberg reported.

The Houthis attacked ships in those waters and the Gulf of Aden from late 2023, when a war in Gaza between Israel and Hamas started. The Houthis said they were acting in solidarity with Palestinians and continued until a ceasefire in Gaza in October 2025.

Yemenis are less supportive of the Houthis starting a military campaign for Iran than for the Palestinians, according to Bloomberg Economics analysts.

As such, the group has justified its recent actions as a response to a “siege” on Yemen, referring to Saudi restrictions on the country’s ports and airports. The group also pointed to a Saudi Arabian strike on Sanaa airport last month.

Iran has framed the Red Sea clashes as a local dispute to be resolved through Saudi-Yemeni dialog, even as state media celebrated them as part of the “resistance”.

“Solidarity with Iran is central to their regional strategy and military partnership, but they also recognize the need to maintain domestic support,” said Nadwa Al-Dawsari, a Yemen expert at the Middle East Institute, based in Washington.

“That is why they consistently frame their actions through a Yemeni nationalist lens.” BLOOMBERG

NEW Zealand’s jobless rate rose to an 11-year high in the second quarter as the global energy shock squeezed company profits and more people sought work.

Unemployment increased to 5.6 per cent from a revised 5.4 per cent three months earlier, Statistics New Zealand said on Wednesday (Aug 5) in Wellington.

That’s the highest level since the third quarter of 2015 and exceeded economists’ median estimate of 5.4 per cent. Employment rose 0.5 per cent from the prior three months, outpacing the 0.1 per cent estimate.

New Zealand’s economic recovery remains fragile in the face of geopolitical ructions such as the US-Iran war, which has driven up costs and eroded business confidence.

Last month, the Reserve Bank began raising interest rates to counter inflationary pressures, suggesting firms will remain cautious about future hiring in the near term.

The New Zealand dollar fell after the report, buying 58.89 US cents at 10.55 am in Wellington.

The jobs report will be unwelcome news for the centre-right coalition government which faces a general election in early November.

The ruling National Party trails in opinion polls as voters grow weary of its claims to be the superior economic manager at a time when the recovery is still struggling for traction.

The RBNZ increased the Official Cash Rate to 2.5 per cent in July and said a further reduction in stimulus is likely. Investors are wagering the benchmark will rise to 3 per cent by the end of the year.

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Employment rose 1.2 per cent from the year-earlier quarter versus economists’ estimated 0.7 per cent increase, the data showed.

The labour force participation rate, which measures how much of the working-age population is actively seeking employment, unexpectedly climbed to 70.7 per cent from 70.4 per cent. Economists expected 70.4 per cent.

The report showed annual wage inflation accelerated for the first time in three years. Ordinary time wages for non-government workers gained 2.1 per cent from a year earlier, rising from a 2 per cent pace in the first quarter. BLOOMBERG

THE Trump administration is preparing to set a price floor and impose tariffs on polysilicon and related products, according to four people familiar with the plan, putting a material critical to solar panels and semiconductors at the centre of US efforts to compete with China on artificial intelligence and energy.

The decision, expected to come later this month, aims to protect US polysilicon factories owned by Hemlock Semiconductor and Wacker Chemie from growing Chinese ambitions in the chip supply chain.

President Donald Trump’s year-long national security investigation into polysilicon by the Commerce Department also has major implications for the growing domestic solar manufacturing industry at a time when the US leader has rolled back federal support for renewable energy.

Details of the probe’s findings under Section 232 of the Trade Expansion Act of 1962 are being reported for the first time by Reuters, including the Trump administration’s plans to pursue a hybrid system combining a minimum import price with tariffs on polysilicon and derivative products, according to the sources familiar with the deliberations, who spoke on condition of anonymity.

Shares of Corning, Toyo, T1 Energy and other US-listed solar manufacturers including First Solar rallied following the Reuters report.

Corning, already up 5.2 per cent before publication, rose to 10 per cent and closed up 9.4 per cent; First Solar rose to 4.7 per cent from 1.8 per cent; T1 Energy climbed to 9.9 per cent from 4.9 per cent; Canadian Solar advanced to a gain of 5.6 per cent from 3 per cent; and Toyo, up about 1 per cent before the story, jumped as high as 5 per cent before ending up 1.7 per cent.

