The Bank of Japan joined other major global central banks in raising interest rates to head off an expected spike in inflation fueled by higher energy costs from the war in the Middle East.
The bank said on Tuesday that it would raise its benchmark interest rate a quarter of a percentage point to 1 percent — the highest level in 31 years. Citing inflationary pressures from rising crude oil prices, the central bank said it would continue raising interest rates while monitoring prices and the broader economy.
Japan, along with much of the rest of the world, is bracing for a surge in prices for oil, gas, and other commodities driven by the closure of the Strait of Hormuz. An agreement between the United States and Iran to reopen the strait will likely provide relief. Still, economists expect war-related pressures to show up in Japan’s pricing data already this month, and lingering supply-chain strains and higher inflation to persist through the end of the year.
The strategy is to get ahead of the coming price surge, drawing lessons from 2022, when Russia’s invasion of Ukraine caused the last major disruption to global energy flows. At the time, the European Central Bank initially described inflation as “transitory” and delayed raising rates, only to see eurozone inflation shoot past 10 percent.

NEW YORK (AP) — A tentative deal to end the Iran war makes it reasonable to ask how soon prices will drop for gasoline, groceries, airline tickets and other items that got more expensive during the conflict.
Not so fast, experts say.
Even after oil starts flowing again from the Middle East, it could take a while for consumers to see a difference at local fuel pumps, supermarkets and other places they shop, according to economists and industry analysts.
Fighting over the Strait of Hormuz disrupted not only supplies of crude and refined fuel but also the supply chains for fertilizer, food and even footwear. Businesses expect higher costs to linger, which means their customers might need to prepare for that too.
“It is not clear, despite three months of war, that anything has been achieved that makes the American consumer better off,” Brett House, an economist who teaches at Columbia Business School, said. “In fact, by almost any measure, not just the American consumer, but the world, is worse off as a result of this attack.”
If the deal between the U.S. and Iran holds, here’s how experts see the war’s effects receding — or not — in the weeks ahead:
US motorists can expect some gas price relief
Following news of the tentative agreement, oil prices fell Monday to about $80 for a barrel of U.S. benchmark crude. That compares to $67 per barrel before the war and the price of over $120 a barrel reached earlier in the conflict.
Refineries typically pay for crude oil a month or more in advance, so even after oil prices drop, they won’t immediately be processing cheaper products.
“The tendency of gasoline prices to fall slowly is partly because the raw material takes weeks to work through the system until it’s delivered to consumers,” said Michael Lynch, a distinguished fellow at the nonpartisan Energy Policy Research Foundation.
In places without enough refining capacity to meet their needs, such as the West Coast of the U.S., gas prices will take longer to drop, said Mark Barteau, a professor of chemical engineering and chemistry at Texas A&M University.
In some Asian and African countries that rely more on oil from the Middle East, the supply shock led to school and government office closures and instructions to work from home, according to the International Energy Agency.
“The bottom line is that getting back to ‘normal’ will be a lengthy process involving many parties and countries,” Barteau said. “Getting an agreement between the U.S. and Iran to open the strait is just the beginning.”
Flights won’t get cheaper right away
Industry experts have spent months warning that even if the war ended, travelers should not expect airfares to go down immediately.
Airlines typically buy fuel in advance, adjust their schedules gradually and price tickets based heavily on demand, meaning lower oil and jet fuel prices can take weeks or months to get factored into the cost of commercial flights.
“I think it’s unlikely that we’re going to see a retreat or reduction in the cost of flying at any point this summer,” Columbia’s House said.
Fuel surcharges that some airlines outside the U.S. added are one of the first areas where passengers might get a reprieve, said Gordon Ho, a professor at the University of Southern California’s business school.
“Consumers are going to say, ‘Wait a minute, why are you still charging me a fuel surcharge?’” Ho said.
Pressure on grocery prices will likely continue
Reopening the strait is unlikely to deliver instant relief at the grocery store, according to David Ortega, a professor of food economics and policy at Michigan State University.
Fuel accounts for roughly 15% to 30% of the total cost of food, according to the Independent Grocers Alliance, a grouping of 7,500 global supermarkets.
