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Polish PM urges energy companies to prioritize cheap power
The Polish energy companies should focus on providing low-cost power over maximising profits. This was the message of Prime Minister Donald Tusk, who echoed a call to repolonise the economy, which sent energy stock prices tumbling. The Warsaw WIG Energy index, which includes a number state-controlled companies, fell by around 5.5% to 0843 GMT despite the market's overall rise. Tusk stated at a business event that the first task of the managers of state companies is to ensure the energy security for the Polish state, as well as the families, households, and entrepreneurs in Poland, by providing the lowest possible cost energy. Not necessarily to maximize the profits of an state-owned corporation." Robert Maj, an analyst at Ipopema Securities, said that the energy stocks fell in response to Tusk’s comments. Maj: "He said that now is not the time for energy firms to maximize their profits." I think investors are reacting because they could mean that tariffs for electricity sales may fall below costs of production.
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IEA and OPEC both cut their oil demand forecasts for 2025 due to trade tensions
The International Energy Agency has cut its projection for global oil demand growth this year. It cited escalating tensions in trade, a day following a similar move by the producer group OPEC. The move by the IEA - which advises industrialised nations - is the latest indicator that oil demand is weakening as a result of U.S. president Donald Trump's tariffs on trade, which has already caused a steep drop in oil prices in this month. The IEA reported in a report that the world oil demand will increase by 730,000 barrels a day this year, a significant drop from the 1.03 million bpd forecast last month. The IEA stated that "the deteriorating outlook of the global economy, coupled with the sudden and sharp escalation of trade tensions early in April, has prompted a downward revision to our forecast for growth in oil demand this year." The United States and China account for about half of the downgrade, while the rest is accounted for by trade-oriented Asian countries. The IEA's first look at the year 2026 predicted a further decline in global demand to 690 000 bpd. The IEA has reduced its forecast for 2025, following a similar decision made by OPEC Monday. However, the Paris-based IEA is making a more dramatic reduction. The Organization of Petroleum Exporting Countries (OPEC) has lowered their forecasts of oil demand for this year and the next, to 1,30 million bpd each. Both figures were down by 150,000 bpd compared to last month. OPEC is more optimistic than the industry and expects oil consumption to continue to rise for many years. The IEA believes that oil demand will peak this decade, as the world shifts to cleaner fuels. (Reporting and editing by Kirsty Donovan, David Holmes, and Alex Lawler)
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Microsoft announces a large carbon removal agreement to support AtmosClear Louisiana project
Microsoft announced on Tuesday that it had signed a contract in Louisiana for a project which would remove 6,75 million metric tonnes of carbon dioxide within 15 years. Microsoft claims this is the largest permanent carbon removal project ever undertaken. Microsoft's greenhouse gases emissions last year were 29.1% more than the 2020 levels due to a growing demand for energy in artificial intelligence applications. It reported greenhouse gas emission of 17.2 millions tons annually at the end 2023. AtmosClear, a company that specializes in carbon capture, is developing a bioenergy project at the Port of Greater Baton Rouge. The project will utilize materials such as sugarcane bagasse or forest trimmings for energy generation and to capture carbon emissions. Microsoft has set a goal of becoming carbon-negative by 2030. The agreement is part of that effort. The announcement is made amid uncertainty over the future of U.S. projects for carbon removal and storage, which were incentivized by a $85 per ton federal credit known as the 45Q. In upcoming budget talks, the Trump administration wants to roll back numerous decarbonization incentive programs that were put in place under former president Joe Biden. The companies have not commented on whether or not the project will proceed if Trump's administration scales back the tax credit. Fidelis, a Texas-based company which owns AtmosClear said that it plans to use the 45Q credit for the carbon capture component of the project. Fidelis estimates that the project could result in over $800 million in investment, around 75 permanent jobs and 600 construction positions. It may also revive forestry jobs in the area that were impacted by the recent mill closures. Microsoft's Senior Director of Energy and Carbon, Brian Marrs said that the company valued the emphasis placed on local agriculture communities in the agreement. He said that the deal would demonstrate Louisiana's leadership as a center for applied technology and carbon management research. Louisiana officials have been lobbying U.S. Department of Energy, and the state’s congressional delegation in the last few weeks to encourage them to save federal funds to support the planned Direct Air Capture Hub for Calcasieu Parish as well as 45Q tax credits. Construction would start in 2026 and commercial operations in 2029. (Reporting and editing by Jamie Freed; Valerie Volcovici)
