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Exxon asks for political support from the US to overturn EU climate law
Exxon Mobil has intensified its attacks on a European Union law on corporate sustainability and taken their concerns directly to U.S. president Donald Trump. They warned that the regulation would lead to more companies leaving Europe. Last year, the EU adopted its corporate sustainability due diligence (CSDD) directive. This mandates that companies fix any human rights or environmental issues in their supply chains or risk a base fine of 5% on global turnover. The European Commission, in response to the criticism of businesses and German and French leaders that the law will harm the competitiveness of the EU, proposed a series of changes to the law earlier this year. In an interview, Exxon CEO Darren Woods said that it would not be enough and called for the law to completely be revoked. Woods stated that he had spoken to Trump, and other members of Trump's administration who are involved in trade and EU policy. The administration also expressed concerns over CSDDD during trade negotiations. Washington and Brussels are still at odds over the simmering dispute, which has recently led to the US considering sanctions against EU officials for separate tech legislation. Woods noted that Woods' oil company has closed, sold or exited 19 of its operations because, according to him, red tape was impeding the business. This is yet another piece of legislation which would either accelerate this incentive or cause businesses to reduce their activities in Europe. The European Commission didn't immediately respond to an inquiry for comment. Woods added that an exorbitant fine of 5% on global sales would "break the bones" of Exxon. Last year, the top U.S. oil producers' sales totaled $339 billion. U.S. legislators are also doing their part to help. In March, Senator Bill Hagerty of Tennessee introduced a bill to protect American companies against being forced to comply to CSDDD. Next month, EU legislators and countries will begin negotiations to change the policy. Environmental activists are appalled by the move to weaken corporate accountability. Exxon announced on Thursday that it will also be pausing its investment of 100 millions euros ($118) in European Plastic Recycling due to separate EU draft rules. Woods expressed his hope that U.S. legislators would make progress in addressing CSDDD. However, he has been disappointed with the response from EU regulators so far. He said, "There's some movement but we need resolution sooner than later." Sheila Dang reported from Houston, Kate Abnett contributed additional reporting and Nathan Crooks edited the story.
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Kuwait Oil Minister expects demand to increase after US rate reduction
Kuwait's oil minister Tariq al-Roumi stated on Thursday that he expected higher demand for oil following the U.S. rate cut this week, especially from Asian markets. On Wednesday, the U.S. Federal Reserve lowered interest rates for the first since December. He also said that he expects new sanctions against Russia to have a positive effect on the oil price. Donald Trump announced on Saturday that the U.S. is prepared to impose new energy sanctions against Russia, provided all NATO countries stop purchasing Russian oil. Eight OPEC+ member countries agreed on September 7, to increase output by 137,000 bpd for October. This is a continuation of the policy of the group since April, which has been to increase production after years of cutting to support the oil markets. Al-Roumi stated that despite the agreement to increase output, "prices were more than satisfactory". He added, "We expected the worst, but everything is fine." The oil market is confusing and difficult to predict. The Minister made these remarks at an event marking the start of oil production at Kuwait Oil Company's Mutriba Field, which is targeting a light oil output between 80,000 to 120,000 bpd. At the event, KOC CEO Ahmad Al-Aidan said: "This step will help Kuwait achieve its strategy of reaching a production capacity for oil of 4 million barrels per day by 2035." The current production capacity is less than 3 million bpd. Reporting by Ahmed Hagagy, Writing by Tala RAMAdan and Ahmed Elimam, Editing by Bernadette BAUCH and Jan Harvey
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Dollar firms after Fed lowers rates and copper falls
The copper price fell on Thursday, as traders took profits after the U.S. Federal Reserve cut rates. Meanwhile, the dollar strengthened after Fed Chairman Jerome Powell said that there would be no further aggressive easing. The benchmark three-month price of copper at the London Metal Exchange fell 0.4% to $9,960.50 a tonne as of 0940 GMT after hitting a low for a week on Wednesday, $9,925. Powell, in his press conference, reacted against the idea of larger cuts. Dollar index rose by 0.1%, to 96.98, on the back of Mr. Trump's remarks. However, it is still down 10.6% for this year. The dollar index is still down around 10.6% this year. Dan Smith, managing Director at Commodity Market Analytics said that the rate decision made on Wednesday was a key driver behind copper's drop. He also pointed out a technical charting pattern called a "triple-top". Smith stated that there has been a significant amount of resistance in the copper market around $10,160. Smith said that the price has turned three times at this point in recent months, which indicates the current momentum will be to the downside. The rest of the base-metals complex was mostly in the red. Aluminium fell as much as 0.6%, to $2,665.50 per ton. This is a new low for the week. It was also down 0.2% at 0940 GMT. The cash aluminum contract premium is added to the contract for three months On Thursday, the price of a ton had dropped to $4 from $16 on Tuesday. Lead was unchanged at $2,012 a ton. Nickel and tin also fell. (Reporting and editing by Rashmi, Harikrishnan Nair, Ed Osmond and Harikrishnan Nair; Additional reporting and editing by Amy Lv & Lewis Jackson)
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Central bank of UAE says that the UAE economy will grow by 4.9% in 2025 due to higher oil production.
