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Oil prices drop as Russian hub resumes loading; markets consider sanctions impact
The oil prices fell on Tuesday, as traders assessed the impact of Western sanctions against Russian flows, and supply concerns waned after the loading of cargo at a Russian hub was resumed following a drone strike in Ukraine. Brent crude futures fell 28 cents or 0.4% to $63.92 per barrel as of 1100 GMT. U.S. West Texas Intermediate crude futures (WTI) were down 26 cents or 0.4% at $59.65 per barrel. According to two industry sources, and LSEG data, the Russian port of Novorossiysk resumed oil loadings Sunday following a two-day suspension triggered a Ukrainian drone and missile attack. In a note, IG analyst Tony Sycamore noted that crude oil prices are marginally lower as "reports indicate that loadings at Novorossiysk have resumed earlier than expected," he wrote. The exports of crude oil from Novorossiysk, and the nearby Caspian pipeline consortium terminal, which together represent about 2.2 millions barrels per day, or roughly 2%, were stopped on Friday. Crude prices rose by more than 2%. Now, traders are focusing more on the long-term effects of Western sanctions on Russian crude oil flows. The U.S. Treasury reported that sanctions imposed on Rosneft in October and Lukoil in November are already cutting into Moscow's oil revenue and will eventually reduce Russian export volumes. ANZ stated in a report that "Moscow crude oil has started trading at a substantial discount to global benchmarks." According to a senior White House official, President Donald Trump will sign legislation imposing sanctions on Russia as long as the final decision is in his hands. Trump said that Republicans were drafting legislation to sanction any country that does business with Russia. He added that Iran may also be included. Goldman Sachs predicted that oil prices would decline until 2026. The company cited a large supply wave which keeps the market in excess. Goldman Sachs said that Brent oil prices could reach $70 per barrel by 2026/2027, if Russian production drops more dramatically.
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US Treasury: sanctions against Rosneft and Lukoil reduce Russia's oil revenue
The U.S. Treasury announced on Monday that U.S. sanction against Russian oil giants Rosneft, and Lukoil have already reduced Russian oil revenues. They are also likely to reduce Russian oil sales in the future. In a press release, the Treasury's Office of Foreign Assets Control stated that their analysis of the first market impact of sanctions announced on the 22nd of October showed they were "having their intended effect of dampening Russian revenue by lowering Russian oil prices and therefore the ability of the country to fund its war against Ukraine." The Treasury's action was one of the strongest U.S. sanction since Russia invaded Ukraine on a large scale in February 2022. It is also the first direct sanction imposed by Donald Trump since he took office in January. The deadline set by the sanctions is November 21, when companies must end their business with Rosneft or Lukoil. Violators could be disconnected from the dollar-based system of financial transactions. It was not clear how Treasury would enforce the sanctions. China and India are the two biggest buyers of Russian crude oil. OFAC's analysis found that prices for several grades of Russian crude oil were at an all-time low. It also noted that a dozen of the largest Indian and Chinese buyers of Russian crude had announced their intention to stop buying Russian crude for December deliveries. LSEG Workspace showed Monday that benchmark Urals crude was loaded in Russia's Black Sea oil port of Novorossiysk On November 12, oil traded at $45.35 a barrel, the lowest price since March 2023. The Russians were just starting to build a "shadow" fleet of tankers at that time to avoid the G7-led $60 per barrel price cap imposed in December 202023. Brent crude futures traded at $64.03 Monday, up from $62.71 the previous day. Urals Novorossiysk climbed to $47.01 Monday. After a drone and missile attack by Ukraine, loadings at the Black Sea Port have resumed. Reports earlier in the month indicated that Russian oil discount to Brent had increased as Indian and Chinese refiners reduced purchases due to U.S. sanction. A Treasury spokesperson stated that the sanctions "starved Putin's war-machine" and the Department "is ready to take additional action if needed to stop the senseless killing in Ukraine". (Reporting and editing by Cynthia Osterman; David Lawder)
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Viridis, Australia's rare earths company, secures Canadian funding interest
Export Development Canada has sent a letter of intent to Viridis Minerals Australia for a debt financing up to $100,000,000 for the Colossus Rare Earths Project in Brazil. The company stated that the financing will help with the execution phase. It follows a letter from Bpifrance Assurance Export in France. Rafael Moreno said that the endorsement from Viridis, the managing director of Viridis, could strengthen the role the project plays in diversifying and securing Western supply chains for rare earths. The Colossus Project is located in Minas Gerais, Brazil. It contains Ionic Adsorption Clay deposits. Rare earth elements are weakly bound to clay minerals and this makes extraction easier. Canada's interest in rare earths comes at a time when Western nations such as the United States and Australia are supporting developers of the material to create an alternative supply chain to counter China's dominance over the industry. As the project moves towards funding completion, the company expects final structuring discussions to be progressed with its financial partners in the coming months. Viridis said that the EDC will continue to adhere to its standard due diligence procedures, internal approvals, and project financing conditions. (Reporting and editing by Alan Barona in Bengaluru, Nikita Maria Jio from Bengaluru)