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UK energy regulator confirms electricity grid reforms
The government has said that the energy regulator in Britain is expected to announce major grid connection reforms on Tuesday to encourage investment in clean energy projects and infrastructure. It said that under the current system, "zombie projects" can cause a delay in the connection queue, leaving businesses to wait up to 15 years for a connection. The zombie project is a speculative plan that, while it may not be feasible due to lack of land rights or funding, still holds a spot in the queue. Ofgem is expected to confirm changes that will allow industries to connect faster, including data centres, AI, and wind and solar power projects. The National Energy System Operator, in partnership with industry, has drafted a new regime that could unlock investment of up to 40 billion pound ($52.8 billion). Ed Miliband, Energy Secretary, said: "These changes will eliminate 'zombie projects' and reduce the time required to bring high-growth firms online. They will also accelerate connections for companies that provide home-grown energy and energy security via our Plan for Change." In a bill passed last month, Britain announced its plans to build critical infrastructure including clean energy projects that are central to driving economic growth. This includes speeding up approvals and reforming grid connections. ($1 = 0.7571 pound) (Reporting and editing by William James; Paul Sandle)
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Sources say that Pakistan is considering US oil imports as a way to reduce the trade imbalance.
According to a source involved in the proposal as well as a refinery executive, Pakistan may import crude oil for the first to time from the United States to counterbalance a trade deficit that led to higher U.S. duties. As President Donald Trump's import duties shake economies and markets, countries are scrambling for ways to reduce their U.S. duty burdens. This includes buying more U.S. gas and oil. A government source involved in the proposal made to the Prime Minister to purchase more U.S. crude said, "It's one of the products that are being reviewed before a delegation leaves for the U.S. It is being actively considered. "We are looking at the opportunities and structure, but it has to be approved by the PM," he added. Trump imposed a baseline 10% tariff on all imports into the U.S., and increased duties on dozens more countries. Pakistan will face a 29% duty due to its $3 billion trade surplus with the U.S., but this is subject to Trump's 90-day pause announced last week. The refinery executive said that they would buy U.S. oil equivalent to Pakistan’s current imports, which is about $1 billion worth of oil. Sources declined to name names as the proposal was still in its early stages. The Pakistani petroleum ministry didn't immediately respond to an inquiry for comment. Data from analytics company Kpler revealed that Pakistan imported 137,000 barrels of crude per day in 2024. Most were light grades, mainly from the Middle East. Saudi Arabia and United Arab Emirates were its main suppliers. Data from Pakistan's Central Bank showed that oil imports totaled $5.1 billion by 2024. Saudi Arabia, via the Saudi Fund for Development, extended to Pakistan a $1.2billion financing facility in February for the importation of oil products for one year. Since 2019, the SFD has given Islamabad approximately $6.7 billion for oil products. Pakistan had said it would send a delegation to the U.S. to negotiate new tariffs in the weeks ahead, before Trump's partial tariff suspension last week. To reduce trade surpluses, several big energy importers want to buy more oil from the U.S. The Indian state-owned gas company GAIL India Ltd. issued a tender last Friday to purchase a 26% share in a U.S. LNG project and import LNG. Japan, South Korea, and Taiwan are also considering participating in an LNG development in Alaska, the U.S. Reporting by Ariba Sharif in Karachi, Editing by Florence Tan and Tony Munroe. Saad Sayeed.
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Kuna reports that Kuwait has begun the merger of KNPC and KIPIC state oil companies.
