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US gasoline prices exceed $3.50 per gallon as the Iran war continues
Gasoline prices in the United States have risen to their highest level since May 2024. This is according to data from AAA and GasBuddy, two price tracking services. The 'Israel-U.S. War with Iran' has stoked supply concerns. Fuel prices have risen across the world due to disruptions in Middle Eastern oil exports via the Strait of Hormuz. This could pinch the wallets of consumers and derail the global economy. This could be the greatest risk to U.S. president Donald Trump and the Republican Party during the November midterm elections. Trump's vow to lower energy prices was a key factor in his re-election bid in 2024. The impact of geopolitical shockwaves on your finances doesn't take many months. "They take days," said Bill?Stern. Chief executive officer of U.S. based small business lending Cardiff. You feel it the moment you fill your car up to take your kids to practice. The average U.S. retail gasoline price has risen nearly?60 since Trump made his decision on February 28 to?join Israel and attack Iran. It stood at $3.58 per gallon on March 5. This rapid increase of 20% in just 11 days is comparable to the spike in prices four years ago, after Russia invaded Ukraine. It's an unprecedented rise. More increases will likely follow as more ships are hit in the Strait of Hormuz and the United States transitions to summer-grade gas, which is cleaner to burn but more expensive to produce. Denton Cinquegrana is the chief oil analyst for Oil Price Information Service. He said that spot and wholesale gasoline prices registered double-digit gains on Wednesday. The next day, wholesale price changes are usually reflected on the pump. The price of crude oil, the largest component in fuel prices, was also rising on Wednesday, despite the proposal from the Paris-based International?Agency for Energy to release 400?million barrels worth of oil. Cinquegrana stated that the IEA announcement on the release of oil raised more questions than it answered, as the group didn't announce who would release the oil or when.
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Oil pushes up, stocks fall and Treasury yields rise
Wall Street shares dropped but the dollar held steady on Wednesday after data showed U.S. Inflation picked up as predicted in February. However, most investors focused on the 'oil price' and the possibility that the U.S. - Israel war against?Iran could impact economic growth on a long-term basis. The Labor Department reported that the consumer price index increased 0.3% in the month of February, which was in line with expectations and higher than the 0.2% rise in January. CPI increased 2.4% over the past year, matching expectations. The core rate, which excludes energy and food prices, also rose 2.5% in line with predictions. Wall Street saw the Dow Jones Industrial Average fall about 0.6% and the S&P 500 drop 0.1%. The Nasdaq Composite remained unchanged. The consumer price index does not reflect the dramatic increase in prices of items like?gasoline that has occurred since the Middle East war began 12 days ago. The markets already indicate that traders are increasingly confident about the likelihood of central banks increasing interest rates in the near future. "February's numbers for inflation were going in the right directions, but the Middle East conflict has changed the course of the trend. We will see inflation instead of deflation as a result of?energy. As the fertiliser market is chaotic, food prices could be showing signs of inflation. The oil market had another volatile session, but the price movements were muted in comparison to Monday's record-breaking price swings. Three sources told us on Wednesday that the International Energy Agency would recommend releasing 400 million barrels, the most in IEA 'history', in order to curb soaring oil prices. Japan and Germany have announced that they will begin releasing reserves. Brent crude futures rose by around 4% to $91 per barrel after rising earlier by up to 6%, reaching almost $93. MSCI All-World fell by 0.2%, European shares declined and the STOXX 600 was down 0.6%. MSCI's broadest Asia-Pacific index outside Japan closed 1% higher. Investors are on edge, as the Middle East conflict could freeze global energy trading and cause a price spike. World leaders are scrambling for solutions to this risk. Since the U.S. and Israeli war against Iran, the Strait of Hormuz has been a dangerous place for ships to enter. Iran's military said that on Wednesday, the world must be "prepared" for oil prices to reach $200 per barrel. Christine Lagarde, President of the European Central Bank (ECB), said that on Tuesday it would do all to control inflation?to prevent a repeat?of?the energy price shock in 2022. Several ECB officials prefer to wait and see before taking any action. The euro dropped around 0.3%, to $1.157. Meanwhile, the pound remained unchanged at $1.341. The yen continued to weaken, leaving the dollar at 158.9 up 0.5%. The BOND YIELD SURGE Adds to Overheating Concerns Due to the fear of continued energy price pressures, bond yields have risen this week. This has added to worries about other market segments that are at risk of being overheated, including private credit and vast investments in AI. Investors also were reminded about the vulnerabilities in private credit when a source close to JPMorgan Chase revealed on Wednesday that the bank was reducing the value of certain loans held by private credit groups and tightening lending to the sector. Blue Owl Capital, Ares Management and other publicly-traded asset management firms lost ground Wednesday due to the jitters felt in the financial sector. U.S. Treasuries dropped again on Wednesday. The yield on the benchmark 10 year note increased by 8.2 basis points, to 4.218%. Reporting by Lawrence Delevingne, Boston; and Amanda Cooper, London. Rae Wee contributed additional reporting from Singapore. Pooja Dasai, Bernadette, Baum, William Maclean and Nick Zieminski edited the story.