But it can take months for an energy shock like the one caused by the Iran war to wind through the food supply chain and raise grocery prices. And once prices go up, it takes them a long time to come back down, especially when the future is unpredictable, Ortega said.
“We’re likely still looking at inflationary pressure on food in the coming months,” Ortega said. “There’s still a good deal of uncertainty about how the reopening will unfold, and it will take time for fuel, diesel and retail fertilizer prices to come back down.”
Rabobank, which is based in the Netherlands, said it expected war-related food price inflation to peak sometime next year in Europe. In the U.S., grocery prices are expected to rise 3.2% this year, which compares to a historical average of 2.6%, according to the U.S. Department of Agriculture.
Farmers remain strapped for fertilizer
Reopening the Strait of Hormuz would also be a welcome change for farmers and the production of food globally. Roughly 30% of the world’s fertilizer passed through the waterway before the war began. Prices soared as the supply was effectively cut off, and shipments probably will take a long time to return to pre-war levels.
The consequences of the shortage facing farmers now may only intensify down the road, regardless.
Many farmers around the world are going through planting seasons without the fertilizer they need or paying sky-high prices for both fertilizer and fuel needed to produce and transport their products. The World Food Program of the United Nations expects this to have a “devastating impact” on crop yields — and consequently, food prices and the availability of food — for months to come.
Retailers don’t anticipate a cost reprieve
U.S. retailers that sell shoes were encouraged to see falling gasoline prices, hoping they would mean Americans have more money to spend on back-to-school shopping, said Andy Polk, senior vice president of the Footwear Distributors and Retailers of America trade group.
However, shoe companies anticipate their own costs staying higher for the foreseeable future, Polk said. The group’s members keep a two- to three-month inventory of finished products, but their next orders may include suppliers charging more for materials, he said.
Most of the footwear sold in the U.S. is imported, and Polk said he expects shipping costs to remain higher for the rest of 2026 and 2027.
U.S. tariffs imposed last year have made it more difficult for shoe sellers to absorb higher costs or pass them on customers, he said. In May, footwear prices were 5.2% higher than the same month a year earlier, according to government figures.
Shipping industry expects a slow recovery
Judah Levine, head of research at the freight booking platform Freightos, said the Straight of Hormuz closure has affected about 2% to 3 % of the total volume of container ships that are used for global shipping, but higher oil prices and disruption have impacted the shipping industry more broadly.
Josh Steinitz, chief strategy officer of the business logistics platform ShipStation Global, said consumers might notice higher shipping costs and more out-of-stock items online until the end of the year.
“I think fuel surcharges, which then flow into shipping costs, which then get passed along to consumers, are still going to be with us for quite sometime from many of the major carriers,” Steinitz said.
___
Associated Press writers Cathy Bussewitz, Anne D’Innocenzio, and Wyatte Grantham-Philips in New York, Dee-Ann Durbin in Detroit and Rio Yamat in Las Vegas contributed to this report.

China’s consumer spending slowdown deepened in May as retail sales unexpectedly fell from a year earlier, in the latest sign that the country’s housing market crash has left millions of families reluctant to spend.
Retail sales dropped 0.6 percent in May from the same month a year earlier, the National Bureau of Statistics said on Tuesday. It was the first year-over-year decline since December 2022, when a wave of coronavirus infections swept the country and kept consumers at home after Beijing abruptly dismantled its stringent “Covid zero” restrictions.
Last month’s decline was a surprise because higher energy costs were expected to help lift retail sales. Gasoline sales, which are included in the retail sales figures, have risen as fuel costs increased following the closure of the Strait of Hormuz, and the retail sales figures are not adjusted for inflation. Yet retail sales still fell. After accounting for rising consumer prices, the decline in spending would have been steeper.

Soundtrack: In Flames – Colony
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Today, I can exclusively report, based on audited financial documents viewed by this publication that have been independently verified by the Financial Times, that OpenAI lost around $38.5 billion in 2025, as well as other crucial details about the financial condition of the company.
Due to the seriousness of this story, I am not going to do very much editorializing, as the numbers speak for themselves.