Polysilicon, an ultra-pure form of silicon, sits at the start of the semiconductor and solar manufacturing supply chains. Manufacturers turn silicon wafers into solar cells and then assemble those into panels used in solar projects.

Domestic semiconductor manufacturing, a Trump priority, depends on solar because the solar industry’s larger demand for polysilicon helps support production of the material required for chips. The chip industry accounts for 2.4 per cent of global polysilicon demand, the Semiconductor Industry Association said.

“They’re finding that they actually do need solar,” said Rhone Resch, chief strategy officer at Japan’s Toyo, which operates a solar panel factory near Houston and plans to invest US$357 million in a nearby solar cell facility.

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Two of the sources said the Commerce plan will allow importers investing in US wafer and cell production to offset the costs associated with the trade protections. China accounts for roughly 80 per cent of global solar manufacturing capacity.

A White House official would not comment ahead of President Donald Trump’s decision. The Commerce Department did not respond to a request for comment.

China’s Embassy in Washington criticised the trade investigation.

“China urges the US to stop the Section 232 tariff measures as soon as possible, and properly resolve the concerns of all parties through equal dialogue,” a spokesperson said.

Under the Cold War-era Section 232 statute, the president can restrict imports deemed a threat to national security after an investigation to confirm a threat exists.

Trump has already completed probes and imposed tariffs on autos, steel, aluminum, copper and lumber. He is expected to soon release the findings of similar investigations into imported drones and industrial robots, which would clear the way for tariffs on those goods.

The administration is also continuing work on closely watched probes into semiconductors, pharmaceuticals, critical minerals and wind turbines as it seeks to rebuild its global tariff regime.

US solar manufacturing has expanded since Congress created tax incentives in 2022. Much of that growth, however, has been concentrated in panel assembly, leaving manufacturers dependent on imported wafers and cells, which require longer investment timelines.

Several US solar factory owners, including Toyo, Qcells, Corning, Canadian Solar and T1 Energy, have announced or started facilities farther up the solar supply chain in part to meet stringent Made-in-America requirements tied to federal clean energy subsidies.

The trade group Solar Energy Manufacturers for America and a bipartisan group of US lawmakers have argued in comments to the Commerce Department that imports from non-Chinese producers like South Korea’s OCI Holdings and Wacker, with factories in Malaysia and Germany, will be needed until domestic polysilicon, wafer and cell production expands.

Hemlock, which operates a plant in Michigan, is a joint venture between Corning and Japan’s Shin-Etsu Handotai. Munich-based Wacker runs a factory in Tennessee.

“Without polysilicon, the next steps of the value chain (wafer and chips or wafer and solar cells) are not possible,” Wacker said in a statement.

Corning declined to comment.

‘Collateral damage’

The administration must walk a fine line between supporting domestic producers and inflating the cost of chips and solar panels, products in high demand amid the data centre boom.

Industry groups representing solar developers and semiconductor buyers have warned the administration that tariffs could raise the cost of solar power plants and increase prices for products including consumer electronics and automobiles.

Even some manufacturers are worried about the impact on demand for their products.

“The market might start having projects fall down” if costs become too high, Martin Pochtaruk, CEO of panel maker Heliene, which operates factories in Minnesota, said in an interview. He called the solar industry’s role in the chip-focused trade investigation “collateral damage.” REUTERS

[WASHINGTON] The Trump administration told artificial intelligence developers on Tuesday (Aug 4) that it will not put open-weight AI models through voluntary safety tests, according to two sources familiar with the discussions.

Open models, including Nvidia’s Nemotron and Meta’s Llama, are AI systems with publicly accessible core components. Closed models are controlled by specific companies. Major US developers of closed models are OpenAI, Google and Anthropic.

The White House discussed the unpublished testing rules with staff from Meta, Anthropic, Google, Nvidia and OpenAI, according to five sources familiar with the meeting.

The meeting follows disclosures from OpenAI and Anthropic that their AI tools breached the systems of other companies.

