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RPT-Russia delays changes to fiscal fund following Iran war energy prices surge
Increased oil revenue from the Iran War benefits Russia Discussions on budget cuts continue * Putin calls for a balanced decision on the use of windfall By Darya Korsunskaya and Elena Fabrichnaya MOSCOW, 23 March - The spike in oil prices triggered by the Iran War has allowed the Russian Government to delay a plan to increase long-term fiscal reserve, according to three sources familiar with the discussion. This will relieve the pressure on short-term financial resources. The Russian economy is one of few in the world to benefit from U.S. and Israeli war against Iran, even though it has been struggling with the costs of military action in Ukraine, international sanctions and other factors. Oil prices have increased to over $100 per barrel. They were around $70 before the start of the war at the end February. Gas prices are also up. According to calculations, based on the price of oil at $75 per barrel, Russian budget oil revenues will grow 70% from March to April, reaching 0.9 trillion Russian roubles. This is the highest level monthly since October 2025. The CUT-OFF Price Determines How Much Revenue Flows into Fund Russia had announced its intention to lower the "cut-off price" of oil before the war in Iran began. The Russian government also claimed that budget cuts were being discussed. The National Wealth Fund receives any revenue above the current cut-off of $59 to be used as a fiscal reserve. Sources who were not authorized to speak in public said that the government will now delay changing the price cut-off. Sources said it is more likely that the change will happen in 2027, since the budget law would need to be amended. CHANGES WERE EXPECTED VERY QUICKLY On February 25, just three days before war broke out, Finance Minister Anton Siluanov announced that changes allowing a lower price cut-off would be announced in two weeks. However, on Monday, President Vladimir Putin called for a balanced approach to the use of revenues from higher oil prices. Siluanov, after his meeting with Putin Monday, said that the government is considering measures to reduce the budget's vulnerability to oil price fluctuations on the medium-term. The Russian budget is based on an average annual oil price equal to the cutoff price. The reserve fund will cover the deficit if the average monthly price of oil is lower than this. If the average price of oil is higher than the cut-off, the surplus will be deposited in the reserve fund. Senior government officials told two other sources that the price cut will be the same and the need to reduce spending was also questioned. NEW SET OF MACRO-FORECASTS In April, the government will release a set of new macro-forecasts, which include an estimate of the average oil price for this year. This information will be used to guide?the budget. The reserve fund, which is now mainly yuan in currency, has a significant impact on the?Russian foreign exchange market. The government's decision in March to stop forex sales while it deliberated on the new cutoff price caused a 6% drop in the exchange rate of the rouble against the dollar. Elvira Nabibullina, the Governor of the Russian Central Bank, stated that it is too early to assess the impact of the higher oil prices on Russia's economy. Nabiullina, along with her first deputy Alexei Zabotkin, said that the budget rule is the best way for Russia to protect itself from external shocks. A person familiar with ongoing discussions stated that, even if Iran's crisis ends suddenly, many Russian policymakers still expect oil prices to remain high for a while. (Writing by Gleb Brynski; Editing by Barbara Lewis).
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Japanese stocks pare gains due to doubts about Trump's Iran remarks
Japanese shares suffered a loss on Tuesday as investors were not convinced that U.S. President Donald Trump's remarks about delaying the targeting of Iran's energy infrastructure would lead to a breakthrough in the 'Middle East conflict. The Nikkei closed at 52,252.28 up 1.4% after rising by as much as 2,3% in the previous session. The Topix, which is a broader index, rose 2.1% to 3,559.67. It had previously risen as high as 2.6%. Trump postponed his threat to bomb Iran’s power grid because of "productive talks" he had with unidentified Iranian officials. Iran denied it had been in talks with the U.S. and pushed oil prices higher. It also launched a number of missiles towards Israel. Tomoichiro Kubota is a senior analyst at Matsui Securities. He said, "Few seem to think that the remarks can help calm down the situation in the Strait of Hormuz. Many see them as nothing more than a temporary delaying tactic." When the market is rising, people are quick to profit. Since its close on February 27, before the outbreak of war, the Nikkei has fallen by about 11%. The Nikkei Index saw 209 advancing stocks on Tuesday, compared to 16 declining ones. Sumitomo Pharma, Japan's largest oil refiner, rose 7.4%. Eneos (Japan's largest oil refinery) and other energy-related stocks also gained, with Eneos rising 4.1%. Tokio Holdings closed?17.1% higher at its 'daily limit' of 6,857yen, after Berkshire Hathaway announced it would buy a 2.49% share in the Japanese insurer as part of an upcoming strategic partnership. Nintendo was the Nikkei index's largest percentage dropper, falling 4.8% after Bloomberg reported a?game maker would cut?Switch 2 production by more than 30% due to poor U.S. sales. Japan Steel Works lost 3.3% and Mitsubishi Heavy Industries fell 1.9%. Reporting by Satoshi Sugyama, Editing by Sherry J. Phillips, Mrigank. Dhaniwala, and Rashmi. Aich
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Semafor reports that US will continue Iran strike, but only on energy sites.
