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Oil prices rise $2 after Iran announces the closure of Strait of Hormuz as a result of US strikes
Oil prices rose?more than?$2 a barrel on Thursday after Iran closed the Strait of Hormuz - a critical energy chokepoint - following the U.S.'s additional strikes against Iran. Brent futures rose by $2.30 or 2.47% to $95.40 per barrel. Meanwhile, U.S. West Texas Intermediate crude (WTI), which is a derivative of WTI, rose by $2.60 or 2.89% to $92.63. U.S. crude futures gained over $3 in the early part of the session. Iran's top Joint Military Command announced on Thursday that the Strait of Hormuz would be closed to all vessels, including commercial and oil tankers, with the warning that any vessel attempting to pass through will be fired upon. The U.S. Military said on X Wednesday that commercial'ships' continue to transit the strait. Iran's state-run media had reported that missiles and drones were used to target U.S. warships near the waterway. U.S. forces launched additional strikes at multiple targets in Iran, starting at 5:15 pm EDT (21.15 GMT). This is the latest of a series of attacks that have escalated and 'threatens to reignite full-scale warfare. Iran's months-long blockade, which usually carries a?fifth of?the?global oil?and?gas shipments, has kept oil prices high. The EIA reported that U.S. crude oil inventories dropped by 7.2 million bbls. to 426.5 million bbls. in the week ending June 5. This was compared to analysts' expectations, which were based on a poll, of a 4 million barrel draw. Since the Iran War began on February 28th, U.S. crude inventories, including those in strategic reserves, have fallen by 79,000,000?barrels as the world's biggest producer has stepped up to fill the supply gaps caused by the closure of the Strait. (Reporting and Editing by Shri Navaratnam.)
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Venezuelan troops deploy against illegal gold miners in the key gold belt
Venezuelan troops have been deployed to target illegal groups that control 'key gold deposits', local residents and human rights activists claim. The government is trying to bring foreign investment into the mining sector, which has long lagged. Residents and activists monitoring the area report that troops have been deployed in Las Claritas, a town located in southern Bolivar State. The town is located in the Orinoco Mining Arc - a mineral-rich area near Venezuelan borders with Guyana, Brazil and Brazil. The Venezuelan Communications Ministry has not responded to a comment request immediately, nor has the government publicly addressed this operation. Five residents reported hearing explosions and gunfire. This caused many people to stay off the street and forced businesses to close. A 45-year old resident reported that "Bombs and gunfire were heard in the jungle". There are mines around those areas. "This is bad, you can't leave." A shopkeeper in Las Claritas reported that drones flew over his store for several hours at night. The residents refused to give their names out of fear for safety. According to non-governmental organizations, and U.N. investigators, much of the mining in the area is controlled by armed groups and organized crime. In a recent post, the rights group Provea stated that "the Venezuelan Army has deployed a massive operation at Km 88 and Las Cristinas in Bolivar State." "We warn against the possibility of extrajudicial executions, and arbitrary detentions of civilians in the region." Operation comes as Venezuela's newly formed government attempts to reopen areas that were previously closed to foreign investment. U.S. troops captured Venezuelan President Nicolas Maduro in January. Delcy Rodriguez was left to assume the position on an interim basis. Since then, Washington and Caracas have been discussing steps to revive investment in oil and mining. Venezuela adopted a new mining legislation in April to encourage foreign investment, while the U.S. Interior Secretary Doug Burgum stated that the government has pledged security guarantees for incoming firms. Crystallex, a Canadian mining company, had planned to develop a gold project at Las Cristinas until Hugo Chavez, the former president, stopped the project as part of his nationalization drive that included electricity, telecommunications and cement, steel, and oil. Foreign investment in mining was limited after?those takesovers. Experts now see potential for a recovery in gold exports within the next few years, but caution that massive investment and renewed exploration will be required. (Reporting and Writing by Daina-Beth Solomon; Editing Jamie Freed).
