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Barclays predicts Brent oil could reach $120/bbl in the Middle East if tensions continue
Barclays stated on Friday that Brent crude oil could test $120 per barrel if Middle East conflict continues for another couple of weeks. Barclays said that "these?numbers? might seem 'too 'high, especially in light of widespread pessimism regarding the oil market outlook for this year. But we reiterate that fundamentals and risks are greater than when we witnessed these levels materialize, during the Russia-Ukraine Conflict." The price of oil has risen sharply due to the U.S. and Israel's increasing conflict with Iran, which has effectively shut the Strait of Hormuz. This has impacted Middle East supply. After Iran threatened to fire on passing vessels, shipping through the Strait of Hormuz was disrupted. This is because it carries about one fifth of all oil, oil, and liquefied gas in the world. Brent crude futures was trading at around $93,60 per barrel, and West Texas Intermediate was at $91.62 per barrel as of 1857 GMT. Barclays reported that oil stranded in tankers on the Middle East Gulf has increased by 85 million barrels, since the conflict began. They also said that the risks for oil prices are still skewed upward. Donald Trump, the U.S. president, demanded Iran's unconditional surrender?on Friday. This was a dramatic increase in his demands, just a week after he began the war with Israel. It could make it harder to negotiate an?assailable end to hostilities. Barclays stated that "Production shutdowns are already occurring in Kuwait and Iraq and could spread to the UAE and Saudi Arabia over time." Barclays stated that the 'far-end 10% scenario is now' implies Brent could reach $150 per barrel by the end of this month.
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South Africa's Central Bank will redraft an adverse risk scenario at the next rate setting meeting
The South African central bank's governor said that the rising oil prices are forcing the central bank to re-evaluate its risk scenarios. The central bank will decide on interest rates on March 26, after keeping the main lending rate at 6.75%, in a split decision in late January. Policy makers at that time cited they wanted to see inflation expectations drop further. Kganyago said that "we had a baseline" (in the meeting in January) and that we had both an optimistic and an adverse scenario. The latter assumed the average oil price per barrel for the year would be $75 and the rand's weakness to 18.50 dollars. He said, "The previous negative scenario is gone. It was in the past. We will create a new one." The rand has weakened to 16.82 cents per dollar this week despite the Middle East Crisis triggered by Israel's bombing Iran and Washington's bombing Iran. Kganyago stated that a 10% change in the exchange rate will have a greater impact on inflation in South Africa than an equivalent jump in oil prices. Kganyago stated that although it was a negative scenario, it did not play out as badly as anticipated. He added that policymakers would only become concerned when they saw the effect of the exchange rate on prices. "As a policy maker, you have to decide if this is transitory or persistent. You only react to the persistent and not the transitory, which is not easy to do. (Reporting and editing by Rodrigo Campos; Karin Strohecker)
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White House: US on the right track to controlling Iran's airspace
White House Press Secretary?KarolineLeavitt stated on Friday that the 'United States was well on its way to achieving control of Iranian airspace. Washington expects to achieve 'the achievable U.S. goals in four to six week. Leavitt told reporters in the White House that Washington is looking into potential candidates for the role of Iran's next leader. This comes a day after President Donald Trump said in an interview the United States must be involved in the selection process. Leavitt stated, "I'm aware that the United States Government and our intelligence agencies are looking at a number of individuals. But I won't go any further into?that." In his 'interview with Trump on Thursday, he said he thought the next leader of Iran was unlikely to be Ayatollah Khamenei, the son of the late Supreme Leader Ayatollah, who is considered the frontrunner for the position of successor to his father who died in a military attack at the beginning of the war. Trump had said earlier on Friday that there would be no Iran deal unless Iran "unconditionally surrendered." "What the President means is that, when he, in his capacity as Commander in Chief of US Armed Forces determines that Iran no longer represents a threat to the United States of America and the Operation Epic Fury goals have 'been fully achieved, then Iran will essentially be at a place of unconditional surrender whether they say it or not," Leavitt stated.