Kuwait is taking steps to merge its two state-owned oil companies, reported the news agency Kuna on Tuesday. The OPEC producer wants to restructure their energy industry. Kuwait National Petroleum Company (KNPC) plans to acquire Kuwait Integrated Petroleum Industries Company (KIPIC), Kuna reported citing KNPC Chief Executive Officer Wadha Al-Khateeb. KIPIC is in charge at Al Zour Refinery, while KNPC oversees Kuwait's refinery industry. Al-Khateeb, cited by Kuna as saying that the rapidly changing global oil and gas industry places a huge responsibility on the energy sector of a country to adapt to and enhance such changing dynamics. Kuna reported that she also reaffirmed Kuwait's commitment to meeting its obligations to clients and maintaining growth, while maintaining Kuwait's position as an international energy industry. Brent crude oil prices fell by 20% in a week, reaching a 4-year low. Since then, prices have recovered a bit to around $66 per barrel. Kuwait Petroleum Corporation CEO Sheikh Nawaf Saud al-Sabah said to reporters in January that Kuwait's daily production capacity was over 3,000,000 barrels. Last year, the wealthy Gulf state announced that it had made a huge oil discovery. The estimated reserves are 3.2 billion barrels. (Reporting and editing by Gerry Doyle, Christopher Cushing and Hadeel al Sayegh)
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Banks vote for loosening climate coalition membership requirements
Chair of the world's largest bank coalition, which is working to combat climate change, has announced that it will be removing some of the more strict membership rules in order to reflect the slower pace of change within the real economy. Net Zero Banking Alliance, a UN-backed coalition that promotes climate action in financial services, has canvassed its members about changes to the rules it follows. This is despite the withdrawal of many of the largest banks from the coalition and the United States leading calls for abandoning climate action. The banks voted to abandon the more strict target of aligning all sector financing to 1.5 degrees Celsius over pre-industrial levels by mid-century, and replace it with an ambition that is more flexible to align their business with a target well below 2 degrees Celsius. Changes reflect the fact that real economic progress has not been as rapid as expected, and policy and technological advances haven't occurred at the pace predicted by banks and asset managers when they first declared collective action on climate change at COP26 Glasgow. Shargiil Bahir, Executive Vice President and Chief Sustainability Officer at First Abu Dhabi Bank, said that "the knowledge we had about what was possible in 2021 has been very different from where we are now." He cited housing and aviation, as two examples. "Some industries are not transforming as quickly as we anticipated four years ago. Either the technology has not moved as fast as expected or the policymaking has not moved as fast," said the expert. Over 100 member banks of the group have already set sector targets aligned with 1.5 degrees, but to increase its numbers the group is looking to attract banks from countries that are not aligned with 1.5 degrees. Bashir explained that the overhaul represents NZBA’s next phase, as it transitions from being primarily an organisation which sets targets to one which assists banks in implementing those changes via webinars, sectoral documents and other capacity building activities. Bashir stated that the financial sector will discuss how it can use different accounting methods to calculate or reduce planetary warming emission, such as avoided emissions and carbon markets. Over 80% NZBA members cast votes, and 90% were in favor of the proposals. (Reporting and editing by Stephen Coates; Virginia Furness)
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IEA: Russia's oil export revenues down 21% y/y in March
The International Energy Agency reported on Tuesday that the revenue Russia received from crude oil sales and oil products fell by 21% compared to a year ago, falling from $16,29 billion to $14.29 Billion. The report also stated that Russian oil exports fell by 390,000.00 barrels per daily (bpd) between March 2024 and 5.06 million bpd in the last month. Fuel exports fell by 210,000 barrels per day (bpd). Last month, the total Russian oil and petroleum products exports dropped by 600,000 compared to last year. The IEA stated that "the widening discounts on Russian grades compared to global benchmarks since the 10th of January contributed to overall price weakness." But strong sour crude supply kept Urals discounts against Dubai delivered to India's west coast at their lowest level since December last year. Washington announced its most extensive sanctions against Russian oil companies, and tanks carrying Russian oil in early January. This was due to Moscow's involvement in the conflict with Ukraine. The IEA reports that Russia's crude production fell to 9,07 million bpd last month from 9,08 million bpd during February, but it was still higher than the country's OPEC+ quota at 8,98 million bpd. OPEC data released on Monday revealed that Russia's crude output fell by 10,000 bpd to 8.963 millions bpd during March. IEA reported that Kazakhstan's production was unchanged from March to the previous month but 390,000 bpd above the target set by OPEC+, a group of major oil producers. Kazakhstan will pump 60,000 barrels per day more than its quota in 2024. However, the output increased further in February due to Tengizchevroil ramping up their expansion towards full capacity. According to the IEA, Western integrated oil companies operate more than half of current Kazakh production. Reporting by Olesya A. Astakhova, Vladimir Soldatkin and Kirby Donovan.