The hacks raised concerns among US lawmakers about whether increasingly capable AI models could be used to conduct or facilitate cyberattacks.

The Trump administration said in June the tests would be voluntary, and designed for AI models with sophisticated hacking capabilities. OpenAI and Anthropic both have models with advanced cybersecurity capabilities.

Five democratic senators called on Trump on Tuesday to work with Congress to pass legislation making testing permanent for the most advanced American-made AI models, called “frontier models”.

“The United States cannot afford to create a policy environment in which the most advanced American AI systems are subject to opaque, case-by-case restrictions while Chinese alternatives appear cheaper, easier to access, and more predictable to deploy,” the senators said in the letter.

The Trump administration has said little in public beyond that US officials are monitoring the OpenAI hack.

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[WASHINGTON/HOUSTON] The White House is expected to extend a waiver of the century-old Jones Act in the coming days to try and hold down petrol prices, sources said, as President Donald Trump escalates his attacks on ExxonMobil and Chevron for making “too much money.”

The Jones Act requires cargo moving between US ports to be carried on ships built in the US, owned by US companies and crewed by American workers, and the waiver aims to lower petrol prices by increasing shipping flexibility and reducing transport bottlenecks.

The oil industry had expected an extension by the end of July.

But administration officials have continued meeting with maritime industry representatives and lawmakers over potential changes to narrow the scope of the waiver while preserving flexibility to move critical fuel supplies, according to three people familiar with the discussions who requested anonymity because they are not authorised to speak publicly.

The current waiver is set to expire on Aug 16 and has already become the longest suspension of the Jones Act rules in the programme’s history.

The exemption has been used nearly 200 times over 4-1/2 months through the end of July, according to US government data. Trump is running out of easy options to lower petrol prices — currently averaging over US$4 a gallon in the US — ahead of the midterm elections in November.

The administration has already leaned on measures including increased oil supply efforts and regulatory flexibility, while Trump on Monday escalated rhetorical pressure on ExxonMobil and Chevron by saying they should return money to consumers at the pump.

Exxon and Chevron did not respond to requests for comment.

US Energy Secretary Chris Wright told reporters in Brownsville, Texas, on Tuesday that the waiver had resulted in lower energy prices in California and on the East Coast and that another extension is likely. He said fuel prices should come down in the coming weeks.

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“President Trump believes in markets and he believes in capitalism. But he’ll use every tool he has, including the bully pulpit, to try to encourage and put pressure to lower energy prices for Americans,” Wright said at a press conference when asked about Trump’s comments on ExxonMobil and Chevron.

Bob McNally, president of Rapidan Energy Group, said the most effective option for any US president would be to press Saudi Arabia to increase oil production — an option not feasible because exports remain constrained by disruptions around the Strait of Hormuz amid the Iran conflict.

Other potential measures, including a windfall profits tax, petrol price controls or legal action against oil companies, are either politically unrealistic, economically risky or unlikely to meaningfully reduce prices, McNally said.

McNally said the Jones Act waiver increases the availability of tankers to move fuel but would probably reduce petrol prices by only pennies per gallon.

Waiver critics push for limits

Critics of the extension are pushing for geographic limits and tighter scrutiny on each shipment.

White House trade adviser Peter Navarro, Office of Management and Budget Director Russell Vought and the White House Energy Dominance Council, among others, have been involved in discussions over the waiver extension, the people said.

No final decision has been made and details are subject to change, the sources said.

Key Republican lawmakers, including House Speaker Mike Johnson and House Majority Leader Steve Scalise, have pressed the administration to limit the exemption, warning that broad use of waivers could weaken the domestic fleet and undermine the Jones Act’s national security goals.

A White House official said the administration was continuing to monitor how the waiver was being used and that discussions were ongoing. Any further announcements would come directly from the president or the administration, the official said.

Maritime groups have been escalating their campaign against extending the Jones Act waiver, with the American Maritime Partnership restarting advertising on CNBC and Fox News and AMP and the American Waterways Operators running digital ads.

AMP President Jennifer Carpenter said the waiver has benefited foreign operators and energy companies more than consumers.