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SEC fines NYSE $9 million for glitch disrupting stock market
New York Stock Exchange agreed to pay $9 million to settle U.S. Securities & 'Exchange Commission charges?over a computer glitch that disrupted the opening of the stock exchange in January 2023 and caused wild swings in prices for blue-chip stocks. The settlement reached on Friday stems from an incident that occurred in 2023 when the NYSE accidentally ran its primary and backup trading system Pillar Production, and Pillar DR (short for disaster recovery) at the same time. The SEC stated that the error caused the primary system to treat opening auctions of 2,824 of NYSE's 3,421?"listed securities" at the time, as if they had already occurred. The glitch led to the halting of trading for 84 stocks. This included 81 stocks whose prices dropped more than 10% with no apparent explanation. More than 4,000 trades were undone or "busted". ExxonMobil was affected, as were McDonald's, 3M and Verizon. According to SEC, it took the NYSE 39 minutes to realize that the 'opening auctions' were a mess and 83 to understand the'scope of damage. The lack of policies and procedures in place to support the "auctions" was allegedly the cause. The NYSE compensated member companies for trading losses in excess of $5.77million. Intercontinental Exchange, based in Atlanta, said that it has improved its procedures and systems. It also stated that the "NYSE opening -and-closing auctions remain to be most reliable liquidity events for NYSE listed symbols." (Reporting from Jonathan Stempel, New York; editing by Hugh Lawson.)
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South32 reports that the U.S. Forest Service has approved a draft for Hermosa Mine expansion
South32, an Australian mining company, said that the U.S. Forest Service had issued a draft decision allowing its Hermosa Mine?project to expand from private land into federal land. South32 reported that the agency had released a draft Record of Decision as well as a final Environmental impact Statement for the project located in the Patagonia Mountains. Hermosa is a deposit of silver, manganese and zinc. The authorization, if approved, would allow South32, Inc. to build infrastructure on land within the Coronado National Forest. This includes a primary access road and a secondary tailings dry-stack facility. South32 stated that Hermosa was the only advanced mine development project capable of producing zinc and manganese, both federally classified as critical minerals. The project also falls under the federal?FAST-41/permitting program which streamlines review for projects deemed to be of national interest. The Forest Service will then issue a final decision after a 45 day 'objection period.' A final Record of decision is expected to be issued in July. South32 stated that it was 'committed to almost 140 additional conservation, mitigation, and monitoring measures developed in collaboration with federal agencies, tribes, and community stakeholders. (Reporting by Dharna Bafna in Bengaluru; Editing by Tasim Zahid)
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EU wheat and crude oil rally as investors are rattled by the Mideast war
Euronext Wheat Futures rose to their highest level since August, Friday, as traders said they were boosted by a surge in oil prices, and investors worried about disruption caused by the Middle East conflict. By 1711 GMT, May milling grain on 'Euronext' was up 2.7% at 207.50 Euros ($240.66 per metric ton). The contract reached its highest level since August 15, at 208.7 Euros, exceeding a previous peak of six months from Tuesday. Brent crude oil reached $90 per barrel for the very first time since April 20,24, which boosted grain markets. Qatar's Energy Minister, who stated that if the war continued, he expected all Gulf energy producers would shut down their exports in a matter of weeks, and oil prices could reach $150. This further unnerved investors. Wheat is sensitive to crude oil partly because of the commodity positions taken by investment funds, and also because corn and other grains are used to make biofuel. A futures dealer commented on the rise of wheat: "You have flows from commodity funds, and also an indirect link to corn." Traders said that the run-up to this weekend encouraged participants to cover their shorts, just as they did last Friday, when there was a growing expectation of a U.S. - Iran war. On the physical wheat market, traders reported that buyers were mostly calm despite the abundance of global supply. Tunisia bought 25,000 tonnes less wheat today than it had requested. The traders saw this as a war-related short covering. Another trader reported that an Egyptian buyer was looking for 30,000 tons of Black Sea 11,5% protein wheat, at a cost of $253 per ton and freight included. The closure of the Strait of Hormuz has caused logistical problems for grain importers from Arab Gulf countries. Some traders were looking for alternative ports to unload their shipments, such as the UAE's eastern coast or Oman. Meanwhile, wheat shipments from Saudi Arabia were transferred to ports on the Red Sea. Some blocked shipments that are?waiting outside of the Hormuz Strait?are being?offered to resale. The second trader stated that the majority of this corn is for Iran, although some wheat may also be looking for new buyers.