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White House official: Trump will support Russia sanctions bill as long as he has final authority
A senior White House official stated on Monday that President Donald Trump would be willing to sign legislation imposing sanctions on Russia, as long as the ultimate decision-making power remained with him. Trump told reporters on Sunday night that he was "OK" with Republicans working on legislation to impose restrictions on countries that do business with Russia because Moscow failed to negotiate a deal with Ukraine. Trump suggested that lawmakers could add Iran to sanctions measures. Both Senator Lindsey Graham, and U.S. Rep. Brian Fitzpatrick are Republicans. They sponsored legislation to impose restrictions on countries that do business with Russia. This includes buyers of Russia's energy exports. Trump's Sunday comments could be a catalyst for legislation in Congress to advance. The Senate and House of Representatives leaders have not brought the legislation up for a vote, as Trump prefers to impose tariffs instead on goods imported from India. India is the second largest buyer of Russian oil in the world after China. The official responded that Trump would sign the bill if asked if he was ready to support it. He said that last night." The official stated that the White House would insist on specific language to ensure that Trump maintains control over sanctions. The official stated that it was important for the White House and President that the package of sanctions include a clause that gives the president the final decision-making power on sanctions. "So long as this is included, I believe the president will sign the bill." Officials at the White House confirmed that they were continuing to negotiate with Russia about ending the war. "We are definitely working on it. We have so many other things going on that it hasn't been in the spotlight. Reporting by Gram Slattery and Andrea Shalal; editing by Caitlin Nickel and Rod Nickel
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Fibre cement maker James Hardie reports 2% drop in second-quarter profit
James Hardie, a fibre cement manufacturer, reported a 2% decline in its second quarter profit on Tuesday. The company attributed the drop to a weaker single-family housing market and inventory reductions that are ongoing in North America. Nigel Stein will take over as chairman of the board on November 17 after Ryan Lada, who succeeds Rachel Wilson, has been named as chief financial officer. James Hardle cited a challenging business environment. This included a modest decline in net organic sales in the siding and trim segment and a lower manufacturing utilization rate in its North America operations. All of this was compounded by a slowing single-family housing market. The company raised its net sales forecasts for the full year for its siding and trim division. This was its biggest contributor to the quarter. It attributed this increase to stabilised market conditions and normalised inventories. The Dublin-based firm reported a net profit of $154 millions for the three-month period ended September 30 compared to $157 million in 2013. This was a significant increase over the Visible Alpha consensus estimate, which was $144.2 million. The company's siding and trim division is expected to generate net sales of between $2.925 billion and $2.995 billion in fiscal 2026. This is up from the previous forecast range of $2.675 to $2.850. (Reporting and editing by Vijay Kishore in Bengaluru, Adwitiya Shrivastava from Bengaluru)
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Rio Tinto will reduce Yarwun's alumina production by 40% starting in October 2026, to prolong the plant's life.
Rio Tinto, Australia's largest alumina refinery company, announced on Tuesday that it would cut production at its Yarwun plant in Queensland by 40 percent starting October of next year. This will extend the life of the plant to 2035 while allowing time for modernization. Under current production rates, Yarwun’s tailings storage facility, which is used to store mining waste, will reach full capacity in 2031. The company said it had looked into options for a new tailings facility but that the required investment was "substantial" and "not currently economically viable." Rio Tinto stated that the reduction will affect around 180 positions. It added that it was actively working to relocate and reassign employees who are affected. According to the company, about 725 employees work at the refinery. The company stated that the production cut would reduce annual alumina production by approximately 1.2 million metric tons, but assured customers that their needs will not be affected. In 2024, the company expects to produce 7.3 million tonnes. Rio Tinto said that its bauxite mining operations and aluminium smelters would continue to run at full capacity.
