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What will a US Naval Blockade of Iran Mean for Oil Flows?
The U.S. Military began blocking shipping traffic in and out Iran's port. This would prevent approximately two million barrels per day of Iranian oil from reaching the global?markets. Here's a look at the details of the "blockade" and its impact on oil markets. WHAT HAS BEEN ANNOUNCED? After the weekend talks between the U.S., Iran and other negotiators in Islamabad ended without agreement, President Donald Trump announced that the U.S. Navy would "begin the process of BLOCKADADING any and ALL ships trying to enter or leave the Strait of Hormuz." U.S. Central Command announced on Monday that vessels not authorised to enter or leave the blockaded area would be subjected to "interception, divertison, and capture". The U.S. Central Command said that it would not interfere with the freedom of navigation by vessels transiting through the Strait of Hormuz from or to non-Iranian port. Iran's Revolutionary Guards warned Trump that any military vessel approaching the Strait would be treated as a breach of ceasefire and punished harshly. What is the impact on oil flows? Blocking Iranian oil shipments would remove a major source of oil from world markets. Iran exported 1.84 million barrels of crude oil per day in March, and has shipped 1,71 million barrels of crude so far in April. This compares to an average of 1.68 millions bpd by 2025. Kpler data revealed that a spike in Iranian production before the start of the war on February 28 had led to a near-record level of Iranian oil being loaded onto?ships. As of early this month, more than 180,000,000 barrels were either in transit or in floating storage. Kpler data showed that more than 180 million barrels of Iranian oil were in transit or floating storage as early as this month. OIL FLOWS from other Gulf producers? The shipping traffic through the Strait of Hormuz has been largely stopped despite the two-week ceasefire announced by Washington and Tehran on April 7. Two more vessels crossed the strait with the Chinese tanker on Tuesday. It was the first time a tanker has passed through the strait since the U.S. blockedade. Two Pakistani flagged tankers, Shalamar, and Khairpur entered the Gulf on Sunday to load cargoes coming from the United Arab Emirates (UAE) and Kuwait. A third Liberian flagged ship, Mombasa B was also transiting the strait and ballasting in Gulf. The Malta-flagged VLCC Agios Fanourios I turned back after trying to pass through the Strait of Hormuz on Sunday in order to load Iraqi crude oil bound for Vietnam. Kpler reports that as of April 7th, 187 tankers containing 172 millions barrels of crude and refined oil were in the Gulf. Which importers are most affected? Prior to the war, China was the largest crude oil importer in the world. The U.S. announced a waiver of sanctions last?month that has allowed other buyers to import Iranian crude oil, including India. Ship tracking data from LSEG & Kpler revealed that India is?set to receive India's first crude shipment from Iran since seven years this coming week. Before the war, around 20% of the world's oil and gas exports went through the Strait of Hormuz. Most of the cargoes were headed for Asia, which is the biggest importing region.
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Stegra receives $1.7 billion in funding from Wallenberg-led Group
Stegra, the Swedish green steel startup, announced on Tuesday that it had raised 1.4 billion euro ($1.65 billion), a funding consortium led by Sweden's influential Wallenberg family. This will allow the company to finish the construction of their plant. Stegra CEO, Henrik?Henriksson, said in a press release that "this financing reflects strong confidence in Stegra's model of business among both new and existing investors as well as lenders." Stegra, who in 2024 claimed to have?secured 6 billion euros in loans, equity and other sources, revealed in October of last year that they were seeking additional funding for the completion of their flagship hydrogen-based steel facility in northern Sweden. The company, which was previously known as H2 Green Steel?had also stated that it had?begun advanced discussions about outsourcing certain operations. The steelmaker said that Wallenberg Investments is leading the financing round. Wallenberg Investments has formed a group of investors who will take a leadership position in Stegra through this transaction. The consortium also includes Temasek, IMAS and Wallenberg Investments. The Wallenberg Family is Sweden's?most powerful business dynasty. They control firms worth hundreds billions?dollars including SEB and Ericsson. The vast family holdings of the Wallenbergs are managed by a 'complex mix' of private companies and foundations, including Knut and Alice Wallenberg Foundation and other foundations, which ultimately own FAM and unlisted investment firms. Stegra stated that the?new financing was agreed in principle and would be subject to final approval from lenders as well as completion of documentation.
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Sources say that China has allowed domestic mills to purchase BHP iron ore.