OpenAI Lost $5.09 Billion In 2024
2024 — OpenAI Had $3.7 Billion In Revenue, $12.4 Billion In Costs and Expenses, and a net loss attributable to the company of $5.09 Billion.
OpenAI’s financial statements tell the story of a company with incredible losses.
Revenue: $3.7 billion
Cost of Revenue: $2.65 billion
Research and Development: $7.81 billion
Sales and Marketing: $1.11 billion
General and Administrative: $907 Million
Total Costs and Expenses: $12.48 billion
Loss from Operations: $8.78 billion
Additional factors – including interest income and interest expense – left it with a net loss of $8.84 billion. It then marked $3.74 billion of losses as “net loss attributable to noncontrolling members capital,” leaving the net loss attributable to the company as $5.09 billion.
It’s unclear what this means, nor how OpenAI reconciled the removal of $3.74 billion in costs. I will not speculate further.
OpenAI Lost $38.5 Billion In 2025
2025 — OpenAI Had $13.07 Billion In Revenue, $34 Billion In Costs and Expenses, and $20.92 Billion In Losses, with a net loss attributable to the company of $38.53 Billion
Revenue: $13.07 billion
Cost of Revenue: $7.5 billion
Research and Development: $19.18 billion
Sales and Marketing: $5.73 billion
General and Administrative: $1.57 Billion
Total Costs and Expenses: $34 billion
Loss from Operations: $20.92 billion
Please note that 2025 was the year that OpenAI converted from a non-profit to a for-profit entity, leading to a $41.55 billion loss due to changes in fair value of convertible interests and warrant liability.
Taking into account other minor factors like interest income and interest expense, OpenAI is left with a net loss of $60.35 billion, which it lowered to $38.53 billion by removing $17.87 billion in costs via that “net loss attributable to noncontrolling members capital” and another $3.95 billion via a “net loss attributable to redeemable noncontrolling interests.”
Ultimately, the net loss attributable to OpenAI in 2025 was $38.5 billion.
At the end of the year, OpenAI had just over $50 billion in assets, with almost half of that in cash.
OpenAI Was Paid $867 Million By SoftBank and $303 Million From Microsoft In 2025
In 2025, SoftBank paid OpenAI $867 million. Microsoft paid it $303 million.
The documents revealed how much OpenAI paid Microsoft for services. In the 2025 calendar year, OpenAI paid Microsoft $10.59 billion for “Research and development” expenses. We believe this most likely refers to the cost of training OpenAI’s models.
The documents also mention a $6.047 billion charge related to “cost of revenue,” a $527 million charge for sales and marketing, and $42 million in “general and administrative expenses.” In total, OpenAI’s expenses to Microsoft amounted to $17.2 billion.
According to the figures, OpenAI had liabilities to Microsoft of $3.64 billion at the close of the calendar year, and additional $21 million in “accrued expenses and other current liabilities.” The documents also mention a further $58 million in non-current liabilities.
Further Notes
I intend to follow up this story in the next month with more in-depth reporting related to the documents. The documents are detailed, and I need time to fully parse them. Once I have done so, you’ll know.
The financial condition of OpenAI is deeply concerning. $38.53 billion in losses are astronomical, and far higher than most believed it would be. Losses also appear to be mounting year-over-year at a dramatic rate, and I’m not sure how this company finds a way toward any kind of sustainability or profitability.
As discussed, I have not editorialized much today. I believe the best thing I can do for the general public is to deliver this news as plainly as possible.

As the rest of the country celebrated the USA’s first World Cup win and the New York Knicks championship, Anthropic spent its weekend fighting the Trump administration over its latest model release. At 5:21 PM on Friday, the company received a US export control directive to suspend access to its Mythos 5 and Fable 5 AI models by “any foreign national” inside or outside the US, “including foreign national Anthropic employees.” The only way that was possible, Anthropic determined, was to completely disable products it spent the past week hyping — and travel to Washington, DC in hopes of changing President Donald Trump’s mind. Now, over the coming days, the US government could dramatically alter the trajectory of the entire industry, dealing a major blow to American AI companies.