Semafor, citing an official from the United States, reported that the United States will 'continue their strikes' on Iran. The pause only applies to attacks against Tehran energy sites. This was during what President Donald Trump described as a "productive" meeting with unidentified Iranian officials. Trump had earlier on Monday postponed by five days a plan of hitting Iran's energy infrastructure and power plants. Later, Iran denied having engaged in negotiations with the United States. A U.S. official said to Semafor that the five-day ceasefire only applies to their energy sites. It is not in the navy, ballistic missiles or the defense industry base. He told the news agency that "the initial initiatives (of Operation) Epic Fury" will continue. Could not verify the report immediately. The White House and the U.S. The State Department, the 'Pentagon' and the White House did not respond immediately to an emailed request for comment. The Semafor Report also stated that Israel did not participate in Washington's discussions with Tehran. Reporting by Ruchika Khanna in Bengaluru, Editing by Lincoln Feast
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Oil resumes its climb after fragile relief rally as shares are jittery
Oil prices rose and stocks were on tenterhooks on Tuesday, as investors worried about the Middle East war were not satisfied with President Donald Trump's decision to postpone the bombing Iran's electricity grid. U.S. Treasury Yields increased and the dollar regained ground in a retracement of a relief rally that swept the markets overnight, after Trump extended his Saturday ultimatum to Iran for it to reopen Strait of Hormuz by 48 hours. Trump cited "productive" discussions Tehran. There was a lot of uncertainty as the world continued to deal with an energy crisis, while Iran denied having engaged in any negotiations with the U.S. Tony Sycamore, IG's market analyst, said that the underlying situation was still fragile or flammable. It doesn't appear that all of the parties are on the same page... Trump may talk all he wants, but the Strait of Hormuz is closed, and will remain closed until the Iranians are?on the exact same page. That's the problem." The European markets were off to a sombre start. EUROSTOXX futures fell 1%, while FTSE Futures dropped 0.47%. S&P 500 Futures dropped 0.56%, and Nasdaq Futures lost 6%. Asia shares, meanwhile, edged up in a rally to catch up with global counterparts. MSCI's broadest Asia-Pacific share index outside Japan rose by 1.3% while Tokyo's Nikkei gained?0.95%. Hong Kong's Hang Seng Index rose 1.6%. The Israeli military reported that Iran launched waves of missiles towards Israel. Semafor, citing an?official from the U.S., reported that the U.S. would continue to?strike Iran with a pause only for attacks on Tehran's oil sites. Oil prices rose again on Tuesday, despite the ongoing war and the fact that shipments of liquefied gas and oil through the Strait of Hormuz are still restricted. Brent crude futures rose 3.6% to $103.58 per barrel, reversing a 10% decline from the previous session. U.S. crude climbed 4.12% to $81.76 per barrel. Thomas Mathews is the head of Asia-Pacific markets at Capital Economics. He said that even though it will be over soon, energy prices could remain higher and bond and equity prices lower for longer. DOLLAR PARES LOSES, YIELDS RISE U.S. Treasury Yields climbed on Tuesday, after a steep fall overnight. Little clarity about a possible end to the conflict has left traders pricing in an increasingly hawkish outlook for global interest rates. In Asia, the two-year yield increased by 7 basis points to 3.9015 percent while the benchmark 10-year rate was up over 4 basis points to 4.3797 percent. Investors have abandoned hope of further monetary ease globally in favor of pricing in rate increases across the majority developed nations. Futures indicate that the U.S. Federal Reserve will keep rates at current levels this year. The Bank of England and European Central Bank, however, are expected to increase rates. Kit Juckes is the head of FX Strategy at Societe Generale. He said: "Unless the Strait of Hormuz (is reopened) very quickly, it's more likely than not that we will see higher interest rates and a significant increase in oil importer's costs in the next few weeks." The U.S. Dollar recovered from its Monday fall, pushing the Euro down by 0.24%, to $1.1587. Sterling fell 0.5%, to $1.3389. The risk-sensitive Australian dollar and New Zealand dollar each fell by more than 0.5%. Spot gold fell 1.3% to $4,350.51 per ounce on expectations that U.S. interest rates will continue to rise. (Reporting and editing by Christopher Cushing; Rae Wee)
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AMBITION EUROPE - A little relief from Trump
