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Oil prices rise as US-Iran truce prospects dim
The stock market in Asia fell on Tuesday, while oil prices eased and remained above $100 per barrel. This is as the U.S. continues to work with Iran towards a ceasefire while also trading blows across the Strait of Hormuz. The yen was also in traders' sights after it briefly jumped during the previous session. This fueled speculation about another round of intervention by Tokyo. The broadest MSCI index of Asia-Pacific stocks outside Japan fell by 0.3%. In a thinned Asia market, shares in Australia dropped 0.4%. Markets in Japan and South Korea had a holiday. Nasdaq and S&P futures both fell about 0.1%, while EUROSTOXX futures dropped 0.2% and FTSE Futures dropped 0.75%. U.S. and Iran launched a new attack in the Gulf Monday, as they fought for control of the Strait of Hormuz through dueling maritime blockades. This comes just a few days after U.S. president Donald Trump announced a new initiative to help stranded ships and tankers pass the crucial energy-trade chokepoint. Maersk has confirmed that the Alliance Fairfax, an American-flagged vehicle ship operated by Farrell Lines, left the Gulf on Monday via the Strait of Hormuz, accompanied by U.S. Military assets. The renewed hostilities still jolted the markets and served to remind us that the Middle East war is far from over. Tony Sycamore is a market analyst for IG. He said, "We began yesterday with high expectations that 'Project Freedom,' as it's called, would be a success, on the ground. It was being marketed more as a humanitarian endeavor." As we could see, the Iranians didn't take that bait. This really indicates that the stalemate is still in place, and it has been a very shaky beginning." Brent crude futures dropped 0.5% to $113.85 per barrel, while U.S. Crude fell 1.3% to $105.03 after spiking in the previous session due to increased concerns about supply disruption. Investors were also preparing for this week's earnings reports, as Advanced Micro Devices, Pfizer, and others would be releasing results in the afternoon. S&P Global Market Intelligence data shows that 83% of S&P500 companies have already reported and have beaten their EPS estimates. 78.2% have also beaten their revenue estimates. Jeff Buchbinder is the chief equity strategist of LPL Financial. He said that AI-driven expenditure will continue to drive S&P 500 earnings growth. YEN INTERVENTION WORT After Monday's brief surge, which saw the Japanese currency reach an intraday peak of 155.69, the yen has been stable at 157.22. Satsuki Katayama, Japanese Finance Minister, spoke Monday against speculation in foreign exchange trading. Market participants are on high alert for any further intervention. Tokyo intervened on Thursday to support?its currency. Abbas Keshvani is Asia Macro Strategist for RBC Capital Markets. He said that authorities may intervene again, if the dollar/yen keeps testing 160, which they have historically protected. In 2022, Tokyo fired three volleys in just a few short weeks. He said: "We believe that the intervention will only act as a cap on USD/JPY and not a catalyst to protracted yen strength." The Australian dollar, in other currencies, eased by 0.06%, to $0.7163, ahead of Reserve Bank of Australia’s interest rate announcement later that day. A hike is widely anticipated. In the meantime, the U.S. Dollar firmed up on a?safe haven demand. A number of data, including the nonfarm payrolls report for April on Friday, could'move' Federal Reserve policy. The U.S. economy is expected to have gained 62,000 jobs after March's 178,000-strong gain. However, problems with seasonal adjustments create much uncertainty. The markets currently expect that the Fed will leave its interest rate policy on hold for this year due to the inflationary pressures from the global energy crisis. Spot gold, meanwhile, rose 0.2%, to $4,529.19 per ounce. This is well within the ranges of recent trading. (Reporting and editing by Christopher Cushing; Rae Wee)
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Regis, a gold mining company in Australia, will take over Vault and create a $7.7 billion gold miner
Regis Resources will take over Vault Minerals, a smaller competitor in Australia. This merger is expected to create Australia's third largest listed gold producer with a market value of around A$10,7 billion ($7.67billion). Both boards would support the combination to create an entity that would have five mines operating in Western Australia, and two expansion projects. This entity would produce 700,000,000 ounces per year of gold. Executives of both companies stated on Tuesday that the deal will unlock more than A$500 Million?in tax benefits for corporations and provide scale to improve procurement and capital cost savings for the combined entity. The deal was made amid a recent surge in bullion price that has encouraged consolidation by mid-tier producers. Central banks are also increasing their gold reserves to diversify away from fiat currency amid geopolitical uncertainties. According to a joint press release, Regis offered 0.6947 percent of its shares for each Vault share. This equates to A$5.15 Billion in value. The offer represents an increase of 10.7% over Vault's Monday closing price of A$4.50. Vault shares jumped up to 6.4%, their largest intraday gain since early April. Regis stock dropped as much as 6,1%, hitting a new