Claude Mythos 5 and Fable 5 are built on the same foundation as Anthropic’s Mythos Preview, which Anthropic dubbed too dangerous to publicly release. (The company’s warnings could be seen as genuine concern or more hype for their own model — or both.) Mythos 5 was made available to a select group of government agencies and companies, while Fable 5, which featured additional safeguards, was deemed “safe for general use.” But when a report indicated those guardrails may have failed, Anthropic’s dire warnings about Mythos falling into the wrong hands came back to haunt it.
A source familiar with the situation, who participated in the negotiations between Anthropic and the Trump administration, said the administration called the AI lab on Friday around 1pm ET and gave the company a 90-minute ultimatum to shut down access to Mythos 5 and Fable 5. If it didn’t, then the government would impose export controls on Anthropic by authority of the US Commerce Department.
The source said that Anthropic executives were talking to the White House within 15 minutes of that first call, confirming that CEO Dario Amodei joined the discussions about an hour and 15 minutes after that initial call. Amodei directly spoke with US Treasury Secretary Scott Bessent, Commerce Secretary Howard Lutnick, and National Cyber Director Sean Cairncross, in some cases more than once, the source confirmed.
Anthropic wrote in a release on Friday that the company believed that the government “believes it has become aware of a method of bypassing, or ‘jailbreaking’ Fable 5.” Rather than an existential threat, though, Anthropic said that the jailbreak in question was a “potential narrow, non-universal” one that was “shared with the government” by an entity the company declined to name. Moreover, Anthropic said the behavior wasn’t unique to Fable 5. “We have reviewed a report that we believe is the basis of the government’s directive and validated that the level of capability displayed there is widely available from other models (including OpenAI’s GPT-5.5),” Anthropic wrote.
Semafor reported, citing one source familiar, that the hubbub began because the US government was concerned that a China-linked group had accessed the technology. But the source said that the China rumors went back weeks, referring to a large global telecommunications company that was initially cleared to be included in access to Mythos Preview, and that when the US government shared its concerns, Anthropic immediately revoked access.
An X post by David Sacks, the US government’s former AI and crypto czar who stepped down in March, didn’t mention China either. Sacks did, however, mention the unnamed entity that had exposed the issue to the government, calling it “a highly credible trusted partner of both Anthropic and the USG who was testing Fable [which] came forward with a jailbreak of those guardrails.”
Some reports point to Amazon CEO Andy Jassy as the person who flagged concerns to the US government after researchers at Amazon had red-teamed Fable 5. That conclusion stands at odds with some independent red-teamers, who have said they were impressed with the level of the protections.
The source familiar with the negotiations said that the Amazon research was explicitly mentioned in conversations with the US government. The person added that Anthropic had had access to that paper within days of the Friday export control directive and had been going back-and-forth since then with Amazon researchers to discuss it.
Everything in that paper, the source said, could be achieved by OpenAI’s GPT-5.5.
Anthropic spent the weekend scrambling to make nice with the Trump administration, beginning with virtual meetings and then flying employees to DC, including Dave Orr, Anthropic’s head of safeguards; Logan Graham, who runs its frontier red team and has led work on Project Glasswing; and Nicholas Carlini, a leading frontier developer and cybersecurity researcher. Axios reported, citing a source familiar with the Trump administration’s thinking, that the company simply has repeatedly made missteps in its communication with the administration and that it “has not done a great job at trying to speak to the administration and appreciate the ideological differences.” For Anthropic, the timing couldn’t be worse: the company had banked on Mythos to help it recover, in part, from months of high-profile clashes with the US Department of Defense.
The source familiar with the negotiations said that Anthropic pre-briefed the administration on Fable 5, and that the US Department of Commerce conducted testing pre-deployment, with no concerns shared at the time. The source added that Anthropic had been working closely with government agencies since Mythos Preview’s release.
The Trump administration initially took a hands-off approach to AI safety — but post-Mythos, it has become more ambivalent, even as it frets over the threat of losing the AI race to China. Now, prominent cybersecurity leaders have warned that sidelining Mythos 5 and Fable 5 could give China a significant AI advantage. Trump’s move has galvanized international calls for alternatives to American AI systems, while effectively putting a major US AI company’s new flagship model on ice.
