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Oil drops but is set to gain the most since 2022
The oil prices dropped on Friday, the first time since six days. This is because the U.S. government has been considering intervening in the futures markets to curb rising 'prices' and issued waivers to Russian oil buyers to ease the supply constraints caused by the Middle East War. Brent crude futures fell 95 cents or 1.1% to $84.46 a barrel, while West Texas Intermediate dropped $1.08 or 1.3% to $79.93 at 0440 GMT. Brent is still up 16.4% while WTI is up 19.2%, making this the biggest weekly gain since Russia's full-scale invasion in Ukraine began in February 2022. The gains were made after the beginning of the war on February 28, between the U.S.,?Israel and Iran, who have halted the movement of tankers through the Strait of Hormuz. This area is responsible for carrying about one-fifth of daily oil supplies in the world. Since then, the conflict has spread to the Middle East's key energy producing region. This has caused disruptions in oil production and shutdowns of refineries as well as liquefied gas plants. Priyanka Sahdeva, senior analyst at Phillip Nova, said that the halting of activities in Hormuz would have a two-fold impact on the oil market: it would make it impossible to store 20 million barrels a day and prevent the flow into the world. This could cause global energy prices to rise. A senior White House official stated on Thursday that the U.S. Treasury Department will announce measures to combat the rising energy prices caused by the conflict in Iran, including possible action involving oil futures markets. This would be an unusual move by Washington, to try and influence the energy price through the financial markets instead of physical oil supplies. Treasury Department also granted waivers to companies on Thursday to allow them to purchase Russian?oil that is stored in tankers. This will ease the supply shortages which are forcing refineries to reduce fuel processing. First waivers have been given to Indian refiners who responded by purchasing millions of barrels from Russian crude oil cargoes. This reverses months of pressure that they were under to stop the purchases. Kpler, a ship-tracking company, has gathered data that shows 30 million barrels (including floating storage) of Russian oil is available in the Indian Ocean and Arabian Sea regions, as well as in Singapore Strait. The recent price increase is still relatively modest compared to other price shocks, such as the one in '2022 after Russia invaded Ukraine and prices rose over $100 per barrel. Tony Sycomore, an IG analyst, said that it was important to keep this in perspective. Despite crude's nearly 20% increase this month the price is only $3.40 higher than its average for the past four years. Helen Clark reported from Perth, and Sudarshan Varadan in Singapore. Christian Schmollinger edited the story.
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Mideast crude prices spike due to the Iran war and Platts Dubai change
According to traders and data, the premiums on Middle East crude soared this week to multi-year highs as Asian refiners scrambled to find supply following the U.S./Israel war against?Iran, which paralysed Strait of Hormuz traffic, cutting off oil flow. The price spike for Asia's main oil is a major problem for refiners in the region, who are now facing higher costs as they struggle to find alternatives and reduce production. The benchmark Dubai cash premium rose to $19.63 per barrel on Thursday, marking the highest level since records began in 2018. Oman crude and Murban crude premiums also rose, reaching $19.15 per barrel and $17.87. Richard Jones, an Energy Aspects crude analyst, said that Dubai spreads had risen as crude exports remained stranded in the Middle East Gulf. This made price discovery nearly impossible. We expect disruptions in the Strait of Hormuz to continue until at least mid-March. Dubai price assessment may be difficult to determine once the current cycle of Oman and Fujairah loading Murban shipment volume is exhausted. ALTERNATIVE SUPPLIES Brent crude surged to July 2022 levels, and its spread over Dubai swaps (also known as Exchange of Futures for Swaps or EFS) increased to $10.42 a barrel on Wednesday compared to 69 cents a barrel at the start of 2026. Brent-linked grades are more expensive in Asia due to the widening price spread. The EFS spike "reflects the difficulty for 'Asia' to replace Middle Eastern crude quickly. Anh Pham is a senior LSEG analyst and said that Asian buyers are more aggressive in their competition for crude outside the strait. "Higher freight rates and longer journey distances make it more difficult for barrels to be shipped from distant regions." Some Asian refiners are still buying crude oil from the U.S.A., Canada, and Brazil, but at a premium. The discount on Canadian TMX crude for delivery to Asia has narrowed from $4 to just $1 a barrel compared to ICE Brent a month earlier. PLATTS DUBAI DIFFERENT CHANGES Some traders believe that the S&P Global Platts Dubai crude oil price assessment has improved the benchmark's performance. Due to shipping disruptions, Platts excluded grades like Qatari al-Shaheen and United Arab Emirates Upper?Zakum as well as Murban loadings from the Jebel dhanna port. A Singapore-based trader stated that only the Murban cargo from Fujairah and Oman is available for delivery. This reduces deliverable crude by around 70%. One trader stated that the price distortion is caused by the exclusion Upper?Zakum which sets the benchmark. In response to S&P Global, the company said that its methodology for Dubai included alternative delivery mechanisms since no one crude stream can guarantee continuity of liquidity. The fact that Platts Dubai is able to deliver more than two million barrels of oil per day demonstrates the'resilience' of the company, even during these extraordinary times. Trade data shows that TotalEnergies was the top bidder at the Platts Window, securing nine Oman and Murban shipments in the last four days.