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US gasoline prices exceed $3.50 per gallon as the Iran war continues
Data from AAA and GasBuddy, two price tracking services, showed that the national average retail price for gasoline surpassed $3.50 per gallon last week, its highest level?since May 20, 2024. The Israel-U.S. war with Iran is causing supply concerns. Fuel prices have risen across the world due to disruptions in Middle Eastern oil exports via the Strait of Hormuz. This could pinch the wallets of consumers and derail the global economy. This could be the greatest risk to U.S. president Donald Trump and his Republican Party during the Midterm Elections in November. Geopolitical shockwaves do not take months to affect your wallet. William Stern, the chief executive of small business lender Cardiff in the U.S., said that it only takes days. You feel it the moment you fill your car up to drive the kids to practice. The average U.S. retail gasoline price has risen by nearly 60 cents in the past two weeks since Trump decided to attack Iran with Israel on February 28, and was $3.58 per gallon on March 1. More increases are expected in the coming days as more ships were struck in the 'Strait of Hormuz' on Wednesday, and the United States transitions to summer-grade gas sales which burn cleaner but cost more to produce. Denton Cinquegrana said that spot and wholesale gasoline prices had double-digit growth on Wednesday. The wholesale price change is usually reflected on the pump the next day. The price of crude oil, which is the largest component in fuel prices, was also rising on Wednesday, despite the proposal from the Paris-based International Energy Agency (IEA) to release "a record 400,000,000 barrels" of?oil. Cinquegrana stated that the IEA announcement?on oil release raised more questions than it answered, as the group didn't announce who would release what amount of oil and when. (Reporting and editing by Nick Zieminski in New York. Reporting by Shariq Khan, New York)
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Aluminum rallies focus on disruptions in supply due to Middle East conflict
After a brief drop in prices triggered by comments made by the U.S. Donald Trump's comments on the?Iran war. Benchmark aluminum?on the London Metal Exchange?was up 1.1% at $3,444 per metric ton as of 1704 GMT. It reached $3,544 per ton earlier this week, its highest level since April 2022. Trump predicted on Monday that the conflict would be over well before his four-week timeline. Due to the closing of the Strait of Hormuz, the war has effectively "frozen" shipments and threatened global supplies of aluminum used for transport, construction and packing. Around seven million metric tonnes of?aluminium smelting is located in the Middle East, which represents 9% global capacity. Aluminium Bahrain, or Alba, one of the world's largest smelters declared force majeure last week to warn customers of delays in shipments. Meanwhile, Qatalum, a smelter in Qatar, began to shut down. Aluminium stocks in LME approved warehouses are a source of concern about supply. On Tuesday, the number of cancelled warrants and metal earmarked to be delivered was 177,325, which is 40%, up from 9% the previous day, before the Middle East turmoil began. Concerns about tight aluminum supplies have led to a premium for the cash contract on the LME. The global economy is under pressure due to concerns over the soaring price of oil and a stronger dollar. The dollar price of metals will become more expensive to holders of other currencies. This could reduce demand. Lead retreated by 0.3% to 1,937, while tin fell 1% to $49.950. Nickel gained 1.4% to 17725. In the last two weeks, nickel ore prices in Indonesia have increased significantly... The LME price floor is $17,000-18,000. This is based on the conversion costs for nickel pig-iron furnaces in order to produce LME grade metal, said Macquarie analyst Jim Lennon. We think that as the nickel market tightens amid increasing costs, NPI nickel and LME nickel have more upside. (Reporting and editing by Leroy Leo, Dita Pujara, and Pratima Dasai)
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Sources say that Mercuria will withdraw almost 100,000 tonnes of aluminum from the LME due to disruptions in Middle East supply.