Sources told?Tuesday that China, as the world's biggest consumer of iron ore, had lifted its bans on purchasing?the key ingredient for steelmaking from mining giant BHP Group. This ended a months-long dispute. Two sources familiar with the situation who requested anonymity because the subject is sensitive, reported that on Tuesday, the state iron ore 'buyer' China Mineral Resources Group (CMRG), notified domestic steel mills that they could buy BHP seaborne cargoes. CMRG didn't immediately respond to a comment request. BHP declined comment. By 0547 GMT, the benchmark May?iron ores on the Singapore Exchange had lost 1.48% and stood at $103.1. CMRG has been progressively tightening the curbs on steel mills and traders who buy BHP iron ore, since September last year, while it negotiated a contract with BHP for 2026. CMRG has banned the purchase of BHP's Jimblebar fins since September last year. The ban was followed by those on the'miner's Jinbao fins' in November and Newman fins' in March. BHP produces all three products. During the ban, Chinese steelmakers could not take delivery of products that were unloaded in ports. Sources also added that CMRG told steelmakers that they can take delivery of BHP cargoes previously subject to 'the bans' as early as next week. These curbs limited the availability of iron ore on the spot market and pushed up prices, even though China's portside stock?piled up at a record-high last month. Prices of iron ore at sea Since last August, prices have remained largely above the psychological level of $100 per metric ton. This is contrary to earlier predictions by some analysts that an oversupply would push them down below $90. Bloomberg News reported earlier Tuesday that China had eased curbs for some BHP cargoes. A team of BHP executives visited China last week and met with officials from China Baowu Steel Group Corp., the largest steelmaker in the world, as well as Chinalco, a giant aluminium company. This comes following the July 1 appointment of Brandon Craig as the new CEO of the company. (Reporting and editing by Sameer Mnekar, in the Beijing and Bengaluru newsrooms; Sherry Jacob Phillips and Clarence Fernandez).
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Final data show that Swedish headline inflation was 1.6% annually in March
The final statistics from the Statistics Office showed that consumer?prices, as measured by a 'fixed interest rate' (CPIF), were down 0.6% on a monthly basis in March compared to the previous month. They also rose 1.6% compared to the same period a year ago. The figures were in line with those published by the flash?figures last week. Statistics office stated that fuel prices increased sharply in march, but were 'offset by an enormous drop in electricity rates. The price of food also fell, mainly due to lower prices for dairy products. Sweden is a?outlier' compared to the rest of Europe and America in that it has seen muted price pressures in spite of the war in Iran. The war has changed market perceptions about the Riksbank rate path. From no change this year, before hostilities started, to a possibility of two hikes, if higher?energy costs spread into other parts of the economy. In March, the Riksbank kept its main interest rate at 1.75% and said it was expecting that rate to stay there for a while. The next rate announcement is scheduled for May 7.
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Mike Dolan: Orban's fall removes another roadblock to European markets
The rejection by Hungary of Viktor Orban, a right-wing nationalist after 16 years at the helm?is a shot in arm for its internal markets. It should also lift EU Assets more broadly, removing an ongoing roadblock for a now-alone bloc. Budapest was hit by a series vetoes and the freezing of 18 billion euros in EU funds as a result of the outgoing PM's "illiberal" democracy. Orban's open embrace of Moscow in issues ranging from Ukraine, energy and foreign policies complicated the EU’s rapid rearmament program to counter the Russian threat to its east since the Ukraine invasion 2022. His removal comes despite, and some would say partially because of, U.S. president Donald Trump's endorsement. It only highlights the electorate’s decision to return towards the EU centre at a time when Transatlantic ties have weakened and the EU must increasingly fend itself in defence and trade. Peter Magyar's centre-right Tisza, which has won a supermajority, giving it the power to reverse Orban’s constitutional changes, is not going to solve Hungary's issues overnight. There will be battles with Brussels about?budgets and frozen funds, as well as the speed of reforms. Relations with Ukraine also need to be handled carefully. On Monday, it was clear that there is a sense of relief in EU capitals. The frustrations of Orban's time may finally be over. Hungarian 10-year government borrowing rates fell by a half-point to their lowest level since 2024. The stock market also gained nearly 5%. Investors viewed the latest twists in the Iran war and the energy shock as a way to reinforce?European's continued performance. Lauren van Biljon is a senior portfolio manager with Allspring Global Investments. She said: "It's an excellent result for Europe." It sets Europe up for an even more cohesive position - from NATO, to everyday European business and also Ukraine. 