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Prices of oil rise amid supply concerns as fragile US-Iran negotiations continue
Prices of oil rose by nearly 1% on Tuesday as the talks to end U.S. - Israel's?war on Iran? appeared fragile. Tehran's response?to a Washington proposal highlighted stark differences which have kept supply concerns alive. Brent crude futures rose 86 cents or 0.8% to $105.07 per barrel. U.S. West Texas Intermediate was up 99 cents or 1% at $99.06 as of 0411 GMT. Both benchmarks rose by nearly 2.8% Monday. U.S. president Donald Trump said on Monday that the ceasefire agreement with Iran is "on life support." He cited disagreements on several demands such as the cessation?of?hostilities across all fronts, removal of the U.S. navy blockade and the resumption Iranian oil sales. Tehran has also stressed its sovereignty over the Strait of Hormuz through which a fifth of all oil and gas liquefied flows. Suvro Sarkar, DBS Bank's energy sector team leader, said that optimism about a?imminent (peace deal) seems to have faded again. If we do not see a deal before?the?end of May then there are upside risks for oil prices. A survey released on Monday showed that OPEC's oil production in April was at its lowest level for more than 20 years. Tim Waterer is the chief market analyst for KCM Trade. He said that a genuine breakthrough towards a peace agreement could cause a sharp correction of $8 to $12. Any escalation in tensions or new blockade threats will quickly push Brent prices back up toward $115 and beyond. Amin Nasser, CEO of Saudi Aramco, warned on Monday that disruptions in oil exports could delay the return of market stability until 2027. This would result in the loss of 100 million barrels per week. Analysts in a?poll predicted that U.S. crude stockpiles would be down around 1.7 millions barrels from the previous week. Walt Chancellor, a Macquarie Group energy strategist, said that the draw will take place against a background of "continued strong net waterborne product export flows in the coming weeks." Market participants also kept a close eye on Trump's meeting with Chinese president Xi Jinping scheduled for Wednesday after Washington imposed sanction on three individuals as well as nine companies who facilitated Iranian oil shipments into China.
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Scientists say global fire outbreaks are at a record high, as 'unprecedented heat extremes' loom.
Scientists warned that climate change is causing unprecedented fire outbreaks in Africa, Asia, and other parts of the world this year. Conditions are expected to worsen as summer in the northern hemisphere approaches and El Nino weather patterns take hold, they said. Scientists warned that fires in the northern hemisphere from January to April had already caused unprecedented damage. They burned more than 150,000,000 hectares of land (370.66,000,000 acres), 20% more than previous records. Researchers said that temperature records may be broken this year. This will cause widespread fires and drought, as well as the effects of climate change caused by humans. Theodore Keeping is a wildfire specialist at Imperial College London, and part of the WWA group. He said that while the global fire season in many places has not yet heated up, the rapid start in combination with the forecast El Nino means we are looking at a severe year. He said that 85 million hectares have been burned in Africa this year, which is 23% higher than the previous record of 69 millions hectares. He said that the unusually high fire activity is caused by rapid changes from extremely wet conditions to extremely dry ones. The previous growing season was characterized by high rainfall, which produced more grass. This created an abundance of fuel for the recent savannah blazes caused by heat and drought. This month, EL NINO conditions are due Keeping reported that Asian fires had burned up to 44 million hectares this year. This is nearly 40% more land than in 2014, the previous record-breaking year. India, Myanmar Thailand, Laos, and China were among the worst affected. El Nino is expected to increase the risk of drought and heat in Australia, Canada, the United States, and the Amazon rainforest. He said: "The risk of extreme fires could be higher than we have ever seen before if an El Nino is strong." World Meteorological Organization has said that El Nino weather conditions caused by warming sea surface temperatures of the Pacific Ocean are expected to begin in May. The U.N. warned that it could cause droughts and flooding in Australia, Indonesia, and other parts of southern Asia, as well as temperature increases in other areas. Friederike Otto is a climate scientist from Imperial College London, and the co-founder and director of World Weather Attribution. She said: "If there is a strong El Nino this year, it is possible that climate change combined with El Nino will lead to unprecedented weather extremes." (Reporting and editing by David Stanway)
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Indian shares drop, rupee falls to record lows as Mideast peace hopes fade
The rupee hit a new record low on Tuesday as crude prices rose. Talks to end the Iran War appeared to be fragile. This fueled concerns about supply and potential economic impacts. The Nifty?50 dropped 0.44% as of?9 :20 a.m. IST to 23,712.2, while the BSE Sensex fell 0.56%?to?75,590.56. Ten of the sixteen major sectors suffered losses. The broader small and mid-caps fell 0.5% and 0.30%, respectively. Other Asian?markets dropped 0.5% as oil prices rose from about $100 a barrel to $105 after U.S. president Donald Trump said that the ceasefire agreement with Iran is "on life support". He had dismissed Tehran's response following a U.S. proposed peace as "stupid". The world's third largest oil importing country is negatively affected by higher crude prices, as they increase inflationary pressures. They also affect growth and corporate earnings. Investors also await India's retail inflation data for April, due later that day. This could provide clues on how the war with Iran has affected the price pressures of the economy.