According to three sources of information, Mercuria, a commodity trader, plans to remove 'large' volumes of aluminum from LME storage facilities, due to the closure of the Strait of Hormuz, which has frozen Middle East shipments, and put further pressure on supplies in Europe, and the United States. Around seven million metric tonnes of primary aluminum are produced in the Middle East each year, which is around 9%. Since last week, aluminium shipments have been halted due to the closure of the Strait of Hormuz as a result of U.S. and Israeli war against Iran. Swiss-based Mercuria?cancelled, or set aside for delivery, nearly 100,000 tons aluminium at LME-approved Port Klang warehouses. On Monday, sources familiar with the issue said. Mercuria declined comment. Aluminium Bahrain, Emirates Global Aluminium and Qatalum are among the Middle East's aluminium producers. Alba, one of the largest smelters in the world, declared force majeure last week, warning its customers about delays. Qatalum, meanwhile, began to shut down. Slow Process to Restart Production To avoid damaging aluminium pots, smelters must reduce production gradually. After pots have cooled down, restarting is a long process that keeps metal off the market. Sources said that Mercuria will need to use the aluminum stored in LME storage to meet its obligations to customers, particularly in Europe and the U.S. where aluminium is in short supply for transport, construction, and packaging. Since the start of the war, the physical market premium that aluminium consumers pay in the United States and Europe above the LME price has increased. It is currently around $3450 per ton. In Europe, the duty-paid aluminum premium, at $420 per ton, is at its highest level since September 2022 when consumers stopped purchasing Russian aluminium following?Russia's invasion of Ukraine. The Midwest premium in the United States is at record levels, with a price of $1.09 per lb, or $2,400 per ton. On 'Tuesday', the number of cancelled warrants (title documents conferring ownership) was 177,325, which is 40%, up from 9% in February, just before the Middle East turmoil began. Sources claim that Gunvor, a Swiss commodity trader, cancelled over 45,000 tonnes of aluminum in LME Port Klang warehouses last week. Gunvor declined comment. Gunvor declined to comment.
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Kast is sworn in to be the president of Chile in the biggest right-wing change in decades
On 'Wednesday', Jose Antonio Kast became the president of Chile, marking the sharpest rightward shift in years. Voters were alarmed by the rising level of insecurity and backed the broader conservative movement that has been sweeping Latin America. The regional presidents, including Argentina's Javier Milei and Ecuador's Daniel Noboa, Paraguay’s Santiago Pena and Spain's King Felipe traveled to Chile for the ceremony of the transfer of power in Valparaiso where Congress is located. Kast succeeds left-wing president Gabriel Boric to whom he lost 2021?election. At a time when Chileans worry about the rising crime rate and the economy. The shooting of a police officer in Puerto Varas, in southern Chile, earlier that day, which left him brain-dead, highlighted Kast's security concerns and led him to send Trinidad Steinert as his new minister for security to the city after the ceremony. "There will be a before and after." Kast said to reporters that whoever attacks a police officer attacks Chile when asked about the earlier shooting. We're going find them, try them and use the full force the law. Kast promised to crack down on crime and migration while boosting the economy through deregulation, cuts in spending and market-friendly policies. Chile is the largest copper producer in the world. Kast was elected at a time when the economy was booming, but now he takes over as the Iran War rattles global markets. The transitional period saw tensions rise between the new and old administrations over the increased pressures from the U.S. regarding a proposed Chinese underwater cable project. "(Kast will) have to manage a challenging international geopolitical environment," said Guillermo Holzmann a 'political analyst' from the University of Valparaiso. He noted economic risks from Iran war, U.S. security strategy in the area and China's impact in 'Latin America. "These decisions require sophisticated diplomacy as well as strategic long- and medium-term vision." Kast will have to deal with a divided Congress, which could hinder his agenda, which he has vowed?to achieve quickly. Nicholas Watson, Teneo's managing director, said that "a barrage" of initiatives are expected in the next three month. (Reporting and editing by Aidan Lewis; Cassandra Garrison, Alistair Bell and Aidan Lewis)
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Official: Gulf trio reviews sovereign investments to offset Iran War Impact