A public letter from tech and cybersecurity executives called for restrictions on Fable 5 to be repealed on Sunday. “Not all of us agree that AI regulation is the right way forward,” the letter states, adding that if regulations are going to happen regardless, then they should be rooted in “scientific evaluations developed with input from industry and academia.”
Alex Stamos, chief product officer at Corridor, told The Verge he organized the public letter because the countless number of vulnerabilities in the past decade-plus, written in a variety of different coding languages, require AI to patch before bad actors find them. “We’re in a race, and I think policymakers don’t understand that,” Stamos said. “There’s this weird arrogance, this idea that American labs are hugely ahead of our adversaries that will always be true, that it’s really important to restrict access because of that. I just think that’s foolish. If the labs are ahead, it’s only by a matter of months. And you can see that in the open evaluations. The cutting-edge models are only something like six months ahead of the Chinese models — and those are the models we know about.”
The public letter goes on to state that though Anthropic’s Mythos-class models are skilled at finding cybersecurity vulnerabilities and taking advantage of exploits, they aren’t “uniquely good” at these tasks and that Fable 5’s safeguards “were so aggressive as to be the source of humor in the cyber community on launch day.” Stamos told The Verge that “there’s a real overstatement of Mythos’ capabilities. Anthropic is somewhat responsible for this themselves, clearly … Mythos is great, but the real turning point was really last year.”
Stamos said the industry is awash with backup contracts being signed with non-US companies and open-weight models being deployed on alternative hardware arrangements because the past weekend made political risk part of companies’ business plans more than ever before.
“They are laughing at us in Beijing right now,” Stamos said. “One of America’s champions is being kneecapped by the US government while we’re in a race with the Chinese. It’s just incredibly stupid. That’s why I wrote the letter, and I think that’s why a lot of people signed onto it.”
Ben Van Roo, co-founder and CEO of Legion Intelligence, a system of agents for the national security community, told The Verge that “the directive of ‘no foreign national should use this model’ is the most impossible thing to enforce.” He added, “When I first read that, my whole… [network of] AI community nerds was exploding.”
To make matters even more urgent, OpenAI, Google, and Microsoft have all come out with their own comparable products to Anthropic’s Mythos, making many of the same claims about their effectiveness and risks. If the Trump administration bans Anthropic’s advanced cybersecurity models, it can make a case for banning its competitors’ models, too. That could spur AI industry leaders to unite and help out Anthropic or, as with its fight over autonomous weapons with the Pentagon, position themselves as a safer and more compliant alternative.
Even as the Trump administration is trying to free tech companies of regulatory hassles, the Anthropic order could amount to a dramatic restriction on powerful AI models — depending on how the next few days play out.
Legion Intelligence’s Van Roo called it “uncharted territory” in the regulatory setting, adding that he doesn’t think this is the last time something like this will happen.
We’ve also entered the era of AI populism, when a growing number of people are pushing back against the AI industry’s outsized influence and the concentration of power at the top via data center protests, pledges to quit using AI chatbots, lawsuits over wrongful deaths, and even attempted attacks on AI company CEOs. Van Roo says the Trump administration’s recent moves against Anthropic could stoke “greater fears and concerns, potentially for the wrong reasons.”
The source familiar with the negotiations described the weekend’s conversations as constructive, with some members of the administration admitting that putting export controls on model providers isn’t ideal, since competitors with similar products may find themselves under the same restrictions — and since the US government is currently exploring a program that would encourage the export of American AI systems.
Monday’s talks concluded with no resolution as of yet.
As Anthropic continues to negotiate with the US government, there’s little chance that the company’s other myriad issues with the Pentagon won’t come up — namely, the ongoing battle between Anthropic and the Department of Defense over acceptable usage policies for Anthropic’s tech by the US military.
“This is new and we’ve never had anything potentially this drastic before, and it does have some real ramifications” in terms of how to enforce access to powerful models, Van Roo said. “Who gets to use this new technology that continues to outpace our own ability to regulate it?”