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Calbee switches to monochrome packaging after being hit by the ink shortage caused by Iran.
Japan's leading snack maker has come up with a "creative" solution to conserve oil-derived materials. It will "switch from brightly colored packaging to black and White". Calbee of Tokyo announced on Tuesday that it will temporarily use only two ink colors on 14 products, including its Potato Chips and Kappa Ebisen snack foods, as well as the Frugra cereal. The new packaging is expected to hit the shelves on May 25. Calbee has the largest market share in the domestic snack market. The company said that the initiative was to maintain stable shipments due to unstable supplies affecting "certain raw materials" as a result of the U.S./Israeli war against Iran. Japanese companies are trying to minimize the impact of rising prices and shortages in input materials, while the government tries to reassure businesses and the public about the supply. For printing ink, Japan imports about 40% of the oil derivative naphtha from the Middle East. Calbee’s Potato Chips can be instantly recognized by their multi-hued design featuring product images against backgrounds that are orange or yellow. The news of the company's 77-year old move was reported in newspapers across Japan. This followed a short panic among fans in March when a different brand of crisps temporarily stopped production of a popular snack, citing difficulty in obtaining the heavy oil required to run their factory. A?government spokesperson was asked about Calbee’s decision. He said that domestic naphtha refinery continues using crude oil stockpiled, and imports from outside the Middle East tripled between May 2014 and the levels before the Iran War broke out. Kei Sato, Deputy Chief Cabinet Secretary, said: "We've not heard of any immediate disruptions in the supply chain for naphtha or printing ink. We recognize that Japan has all the necessary quantities." Since the Iran War began, the Strait of Hormuz has virtually been closed. This has caused a global energy shortage.
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AI rally pauses while Middle East ceasefire is on 'life-support'
The dollar and oil rose on Tuesday, as traders waited for U.S. inflation data and a 'chip rally' that had been raging in the chip stock market cooled. Donald Trump, the U.S. president, said that the ceasefire agreement with Iran was "on life support", after Tehran's reaction to a proposal from the U.S. The proposal to end the conflict made it clear that the two sides are still far apart. Brent crude futures rose 0.7% to $105. S&P futures fell 0.2%, and the KOSPI index in Seoul, which is considered to be unstoppable by many investors, dropped 3%. Tokyo's Nikkei index was flat, but MSCI's broadest Asian share index excluding Japan dropped 1%. European futures fell ?1%. The markets are watching Trump's visit to China on Wednesday, but they don't expect any progress in the area of trade or Iran. They just want the status quo to continue. Investors shouldn't expect to see sweeping deals. "A 'win' means no new tariffs or export controls and maybe small symbolic deals such as agricultural purchase, aircraft orders, signals on rare Earths, said Daniel Casali chief investment strategist of Evelyn Partners. These may seem minor, yet stability on the margins is important. Wall Street has been resilient despite the rising oil price. The S&P 500, and Nasdaq have all reached new highs. The U.S. consumer price index is expected to rise by a scorching 3.7% on a year-over-year basis. Markets could be rattled by any suggestion that the Federal Reserve might need to raise interest rates this year, rather than reduce them as investors expected before World War II. Global bond yields increased overnight, led by a selloff of gilts, after Prime Minister Keir starmer's speech did not dispel investor doubts regarding his political survival following Labour's heavy loss in the local elections last week. Japan's 10-year bond yield jumped to a new 29-year high, 2.54%, ahead of a later auction. Summary of the opinions expressed at the Bank of Japan meeting in April reinforced the growing hawkish tilt on the board. This leaves the door open to a rate hike in June. The benchmark 10-year Treasury yields remained at 4.42%. The dollar rose to 157.53 Japanese yen in currency trading. U.S. Treasury Sec. Scott Bessent, who is visiting Tokyo to meet with Japanese officials, did not mention his support for Japan's currency interventions in a press conference on Tuesday. Satsuki Katayama, Japanese Finance Minister, said: "We agree that we are extremely well coordinated on recent market movements including exchange rates." The euro fell 0.2% to 1.1762, and the Australian dollar dropped 0.25% to $0.7232. The Australian government will announce a smaller budget deficit than it had previously announced on Tuesday.
