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Asia's jet-fuel and diesel cash premiums reach multi-year highs due to Mideast concerns
Multiple regional trade sources reported that the cash differentials for jet fuel and diesel in Asia reached multi-year highs as the'markets priced in' the risks of supply disruptions as the conflict in Middle East intensifies. Jet Fuel Cash Differentials LSEG's pricing data showed that the session ended with a $4 premium per barrel. This was more than $2 above the previous close, and levels last seen in September of 2022. Diesel cash differentials The data revealed that premiums were around $4.25 per barrel, the last time they reached those levels was in November 2022. The refining margins for both gasoil with 10ppm sulphur and jet fuel increased to around $30 per barrel or more. This is close to four-month highs. Trade sources say that the biggest concern for the market was the disruption of middle distillates loading through the Strait of Hormuz. This could have a knock-on effect on demand for Asia-loading goods. They said that if the conflict or disruption continues, Europe might need to look for replacement supplies in Asia. Kpler shiptracking data showed that last year, nearly 600,000 metric tons of diesel flowed per month from exporters along the Strait of Hormuz to Europe. Kpler shiptracking data showed that 1.1 million tons of jet fuel was shipped on this route every month. The data also showed that 40% of the jet?fuel shipped from refiners via the Strait of Hormuz was bound for Europe in the past year. Reporting by Trixie YAP; Editing and Revision by Kirby Donovan, Barbara Lewis
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Trump's SEC gives companies more control over investors. They were pushed back by lawsuits
Activists said that a new federal approach, which gives U.S. firms more control over the proposals that shareholders vote on during their annual meetings, creates regulatory uncertainty and leads to litigation. In November, the U.S. Securities and Exchange Commission changed its tradition of having staff approve shareholder proposals before a company rejects them. It gave executives greater discretion in deciding which resolutions to include on their proxy statement, the mandatory document distributed before shareholder meetings. At least three lawsuits have been filed by investors against AT&T and Axon Enterprises, and there could be more. Giovanna Eichner, a shareholder advocate with Green Century Capital Management in Boston, said that the SEC's decision to step back created uncertainty for the engagement process. Eichner stated that "this lack of rules and structure is more than anything else leaving everyone in a state of confusion about how to proceed." In November, activists expressed concern that the changes were in line with other efforts by Trump's appointed regulators to reininforce shareholder efforts in environmental, social, and governance (ESG investing). Republicans from states that produce energy have criticized ESG initiatives for reducing corporate profits. However, the legal threat has made U.S. listed companies more cautious about their new power. As You Sow, a shareholder activist group, has filed 47 proxy proposals this year. Companies have blocked up to half of them using their new power. This is roughly the same as last year when companies only blocked 8 out of 63 resolutions. "Companies must decide whether they want to maintain a good relationship between themselves and their shareholders or if they want to pay millions to corporate lawyers." Andy Behar, CEO of As You Sow. A SEC spokesperson declined to comment. In November, a person who was familiar with agency thinking stated that the change was primarily motivated by the desire to save time for staff. LAWSUITS CHANGE TACK: CHANGING TACK Pepsi informed the SEC on January 5 that it would not be submitting a proposal to review animal welfare practices in its supply chain. For example, whether bulls are being forced at Indian sugar factories to pull sugarcane carts with excessive weight. Pepsi claimed that the applicant failed to provide details about their availability to discuss this proposal in the manner required. The plaintiff sued the company on February 19, stating that she had offered to have a meeting with them. The following day, Pepsi announced that it would include this resolution in its proxy. Asher Smith, an attorney representing the People?for Ethical Treat of Animals Foundation and the filer, said: "It's us who brought the lawsuit. We forced Pepsi into following the proper procedure." Pepsi did not respond to any questions. New York City pension funds sued AT&T on February 17, after the company refused shareholders the opportunity to vote on a proposal that sought details about its workforce demographics. Mark Levine, the New York Comptroller who oversees the pension funds of the city, announced a week later that AT&T had agreed to settle by allowing shareholders to vote. He called it a "major victory" for investors in the face of corporate efforts to undermine transparency and accountability. AT&T declined to comment on requests. Axon, the maker of stun guns, plans to avoid a vote that would require a report about its political contributions. The company says it will "micromanage" their business. Nathan Cummings Foundation sued the company at the U.S. District Court for the District of Columbia in order to force a vote. This suit is still pending. Laura Campos is a senior director of the?foundation. She said that shareholders needed to sue to protect their rights to submit resolutions. She said that when the Securities and Exchange Commission stopped providing substantive answers to no-action requests it left shareholders with limited options to protect their rights. Axon didn't answer any questions. Other companies have chosen a different path. On November 7, Starbucks asked that a conservative think tank, National Center for Public Policy Research, skip a resolution filed on the topic of transsexual health care coverage. Starbucks claimed that the issue was "ordinary business" and therefore a vote could be skipped. Starbucks could have ignored the resolution after the SEC made its change, but chose to schedule the vote for their annual meeting on March 25, instead. The company declined to comment.