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ROI-Global trade in rude health? McGeever: Yes, with a catch
Global trade doesn't cool in the shadow of tariffs, wars on trade, real wars, and energy shocks. It's heating. How durable is it when the price, and not volume, is what's stoking up the flames? Recent trade data, from the U.S., China and other major economies, shows that cross-border commerce has grown at a faster rate than economists expected. In many cases the price increases were the primary cause of increased activity and surprising export figures. This reflects the spike in inflation caused by the Iran War, particularly on the oil and energy markets. This was especially true in the U.S. where exports reached a record of $327 billion last month, driven by shipments from a wide range of products. In fact, the goods surplus shrank to its lowest level since 2020. This is good news for the U.S. economic system, since the declining deficit could contribute to the growth of the economy in the second quarter. This could have been primarily due to the high prices of oil, fuel, and other energy products. This raises the issue of how durable this improvement is. It's clear that it isn't just the price that does all the work. The physical export volumes of Canada have returned to their previous levels before Donald Trump was elected to the White House by the U.S. in November 2024. This has sparked trade tensions with the neighboring countries. According to CIBC, the exports of April were only second to those in February last year when companies were preparing for Trump's looming duties. Base effects are another factor that may be affecting headline trade figures. The slowdown in trade during the first half of the year as Trump's tariff wars began is now used to compare year-over-year figures. This suggests that it's too early to predict a?trade revival. HAPPY CHIPS DAY! The price is also an important factor in Asia's trade boom. However, the soaring demand for AI is also fueling the sizzling numbers. China, the largest exporter in the world, saw its total exports rise 19.4% in May. Pantheon Macroeconomics says that sales of high-tech goods accounted for 12 percent of this. While the value of integrated-circuit exports has more than doubled in the last year, export volumes have only increased by 2%. This suggests that the headline figure is inflated because the price was high. The same thing is happening in other sectors. However, Beijing policymakers and critics will continue to focus on headline dollar figures, particularly the large one, China's total 12-month rolling trade surplus of more than $1 trillion. Taiwan's AI export surge was even more impressive. Exports rose in May more than expected to the second highest level by value ever, up almost 52% compared to a year ago. Price was again a major factor. TSMC, the world's largest manufacturer of advanced chips that power AI applications and a major global supplier to Nvidia and Apple, is located in Taiwan. Chips, computer equipment and software, as well as other high-tech products, have seen a surge in price over the last year, largely due to an explosion in demand. Goldman Sachs Global Institute estimates that AI-related investments will reach $7,6 trillion by 2031. SURPRISING RESILIENCE Global trade has shown a remarkable resilience, which few observers could have imagined possible in the face of volatile market conditions. Trump's "Liberation Day tariffs" triggered a global trade war, which may have ended decades of internationalization. Geopolitical rifts also threaten trade flows, notably in Middle East. The 'AI frenzy' is largely responsible for the booming global trade. The demand for these applications has been increasing, a large part of trade in AI products is cross-border and many have been exempted from tariffs. The question is, can this continue? Could the rise in AI compute costs curb demand eventually? Could major powers seek to reduce AI supply chains in order to minimize national security risks? The AI boom is unlikely to fade away, which suggests that trade activity may remain resilient, despite tariffs, protectionism and deglobalization. Everything seems to be dependent on the outcome of this tech story, just as it is with other parts of the global economic system. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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South Korea demands fair treatment from EU on new steel import tariffs
His office reported that South Korean President Lee Jae Myung had asked the European Union to "consider" the Korean steel producers as the bloc prepares to raise import tariffs starting July 1. The president's office released a statement saying that Lee made this request at a meeting with European Council President Antonio Costa and European Commission Presiden Ursula von der Leyen in Belgium on Wednesday. The office reported that Lee requested the EU ensure that 'South Korean steelmakers' can access the'market of the bloc' on terms as favorable as those offered to their competitors. He cited South Korea's position as a strategic free trade partner to the EU. The European Parliament voted in 'May to reduce tariff-free imports of steel?by almost half, from levels in 2024?to 18,3 million metric tons per year. Tariffs of 50% will be applied to volumes above this level. This is an increase from the current 25%. Eurofer data shows that in 2024, South Korea will be the second-largest steel exporter into the EU, with 3.3 million tons of finished steel products.
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French utility EDF and Centrica eye UK Government deal on Sizewell B Nuclear Plant Extension
A spokesperson for EDF said on Wednesday that the French company and UK-based Centrica were prepared to invest?about PS800 million ($1.07 billion) in order to extend the life of Britain's Sizewell B Nuclear Power Station to 2055, from 2035. Sizewell B, located on the North Sea Coast in Suffolk, supplies almost 1.2 gigawatts to the grid and is the only pressure-water reactor in Britain. A spokesperson for the French utility said that it was looking to?agree on a framework' with the UK Government. EDF said that the volatility in the energy markets has increased the need to secure a model suitable for reducing commercial risks, and enabling investment decisions. Centrica holds a 20% stake in the UK's nuclear generation business of EDF Energy, which includes Sizewell B. EDF's British branch had stated in January that a life extension of the plant was technically possible and that negotiations were underway with the UK for the necessary investment. Bloomberg News reported, citing a source, that EDF, Centrica and the government were close to negotiating a draft agreement to extend life of the plant. According to the report, companies are close to a heads-of-terms agreement with Department for Energy Security and Net Zero. An announcement is expected in the next few weeks. Bloomberg reported that under the terms discussed, Sizewell B would receive approximately PS70 per megawatt hour of electricity generated. The UK Department for Energy Security and Net Zero, as well as Centrica did not immediately respond to requests for comments on the report.