low. The companies stated that Regis shareholders will own approximately 51% and Vault shareholders, the remainder. On an analyst call, Regis CEO Jim Beyer said, "By merging the two businesses, we are creating a'stronger company, with greater scale, better diversification, and a stronger balanced sheet." Broker Ord Minnett described the deal as "a positive step" due to the "increased size of the merged entity," which offered "a powerful platform for enhancing?the portfolio through potential M&A/growth opportunities." Ramelius Resources acquired Spartan Resources, a smaller competitor, in an A$2.4 billion deal last year. The move was part of a consolidation wave?in this sector, driven by the rallying gold prices. The boards of Regis and Vault unanimously approved the merger, if no better offer was presented. (1 Australian dollar = $1) (Reporting and editing by Sahal Muhammad and Subhranshu Sahu; Additional reporting by Melanie Burton, Melbourne)
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IAEA: drones damaged equipment at Zaporizhzhia Nuclear Plant in Ukraine
The International Atomic Energy Agency reported that a drone had 'damaged' the meteorological monitoring equipment in a Russian-owned Zaporizhzhia Nuclear Power Plant located in southeast Ukraine. In the first weeks of Moscow’s invasion of Ukraine in February 2022, Russian forces seized Zaporizhzhia, Europe's largest nuclear power plant with six reactors. Since then, both sides have accused each other of taking military actions that could compromise the safety of the plant. IAEA posted on X that?a team from its experts visited the station's External Radiation Control Laboratory?, a day after Russian management claimed the plant had been struck by a drone. The IAEA's nuclear watchdog said that the team had observed damage to the laboratory's weather monitoring equipment, which was "no longer operational." In the statement, IAEA Director-General Rafael Grossi issued a new appeal for "maximum military restraint around all nuclear facilities in order to avoid safety risk". Since the start of the conflict, drones have 'hit the plant several times. On Sunday, the plant's management said that damage was?minor and operations were unaffected. The IAEA announced last week that it was attempting to arrange a local truce to allow repair work to be done. Grossi has made several visits to the Zaporizhzhia nuclear plant since it came under Russian control. The IAEA also has observers in place at Zaporizhzhia as well as Ukraine's other three working nuclear stations. (Reporting and editing by Nia William, Ron Popeski, Christopher Cushing and Abu Sultan in Bengaluru)
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IMF chief Georgieva warns a'much more worse outcome' is the Middle East war drags on into 2027
The head of the International Monetary Fund warned on Monday that inflation is already increasing and the global economy could suffer a "much more serious outcome" if the Middle East war drags into 2027, and oil prices reach $125 a barrel. IMF's Kristalina Georgieva stated that due to the continued war, the "reference scenario", which assumed a short-lived crisis and forecasted a slight growth slowdown of 3.1% as well as a minor rise in prices at 4.4% was no longer feasible. Georgieva stated that "this scenario is moving further and farther behind the mirror in the rear view" with each passing day. She said that the "adverse scenarios" of the IMF were already in place due to the continuation of the conflict, the forecasted oil price of $100 or more per barrel and the rising inflationary pressures. She said that long-term inflation expectations were anchored, and financial conditions weren't tightening. But, this could change if war continued. She said: "If this trend continues and oil prices are $125 higher or less in 2027, we can expect an even worse outcome." "We will then see inflation rising and then, inevitably, 'inflation expectations' would begin to de-anchor." IMF released three scenarios last month for global GDP growth in 2026-2027, amid the uncertainty surrounding the Middle East war - a "reference scenario", a "middle adverse scenario", and a much worse "severe" scenario. The adverse scenario predicted global growth slowing down to 2.5% by 2026, and headline inflation at 5.4%. The severe scenario predicted growth of only 2% with headline inflation of 5,8%. Mike Wirth, Chairman and CEO of Chevron, spoke on the same panel. He said that the Strait of Hormuz would be closed, which is where 20% of global oil supplies passed before the war. Wirth stated that economies will start shrinking in Asia first as the demand is adjusted to "meet the supply" while the strait is closed due to the U.S. Israel war against Iran. Georgieva stated that the IMF is closely tracking the slow-moving effect of the conflict on supply chain, as fertilizer was already 30% to 40% higher in price, which would "drive food prices between 3% and 6 percent." Other industries may also be affected. She said: "I want to emphasize that this is a serious issue." She expressed concern about the fact that many policymakers still act as if the crisis will end in a few months, and are putting measures in place to reduce the impact on businesses and consumers, which is keeping the demand for oil high. She said, "Don't put gasoline on the fire." Everyone in this room understands that when your supply decreases, demand will follow.