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Mideast crude benchmarks reach a three-year high due to military conflict that disrupts supply
On 'Monday, spot premiums for Middle East crude benchmarks Dubai, Murban and Oman rose to three-year-highs as a military conflict disrupted shipping across the world's largest oil-exporting area. U.S. and Israel strikes on Saturday killed Iranian Supreme leader Ayatollah Khamenei, causing retaliatory actions by Iran. This has increased the risks for commercial shipping in the last 24 hours. Shipping data revealed that at least 150 vessels including oil tankers and LNG tanks had anchored in the Strait of Hormuz (and its surrounding waters) on Sunday. On Monday, the disruptions caused a 9% increase in global oil prices. Data from trade sources showed that Cash Dubai's premium reached $5.91 per barrel on Monday. This is the highest since September 2022. The spot premiums for Oman futures and Murban swaps to Dubai also rose to three-year highs, at $5.51 per barrel and $6.52. Ships carrying diesel, jet-fuel, gasoline, and other products, as well as oil equivalent to one-fifth the global demand, from Saudi Arabia and the United Arab Emirates sail through the Strait. Sources said that the prompt monthly price spread in Dubai, a Middle East benchmark, widened to $3.25 per barrel on Monday from 52 cents the previous day. They also noted that the April-May spread jumped from 52 cents to $1.43 per barrel. Backwardation is a market structure in which prices for immediate months are higher than future months' prices, indicating a shortage. Saudi Aramco shut down its 550,000 barrels-per-day Ras Tanura Refinery on Monday as a precautionary move following a drone strike.
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Uganda's Central Bank to Start its Gold Buying Programme This Month
Uganda's central?bank will begin its domestic gold purchase?programme in this month, the?bank said on Monday. It joins other?policymakers?around the globe who are building up their gold stock after the surge in gold's price. Two years ago, the East African nation announced that the plan would boost reserves and cushion its economy from international financial market risks. Adam Mugume is the executive director of research and economics at?the?bank. He said that if all goes according to plan, we will be able?to purchase at least 100kg of gold between March and June 2026. We are working with gold refineries to finalise the contract to perform fire assaying, and to refine gold to the purity levels needed. GOLD IN DEMAND Spot gold jumped by more than 2% to $5,395.99 per ounce on Monday, amid concerns over the impact of U.S. and Israeli strikes on Iran. Mugume didn't say how the price movement would affect the plan. This year, the price of gold has reached record levels amid increased global political and economic uncertainty. The central banks of?Kenya, and the Democratic Republic of Congo also announced plans to diversify their reserve by purchasing gold. Uganda exported $5.8 Billion worth of 'gold last year. This is a 76% rise from 2024. However, small-scale wildcat miner?still dominates domestic production. Last year, the country opened its first large-scale mine. The Chinese-owned mine is expected to process about 5,000 metric tons of gold ore each day, and produce a little over 1.2 tons of refined metal per year. Mugume stated that the central bank would purchase from small-scale miners, medium-sized producers and large-scale producers. In 2017, Uganda established its first gold refinery, the?Africa Gold Refinery. Since then, several other facilities have been set up to process both local production and gold shipments from the neighbouring Democratic Republic of Congo. Reporting by Elias Biryabarema. (Editing by Duncan Miriri, Mark Potter and Mark Potter).