“The waiver has shifted routine domestic commerce to foreign operators, including entities linked to China and Russia, while undermining the US maritime industrial base,” Carpenter said. REUTERS

THE US trade deficit narrowed in June as imports fell for the first time since the start of the year in a broad decline. 

The gap in goods and services trade shrank 5.6 per cent from the prior month to US$73.3 billion, Commerce Department data showed on Tuesday (Aug 4). The value of imports declined 1.8 per cent while exports fell 0.9 per cent.

The trade data wraps up a quarter in which net exports continued to weigh on economic growth. Trade has been volatile month to month amid fluctuating tariff policy, disruptions from war in the Middle East and a rush to invest in artificial intelligence.

While many levies on imports were struck down by the Supreme Court in the first quarter, the Trump administration is seeking other routes to tariff imports.

Imports of computers, peripherals and parts surged in 2025 into early this year as companies aggressively pursue investment in AI.

The latest trade report, however, showed imports of computers and semiconductors took a breather in June. The broader capital goods category that includes such equipment declined for the first time since September 2025.

On an inflation-adjusted basis, the merchandise-trade deficit narrowed to US$94.5 billion in June.

Oil exports

Meanwhile, the value of outbound US shipments of industrial supplies such as oil and petroleum products decreased 4 per cent. The decline reflected cheaper crude prices and a pullback in volume.

Despite the drop in goods exports, shipments of non-monetary gold surged. Trade in this category has been particularly volatile since early last year.

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By country, the US merchandise-trade deficits with Mexico and Canada widened. The Trump administration has recently decided that it would not renew its trade deal with its neighbours, pursuing annual reviews instead, which could fuel additional uncertainty for firms in the months to come.

The US shortfall with China also grew. Vietnam – a major beneficiary of supply-chain shifts since trade tensions between the US and China erupted in US President Donald Trump’s first term – widened as well. 

On the services front, spending by international visitors to the US rose for a second month as the Fifa World Cup kicked off. US travel exports, which measure expenditures by non-US citizens, increased 2.4 per cent to the highest since the start of 2025. BLOOMBERG

[LONDON] Artificial intelligence could enable developing countries to gain a century’s worth of development in a decade if they act quickly on power, connectivity and skills gaps, the World Bank said in a report on Tuesday (Aug 4).

Widespread job losses due to AI are also less of a threat to emerging economies, it said, adding that developing economies have more to gain and less to fear than richer nations.

“AI has thrown developing economies a lifeline, and they should seize it,” said Indermit Gill, the World Bank’s chief economist, in a statement accompanying the report.

Companies worldwide are spending billions to harness an anticipated AI revolution, while governments are scrambling to ensure their nations reap the benefits.

For many companies and countries, the challenge will be to build power-hungry data centres and find the energy generation to support them. But Gill said that emerging economies do not need vast resources or bespoke large language models to benefit.

“By adapting small, low-cost AI tools to local conditions, they can bring better medical care, education, judicial services and agricultural extension within reach of millions.”

Healthcare workers may be able to use AI to speed diagnoses; teachers could use it to improve lesson plans; farmers might rely on it to determine what to plant and when.

The International Monetary Fund has said that AI could boost Sub-Saharan Africa’s economy by about 4 per cent over the next decade, under the right circumstances.

Fewer jobs at risk – but stakes are high

Generative AI is three times more likely to threaten jobs in rich countries, where 14.2 per cent are at risk, than in low-income and middle-income countries, where 4.5 per cent of jobs are exposed, the World Bank found.

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The share of jobs expected to benefit from meaningful productivity gains is also similar: 16.2 per cent in developing economies and 18.7 per cent in high-income countries.

The World Bank said in the report that governments must improve electricity and Internet access, boost digital skills and expand access to smartphones and computing devices.

It warned, however, that AI could bring “greater income inequality, stealthier misinformation, and political repression”.

But the cost of missing out would be severe, it said.

“Today’s developing economies missed the first Industrial Revolution and spent the next two centuries paying the price,” Gill said. “They cannot afford to miss this one.” REUTERS