Investors take stock of US Trade Policy and see stocks fall, bond sales abate
After a turbulent week, investors were greeted with calm Friday, after the confusion surrounding U.S. Trade Policy and a global increase in borrowing costs. A steep selloff of bonds subsided and currencies stabilized, although stocks followed Wall Street lower.
Overnight, the Nasdaq confirmed that it had been in a corrective phase since its peak in December last year. U.S. stock markets are facing headwinds due to a dimming outlook for growth in the largest economy in the world and uncertainty surrounding President Donald Trump's trade policies.
Trump suspended on Thursday the 25% tariffs that he had imposed on most goods coming from Canada and Mexico, until April 2, the date he threatened to impose an international regime of reciprocal duties on all U.S. Trading Partners.
Trump's rapidly changing trade policy has sent the markets into a tailspin. However, currencies such as the yen, the Swiss franc and gold have been some of the few assets that investors have sought out as they look for safety.
The Japanese yen was near its highest level in five-months at 147.95, and on course for a weekly gain of 1.8%, while the Swissie reached a new three-month high of 0.8822 to the dollar.
The gold price dropped slightly but was still close to a record at $2,904.62 per ounce.
Tony Sycamore is a market analyst with IG. He said that the rapidly shifting sands from U.S. Tariffs have turned into quicksand, which businesses in Canada, Mexico and the U.S. are drowning in.
I'm not very confident about investing money in the market at this time because there is so much uncertainty. "It's a terrible, horrible environment for investors to operate in."
The sharp decline in European bond prices, triggered by Germany’s massive spending plan, showed signs of easing on Friday. Bund futures rose more than 0.8% while French OAT futures rose 0.7%. Bond yields are inversely related to bond prices.
In Japan, the government bonds continued to be sold, but at a lower level than during the previous session.
The yield on the 10-year Japanese Government Bond (JGB) rose by 1.5 basis points, to 1.53%. This is its highest level since 2006. Meanwhile, the yield on the 20-year bond increased by 2 bps, to a record high of more than 16 years, 2.22%.
The euro has been on fire this week due to the surge in European borrowing rates. It is expected that the currency will have its biggest weekly gain in almost five years by Friday, at over 4%. It was last trading 0.07% higher, at $1.0794.
The European Central Bank cut rates again on Thursday, but warned that "phenomenal uncertainties" could lead to inflation. This includes the possibility of trade wars or increased defence spending.
Mark Wall, chief European Economist at Deutsche Bank said that the ECB is in a difficult position due to the imminent threat of U.S. Tariffs. This could lead to further policy rate reductions - or even a move towards stimulative territory – and the increasing commitment for higher defence expenditures over the next few years.
This environment calls for a deft touch on the monetary lever, and the preservation policy flexibility.
ASIA STOCKS UPBEAT
MSCI's broadest Asia-Pacific share index outside Japan traded at 0.5% lower last week, but was on course for a gain of over 2.5% in a single week, the largest weekly increase since nearly six months.
Investors continued to pour money into shares of artificial intelligence and were encouraged by Beijing's new policy.
The blue-chip index of China, the CSI300, fell by 0.2% but is expected to gain 1.5% this week. Meanwhile, the Shanghai Composite Index is also on course for a weekly gain of 1.85%.
Hong Kong's Hang Seng Index grew 0.3%, and was on track for a weekly gain of more than 6%.
Goldman Sachs analysts wrote in a report that they expect fiscal easing to be significant this year. They also said there would be a greater focus on high-tech manufacturing and consumption.
Japan's Nikkei fell 1.85%.
Investors will be focused on the February U.S. Nonfarm Payrolls Report, which will give them further insight into the health of the largest economy in the world.
After January's 143,000 job gains, 160,000 new jobs are expected to have been created in February.
Investors are betting on more Federal Reserve rate cuts in 2019. This is due to a series of disappointing U.S. data and concerns about Trump's tariffs. Fed funds futures show just under 77 basis points of ease priced into this year.
The dollar has also been pushed down, and is expected to drop by more than 3% in a week against a basket.
Brent crude futures rose 0.27%, to $69.65 a barrel, while U.S. West Texas intermediate crude futures rose 0.2%, to $66.49 a barrel. (Reporting and editing by Jamie Freed; Rae Wee)
(source: Reuters)