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Saudi Arabia declares its strong fiscal position as Iran tensions spread
Saudi Arabia's Finance Ministry said 'on Friday that the kingdom's fiscal situation was strong, and it had multiple export 'routes' including the 'Red Sea'. This is a week after the U.S. - Israeli war against Iran has caused turmoil in the area. The spokesperson for the Saudi Arabian finance ministry said that "economic activity continues to run normally" in a statement referring to "recent events", but not directly mentioning the conflict. The statement continued, "We continue to evaluate economic and fiscal indicators on a regular basis. Current data confirms that our fiscal 'position and medium-term prospects remain solid." Iran has launched attacks across the region in response to the U.S., Israeli and other countries' attacks. Saudi Arabia has suffered fewer strikes than the rest of the Gulf states. The price of oil has risen by 20% since Friday. Attacks have also slashed hydrocarbon exports through the Strait of Hormuz, as well as halted production at Saudi Aramco’s largest domestic refinery. The statement read: "Energy prices are currently rising as a result of recent developments in the energy markets." "Our energy exporting infrastructure remains resilient and the Kingdom has the flexibility to use multiple export routes including through Red Sea." The top oil exporter in the world registered a deficit of 276 billion Riyals ($73.54 Billion) for the fiscal year 2025, much higher than the initial estimate of 245 Billion. The oil revenue in 2025 was down by 20% from the previous years to 590 billion Riyals.
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Schnabel warns that the Iran war could threaten the ECB’s 'good position'
Isabel Schnabel, ECB 'board member, said on Friday that the policy of the European Central Bank is in a 'good place, but geopolitical instability creates inflation risks, which require vigilance by banks. Financial investors increased their bets on an ECB rate hike in 2026. A spike in energy prices caused by war is likely to quickly feed through to consumer costs, raising inflation above the ECB’s 2% target. The ECB's tolerance of excessive inflation is lowered by its experience in 2022 with the runaway price increases. Schnabel, in an address in New York, said that monetary policy was in a positive place. "Inflation is projected to be within our target range over the medium-term?and inflation expectations are anchored. She said: "We must be vigilant, as the current macroeconomic and geopolitical environment creates upside inflation risks over the relevant policy horizon." The recent spike in energy prices following tensions in Iran has made the inflation trajectory more uncertain. She added that the ECB must closely monitor the persistency of the energy shock, its 'impact on inflation expectations, and any indications that firms are passing on higher costs to their customers. The ECB's meeting on?March 19 will evaluate?the Iran War's impact on economy. However, most policymakers dismiss the notion that policy actions could be taken as early as this month. Schnabel argued the volatility of prices is "limited" to the ECB as long as the rises above the target are small and temporary, with expectations anchored at 2%. The ECB should "tread lightly" when the underlying wage and price dynamics are not in sync with their target. The inflation rate began to rise during the reopening of the country after the pandemic in 2021. However, central banks all over the world dismissed it as "transitory". They were wrong. By late 2022, the price increase had risen into double digits. The ECB, one of the 'last major central banks to react', raised rates at a record rate from July 2022. It was, however, the first to bring down inflation, which had been "at target" for the majority of the last year. Schnabel also downplayed arguments that rising imports from China, as part of changing trade patterns in a world of U.S. Tariffs, would drive prices down and create a drag on the inflation. She said that the ECB's staff analysis found that the impact of the trade diversion to China on the euro zone was statistically insignificant and modest. Schnabel added that prices could be pushed upwards by a historically tight labor market. This tightness is expected to increase due to a rapid ageing population, a moderated immigration, and a rise in skill mismatches. (Reporting and editing by Hugh Lawson; Balazs Coranyi)
Fed's Waller says current oil prices shock will not have a persistent impact on inflation. BBG TV
The U.S. Federal Reserve's Christopher Waller stated on Friday that while the price of gas may have risen after the U.S. launched airstrikes in Iran, the increase in global oil prices is unlikely to cause a 'persistent rise in inflation, or to warrant a monetary policy change.
You'll see an increase in gas prices. "Americans will be shocked when they see the price of gasoline at the pump," Waller said on Bloomberg Television. "If the coil is unwound within a few weeks, or even two months then it won't be a major factor in the future."
Oil prices have risen to almost $90 per barrel, compared to $72 just before President Donald Trump launched an air attack on Iran in order to replace its hardline islamist government. Gas prices in the United States have increased by around 10%, from under $3 per gallon to $3.32.
Gas prices are expected to be short-lived. This is in contrast to the successive oil disruptions that occurred during the 1970s, which never allowed for prices recover.
"This is...more of a one-off,"?Waller stated about the current rise in crude oil prices. Oil prices and other commodities - like food - fluctuate, which is why the Fed looks at "core" inflation, which excludes these volatile items, to try to reach the 2% target.
Trump has not given a timeline for the conflict. Shipping through the Strait of Hormuz, which is critical to the flow of oil and gas across the world's oceans, has almost stopped. Some regional officials warn of future price increases depending on how long the conflict continues or the success of Iranian counterattacks.
The markets have become more sceptical about further Fed rate cuts.
Waller said that the Fed's outlook would be at risk if the oil price shock "became more permanent...then it will start leaking through to other areas of the economy."
(source: Reuters)