'UNDERAPPRECIATED' Morgan Stanley sees the implications of the Hungarian domestic market as obvious. The unfreezing of EU funding alone, which amounts to around 8% of Hungary’s annual Gross Domestic Product (GDP), can add 1-1.5 percentage point to Hungarian GDP. The bank says that the spread across European equity is "underappreciated". The report cited two catalysts for the positive sentiment in EU equity markets, namely: improved EU policy coordination and the potential release of a 90 billion euro joint loan, which was agreed on in December, but vetoed in Hungary. Morgan Stanley sees this result as supporting the continued narrowing in the valuation gap between European equities and U.S. equities. The euro zone discount compared to U.S. counterparts is the lowest it has been in three years, and about half of its peak before?the U.S. elections of 2024. There is still a lot of uncertainty about what a full repricing would look like. It is the deeper message that may be most important to an EU bloc growing increasingly concerned about internal and external political winds that threaten its founding principles. Laszlo Bruszt, a professor at Central European University whose university was also driven out of Budapest by Orban's government in 2019, finds the outcome particularly resonant. He wrote in Project Syndicate that "Orban's Fall does challenge the feeling of inevitability" surrounding the global shift away from liberal democracy. Save the date! On?April 23, at 1300 GMT/9 a.m. ET, ROI columnists Mike Dolan and Jamie McGeever, will be joining LSEG in a webinar, "Markets unpacked?with open interest: Rethinking safety havens during uncertain times." Sign up here. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks. ($1 = 0.8522 euros)
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Philippines asks US for extension on waiver to purchase Russian oil
On Tuesday, the Philippines' Energy Secretary Sharon Garin announced that her country is asking for an extension of a waiver allowing it to buy Russian oil and petroleum. Garin told a news briefing that he was awaiting the response of the other party, but he was confident about getting this 'other window.' The waiver had expired on April 11. Garin stated that the government is confident about obtaining the extension, but is also preparing alternative?supply arrangements in the event the request is denied. She said that the Philippines is diversifying its energy supply sources, and the options do not just stop at Russia. The government is also looking to producers in South America including Argentina and Colombia, as well Canada and even the United States. We wanted more options, so we opened the Russian window. She said, "We need diversification." Jose Manuel Romualdez said that the Philippine ambassador to the United States was working with Washington last month to secure waivers and exemptions that would 'allow Manila to purchase oil from sanctioned U.S. countries. Reporting by Karen Lema, Nestor Corrales and David Stanway; Editing by John Mair & David Stanway
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Gold prices rise as the dollar weakens and oil prices fall, easing inflation fears
On?Tuesday, gold rebounded from a near-one-week 'low? hit the day prior,?on a softer dollar, and as oil prices dropped on hopes of more U.S. Iran peace talks, easing fears about inflation. As of 0509 GMT spot gold rose 0.7% to $4,769.77 an ounce after falling to its lowest level since the previous session on April 7. U.S. Gold Futures for June Delivery rose 0.5% to $ 4,791.70. Oil prices fell below $100 per barrel, as signs of a possible U.S. Iran dialogue to end the war eased concerns about the supply risks resulting from the U.S. Blockade of Strait of Hormuz. By increasing transportation and production costs, higher crude prices contribute to inflation. Gold's appeal is typically boosted by inflation as a hedge. However, high interest rates can reduce its demand. Ilya Spirak, Tastylive's head of global macro, believes that the markets still believe there is time to reach a deal between the United States, and Iran. Reports indicate that Washington and Tehran are still in negotiations, but U.S. Vice-President JD Vance stated in an interview that Washington expects Iran to progress on opening the Strait of Hormuz. President Donald Trump announced that the U.S. began a military blockade on Iran's ports Monday. Meanwhile, Tehran has threatened to retaliate by attacking the ports of its Gulf neighbours after talks on ending the conflict in Islamabad broke down. The U.S. Dollar is also near its lowest point in over a month, which makes gold that's denominated in greenbacks more affordable to holders of other currencies. Near-term, the U.S. and Iran headlines could be driving force due to a thin macro-calendar. This sets up choppy prices for the moment," said Spivak, adding that resistance could be found around $4,850. The traders now expect a 25% chance that the U.S. will cut its interest rate by 25 basis points this year. This is up from 12% last week. There were two expected cuts this year before the war. (Reporting by Noel John in Bengaluru; Editing by Rashmi Aich and Subhranshu Sahu) (Reporting from Noel John, Bengaluru. Editing by Rashmi aich and Subhranshu Sahu.