Rae Wee gives us a look at what the future holds for European and global markets. The relief rally that was sparked by President Donald Trump's decision to postpone his threat to bomb Iran’s power grid lasted only one day. As 'Tehran' denied it was in talks with Washington, and as?global energy supply remained crippled on Tuesday, the risk sentiment in Asia quickly soured. Brent crude futures rose back to $100 per barrel. Asian shares recovered slightly, in a catch up rally with their global counterparts overnight. However, U.S. futures and European futures declined in choppy trading. The dollar recovered its losses, and U.S. Treasury yields began to climb again. Trump has added five more days to his ultimatum to Iran that it reopens the Strait of Hormuz in 48 hours. However, the situation is still tense. There are few signs of a resolution to the Middle East conflict. The Israeli military said that Iran fired multiple missile waves at Israel. This triggered air raid sirens across the country, including Tel Aviv. In addition to scrambling for supplies, governments all over the world are also looking at ways to reduce demand and secure energy. In a post posted on X by Prime Minister Sanae Takayi on Tuesday, Takaichi stated that Japan will begin releasing oil held in joint stockpiles by other producing nations by the end March. The South Korean president Lee Jae Myung has called for an energy-saving campaign nationwide, and said that public institutions will reduce their use of cars. Three industry sources claim that traders have offered Iranian oil at a higher price to Indian refiners after Washington 'temporarily lifted sanctions' to ease the energy shortage. Data on Tuesday revealed that Japan's core inflation rate slowed to below the central bank target of 2% in February, for the first time in four years. This makes it more difficult for the Bank of Japan to communicate as they try and raise the still low borrowing costs. Also due on Tuesday are flash PMI readings from the Euro?zone, UK and U.S. The following are key developments that may influence the markets on Tuesday. - UK, euro zone, U.S. flash PMIs (March) ECB's Pedro Machado and Piero Cipollone speak at separate events Barr, Feds speaks
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Australia and EU sign trade agreement, seeking to reduce reliance on China in terms of critical minerals
Australia and the European Union have signed a deal on Tuesday after eight years of negotiations. The agreement removes tariffs from almost all European goods, and nearly 'all' exports of critical minerals from Australia. Some Australian agricultural products, such as beef and lamb meat, will be subjected to export quotas. Australian farmers have sharply criticized the pact, claiming that it provides "subpar access" to the bloc. Both sides intensified their talks after the Trump administration increased U.S. Tariffs, and the West became more concerned about China's dominance in rare earths and critical minerals. Both sides signed an agreement to strengthen security and defence relations. Ursula von der Leyen, President of the European Commission, said that although Australia and the?EU are geographically separated from each other, they could not be more similar in their worldview. We are getting closer with these new dynamic partnerships in security, defence and trade. The agreement will eliminate over 99% tariffs on EU exports to Australia. This will save companies 1 billion euros ($1.2billion) in duty fees each year. EU exports to Australia will now grow up to 33% in the next decade. The Australian Prime Minister Anthony Albanese said at a news conference that this agreement will be worth approximately A$10 billion ($7billion) to the Australian economy annually. He added that the removal of nearly all import tariffs on critical minerals from Australia into the European Union?will help stabilize global supply chains. Von der Leyen, Australia's member of parliament, told the Australian Parliament that "getting China right" is a crucial strategic imperative for both Europe and Australia. This is why realizing our vital minerals partnership is critical to our success. We cannot be too dependent on one supplier, which is why we are so interdependent. The agreement also shows Europe's increasing engagement in the Indo-Pacific region, following trade agreements with India and Indonesia signed in September. AUSTRALIA AGREE TO BEEF QUOTAS Australian tariffs on European wine, sparkling wines, fruit, vegetables, and chocolates will be zero from the first day, and for cheeses older than three years. EU will eliminate tariffs on many agricultural products, but certain key exports may be subject to quotas. The EU will remove tariffs on many agricultural products, but some key exports will be subject to quotas. Hamish McIntyre of the National Farmers Federation said that Australian farmers were "extremely disappointed" by the conclusion of negotiations for a free-trade agreement with 'the European Union' (EU), which ended without any commercially significant gains in agricultural market access since Australia last walked out from negotiations. After a relatively brief phase-out, certain EU geographical?indications names, such as Pecorino romano or Ouzo will be protected. Some producers of goods such as feta can continue to use these names provided they clearly label the origin. Australia has also agreed to raise the threshold of the luxury vehicle tax for EU electric cars to?A$120,000 (83,600 dollars), which means that about 75% EVs in the region are exempt from tax. The trade between the two countries is substantial, with EU firms exporting goods to Australia worth 37 billion euros in 2025 and services worth 28 billion euros in 2023. Official data revealed that the EU as a whole was Australia's third largest two-way trade partner as well as its sixth largest export destination in 2024. In 2024, the bloc was Australia's largest source of foreign investments.