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Hawaii looks at suspending gasoline tax as prices rise
Hawaii Governor Josh Green said he was considering a pause in the state's gasoline tax due to the surge of prices at the pump three months into the Iran War. Gasoline prices on the island are among the highest in the United States. They average $5.58 a gallon - up $1 over last year's price of $4.48. Gas prices are soaring. Green stated in a press release that he was considering a temporary halt on the state and local taxes on gasoline for a part of summer to provide some relief to consumers. His office stated that the governor is evaluating?various options including executive actions. The state uses the revenue from taxes to maintain its infrastructure, such as roads and bridges. The American Automobile Association estimates that the average national gasoline price per gallon is $4.15. This is up over $1 from one year ago. The national average is still higher than 2025 but has dropped from $4.52 last month. California, Washington and Hawaii are the states that have been hardest hit, with an average price per gallon ranging from $5.07 to $5.83, according to AAA. In these states, the averages ranged from $3.64 to $4.68 per month a year earlier. Only a few states, including Indiana and Georgia, have taken concrete measures to provide relief. Utah passed a bill that reduced the state tax by 15% between July and December. The conflict is preventing oil from flowing through the Strait of Hormuz. Before the conflict, about one-fifth of the daily supply of oil in the world passed through this strait. Carl Davis, Research Director at the Institute for Taxation and Economic Policy said that "high energy prices are a worldwide problem and there is no way to fix it." Even if they suspend the gas tax, we will still pay a lot more than before the war began. Gas prices are too high to fix with a holiday. According to an Ipsos/May poll, more than 6/10 Americans believe that their household finances have been affected by higher gas prices. CNBC shared data from 'Moody's Analytics' that showed the average U.S. family has spent an extra $450 on fuel since the Iran War began on February 28. According to Moody's, this figure could rise to nearly $2,000 after a year if the conflict continues. Donald Trump, the U.S. President, has said that he expects gas prices will drop once the conflict ends. Even if U.S.-Iran agree on a peace agreement, oil industry experts believe that fuel prices will continue to be under pressure, even after the conflict ends. It will take many months for Middle East production to return to prewar levels. (Reporting and editing by Donna Bryson in Washington, Sanjeev MIglani, and Jasper Ward)
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Albania protests continue to grow as opposition to Kushner Resort persists
On Wednesday, thousands of Albanians took to the streets in Tirana's capital city for the largest protest yet against the construction of a resort planned by Donald Trump's son-in law Jared Kushner. The project is 'expected to cost about 5 billion euros.' It has sparked outrage among Balkan citizens because it is located near a wetland that protects flamingos, seals, and sea turtles. But also, there was a perception of a lack of transparency in the plans designed by the foreign investors. The crowd stretched for half a mile down one of the main boulevards in the city. Protesters chanted, "New Albania", and held signs saying "Albania isn't for sale". "The Zvernec project is a project... without transparency. This is the culmination of the events that have taken place in Albania over the past 35 years. "Enough is enough",?said Leand Lakrori, a protester. The protests represent the latest test of Rama's leadership. He has been in office since 2013, and many blame him for not doing enough to eradicate widespread corruption and improve basic services such as healthcare. Rama said in an interview with this week's newspaper that the project will go forward and be completed properly. He says that he has also made significant progress in reducing corruption, including the creation of an?special prosecutor's office (SPAK), which has launched a number of high-profile cases over the past few years. As well, violence broke out earlier this year when protesters called for the resignation of Rama’s deputy Belinda Balluku over allegations of?corruption. Rama dismissed?Balluku but mistrust still remains. "I'm here protesting, to end this saga of Albanian government. Fabio Bracaj said that the two parties are always the same. "We want to see a new era... a better country." Kushner's and Ivanka Trump's idea for the resort was born when they fell in love with Albania on a yacht a few years ago. Last month, protests broke out at a development site near Zvernec after developers built a fence to surround some land. Since then, the fence has been removed.