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Oil prices rise, while stocks fall as Iran tightens its grip on the Strait of Hormuz
Oil prices rose 6% and stocks fell on Monday as Iran intensified its military campaign, attacking several ships in Strait of Hormuz?and?setting a UAE port of oil ablaze. Brent futures rose by $6.27 or 5.8% to $114.44 a barrel. U.S. West Texas Intermediate crude (WTI), however, rose $4.48 or 4.4% to $106.42. The move came after U.S. president Donald Trump announced over the weekend that U.S. Navy forces would open the strait, leading to the biggest escalation of the war since the ceasefire was declared. Since two months, the Strait of Hormuz has been seriously disrupted. It is through this strait that a fifth of all oil and gas transported by sea in the world normally passes. The Dow Jones Industrial Average?was down 1.13%. The S&P 500 was 0.41% lower. And the Nasdaq Composite fell 0.19%. The longer oil prices remain above $100 per barrel, the less the fiscal stimulus from the tax cuts that were passed in 2025 will be a stimulus and more likely to act as a shock-absorber, said Brock Weimer. MSCI's broadest?global share index outside Japan dropped 0.22%. German automakers in Europe weighed on regional equity after Trump announced on Friday that he would "raise tariffs" on European cars. The STOXX 600 index for the whole of Europe fell by 0.99%. The benchmark 10-year bond rate for the Euro Zone, Germany, increased 5 basis points, to 3.08%. London's markets were closed due to a public holiday. CENTRAL BANKS TURN HAWKISH AFTER OIL FANS INFLATION FEARS Oil-driven inflation has pushed bond rates higher and complicated global monetary policy outlook. Markets are no longer expecting the Federal Reserve to reduce rates this year and have started pricing in increases from the European Central Bank (ECB)?and Bank of England. Barclays, along with other brokerages, forecasted on Monday that the Fed would not ease policy in 2019. The Friday April payrolls report may further alter expectations. The yield on the benchmark U.S. 10 year notes increased?6 basis points to 4.438%. FOREX TRADERS ARE KEPT ON THE EDGE BY YEN VOLATILITY The currency markets were also unsteady, as traders closely watched for signs of a?Japanese Intervention to Support the Yen. In Asian trading, the dollar dropped sharply against yen before turning around. The Japanese yen last fell 0.04% against greenbacks at?157.12 each. Analysts think Tokyo could have intervened in the last week for around $35 billion. Roberto Cobo Garcia is the head of G10 'FX strategy' at BBVA. He said: "The case for intervention?is strong given the inflationary effect of a weaker yen through import prices, a U.S. Administration that is generally comfortable with such an action, and Japan’s abundant FX reserves." The Euro fell by 0.24% at $1.1692, while the Sterling fell by?0.29% at $1.3532. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.28%, reaching 98.44. On the commodity markets, gold dropped 2.13% to $4,515.27 per ounce.
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Commissioner says EU countries can better target their measures to reduce energy prices
Valdis Dombrovskis, European Economic Commissar Valdis Dombrovskis said at a Monday press conference that the European Union could do a better job of targeting measures to reduce energy prices to the most vulnerable sectors of the economy. The International Monetary Fund and the Commission have criticised the EU for adopting measures such as reducing VAT or excise taxes on fuel. This lowers prices for all consumers rather than those most affected, causing the biggest price drop. Dombrovskis, after a meeting of the?EU Finance Ministers, said that "our first assessment of measures taken by member states to date shows that they could be better targeted?at those most affected." He said, "Our room for maneuvering is already limited due to the higher debt and deficit levels and a more competitive interest rate environment. We also urgently need additional defense spending." We simply cannot afford to make the same mistakes again. He said that it is essential for any'support measures' to be temporary, targeted, and not increase the?aggregate demand for energy. Dombrovskis said that although individual countries could impose windfall tax on energy companies "if they so choose", the Commission would not recommend such a measure at the European Level. "We do not recommend any?EU initiative because the previous application of a?windfall?tax during the energy crisis in 2022 produced mixed results," Dombrovskis stated. (Reporting from Makini Brice and Jan Strupczewski, in Paris; Editing by Matthew Lewis).