Gulf officials said that three Gulf states were reviewing the way they invest trillions of dollars from their sovereign wealth funds to offset the losses caused by the U.S. and Israeli war against Iran. The official who spoke on condition of anonymity because the matter was sensitive and without naming the states, explained that these reviews could include reversing investment pledges, divesting and re-evaluating global sponsorship deals. The top four economies of the Gulf Cooperation Council are Saudi Arabia, Qatar and Kuwait. Three of the four largest economies in the GCC will be assessing current and future investments and sponsorships to see if the situation lasts. The official said that "a review of their investment strategies for sovereign wealth funds has already begun." The official said that the talks were between representatives from the government and not the funds, and that the assessments were not coordinated. In only 12 days, this conflict has dealt a serious economic blow to some of the Gulf's biggest economies. It has crippled aviation, tourism, port and logistics networks while also cutting off key commercial arteries. Five Trillion Dollars in Wealth The UAE has said that it will stick to its investment plan. The UAE has adopted economic strategies which are forward-looking and enhance the UAE's ability to absorb geopolitical or economic pressures. In a press release. "In this respect, there are no changes to the investment plans or economic priorities for long-term." A Saudi source said that due to the current geopolitical environment, the Public Investment Fund of the Kingdom is expected to not revise its 'long-term investments plans. The Saudi Arabian finance ministry did not respond to a request for comment. Qatar's Finance Ministry has not responded to our request for a comment. Kuwait's Ministry of Economic Affairs and Investment was unable comment. Analysts say a fiscal shock could lead to a review of the way the $5 trillion in sovereign wealth funds in the region is used. But the official's remarks show that this process has already begun. The official stated that "once the war is over, we'll see the balance sheet and then figure out how best to cover losses." Analysts at JPMorgan cut their growth predictions for non-oil industries by 1.2 percentage point for GCC countries and 2.3 points for the UAE. This was the most drastic revision in the group. JPMorgan analysts warn that, while the hydrocarbon industry could recover depending on the length of the conflict in the coming year, there will be some lasting damage to the non-hydrocarbon activities and this could affect the diversification plans for the region. WIDE REACH and BIG COMMITMENT Gulf States have tried to diversify their economies but oil and Gas revenues still anchor the public finances which are very different in strength throughout the region. Kuwait's KIA, Qatar's QIA, the UAE's ADIA, Saudi Arabia's PIF and the UAE's Mubadala are among the largest sovereign funds in the world, with assets that have been built over decades of investment at home and abroad. Officials said that the reassessment includes global assets, not just U.S. assets. The United States is already one of most popular destinations for Gulf sovereign funds, with governments having pledged trillions in future investments since President Donald Trump's return to the White House. Gulf sovereign investors, beyond the U.S.?pledge are evaluating whether the conflict will slow down or change the shape of global sponsorship and investment deals. The size of the overseas pledges, sponsorships and funding is enormous. The?UAE, for instance, agreed to invest as much as $50 billion in Canada last year. Meanwhile, QIA, backed by Qatari Diar, signed a landmark coastal development worth $30 billion on an undeveloped stretch of Egypt's Mediterranean coast. Qatar Airways is sponsoring Formula 1 motorsports until 2027. Mubadala has been a major title sponsor of multiple?ATP tennis and WTA events. PIF became an official partner for this year's FIFA World Cup. SLOWING NEW COMMITMENTS Analysts predict that these positions will not be released immediately. However, they said the direction and pace of capital investments could change. The first reaction should not be to sell off global assets. "Before unwinding any overseas assets, they will evaluate the potential impact, and whether there is a value-add in redirecting this capital locally," said Jahangir Aka founder of London's Aka & Associates. Aka said, "For the time being, the 'Gulf Investments' global investments provide resilience as a diverter, and it is unlikely that you will see a?significant reduction in these assets, as they continue to produce income for governments at home." Aka explained that "you may instead see a slower pace in new commitments, and defer money to overseas countries until there is more clarity about any structural impact the current conflict." Reporting by Andrew Mills, Rachna uppal, Federico Maccioni, and Hadeel al Sayegh, in Doha; Additional reporting by Ahmed Hagagy. Writing by Federico Maccioni, Andrew Mills, and Andrew Mills. Editing by Mahal Dahan, ElisaMartinuzzi, Anousha Sakowi, and Alexander Smith.