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Sri Lankan motorists queue up to fill-up in the wake of Iran's turmoil
Fuel stations in Sri Lanka were crowded on Monday, as fears of oil shortages grew due to the conflict in Iran. The island nation is still recovering from its deep financial crisis. A nation of 22 million people is struggling to recover from a crisis caused by a record dollar shortfall in 2022. The IMF has provided a $2.9 billion credit programme. Sri Lanka was at the height of their problems when they faced a massive shortage of fuel for several months. This led to huge protests, and eventually the ousting of the former president Gotabaya Rajapaksa. As U.S.-Israeli?strikes against Iran raised fears of another fuel crisis, islanders lined up in front of fuel stations on Monday. Many people panic bought despite assurances by the authorities that Sri Lanka had enough diesel and petrol stocks to last 35 days and 37 days respectively, the full amount the country normally stores. "There is fuel." The war has caused panic among the people, and they have created these long lines. People are rushing to fill up, but there's enough fuel in Sri Lanka", said Mohammed Aslem a 36-year old three-wheeler operator standing in Colombo's fuel queue. Sri Lanka imported fuel worth $3.83 billion last year according to data from the government. The majority of shipments came from India and Singapore. S. Rajakaruna told reporters that Sri Lanka did not have the storage capacity to store fuel beyond the next few weeks. However, there were enough confirmed shipments until the end of the month. Rajakaruna said that the CPC also increased distribution by releasing over 5 million litres despite Monday's public holiday. The police have 'ordered that stations stop dispense?fuel in cans and warned of legal action against hoarders. The public was reassured by Lanka IOC PLC and Sinopec, both of which operate fuel stations. (Reporting and editing by Uditha Jasinghe)
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Emails show that EU policymakers do not expect immediate impact on oil security from the conflict in Iran.
In an email received by on Monday, the European Commission said that it did not expect the conflict to escalate in the Middle East to have any immediate impact on the security of the oil supply in the European Union. The price of oil rose by 9% Monday, after retaliatory Iranian strikes disrupted shipping in the Strait of Hormuz following the initial bombings by Israel and the United States which killed Iranian Supreme Leader Ali Khamenei. In an email to EU governments, the Commission said: "At this time, we don't foresee any immediate impact of?oil security of supply (SOS)". In an email, the Commission asked EU countries to provide their own assessment of the security of oil supply today. The email stated that Brussels was also considering holding a virtual meeting for the EU's Oil Coordination Group later this week. This group helps to coordinate?between the governments of EU member states in case there are?oil?supply?problems. Analysts are expecting oil prices to stay high in the next few days, as they assess the impact of the Middle East conflict, particularly on the Strait of Hormuz which is a conduit for?more than 20% of the global 'oil. A spokesperson for the Commission did not respond immediately to a comment request. (Reporting and editing by Bart Meijer, Barbara Lewis and Kate Abnett)
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The Asia market for high-sulfur fuel oil is growing as tensions in the Middle East threaten to reduce exports
As tensions between the U.S. and Iran disrupted traffic in the Strait of Hormuz, fears of tightening exports grew. The Middle East is one of the largest exporters of fuel oil into Asia. Most barrels end up in bunker hubs, where they are sold to ships to refuel them, or to refineries to use as feedstock for other oil products. Cracks in HSFO received a 'boost' as traders waited for clarity from Middle Eastern exporters such as?the United Arab Emirates?, Iraq?, Kuwait? and Saudi Arabia?. Expectations of a tighter sour crude oil market also lent a boost. Singapore's 380cst HSFO/Dubai Crack for April slid into premium territory Monday, reaching a?session-high of 27 cents a barrel, according to LSEG data. HSFO cracks are usually discounted to Brent. The HSFO crack was at 68 cents per barrel by the close of Asia (0830 GMT), an increase of more than 80% compared to last Friday. The 380-cst Brent/HSFO crack, which was the most actively traded, closed at a discount around $2 per barrel, an increase of?more than 60 percent from the previous session. Xavier Tang is a senior analyst at Vortexa. He said that dirty product exports within the Straits of Hormuz from the Middle East Gulf will account for 9% of the global seaborne dirty products flows by 2025. Tang said that the Middle Eastern barrels are high in HSFO yields, and any disruption of crude flows would have a large impact on prices. Aramco, the Saudi Arabian state oil company, shut down its Ras Tanura refining plant after it was struck by a drone on Monday, according to a source in the industry. (Reporting and editing by Himani Sarkar, Diti Pujara and Jeslyn?Lerh)