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US announces new approach to proxy disputes, seen by activist shareholders as a blow
On Monday, the top U.S. financial regulatory body changed the grounds for which companies can request permission to skip voting on shareholder resolutions. This is seen as making things more difficult for activists who want to force votes about controversial topics like climate change or workplace diversity. The Securities and Exchange Commission announced on its website that it will no longer rule on common proxy objections such as whether or not an activist's request was filed late, or if the filer owns enough shares. The SEC stated that there is an exception if a company claims jurisdictional reasons, such as state law, which gives them grounds to exclude a particular item. Last month, SEC Chairman Paul Atkins - an appointee by President Donald Trump - suggested that many shareholder proposals were improper under Delaware law. According to Erik Gerding of Freshfields, who was the director of the division until last December, the new policy and Atkins views will lead companies to rely on the state exemption when filing their requests. Gerding stated that "this could be the end for shareholder proposals, as we know it," if Delaware courts and the state legislature support Atkins' view. SEEKING RESURANCE Around this time every year, companies begin to ask the SEC Division of Corporation Finance if they can be assured they won't face enforcement action for leaving shareholder resolutions out of their annual meeting ballots. They are granted permission about half of the time. Recent shareholder meetings have been dominated by resolutions addressing topics like workforce diversity and emission, despite the fact that top investors' support has declined in recent years. Fund leaders claim that their support is less needed because companies have recently implemented voluntary reforms on issues of environmental, social, and governance. Republicans have criticized ESG efforts. This year, the agency took other steps to reduce activist influence. Sanford Lewis, a lawyer who represents ESG activist, said that nearly all proposals can be blocked if there is an "extreme attack on shareholder rights". He said that activists might focus on challenging individual directors. A spokesperson for the SEC said in an email that the decision was made "after thoroughly considering staff resources and timing issues, as well as the role of the staff in the shareholder proposal processes." The spokesperson stated that "with over 900 filings and registration statements received during the shutdown of the government, this decision allows staff to focus their attention on transactional issues, such as capital formation and investor safety, which are time sensitive." Caroline Crenshaw - the only Democrat at the SEC - said in a statement that Monday's changes were "more of a gift to the issuers rather than an exercise on resource allocation." It is also an act of hostility towards shareholders.
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Sources: Chevron is a contender to buy Lukoil assets.
Five sources familiar with this process said on Monday that the U.S. oil giant Chevron was examining options to purchase global assets from sanctioned Russian oil company Lukoil. Last week, the U.S. Treasury cleared potential buyers to speak to Lukoil regarding foreign assets. Chevron will join Carlyle, and other firms to compete for Lukoil's portfolio of at least $20 billion. Last month, the United States imposed sanctions against Russia's two largest oil companies, Lukoil & Rosneft, in an effort by President Donald Trump’s administration to force Moscow to peace talks with Ukraine. Five sources confirmed that Chevron was looking at options to purchase assets from Lukoil in areas where they overlap, rather than buying the entire portfolio. The sources asked to remain anonymous as they were not permitted to speak with the media. Chevron has never been reported to have an interest. Chevron stated that it adheres to all laws and regulations relevant to its business. It does not comment on any commercial issues. Lukoil produces 2% of the world's oil at home, but also abroad. The company has announced that it is looking for buyers of its international assets. These produce 0.5% of oil globally and are valued at $22 billion based on filings from 2024. Sources told us last week that Carlyle, a U.S.-based private equity firm, is one of the companies exploring options for buying Lukoil’s foreign assets. Lukoil owns three refineries in Europe and oilfields in Kazakhstan (Uzbekistan), Iraq (Mexico), Ghana, Egypt, Nigeria and Ghana. It also has hundreds of retail fuel station around the globe, including the United States. Lukoil is a shareholder in both the Karachaganak and Tengiz fields in Kazakhstan. These fields are also owned by Chevron Exxon Mobil Eni Shell. The fields are a major source of crude oil for the CPC Pipeline, which transports more than 1.6 millions barrels of crude per day, or 1,5% of the global demand for oil, to the global markets via Russia. Lukoil has also a stake (50%) in the Nigerian offshore licence OML-140 that is operated by Chevron. Lukoil's Finland-based petrol chain Teboil said Monday that it expected its ownership to be changed as part of Lukoil's efforts in selling international assets. Lukoil operates the West Qurna 2 in Iraq where Exxon operated the West Qurna 1, which was adjacent to it, before leaving last year. Three Iraqi energy officials said on Monday that the Iraqi government was considering requesting a six-month waiver of sanctions from the U.S. Treasury to give Lukoil more time to dispose of its stake in West Qurna 2. Iraq has ruled the possibility of the state purchasing Lukoil’s stake in this project. (Additional reporting from Jarrett Renshaw; Sheila Dang; Shadia Nasralla, Writing by Dmitry Zhdannikov, Editing by Jan Harvey & Nia Williams.
China and Russia to increase cooperation in energy, agriculture
China is prepared to intensify cooperation with Russia on energy, agriculture, and other investments. Premier Li Qiang made this statement during a Monday meeting in Moscow with Russian Prime Minster Mikhail Mishustin.
Li told Mishustin, the Russian official news agency Xinhua reported that China welcomed more agricultural and food product from Russia. Xinhua reported, citing Li, that China hopes Russia will also make it easier for Chinese companies to invest and operate in Russia. Mishustin said to Li that the bilateral cooperation has proven resilient in the face of external challenges.
According to a transcription of the meeting posted on the Russian government's website, Mishustin said that their cooperation was "special and strategic" and covered the oil, coal, and nuclear sectors. Russia, which is fighting NATO-supplied Ukrainian troops, and China, who are under pressure by the United States to counter their growing economic and military strength, have found a common geopolitical purpose. Beijing and Moscow announced their "no-limits" strategic partnership only days before Putin sent thousands of Russian soldiers into Ukraine in 2022. Xi met Putin over 40 times in the last decade. In recent months, Putin has publicly referred China as an ally.
(source: Reuters)