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Oil prices rebound as shares jittery and relief rally weakens
Oil prices and stocks rose in a choppy?trade as U.S. president Donald Trump's decision to postpone the bombing Iran's grid did not placate investors worried about the ramifications from the Middle?East conflict. The U.S. Treasury yields rose and the dollar gained lost ground, in a retracement of a relief rally that swept the markets overnight, after Trump extended his Saturday ultimatum to Iran for it to reopen Strait of Hormuz by 48 hours. Trump cited "productive" discussions Tehran. There was a lot of uncertainty as the world continued to deal with an energy crisis, while Iran denied having engaged in any negotiations with the U.S. Tony Sycamore, IG's market analyst, said that the underlying situation was still fragile or flammable. The Strait of Hormuz is closed, and will remain closed until the Iranians are on the same page. That's the problem. Asia shares rose on Tuesday, catching up to their global counterparts. MSCI's broadest Asia-Pacific share index outside Japan rose by 1% while Tokyo's Nikkei gained 0.8%. Hong Kong's Hang Seng Index rose 1.4%. The U.S. Futures market fell after Wall Street closed higher overnight. Nasdaq Futures fell 0.6% while S&P500 futures dropped?0.5%. The FTSE Futures also fell 0.8% and the EuroStoxx 50 futures 0.9%. Brent crude futures rose 4.2% to $10421 per barrel, reversing a 10% drop from Monday. Meanwhile, U.S. Crude rose 4.3% to $91.93 a barrel. Two tankers bound to India passed through the Strait of Hormuz Monday. The war continues, however, to disrupt the traffic in the waterway. This has caused the suspension of shipments of one-fifth of all oil and gas liquefied around the world. Thomas Mathews is the head of markets at Capital Economics for Asia-Pacific. He said that even if the war ends soon, energy prices could remain higher and bond and equity values lower for a longer period than they would have otherwise. DOLLAR? GETS IT MOJO BACK The U.S. Treasury yields increased on Tuesday, after a steep fall overnight. Little clarity about an end to this conflict has left traders pricing in more hawkish interest rate expectations for the global economy. In Asia, the two-year yield increased by 8 basis points to 3.9136%. The benchmark 10-year rate was also up 4 bps. Investors have abandoned the hope of further monetary easing and are now pricing in rate increases across developed nations. Futures indicate a slight chance of an increase in the U.S. Federal Reserve's rates this year. The Bank of England and European Central Bank, on the other hand, are expected to increase rates. Kit Juckes is the head of Societe Generale's FX strategy. The U.S. Dollar rebounded on Monday from its?fall, driving the euro down by 0.27%, to $1.1585. Sterling fell?0.45%, to $1.3394. The dollar rose 0.14% against the yen to 158.63. Data released on Tuesday revealed that Japan's core inflation rate for consumers fell below the Bank of Japan target of 2% in February, the first time since nearly four years. This complicates the efforts of the bank to justify future interest rate increases. Spot gold fell 1% to $4,364.09 an ounce. (Reporting and editing by Christopher Cushing; Rae Wee)
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Japanese stocks lose gains due to Middle East War concerns
Japanese shares retreated on Tuesday as investors weren't convinced that U.S. president Donald 'Trump's remarks about delaying the targeting of 'Iran's energy infrastructure would lead to an end to the Middle East conflict. The Nikkei was up 0.3% at 51,681.73 by 0216 GMT. It had risen as high as 2.3% in the previous session. The Topix index rose 1.1% to 3,526.07 after jumping 2.6% earlier in the session. Trump postponed his threat to bomb Iran’s power grid due to what he called "productive talks" he had with unidentified Iranian officials. Iran denied that it was in talks with the U.S. This pushed oil prices up. Tomoichiro Kubota is a senior analyst at Matsui Securities. He said, "Few seem to believe that the remarks can help calm down the situation in the Strait of Hormuz and many see them as a temporary delay tactic." When the market is rising, people are quick to profit. Since its close on February 27, before the outbreak of war, the Nikkei has fallen by nearly 12%. Nikkei 225 ascended on Tuesday and 27 declined. Sumitomo Pharma, Japan's largest oil refiner, rose 4.9%. Shares of energy-related companies, such as?Eneos Japan's largest refiner, also increased. Tokio Holdings' daily limit was 6,857 yen. Berkshire Hathaway announced that it would be buying a 2.4% stake in the Japanese insurance company for $1.8 billion, as part of a new strategic alliance. Japan Steel Works was the Nikkei's largest percentage decliner, with a drop of 4.7%. Kawasaki Heavy Industries, with a loss of 3.9%, and IHI Corp, which fell by 3.5%, were also amongst those who suffered. Reporting by Satoshi Sugyama, Editing by Sherry J. Phillips and Mrigank. Dhaniwala