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Court rules that ex-Yukos investors in the UK can enforce arbitration awards against Russia worth $65 billion
The London High Court ruled that former Yukos investors can enforce arbitration awards against Russia now worth more than $65 billion for the?seizure?of the defunct oil company. Three former Yukos shareholder companies - Hulley Enterprises (formerly Yukos Universal), Veteran Petroleum and Yukos Universal - have been battling to enforce the 2014 award for over a decade, with limited success. They've recovered?only 1.6 million euro ($1.89million) so far. The arbitration tribunal at The Hague awarded the companies just over $50 billion in 2014. The arbitral tribunal found that Russia had carried out "a devious and calculated expropriation of Yukos" after its former owner Mikhail Khodorkovsky's imprisonment. Since then, they have tried to enforce the award in Britain, America and the Netherlands, where the Dutch Supreme Court rejected Russia's appeal last year to reverse the award. In the London leg, Russia has argued that it didn't agree to submit itself to the?jurisdiction?of the arbitration. This argument was rejected both in November 2023, and again on appeal in February last year. After a hearing in January, the High Court decided that the arbitral award would be recognized?and the investors could?seek enforcement?in England. The Russian Embassy in London didn't immediately respond to our request for comment. (Reporting and editing by Sarah Young; Sam Tobin)
China's oil refiners are protected from the conflict between Iran and Russia by having a large supply of Iranian and Russian oil.
Oil refiners will be able to weather the near-term disruption of the Iran conflict thanks to record shipments from Iran and Russia and aggressive government stockpiling.
China is the world's largest oil importer. Its independent refiners - known as teapots - are the primary market for Iranian crude oil, which trades at a steep discount due to U.S. Sanctions that have scared away most buyers.
Chinese traders were largely on the sidelines on Monday, trying to digest the effects of the U.S. and Israel attack on Iran. They also wanted to understand the Iranian retaliation strikes in the Gulf, as well as the expansion of the conflict into Lebanon. Oil prices rose 9% on Sunday
A senior trader at a large independent refiner said, "The market is volatile and could change every day."
The second trader at a Shandong-based oil processing plant said that he couldn't "bid" because he didn't know how the situation would evolve.
NARROWER DISCOUNTS FOR IRANIAN "CRUDE"
The trader added that there was no need to worry about the supply of oil for the months of March and April, as the Russian barrels were plentiful, as were the record volumes Iranian oil.
Since the third quarter of last year, his plant has also diversified into increasing supplies from Russia, and Brazil, because Iranian oil -?once the highest grade - has?lost a little of its price edge.
Despite the lack of clear indications on pricing, some traders believe that discounts for Iranian crude will narrow due to expectations of tighter supplies. One trader cited a price of ICE Brent minus 9 dollars a barrel delivered, down from minus 11 dollars last week.
Market speculation also suggests that Washington could remove Iranian supplies from its sanctions list in the future if Washington takes control of Iranian oil imports as a result of the military campaign.
According to Kpler, China's total seaborne oil imports for the year so far is 11.5% from Iran, and 10.5% from Russia.
Kpler estimated that the Iranian oil shipped in February was 2.15 million barrels a day, which is?the highest since July 2018'. Vortexa put it at 2,000,000 bpd. Iranian exporters allegedly rushed to ship oil ahead of a potential conflict.
China's Russian imports will rise for the third consecutive month, reaching a record level in February as India reduced purchases. Early deals for April arriving shipments of Russian ESPO blended oil remained at a deep discount, with ICE Brent minus 8-$9 per barrel.
Emma Li, Vortexa China Analyst, stated that the abundance of Russian and Iranian shipments means teapots will not be turning to the mainstream in the near future.
According to Vortexa, and traders, China's stockpiles have amounted to 900 million barrels of oil under state control, which is 78 days worth of imports.
If the Iranian oil discount is no longer available, independent Chinese refiners will likely return to their previous buying habits.
Traders said that they preferred cargoes of Russian oil, but also those from Brazil, Canada, and Chinese offshore production.
(source: Reuters)