Central bank of the United Arab Emirates said that the economy will grow by 4.9% in 2025 compared to an earlier forecast. This is due to increased oil production and growth in non-hydrocarbon sectors. In a quarterly report, the bank stated that it expects hydrocarbon production to increase in accordance with OPEC+ quotas by 5.8% by 2025 and 6.5% by next year. The report stated that "this real adjustment in hydrocarbon production is expected to offset the negative impact on government revenue of the decline in crude oil prices, creating a ripple effect for non-hydrocarbon sector." The UAE is a major oil exporter and has intensified plans to diversify their economy. In the first quarter, the non-hydrocarbons sector accounted for 77.1% total GDP. The central bank projects that the non-hydrocarbon GNP will grow by 4.5% and 4.8% respectively in 2025, and 2026. This growth is likely to be boosted indirectly by the higher hydrocarbon growth through increased investment, government expenditure and confidence. The UAE economy grew by 3.9% in the first three months of the year, led by a non-hydrocarbon expansion of 5.3%. This was driven by manufacturing, financial services and construction sectors. Reporting by Rachna uppal; editing by Andrew Cawthorne
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Stocks and the dollar rise after Fed cuts, but now focus is on BoE
The dollar and stocks both rose on Thursday, after the U.S. Federal Reserve cut its interest rates for the first time this year. Meanwhile, French politics kept the markets in France jittery. And the pound remained steady ahead of the Bank of England's rate announcement. The Fed's steady-as-she-goes-message from what had been a politically charged meeting lifted both the pan-European STOXX 600 and Wall Street futures 0.5%, despite an initially mixed reaction from U.S. traders on Wednesday. Asia also rallied over night. Chinese stocks reached a decade-high as local chipmakers rejoiced at reports that U.S. giant Nvidia was banned in China. South Korea, Taiwan, and Japan's Nikkei ended all more than 1% higher. The dollar's rise to nearly 0.2% on the currency market may also have been a relief for firms that export to countries other than the United States after a recent plunge to its lowest level in three-and-a-half years. The Fed's "dot plot", which is closely monitored, had indicated that two additional rate reductions would be made over the remaining two meetings of this year but only one in 2026. Fed Chair Jerome Powell also moderated expectations by saying that the central bank didn't need to act quickly, though analysts admit this could change. Richard Cochinos, RBC Capital Markets, said: "We look beyond the volatility of one or two days to find underlying trends." In this case, we expect a weaker U.S. Dollar," Cochinos said. He pointed to the expectation of U.S. interest rates falling to 3% in 2013. The euro was largely unchanged at $1.1825, and the sterling was at $1.36. It is widely expected that the BoE will keep UK interest rates at 4% in the future. The main focus will be whether the British central banks slows down the pace of its 100 billion pounds a year reduction in government bond holdings in response to the recent volatility on UK bond markets. The BoE poll conducted in August showed that economists expected the Monetary Policy Committee (MPC) to reduce the pace of monetary policy to 67.5 billion pounds (92.2 billion dollars). This is a larger drop than the 72 billion pounds predicted by the BoE poll. In response to a 25 basis point rate reduction announced by its central bank earlier, the Norwegian crown softened just a little. The Norwegian crown was close to its three-year high against the dollar, and was at a two-month high when compared with the euro. New Zealand's Dollar fell after the data showed that the economy of the country shrank much more than expected. FRENCH FOCUS After the release of August's weaker than expected labour market data, the Australian dollar fell 0.4%. The bond markets are still on the rise, with the yield of the benchmark 10-year Treasury note dropping to 4.06%, and the two-year rate, which is rising with traders' expectation of higher Fed Funds rates, at 3.53 %. The benchmark yield for the Euro Zone, Germany's 10-year bond, fell by 0.5 basis points, to 2.67%. However, attention was again focused on France, as its bond yields moved above Italy's. Brent crude oil fell 0.2% to $67.87 a barrel. Gold, a safe haven, rose 0.2% to $3,665 an ounce.