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Nickel producers in Indonesia reduce battery feed production as the sulphur squeeze bites
Three sources said that a sulphur scarcity, caused by the Iran War, forced nickel processors in Indonesia to reduce their output?by 10% or more since last month. The cutbacks?have?hit plants using sulphuric acids to process nickel ore, a feedstock for electric vehicle batteries, into mixed hydroxide precipate (MHP), one of the most clear signs yet that U.S. and Israeli war against Iran is affecting mining supply chains. However, output remains relatively high. Sources said that affected plants include those owned by Chinese companies such as Huayou Cobalt and Lygend Resources, as well Tsingshan Group. Requests for comment were not immediately answered by the companies. Sources said that several plants were operating above their capacity due to high margins and a large demand. The curbs have now lowered the output to the nameplate level. This means that Indonesia's nickel production is still high but MHP supplies are tightening. The Middle East is a major supplier of SULFUR According to Arif Perdana 'Kusuma', the chairman of FINI (Indonesia's nickel smelters' association), about a quarter or more of the world's sulphur is supplied by Middle East. These disruptions have pushed prices up and squeezed margins for Indonesian MHP producers, leading to the production cutbacks. One trader reported that spot sulphur prices delivered to Indonesia had risen to over $800 per metric ton. Some cargoes were sold for as much as $1,000, compared to around $500 prior to the start of the war. Sources declined to name themselves as they weren't authorised to talk to the media. In Search of Alternatives Kusuma stated that no nickel refineries using high-pressure acid lach (HPAL) had been forced by the sulphur shortages to stop MHP production, but stocks at several firms are running low. He said that in some places, the current stocks would only last until May or even earlier. However, he did not say whether plants had reduced production. Some producers are now looking for alternative sources of sulphur, but this is difficult due to the smaller volumes and longer shipping distances. Some producers were importing sulphuric acids instead. This poses logistical challenges and requires import permits. He said that HPAL's operating costs now account for between 30% and 35% sulphur, up from the usual 25%. Reports last month indicated that some Indonesian factories had inventory?lasting just one to two months. Production cuts are likely in April if the supply does not recover. Indonesia's nickel industry is struggling with higher ore costs after Jakarta restricted mining output. Indonesia announced that nickel mining quotas for 2026 would be reduced from 379 millions to 250 million wet metric tons. The nickel ore price is expected to increase after Indonesia changed the formula for calculating tax, royalties, and other charges on nickel ore sales. This new formula will be implemented in April and put further pressure on producers' margins. (Reported by China C&E Team and Fransiska Nangoy from Jakarta; Editing done by Tony Munroe, Thomas Derpinghaus and Thomas Munroe)
Oil and dollar drop on hope of US-Iran resolution
Asian stocks rose on Tuesday, while oil prices fell and the safe haven dollar dropped. Investors bet on a solution to the Middle East conflict despite the U.S. blocking Iran's ports after the failure of the peace talks at the weekend.
A U.S. official stated that there is progress in reaching an agreement.
U.S. president Donald Trump said Iran also wants to make a bargain, but he won't come to an agreement that would allow Tehran to possess a nuclear weapons.
Investors seized on the hope of an off-ramp to lift overall market sentiment, sending MSCI’s broadest Asia-Pacific share index outside Japan up by nearly 2%. Japan’s Nikkei also rose by more than 2%.
Following an overnight rally in Wall Street, Nasdaq Futures rose 0.2%, S&P futures remained?steady. EUROSTOXX50 futures grew by 0.41%, and DAX futures rose 0.6%.
Markets are trading in hope, but not in resolution. "The failed weekend talks didn't produce a deal but they didn't close the door on diplomatic relations, and that was enough to allow equities continue to rise for now," said Charu C. Chanana.
She added, "The problem is that markets are pricing the possibility of de-escalation quicker than it's actually happening, so I still expect a choppy and headline-driven tape, rather than a clear risk-on trend."
The U.S. began a blockade on Iran's ports. This angered Tehran and added uncertainty to the waterway. However, shipping data revealed that a Chinese tanker sanctioned by the U.S. passed through the Strait of Hormuz Tuesday.
Trump said that Washington would block Iranian vessels, and any ships who paid tolls. He also stated that any Iranian "fast attack" ships that came near the blockade will be eliminated.
The U.S. played the trump card. It's important to me because it forced Iran to open up the Strait, without needing to put boots on the ground," Tony Sycamore said.
The Iranians are now forced to rethink their plans.
Brent crude futures fell 1.5% to $97.90 per barrel as the expectations of a further dialogue ending the war overshadowed concerns about supply disruptions. U.S. crude oil futures dropped 2.3% to $96.78 a barrel.
In China, data on Tuesday showed the country's export engine slowed in March as buyers chasing an artificial-intelligence-fuelled future ran into the hard reality of the war.
CSI300, the blue-chip index of the country, tracked the regional rally and rose 0.7%. Hong Kong's Hang Seng Index grew by 0.4%.
DOLLAR AT THE BACKFOOT
The dollar dropped to a one-and-a half month low of 98.298 versus a basket?of currencies on Tuesday as a buoyant risk mood dampened demand.
The euro was trading at $1.1769, up 0.1%. Sterling rose to $1.3521, a six-week high.
Joseph Capurso is a strategist with Commonwealth Bank of Australia.
The U.S. Dollar would likely rise against all other currencies if the markets fell again.
Treasury yields in the U.S. have remained relatively unchanged. The two-year yield is at 3.7678%, while the benchmark 10-year yield stands at 4.2775%.
Investors are preparing for the possibility of a number major central banks raising interest rates. This is a dramatic change from what investors expected before the war, which was for rate cuts or an extended pause.
Other than that, spot gold rose 0.7% to $4,770.31 per ounce. (Reporting and editing by Kevin Buckland, Jamie Freed and Rae Wee)
(source: Reuters)