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The FOREX Dollar falls as US inflation data holds off rate hike
Dollar fell on Wednesday, after data revealed that U.S. consumer prices rose to their highest level in 3 years in May. The reading, however, was in line economists' predictions, and did little to increase?the odds of a Federal Reserve interest rate hike this year. U.S. consumer prices rose at their fastest rate in three years, as the Iran War increased the cost of gasoline and energy products. Bureau of Labor Statistics of the Labor Department announced on Wednesday that the Consumer Price Index had increased by 4.2% over the 12-month period ending in May. This is the biggest gain since April 20,23. The economists polled had predicted the CPI to increase 4.2% on an annual basis. Karl Schamotta is the chief market strategist for Corpay, a Toronto-based company. He said that the Federal Reserve has not yet been able to use the soaring prices of energy in its core measures. The dollar index (which measures the U.S. dollar against six other currencies) was down 0.1% at 99.875, but still not far off the two-month-high of 100.214 that was reached on Monday. Schamotta stated that traders are preparing for a neutral statement from officials at the Federal Open Market Committee meeting next week, and have modestly reduced expectations of a rate increase by year's end. The traders of short-term U.S. rates have backed away from betting that the Federal Reserve will raise interest rates as early as September. However, they remain confident that an increase in rate is coming by October. According to a large majority of economists polled, the Fed will keep its key rate unchanged for the remainder of 2026. Jason Pride, the chief of investment strategy and research for wealth management firm Glenmede, stated in a report that "after three months of high energy costs, there has been no meaningful pass-through" to core goods. This is the most important data in the report today that shows the Iran shock has not spread to a generalized episode of inflation. Even so, traders were on edge. U.S. president Donald Trump announced on Wednesday the United States would attack Iran "very strongly" if a peace deal was not reached. He also revealed that the U.S. Military secretly escorted vessels carrying more than 100,000,000 barrels of crude oil out of Strait of Hormuz to moderate global oil prices. The Yen remains in focus A Bank of Japan rate increase at its policy meeting on June 16 is almost completely?priced-in, which means that it will not trigger a significant turnaround in the yen's weakness even if it occurs. Tony Sycamore said that a hawkish comment from Governor (Kazuo Ueda) would be needed to signal the BOJ's next hike could move from December to September – with the?possibility a third increase before the end of the year," Tony Sycamore wrote in a note. Without that, or something similar the Ministry of Finance will likely have to use its chequebook again to defend the currency. The Japanese yen remained steady at 160.475 against the dollar. It continues to hover near the 160 level, which is widely considered a "line in the sand" for official intervention. According to a poll of economists, the BOJ is likely to raise its key rate in this month's quarter and again next year. This will bring borrowing costs up to 1.25% at the end of the calendar year. DOLLAR SOFTNESS On Wednesday, the Bank of Canada kept its benchmark rate at the same level. Governor Tiff MacKlem said that the central banks would not hesitate to increase rates to control inflation. The pound was 0.1% stronger against the dollar Wednesday as investors closely watched the latest escalation of tensions between Iran and the U.S. ahead of the UK GDP data on Friday. The leading cryptocurrency, bitcoin, was almost flat on the day. It now stands at $61,949. (Reporting and editing by Kevin Buckland; Will Dunham, Jan Harvey and Kevin Buckland; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in London; Reporting by Saqib Ahmed Iqbal; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in Tokyo)
Wacker Chemie's sales and profit will drop by 2024, but the shares will rise on strong Q1 results.
Wacker Chemie, a German chemical manufacturer, said Tuesday that it expects a slight drop in sales and profits for 2024. However the shares of the company jumped after signs of an excellent start to the new year.
Sebastian Bray, Berenberg analyst, said: "I think the company's Q1 2024 has been robust. I see some encouraging signs from the silicones segment."
Investors seemed to agree, as shares rose 6.5% in the morning's trading.
The company still expects business to be slightly slower than last year and sales in 2024 to range between 6 billion to 6.5 billion euro.
Wacker Chemie expects to earn between 600 and 800 million euros annually in 2024 before depreciation, interest, taxes, and amortization (EBITDA), compared with 824 million euro in 2023.
The Bavarian company stated that it expects the weakness of the market with lower prices to continue, but also volume growth and positive effects on product mix at its chemical divisions.
The company confirmed its preliminary results for 2023, which it announced in January. EBITDA dropped 60% on an annual basis to 824 millions euros.
The company said it expects EBITDA to be the same as the previous quarter and sales for the first half of 2024 will be lower at 1.5 billion euro than in 2023.
In a press release, Christian Hartel, Chief Executive Officer of the company said that "the weak economy continues affecting customer order trends across a wide range of application fields."
Hartel stated that although the demand for silicones increased in certain customer sectors in the beginning of the year, the construction industry was still experiencing some constraints.
Since over a year now, chemical companies have faced increasing pressure to reduce their inventories due to a drop in demand from industrial customers as energy prices rose.
Wacker Chemie anticipates long-term sales exceeding 10 billion Euros with an EBITDA margin of 20%.
The company proposes a dividend per share of 3 euros, a dramatic drop from the 12 euros per share dividend in 2022 during a year of record profits.
Analysts at JP Morgan said Wacker Chemie’s guidance for the first-quarter was better than expected. They noted that it reflected an increased order intake, particularly in silicones, in the first quarter.
(source: Reuters)