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Russia announces changes to its budget aimed at decreasing oil revenue dependence
The Russian Finance Ministry announced on Thursday a new measure that it claimed was designed to shield the state budget against oil price fluctuations as well as Western sanctions targeted at Russian energy exports. The government is lowering the price cutoff for oil that oil revenues are deposited into the fiscal reserves fund. This will ensure the fund has enough money to replenish it. At a public meeting, Finance Minister Anton Siluanov stated that "to make our finances more robust, we propose a reduction of dependence on different constraints, whether they are price-related or volume related, in the budget’s reliance on revenues from oil and gas". Siluanov's new measure, which he sought to reinstate the budget rule, after it had been abandoned following the beginning of the conflict in Ukraine, is a victory. However, Russian media claimed that he wanted a larger reduction. The budget is more vulnerable to a drop in oil prices if the rule isn't in place. Siluanov stated that the price cutoff would be reduced by $1 per year, bringing it down to $55 a barrel in 2030. Currently, the cut-off price for barrels is $60. The draft budget will be presented to the parliament on 29 September. Currently, the fiscal reserve fund has approximately 4 trillion roubles (48.25 billion dollars) available. The government plans to use 447 billion roubles (5.39 billion dollars) of the fund to cover a part of the deficit expected to exceed 1.7% GDP. Siluanov stated that the new measures will allow the state budget to reduce the share of revenues from energy to around 22% in the first eight month of 2025, down from 25%. ($1 = 82,9000 roubles). (Reporting and editing by Andrew Osborn. Darya Corsunskaya.
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Dollar gains after Fed Chair's remarks as gold falls further from records
Gold fell further from its previous session record, as the dollar rose after the U.S. Federal Reserve took a more measured approach to future easing in response to a widely anticipated 25 basis point interest rate reduction. As of 0801 GMT, spot gold was down by 0.1% to $3,657.21 an ounce. Prices reached a record-high of $3,707,40 on Wednesday before falling 0.8%. U.S. Gold Futures for December Delivery fell 0.7% to $3691.0. The Fed cut rates by 25 basis point on Wednesday, and said it would continue to lower borrowing costs throughout the remainder of this year. Fed Chair Jerome Powell described the action as risk-management in response to a weakening labour market. He said that the Fed was in a situation where it is "meeting by meeting" in regards to interest rate outlook. Peter Fertig, an analyst at Quantitative Commodity Analysis, said that there was a "bit of disappointment" in the gold market, as the market had expected the Fed to reduce the opportunity costs for gold holdings (more than they did). Gold became more expensive for holders of other currencies due to the 0.2% increase in the dollar. On Wednesday, it fell to its lowest level in more than three-and-a half years. In a low-interest rate environment, non-yielding gold bullion is a good investment. It's a safe haven during times of geopolitical or economic uncertainty. According to CME Group’s FedWatch tool, traders are pricing in a 90 percent chance that the Fed will cut rates again by 25 bp at its next meeting in October. ANZ said that it expects gold will outperform the early stages of the easing cycle. The bank said that the demand for safe haven assets in a geopolitical environment of uncertainty is likely to increase investor demand. The SPDR Gold Trust is the largest gold-backed ETF in the world. Its holdings dropped 0.44% on Wednesday to 975.66 tons from 979.95 on Tuesday. The price of spot silver increased by 0.1%, to $41.70 an ounce. Platinum rose 2%, to $1,389.57, and palladium remained unchanged at $1,154.0/oz. (Reporting by Ishaan Arora in Bengaluru; Editing by Jan Harvey)
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Octopus Energy, UK spins off Kraken Technology arm
Octopus Energy announced on Thursday that it will spin off its technology arm Kraken Technologies and name Tim Wan the newly-separated company's Chief Financial Officer. Britain's largest electricity provider is focusing on its core business. Kraken, a company that provides energy software to major energy companies such as EDF, National Grid US, and Tokyo Gas has reached $500 million in annual revenue committed through licensing agreements. Separation will allow Kraken to expand and invest as required, while also reassuring Kraken's customers about potential conflicts of interests from being owned by another company. Kraken is a global success business that has been operating independently for a while. Completing our journey towards full independence is the next strategic and inevitable step, said Kraken CEO Amir Orad in a press release. Wan, the incoming CFO, was finance chief of the U.S. listed software platform Asana between 2017 and 2024. He oversaw the market listing. Octopus Energy has not provided specifics about Kraken's spin-off. Sky News A report from July stated that the technology group's value could reach up to 10 billion pounds ($13.63billion) if it were separated. The spin-off is expected to also boost Australian electricity and Gas retailer Origin Energy Octopus is owned by, who owns approximately 23%. Origin did not respond immediately to a comment request.