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The morning bid is a tumultuous market in Europe and the Middle East
Rae Wee gives us a look at what the European and global markets will be like tomorrow. U.S. European and U.S. stock futures rose?on Friday, while Asian stocks pared their early losses. This was presumably due to a'minor decline in oil prices' as the U.S. It is still unclear how that will work. It doesn't make sense to try and distort derivatives when the actual product is scarce. The war in the Middle East continues to disrupt everything, from air travel to shipping. Donald Trump, the U.S. president who is always eager to get involved in world affairs, said that he would like to be able to decide Iran's next leader. Investors have been in a tumultuous week, swinging between wishful thinking or panic about the potential severity and length of the conflict. The impact of the war has been most acutely felt on the energy markets, where oil is set to make its biggest weekly gain since Russia invaded Ukraine back in February 2022. Investors have priced in more hawkish expectations of rates across the major central banks, driving yields higher. The Asian stock market was on track for its biggest weekly drop in six years. One could forget about the U.S. Nonfarm Payrolls that are due later on in the day. The world's biggest economy is expected to have added 59,000 new jobs in February, after increasing by 130,000 in the previous month. Meanwhile, the unemployment rate will remain at 4.3%. Even though it is too early to see any concrete evidence of AI's impact on the labour market, the report will be closely examined for warning signs such as weak job growth or even net loss of jobs, and an increase in unemployment. The following are key developments that may influence the markets on Friday. Payrolls of non-farm workers in the U.S. (February) Federal Reserve's Daly Paulson Collins Hammack
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ASIA GOLD - High price of gold deters Indian buyers; China demand remains steady
The demand for gold in India slowed this week due to volatile prices amid the escalating Middle East conflict. Premiums in China remained 'firm' on a rise in investment demand. The closure of airspace in the region has sharply reduced supply, resulting in a reduction of discounts across India. Retail buyers in India are having a hard time digesting the steep price increase. Gold is now unaffordable at these prices, said Varghese Aukka, managing Director of Jos Alukkas in Thrissur, Kerala. On Friday, the price of gold in India was around 160,000 rupees per 10 grams, up from 169,880 earlier this week. Bullion dealers in the region offer discounts This week, official domestic gold prices could drop by up to $28 an ounce, including 6% import and 3% sales taxes. That's a significant discount compared to last week when they dropped up to $65 per ounce, which was a 10-month-high. Due to the widespread cancellation of flights and the closure of airspace in the Middle East conflict, gold imports from the key supplier, the United Arab Emirates, to India have almost ceased. This has helped to narrow the discounts. The wedding season is still in a slump. "Buyers are delaying purchases due to the volatility of prices," he said. Weddings in India are the main reason for gold purchases. Jewellery is a key part of brides' attire, and is often given as a gift by family members and guests. In the meantime, physical demand for gold in Chinese markets remains strong despite higher spot prices. Gold prices rose by $13 to $15 per ounce above global benchmarks This week, the premium is slightly higher than last week's $12 to $13 premium. Peter Fung, the head of Wing Fung Precious Metals' dealing department, said that a steady premium means "physical (gold) demand in China is still very stable" even after gold prices reached $5,000. Spot gold prices rose by more than 8% during February, marking the seventh consecutive month of gains amid increased global political and economic uncertainty. Prices have been volatile, and have fallen by about 3% this week due to inflation fears and the fading prospects of interest rate cuts. On Friday, prices were at $5,135 an ounce. Physical gold is available in Hong Kong Traded at par to premiums as high as $2 in Japan Gold was sold with a premium of up to $1. In Singapore Gold was traded for a premium of $2.25. This is down from the premiums of $3.50 to $4.80 last week. ($1 = 91,6400 Indian Rupees) (Reporting from Noel John and Rajendra Jhadhav in Bengaluru; Editing by SumanaNandy)
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Indian shares drop as Mideast War lifts crude and keeps risk appetite low
Indian shares fell Friday, with losses mainly in financial stocks. Investors remained cautious amid the U.S.-Israeli conflict against Iran that has pushed up oil prices and weakened global risk appetite. As of 10:05 am IST, the BSE Sensex fell 0.61% and was down to 79530.73. The Nifty 50 was also down by 0.59%. The conflict has raised fears that a wider energy supply shock could further increase crude prices, revive inflation pressures and cloud the global economic outlook. The dollar strengthened as the conflict continued to show no signs of abating. Brent crude rose 5% on Thursday to a 20 month high of $86.28 per barrel. It was trading last at $84.4. India is the third largest crude importer in the world. Higher oil prices can be negative for India. Ponmudi R., CEO of Enrich Money, stated that persistent Middle East tensions keep crude oil prices high, which raises concerns about a renewed inflation, and tighter monetary policies, leading to investors becoming risk-averse. On Friday, 12 of the 16 major sectors posted losses. Small-caps and middle-caps both rose by 0.2%. The two heaviest Indian benchmarks – HDFC Bank (down 1.3%) and ICICI Bank (down 2.2%), respectively – dragged down the financials and banks sectors. A report stated that Indian refiners were buying millions of barrels of Russian crude oil to fill in gaps caused by?disruptions related to the Strait of Hormuz. This was after an?U.S. The 30-day waiver allows purchases of Russian crude oil. Reliance Industries gained about 2% following the news. This helped limit losses in benchmarks. Discounted Russian crude may lower feedstock costs, which could boost the company's margins. Interglobe Aviation, among other stocks fell by 2% as J.P.Morgan warned of pressure on earnings caused by?headwinds due to higher fuel costs? and a?moderation in international air traffic because of the Middle East Crisis? Larsen & Toubro has dropped 2% this week and is down 7.5%.