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Sources say that Mercuria will withdraw almost 100,000 tonnes of aluminum from the LME due to disruptions in Middle East supply.
According to three sources, the commodity trader Mercuria intends to remove large volumes of aluminum from LME storage facilities, as the closure of the Strait of Hormuz has 'frozen' Middle East shipments, and put further pressure on supplies in Europe, and the United States. Around 9% of global primary aluminium is produced in the Middle East. Since last week, the U.S. and Israeli war on Iran has closed the Strait of Hormuz. Mercuria, a Swiss company, cancelled or designated for delivery on Monday nearly 100,000 tons?of aluminium in LME-approved Port Klang warehouses. The sources who are familiar with the issue said. Mercuria declined to comment. Aluminium Bahrain, Emirates Global Aluminium and Qatalum are among the Middle East's aluminium producers. Alba, the company that operates one of the largest smelters in the world, declared force majeure last week and warned customers about delays to shipments as Qatalum began to shut down. Slow Process to Restart Production To avoid damaging aluminium pots, smelters must reduce production gradually. After pots have cooled down, the process of restarting is slow, and metal will remain off the market for several months. The sources said that Mercuria will need to use the aluminum in LME storage to meet its obligations to customers across Europe and the U.S. where aluminium is in short supply for transport, construction, and packaging. Since the start of the war, the physical market premium that aluminium buyers in the United States or Europe pay -- around $3450 per ton - has risen. The duty-paid aluminum premium in Europe is around $420 per ton. This is the highest it has been since September 2022, when consumers stopped purchasing?Russian Aluminium after Russia invaded Ukraine. The Midwest premium in the United States is at record levels, with a price of around $1.09 per lb, or $2,400 per tonne. On Tuesday, the number of canceled?warrants - title documents that confer ownership - was 177,325. This is up from 9% in February, before the Middle East turmoil began. (Reporting and editing by Bernadette B. Baum; Additional reporting by Polina D. Devitt, Tom Daly)
US consumer inflation is stable before the Iran conflict increases oil prices
U.S. consumer price rose modestly in February, as rents continued to increase at a steady pace. However, households had to pay more for gas and groceries. And higher costs will be in store due to the escalating Middle East war.
The Labor Department's Consumer Price Index Report on Wednesday also showed that inflation was muted in the month prior to the U.S.-Israeli strikes against Iran. Tehran retaliated against the attacks that took place at the end of February and has subsequently pushed up oil prices.
AAA data showed that gasoline prices had risen by 20% since the start of the war, to $3.58 a gallon. Gasoline prices had been increasing in anticipation of hostilities in Middle East.
The Federal Reserve is expected to hold interest rates at the same level next week, according to economists.
Ellen Zentner is the chief economist at Morgan Stanley Wealth Management. She said that a steady inflation rate would be welcome on any day. But, with geopolitical unrest and soaring oil prices, this data may not have the same weight, either in the markets or among the Fed.
Bureau of Labor Statistics of the Labor Department reported that Consumer Price Index increased 0.3% in February after increasing 0.2% in January. CPI increased by 2.4% in the 12-month period ending February. This is the same as the increase of January, and reflects the removal of high readings from last year. The CPI increase was in line with expectations.