Citigroup sees loan book hit in climate action ramp-up, document programs
Citigroup could suffer billions of dollars of losses in its loan book if the world sped up efforts to take on climate change, according to a confidential analysis prepared by the U.S. bank that was reviewed .
The analysis was drafted by Citigroup last summer season as it prepared to make a submission to the Federal Reserve on how it plans to handle the impacts of climate change. Five other significant U.S. banks were also required to make confidential submissions using the exact same directions from the Fed.
might not establish just how much of the info in the document it reviewed made it to Citigroup's authorities submission, on which the bank decreased to comment.
The analysis stated that if efforts to fight environment change increase enough to put the world on a course to bringing greenhouse gas emissions down to no on a net basis by 2050, the bank would suffer $10.3 billion in loan losses over 10 years, more than the $7.1 billion in losses anticipated if those efforts did not speed up.
The workout presumed all 6 banks' balance sheets would not modification in that time.
While the estimated hit to Citigroup would be little in relation to the $730 billion wholesale loan book examined, the analysis provides uncommon insight into how the shift far from fossil fuels might affect a top Wall Street bank in an essential location of its service.
The losses would take place since a few of Citigroup's. debtors in the oil, gas and realty sectors would take a. monetary hit if the world was instantly placed on track to suppress. overall greenhouse gas emissions to zero on a net basis by 2050,. the document reviewed showed.
That highlights the challenges that Citigroup and other. banks that have actually vowed to cut their own emissions to net absolutely no. by 2050 face in handling their loan book direct exposure, stated Greg. Hopper, a previous Goldman Sachs Group run the risk of officer who is. now a senior fellow at the Bank Policy Institute.
When a company's pace of transition is too fast or too slow. with regard to the actual underlying market shift pace, it. can suffer losses, Hopper said.
A Citigroup spokesperson decreased to comment beyond what the. bank said in a report on climate change launched last month. That report stated its submission to the Fed had produced beneficial. insights into vulnerabilities, but did not include its analysis. of prospective losses.
Citigroup's shares were little bit changed on Wednesday. morning in New York, up 0.2% at $61.43.
To be sure, Citigroup's analysis is based on a. simulation with numerous assumptions and unpredictabilities, and the. opportunities of the scenario it analyzed happening are remote. That is because the 2050 net-zero target, which was consented to by. almost 200 countries in 2015 in order to limit worldwide warming to. 2 degrees Celsius (3.6 degrees Fahrenheit) above preindustrial. times, is not likely to be achieved without significant policy changes,. such as a worldwide carbon tax, researchers say.
The Fed had said it would publish anonymized, aggregated. findings from the 6 U.S. banks on their environment direct exposure by. the end of 2023, however it has yet to do so.
A Fed spokesperson said it had not requested quotes of. prospective losses and would not release any dollar figures. The. regulator initially said it wished to evaluate how ready banks. are to manage environment risks and it would not use the exercise to. enforce any capital requirements.
Fed Chair Jerome Powell has stated that the reserve bank will. not try to pursue policy changes to deal with environment change and. should rather stay with its mandate of handling threats to the. banking system.
That contrasts with the European Central Bank, which. actively promotes the energy shift and stated last September. that postponing it would raise credit threats for banks.
CYCLONE EFFECT
The Citigroup analysis likewise discovered that a serious hurricane in. the Northeast U.S. could set off a $63.5 million loss to a $49. billion loan portfolio in one year if the possessions were not. covered by any insurance coverage. The result on Citigroup's business. would be muted, the document stated.
For a typhoon in the Southeast U.S., assuming no insurance. protection, a $15 billion portfolio could take a hit of $142. million over 12 months. That would increase by $571 million if. the analysis considered persistent flooding, the file. kept in mind.
Financing in various regions and sectors assists a big bank,. such as Citigroup, restrict the effect of extreme weather condition occasions on. its loan book, said Clifford Rossi, a former Citigroup customer. providing risk officer who is now a University of Maryland. business professor.
JPMorgan Chase, the biggest U.S. bank, stated in its. 2023 climate report that geographic spread, brief loan durations. and insurance coverage cushioned its customer credit portfolio from. environment risks, so monetary losses due to extreme weather occasions. have actually not been product to the company.
The Fed developed directions for the climate danger. workout based on work carried out by the U.N.'s. Intergovernmental Panel on Environment Change and the Network for. Greening the Financial System, a union of central banks and. regulators focused on the problem.
Sarah Blossom Raskin, a former Fed board guv who is now a. Duke University law professor, said the workout did not go far. enough since it would have no bearing on regulative needs on. the banks.
This is the equivalent of the banks being guaranteed by. the Fed that the outcomes would be ... shredded, buried, and. cleaned far from any use whatsoever, she stated.
(source: Reuters)