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Sources say that India's Aditya Birla Group has restarted its iron ore business.
Three'sources' familiar with the matter said that Aditya Birla Global Trading, an Indian commodities trading company, is resuming its iron ore operations as other traders leave the market because of record low volatility. The Singapore-headquartered company, part of India's conglomerate Aditya Birla Group, which also owns aluminium producer Hindalco, trades ?agriculture, energy and metals but not iron ore, according to ?its website. According to two sources, the company has suspended its iron-ore business and will return to the Chinese market in order to diversify their portfolio and reduce the risk. All sources were speaking under condition of anonymity, as they weren't authorised to talk to the media. Metals traders are moving to metals trading in order to take advantage of the booming markets for aluminium and copper. However, iron ore is not benefiting from this new enthusiasm because volatility has fallen. China Minerals Resources Group, a state-owned buyer of iron ore, has been consolidating its purchases and trying to reduce volatility. Aditya Birla Global Trading and Aditya Birla Group did not reply to questions from. Reporting by Amy Lv and Neha Arora, New Delhi. Editing by Lewis Jackson & Jacqueline Wong.
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US Treasury could announce measures on the oil futures markets as energy prices increase
A senior White House official said that the U.S. Treasury Department may announce measures to combat rising energy costs as early as Thursday. These could include action on the oil futures markets. The global oil price has risen since the war began with Iran on Saturday. This is because the conflict in the Middle East has disrupted supplies. JOHN KILDUFF - PARTNER AT AGAIN CAPITALS "Intervention of Treasury in this market would be unprecedented. It is not fair to compare the use of treasury futures in the GFC with treasury markets. The U.S. Treasury is a major player in the bond markets. I presume the goal in this case is to lower the futures prices. This would theoretically involve selling many futures on an open market to affect prices." In the event that a second, acute supply disruption occurs, it would require a large amount of resources (capitalize the margin calls) to support this position. Treasury has 'unlimited resources, but. JOHN PAISEY, PRESIDENT OF STRATAS ADVISERS The U.S. government's stance on the issue could moderate oil prices, but the physical disruption of supply is still a problem, especially with the closing of the Strait of Hormuz. There is also no spare capacity in the Gulf. Financial manipulation will not work if oil is kept off the market in large quantities. "Traders will keep betting that the oil price will go up - because it should." PHIL FLYNN SENIOR ANALYST AT PRICE FUTURES GROUPS "This is a very novel, think-outside-the-box move. You can sell the front of the curve to the market and then buy the back using futures instead of physical barrels. The Treasury's traditional role is focused on fiscal policy, managing debt, and occasionally intervening in currency markets via mechanisms such as the Exchange Stabilization Fund. But not commodities like oil. TONY SYCAMORE IG MARKET ANALYST "If they try to influence the futures themselves (deliverable contracts), it could create a temporary pause or spook some speculative investors, but I would be surprised if this moved the needle beyond a few days. The oil market is global and driven by supply/demand fundamentals, especially now that tanker traffic in the Strait has been clogged and there's the real threat of Iranian drones and other'strikes. "A bit of Treasury jawboning and symbolic action will not unlock or change this." ED MEIR, MAREX ANALYST "I don't know what they are thinking, but selling futures in order to lower prices is a huge gamble. It will also be a unprecedented intervention in the crude oil markets. The question that immediately comes to mind is: "What happens if the prices continue to rise and go against an potential Treasury short? Will they use SPR oil as a delivery against their short, or will they continue to post margin to ride their position? Reporting by Pablo Sinha in Bengaluru, Anushree mukherjee, and Ashitha shivaprasad; editing by Nia Williams and Sumana nandy
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After a wild earnings season, Australia's stocks have lost $93 billion in one week due to the Mideast War