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US Justice Dept. sues Minnesota to block climate change lawsuit
The U.S. Justice Department has filed a lawsuit to block Minnesota's long-running lawsuit that seeks?to hold Exxon Mobil and other oil industry participants accountable?for the harms caused by climate changes. The lawsuit was the latest in a long line of lawsuits filed by President Donald Trump to stop Democratic-led state governments from enforcing climate change laws and pursuing lawsuits against fossil fuel companies. Judges have recently dismissed ?two similar lawsuits that the Justice Department filed against Michigan and Hawaii, which are among the ?numerous states and local governments that have in recent years pursued climate-change-related investigations or lawsuits against fossil ?fuel producers. The Justice Department filed a new lawsuit against Exxon and Koch Industries, as well as the American Petroleum Institute. This lawsuit was brought by Minnesota Attorney General Keith Ellison in 2020?during Trump’s first term. The lawsuit accuses?defendants' of fraud and violating state laws by misleading Minnesotans regarding the climate change consequences of fossil fuels. The defendants have been fighting this case for many years and deny any wrongdoing. The Justice Department announced Monday's lawsuit citing an executive order Trump issued last year that directed it to take actions to stop the enforcement of state laws, and lawsuits which burden oil and gas production. In a press release, Associate Attorney General Stanley Woodward stated that "President Trump has promised to unleash American dominance in energy and Minnesota officials cannot undermine this directive by mandating their woke climate preferences as the 'uniform policy for our nation. The Justice Department argues Minnesota's lawsuit is a violation of the U.S. Constitution, as it seeks to regulate greenhouse gases emissions that are exclusive to the federal government. In a press release, Ellison pledged to?seek the dismissal of "the frivolous and meritless lawsuit". He said: "The American people deserve a Department of Justice who fights for them, and it is a great shame that Trump's DOJ prefers to sell us out in order to Big Oil." (Reporting and editing by Susan Heavey)
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Goldman warns that global oil reserves are approaching an eight-year low. The speed of depletion is a cause for concern
Goldman Sachs warned on Monday that global oil stocks were approaching their 'lowest level in 8 years.' The speed of depletion was a growing concern, as the Strait of Hormuz remains restricted. The oil prices rose by about 6% after Iran attacked several ships in the Strait of Hormuz, and also set a UAE oil port on fire. This was the largest escalation of violence since President Donald Trump tried to use the U.S. Navy for freeing up shipping four weeks ago. Bank?estimated that total global oil stock stood at 101-days of global demand, and could drop to 98-days by the end May. Goldman said that while total global stock levels are unlikely to reach minimum operational levels by summer, the speed of depletion in some regions and products is worrying. Bank estimates that commercially refined 'products have been reduced from a stock of?50 DoD prior to the U.S. Israel war against Iran, down to 45 % DoD today. The bank also stated that the buffers for easily accessible refined products were rapidly approaching very low levels. (Reporting by Ishaan Arora in Bengaluru; Editing by Deepa Babington)
California investigates Trump administration's deal to cancel offshore Wind Lease
California's energy officials opened an investigation on Monday into the Trump Administration's agreement with an offshore wind company?to cancel a planned project?off its central coast. The state is seeking information on the $120 million government payment to determine if it violates the law. The recent strategy of President Donald Trump to undermine the nation's young offshore wind industry includes refunding offshore lease payments in exchange for fossil fuel investments.
California Energy Commission has issued a subpoena to Golden State Wind LLC. This is a joint venture between Ocean Winds and London-based offshore investment firm Reventus Power. Ocean Winds is a joint venture between France's ENGIE, and Portugal's EDP Renewables.
David Hochschild, CEC's?Chairman, said in a press release that Californians "deserve immediate answers" about the nature and amount of this payment. Taxpayer dollars are better spent on building a sustainable energy future than paying to make projects disappear. California wants to achieve its climate change goals by installing 25 gigawatts offshore wind power by 2045. The state announced that it had spent more than $100,000,000 to develop the port and transmission infrastructure needed for offshore wind.
Golden State Wind and Interior Department representatives were not available to comment immediately. (Reporting and editing by Stephen Coates; Nichola Groom)
(source: Reuters)