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Petrobras Q1 profits slip as oil price rise yet to be felt
In a filing on Monday, Brazil's state-run Petrobras said that it had missed market expectations in its?first quarter net profit. The?impact? of higher oil prices due to the Middle East conflict has yet to be reflected in the results. Petrobras reported a net loss of approximately 32.7 billion reals ($6.68 billion) - down 7.2% compared to a year earlier. In a separate filing, the company approved a dividend payout of 9 billion reals to its shareholders. The company stated that the increase in oil prices following the U.S. - Israel conflict with Iran, which began in late February, would only be felt by the second 'quarter. The firm stated that most Petrobras exports go to Asian markets. Pricing is usually based on "quotations" from the month before the cargo arrives. According to the results of the firm, the average Brent crude price in the first quarter of 2018 was $80.60. This is only 6.5% higher than the prices of a year ago. Brent prices rose past $100 following the closure of the Strait of Hormuz. Brazilian oil giant Petrobras has been increasingly dependent on exports for revenue generation. While the company's?revenues from?exports increased 28.3% during the first quarter, the?revenues from?sales within Brazil decreased 9.4%. The market expected 136.08 billion?reais. However, the net revenue was only a slight increase of?0.4% to 123.69 reais. The core earnings as measured by adjusted earnings prior to interest, taxes and depreciation (EBITDA), fell 2.4%. Analysts ?expected 64.48 billion reais.
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Prices of oil rise amid supply concerns as fragile US-Iran negotiations continue
The oil prices increased in the early Asian trading on Tuesday as negotiations to end the "war" between the United States of America and Iran appeared 'fragile.' Tehran’s response to the U.S. proposal highlighted stark differences which kept supply concerns alive. Brent crude futures rose 30 cents or 0.29% to $104.51 a barrel. U.S. West Texas Intermediate was up 31 cents or 0.32% to $98.38 at 00:02 GMT. Both benchmarks rose by nearly 2.8% Monday. U.S. president Donald Trump stated on Monday that the Iranian ceasefire was "on life support." He cited disagreements on several demands such as the cessation on all fronts of hostilities, the removal?of a U.S. Naval Blockade, resumption Iranian oil sales and compensation for damage caused by war. Tehran also emphasized its sovereignty over the Strait of Hormuz,?which is responsible for about a fifth of all global oil and liquefied gas flows. Tim Waterer is the chief market analyst at KCM Trade. He said in an email that as long as US-Iran talks remain unresolved and physical flow through the Strait of Hormuz remains restricted, prices should hold above $100. He said that a genuine breakthrough towards a peace agreement could trigger an $8-12 correction. Any escalation of blockade threats or escalation in price would push Brent prices back to $115+. A survey released on Monday showed that OPEC's oil production in April was at its lowest level for over 20 years. Amin Nasser, CEO of Saudi Aramco, warned on Monday that disruptions in oil exports across the Strait could delay the return of market stability until as late as 2027. This would result in a loss of around 100 million barrels per week. The Trump administration announced Monday plans to lend 53.3 million barrels from the U.S. Strategic Petroleum Reserve to help temper the oil markets. The first shipment to Turkey was crude oil from the U.S. SPR, according to ship-tracking data. Washington imposed sanctions against three individuals and nine firms, including those based in Hong Kong, United Arab Emirates and Oman. They were sanctioned for facilitating Iranian oil shipments into China. Separately, on Monday, the Wall Street Journal reported that the UAE had conducted military strikes against Iran, including an early April attack on a refinery located on Iran's Lavan Island. Reports said that the UAE had not acknowledged the strikes publicly. Reporting by Anmol Chaubey, Bengaluru. Editing by SonaliPaul
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The US Supreme Court has cleared the way for Alabama Republicans and their new voting map
The Supreme Court of the United States cleared the way for Alabama Republicans on Monday to pursue a congressional vote map that is more favorable to their political party ahead of the November midterm elections. This is the latest result from the court’s landmark voting rights ruling. The Supreme Court overturned a lower court decision that blocked the state Republicans' preferred map for being racially biased and illegally diluting voting power among Black Alabamians. Politically conservative Southern states are expected to revert back to the previous map. This would reduce the number of districts in which Black voters make up a majority or near-majority from two to just one of the seven U.S. House district of the state. The Republicans could benefit from using the old map. The conservative majority of the nine-member court was responsible for this order. Three liberal justices dissented, suggesting that the lower court should reapply the judicial block on the Alabama Republicans' preferred maps. The Republican Party of President Donald Trump is fighting to keep control of both the House and the Senate in the midterms. Alabama is