In order to achieve its inflation target of 2%, the U.S. Central Bank tracks Personal Consumption Spending price indexes.
After a similar increase in January, the rise in CPI was reflected in a 0.2% rise in owners' equivalent rental of primary residence. The primary rents rose by 0.1%. This is the lowest gain since January 20,21. Economists argued, however, that the October inflation data was not collected due to last year's shutdown of government, which caused rents to be distorted.
In normal times, this would not be a problem, said Gregory Daco, chief economics at EY-Parthenon. "These are not normal times. The data should be interpreted in light of the distortions caused by the government shutdown, the unprecedented volatility in trade policy, and the record swings in oil prices linked to the Middle East conflict."
Daco estimates that the 43-day record shutdown last year caused CPI inflation to understate by approximately 0.3-0.4 percent points. After two consecutive months of declining gasoline prices, the price increased by 0.8%. The price of oil soared to well over $100 per barrel in the first part of this week before falling back. On Wednesday, oil prices recovered as traders questioned whether the International Energy Agency proposal to release record amounts of reserves would be able to offset any potential supply shocks caused by the Iran War.
Economists expected gasoline prices to reach $4 per gallon in the near future. Electricity prices, though they eased monthly, jumped by 4.8% compared to a year earlier due to the strong demand for artificial intelligence from data centers. Last month, prices for household gas soared by 3.1%. Prices for gas piped to households rose 10.9% on an annual basis.
Last month, food prices increased by 0.4%. This was largely due to a 3.7% increase in the price of chewing gum and candy. Fruit and vegetable costs increased by 1.4% while non-alcoholic beverages went up 0.8%. Prices for dairy products and other related items dropped by 0.6%, while cereals and baked goods fell by 0.2%. Prices of food are 3.1% more expensive than they were a year earlier.
RISE IN FOOD AND GASOLINE PRICE IS IMPACTING CONSUMERS
The Trump administration highlighted the moderate increases in CPI as an indication of a cooling of overall inflation. A White House spokesperson posted on social media that "the nation will see even greater economic progress" once the disruptions caused by war are over.
The rising food and gasoline prices pose a risk to Trump's Republican Party as they prepare for the November midterm elections.
The Wall Street stock market was mixed. Dollar rose against a basket currency. The yields on U.S. Treasury bonds were higher. The CPI increased as well, despite the staggered, but continued pass-through of Trump's sweeping Tariffs. Trump imposed them under a law intended for national emergencies, that has since been ruled unconstitutional by the U.S. Supreme Court.
The Institute for Supply Management's surveys show that input costs have been steadily rising. Trump responded to the Supreme Court ruling by imposing an initial 10% global tariff. He said that this would increase to 15%.
The CPI rose 0.3% in January, but gained only 0.2% when the volatile energy and food components are excluded. Core CPI inflation was slowed by the third consecutive monthly decrease in motor vehicle prices as well as a smaller increase in rental rates.
The cost of furniture and household operations increased by 0.3%, while apparel prices rose 1.3%. This is due to the import duty pass-through.
Healthcare costs rose 0.5%. Hospital services increased by 0.6%, while prices for physician's services rose 0.3%. ?Prescription prices, however, fell 0.2%. Hotel and motel room prices rose by 1.1%. The cost of airline tickets increased by 1.4%, and it is possible that they will rise even more as jet fuel prices are likely to increase due to the war.
The core CPI rose 2.5% in the 12 months to February after increasing by the same margin of 2.5% in January. This also reflects favorable base effects. The tame core CPI readings are unlikely to translate into modest core PCE inflation gains for February, according to economists. This is because different weightings and unexpectedly strong service prices in January's Producer Price Index report may have contributed.
The delayed January?PCE data, due this Friday, is expected to show an increase in core inflation. The PCE data for February will be released on 9 April. The core PCE is expected to increase by 0.5% in January and 0.4% in February, according to economists.
James McCann is a senior economist at Edward Jones, who specializes in investment strategy. He said that another setback in inflation will likely make the central banks more cautious about further interest rate reductions. The Fed could still cut rates this year but the story is increasingly looking like it will be in late 2026 based on inflation expectations.
(source: Reuters)