Investors are on edge due to the escalating Middle East conflict, and record earnings season volatility. S&P/ASX 200 has lost more than half its gains in February after a 3.8% drop since the weekend, when Israel and the United States began bombing Iran. The benchmark index fell another 1.1% on the Friday, with many blue-chip stocks falling. Nick Twidale is the chief market strategist for ATFX Global. He said, "Global downturns hit Australia harder than other jurisdictions. I think that we could see a downturn if this war continues too long." Once the conflict is over, Australia will have more to offer. "Unfortunately, at this moment, it appears to be moving on." Investors are worried about inflation fueled by rising oil prices, and the stock markets around the world are tumbling to their worst weekly losses for three years. "A prolonged conflict would be a negative for asset prices worldwide and?Australia will not be immune from this," said Phil Cornet a portfolio manager with Atlas Funds Management. The sell-off this week comes on the heels of Australia's half year earnings season which was marked by wild swings, with profits beats being rewarded and negative surprises severely punished. The ASX 200 has seen a record number of companies move by over three standard deviations during their reporting day. This is the highest percentage since JPMorgan started tracking this metric in 2015. In a recent report, the equity strategists at JPMorgan Australia, headed by Jason Steed wrote: "February's result season brought another record in terms of volatility for single stocks." According to LSEG, the top 20?companies of Australia, which account for close to two thirds of the benchmark ASX 200,?had their most volatile February in six years. CSL, the biotechnology giant, has fallen as much as 12 percent after reporting an 81% decline in first-half profits. Coles, the country's No. 2 grocery store, has fallen more than 7% since announcing a slow?start to second half. Companies that extract resources, drill oil or operate as licensed, regulated financial institutions are seen as more disruption-resistant, said Cameron ?Gleeson, a senior investment strategist at Betashares. BHP Group, the largest listed mining company in the world, rose 7% to notch a new record high. Commonwealth Bank of Australia, meanwhile, rallied by more than 8%, its best session since march 2020, following earnings reports that beat expectations.
Asia replaces Russian crude oil quickly: Russell
Asia's crude markets are quickly adjusting to the new sanctions against Russia, grabbing cargoes as they come and looking for alternatives to deliver in the coming months.
According to LSEG Oil Research, the top oil-importing continent Asia is expected to receive approximately 3.23 million barrels of Russian crude per day in February.
India and China both bought less, but this is a decrease of 7.4% compared to January's 3,49 million bpd.
In Asia, there are only two major buyers of Russian crude oil by sea, namely India and China. Myanmar does also take a small amount.
LSEG expects India's imports to Russian oil to reach a record high in three months, at least 1,71 million bpd. This figure may increase by the end February as more cargoes will be assessed.
After Western sanctions shut down customers in Europe, the South Asian nation has become the largest buyer of Russian crude.
India was allowed to purchase Russian oil at discounted prices as the United States, and other Western countries, tried to keep Russian oil on the global market. However sanctions were imposed after the February 2022 invasion by Ukraine to cut off the revenue flowing to Moscow.
Last month, former president Joe Biden imposed restrictions on Russia's shadow tanker fleet in order to prevent the vessels from delivering crude oil.
The Indian refiners were scrambling to purchase as much Russian crude before the new measures took effect, resulting in an increase in arrivals in February before a possible decline in March.
Chinese refiners have cut back more quickly on Russian crude. Imports of seaborne crude in February are expected to be around 500,000 barrels per day, down from an average of 1.05 million barrels per day over the previous three months.
According to LSEG's estimates, China's crude imports are expected to total 10.35 million bpd for February, which is roughly the same as January's 10,10 million bpd but lower than 11.16 million bpd from February 2024.
China has replaced Russian crude oil with cargoes from suppliers other than Russia. So far, it appears to have mostly turned to Angola or Brazil.
Switching suppliers is a good way to save money.
The imports of Angolan crude oil in Asia are expected to jump to 1.13m bpd by February, up from 670,000bpd. Those from Brazil will also increase to 1.05m bpd.
China's decision, as part of its response to the new president Donald Trump's 10% tariff on all Chinese imports, to levy 10% tariffs on crude oil imports has made the situation even more complicated.
It will take several more months before the tariffs on U.S. crude oil are applied to actual imports. This is because there are several months between when the cargoes are organized and when they arrive.
Kpler, a commodity analyst firm, estimates that China's imports from the U.S. of crude oil will increase significantly in March and April. Arrivals for March are currently estimated at 339,000 barrels per day and those for April to be 461,000.
These cargoes have already been placed on the water, or arranged.
China's imports of crude oil from the United States are likely to fall in May, but India could pick up the slack.
These are the views of the columnist, an author for.
(source: Reuters)