Japan's core rate of inflation falls below BOJ target and complicates communication about rates
Data showed that Japan's core consumer price inflation in February fell below the central bank’s 2% target for the first time since nearly four years. Government fuel subsidies were used to offset the rising import costs due to a weaker yen, and the surging oil prices from the 'Iran war'.
The reading will not change the Bank of Japan’s plan to tighten monetary policy, but the government’s intervention in the market to lower prices may make it more difficult for the bank to communicate as they try to increase the still low borrowing rates.
Last week, the BOJ announced that it would release by summer a price indicator which removes such one-off factors from policy to measure underlying inflation. Some analysts believe this is an attempt to justify further rate increases.
CORE INFLATION STILL HIGH
Abhijit SURYA, senior APAC Economist at Capital Economics said that inflationary pressures were more entrenched than the headline result of February might suggest.
We believe that Bank of Japan's preferred?core-inflation measure will remain above its target of 2% for the near future. The case for tightening policy is still valid.
Data showed that the core consumer price index, which excludes volatile fresh food prices, increased 1.6% from a previous year in February. This was in line with the median market expectation of a 1.7% increase.
The BOJ target was not met for the first since March 2022.
The BOJ closely monitors a separate index that strips out both fuel and fresh food prices. This index, which is a "better indicator of demand-driven inflation", rose by 2.5% over the past year, following a 2.6% increase in January.
The main reason for the drop in energy prices, which was caused by the return of gas and electricity subsidies, was the 9.1% decrease in costs.
Other measures have also helped to moderate inflationary pressure. According to a government report, the gasoline tax reduction in February reduced headline inflation by 0.94%. In February, tuition fell by 9.6% on an annual basis due to increased government subsidies.
Analysts say that the BOJ is likely to remove such factors from its new price index.
Prices for goods and services that are not subsidised rose. Food prices, excluding volatile items such as vegetables and fruits, rose by 5.7% in Feburary after an increase of 6.2% in January. The service sector inflation rate remained at 1.4%.
SUBSIDIES COMPLICATE MESSAGING
The BOJ has ended its decade-long massive stimulus program in 2024, and increased rates in several steps, including in December. This was based on the belief that Japan had made steady progress towards achieving a 2% inflation goal.
Kazuo Ueda, the governor of the Bank of Japan, has indicated that the bank is willing to raise rates in the future if they become more confident that the inflation rate, or the price trend, driven by domestic demand will stabilize around the 2% target.
Fuel subsidies and other measures taken by the government to help cushion households from the rising cost of living have affected prices, complicating the BOJ's attempts to measure inflation.
The Middle East conflict has caused a spike in crude prices. This month, the government introduced a price cut on gasoline that analysts say could reduce the core CPI by as much as 0.5%.
The?BOJ is faced with a tough choice, as the war increases inflationary pressures while also hurting profits for corporations and an economy that relies heavily on fuel imports.
Takeshi Minami is the chief economist of Norinchukin Research Institute. He said that if the BOJ raised rates, it could harm the economy, which was already hurt by the worsening business mood due to the conflict. We expect the BOJ will be in a waiting-and-seeing mode. (Reporting and editing by Leika Kihara)
(source: Reuters)