one of a number of Republican-led states which have sought to eliminate congressional districts with a majority of Black voters and increase their party's odds ahead of the midterm elections after the Supreme Court ruled that a key provision in the Voting Right Act was invalidated. Black voters are more likely to support Democratic candidates. In a landmark ruling on April 29, the court struck down a map of Louisiana's second U.S. Congress district with a majority of Black voters. The majority ruled that the new map relied too heavily upon race, violating the equal protection principle of the constitution. Alabama filed an emergency motion after the Supreme Court decision asking for permission to return to an old map that only had one district with a majority of Black voters. Alabama, where Black voters account for a quarter, was ordered by a lower-court to use a district map with two districts that are majority Black. Both are held by Black Democrats. The lower court ruled that a previous map intentionally discriminated against Blacks and unlawfully dilute their voting power. Alabama officials argued that the court-ordered Alabama map had constitutional flaws similar to Louisiana's. Steve Marshall, Alabama's Republican Attorney-General, called the order of Monday a "major win at the U.S. Supreme Court" in a post on social media. Marshall wrote: "For far too long, federal judges who are not elected have had more influence over Alabama's election than Alabama's electors." "That's over now." Deuel ROSS, an attorney at the NAACP Legal Defense and Educational Fund, who represents a plaintiff group in the case, stated that his clients are "deeply dissatisfied" with the Supreme Court's decision to temporarily allow Alabama to use a map which is intentionally discriminatory. Ross stated that "the court's ruling interferes with the ongoing election, and casts doubt on the validity of thousands of early votes." "We will explore all options to restore the court-ordered maps and protect the voting rights of the voters," Ross said. DISSENT SUGGESTS LOWER COURT CAN AGAIN BLOCK NEW MAP Sonia Sotomayor, a liberal Justice from the United States, argued in a dissent that the ruling of the lower court concerning Alabama's electoral map was more extensive than the Louisiana case and that it included findings of unconstitutional racism by deliberately diluting Black voters' votes in Alabama. Sotomayor, joined by two other liberal justices in a dissenting opinion, wrote that the?majority decision to overturn the lower court ruling was "inappropriate" and would cause confusion when Alabamians vote in elections scheduled to take place next week. She stated that the lower court was "free on remand" to determine whether Callais had any impact on its Fourteenth Amendment analyses or if their prior reasoning is unaffected. This was referring to Louisiana v. Callais, a decision of the court dated April 29, 2019. The court upheld a lower court decision in 2023 that the state's Republican drawn electoral map dilutes Black voters' powers, and violates the Voting Right Act. This 5-4 'ruling' was written by Chief Justice John Roberts and joined by Justice Brett Kavanaugh, a conservative Justice from the court and three liberal justices. Redistricting is a process that redraws the boundaries of the legislative districts in the United States to reflect the population changes measured by the 10 year national census. State legislatures typically redistrict once every decade. Republicans and Democrats are engaged in a multi-state redistricting battle that was ignited by Trump's unprecedented mid-decade initiative to redraw the maps of Republican-led state, starting with Texas.
Markets assess tensions in the Middle East ahead of US inflation data
The gold price remained stable on Tuesday as the markets weighed developments in the Middle East conflict, interest rate expectations and key U.S. Inflation data.
By 0246 GMT, spot gold remained at $4732.89 an ounce. U.S. Gold futures for delivery in June gained 0.3%, to $4742.40. U.S. president Donald Trump stated on Monday that the ceasefire agreement with Iran is "on life support". This was after Tehran's reaction to a U.S. plan to end this war showed how far apart they are on many issues. Ilya Spirak, the head of global macro at 'Tastylive', said that expectations have already shifted for many central banks to a more hawkish stance.
We're looking at the CPI numbers to see if they give a stronger indication of inflation than expected.
Investors may get a clue about the Fed's monetary policy by looking at the data that is due later today.
In early Asian trade, oil prices increased, and the dollar continued its gains from the previous day.
Increased crude oil prices can cause inflation and increase the probability of higher interest rates. Gold is often seen as a hedge to inflation but high rates tend to weigh on this non-yielding investment. BofA Global Research & Goldman Sachs have lowered their expectations for U.S. rate cuts in this year, citing high energy costs and the 'growing strength of the labour market. The markets are also closely watching Trump's two day visit to China, where he will meet Chinese President Xi Jinping and discuss a variety of topics including the Middle East.
Silver spot was unchanged at $86.08 per ounce. Platinum fell 1.6% to $1,098.25 and palladium dropped 1% to $1,494. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu and Harikrishnan Nair)
(source: Reuters)