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Middle East tensions drive oil over $100, Wall Street drops
Brent crude prices soared to $100 per barrel on Wednesday, and Wall Street opened lower as the escalating conflict engulfing the Middle East fueled fears?about? energy-driven inflation in advance of several important central bank decisions. Brent crude futures climbed as high as 3%, reaching a session-high of $100.95. This was the first time that Brent crude had breached the symbol since July 24. After Iran claimed it fired missiles at an American base in Jordan, and both sides claimed they attacked vessels, oil supply from the region became a concern. Brent crude prices rose by 2.83% at the start of U.S. trade, and were priced at $100.70 per barrel. The stock markets around the world were under pressure due to the recent surge in energy costs, which prompted concerns that central banks would tighten monetary policy for longer if inflation continues to rise. The Dow Jones Industrial Average fell by 0.75% during early trading. Meanwhile, the S&P 500 was down by 0.30% while the Nasdaq Composite dropped by 0.35%. The pan-European STOXX 600 Index?fell 1.2% while MSCI's global stock index fell 3.39 points or 0.29%. The euro edged up ahead of Thursday's policy announcement by the European Central Bank. Markets were expecting an increase amid inflationary pressures caused by the Iran War. The currency reached a new high of $1.16493, which is more than a week old. As traders redeemed short positions, the yen reached a 'nearly 7-month high' against the dollar on Tuesday. The Bank of Japan is expected to increase rates faster and there could be a rush of Japanese capital repatriated. Japan and the Eurozone are both energy importers. The dollar index fell by 0.13%, to 98.65, measuring the greenback in relation to a basket including the yen, the euro and other currencies. U.S. INFLATION TESTS The benchmark yield for global borrowing costs is the 10-year U.S. Treasury. It traded at 4,794%. Last week, it reached a high of nearly three years at 4.818% as traders ramped up expectations of tighter monetary policies. The U.S. consumer and producer price reports that will be released this week are a test of these bets. Policymakers are looking for more evidence that inflation is continuing to cool. In the latest survey, 70% of economists expect that the Federal Reserve will keep rates the same at its rate-setting meeting on Tuesday. However, this is lower than the 90% of economists who expected rates to remain the same in August. Matthew Ryan, the Head of Market Strategy for global financial services company?Ebury, said: "Financial market participants are genuinely divided on whether or not the FOMC will increase rates at its September meeting next week, a state of 'uncertainty that is unusually close to a deadline. The yen gained around 0.4%, reaching 153.350 to the dollar. It is now back at its previous high of 152.89. The yen had risen by around 4% in the last five days, with BOJ officials' hawkish comments ostensibly triggering a move which?then snowballed when breaks of key levels led to additional buying. Sterling edged up 0.14%. The Bank of England will announce its latest decision on Thursday of the following week. Economists predict that the key rate for the rest of the year will remain unchanged. Gold rose 1.5% to $4,418 per ounce.
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Nepal uses drones to provide flood relief
After last month's floods, Nepalese army has turned to drones to provide relief to the displaced. Since a Himalayan iceberg broke off at the Nepal-China boundary in late August, more than 5,000 people have been confirmed missing and dead in Nepal. "Most our helicopters are busy with rescue operations." Drones are the only way to deliver food, medicine, fuel and other 'essentials'. He said drones can be used to transport up to 60 kg (132 lbs), and are capable of traveling up to 4 km (2 miles). They have already made a difference for communities that desperately need aid. A fleet of four DJI FlyCart100 drones donated by China, as part of an aid package, allows the army to make around 10-16 deliveries per day. Drones are also used to move flood victims' bodies in some areas. They have also played a major role in search and rescue missions. We've been moving back and forth in the early morning. It is a bit hectic because we have to get this done right away," said Milan Pandey, a drone operator at Airlift Technology. Pandey stated that "Nepal's geography and terrain would make drones much faster, cheaper, and more efficient."
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As a wave of US-Iran strikes exposes the dwindling safety network, oil prices surpass $100
The price of oil topped $100 per barrel for the first six-week period on Wednesday, as an escalation of fighting between U.S. forces and 'Iranian forces raised concerns about the supply coming from the region. This also heightened fears over inflationary pressures and increased energy costs. Brent, the global benchmark for oil, has increased by 25 percent since early last week as hope fades of a permanent solution to the six-month old U.S./Iran conflict. This week, the rally intensified after Iran-backed Houthi attacked Saudi energy installations and set them ablaze. The increased risk of disruptions spreading across the Gulf region was heightened by the attacks. The break of oil above $100 indicates that global markets are becoming more vulnerable following months of losses in supply due to disruptions of oil exports via the Strait of Hormuz, and inventory reductions. Oil broker PVM's Tamas Varga said that oil investors are expressing unambiguously their views on the impact of this latest escalation. They are voting with their dollars,?and that vote strongly indicates, that until the Strait of Hormuz is reopened and oil flows again unhindered, the supply will not align with the demand in the near future. Brent futures are still far from the $126 mark that was reached earlier in this conflict. However, sustained prices above $100 per barrel would have a significant impact on energy markets. They could increase transport and manufacturing costs and reignite inflation fears, as well as keep interest rates high for longer. OIL STOCKS are low The war in Iran has led to a six-month reduction in Middle East oil exports, which has helped reduce the oil stock of some major consumers. The United States also drained heavily from its Strategic Petroleum Reserve. It is now at its lowest level since 1982. After years of releases from former President Joe Biden, and President Donald Trump to cushion consumers from high fuel costs, the reserve now contains 289.7 millions barrels. High gas prices pose a threat to Trump's Republican Party. The party will be fighting for a narrow majority in both chambers of Congress at the midterm elections this November. For Labor Day, the national average gas price was predicted to be $4.03 per gallon. Analysts claim that $4 per gallon will be a major issue for consumers. International Energy Agency (IEA), the West's energy watchdog announced in March that 400 million barrels of emergency oil reserves had been released. The agency also stated that the global economy still has "substantial stocks". Around three quarters have already been released. According to the IEA, total global oil reserves, including all types, such as commercial stock, U.S. stocks and SPR, Chinese oils, and stocks on the water, appear fairly secure. Yet, many of these are in transit, pledged to buyers or held by countries like China that do not provide much information on their available reserves. OIL FLOWS FROM THE MIDDLE ESTATE STILL DISRUPTED Brent reached $126 per barrel in April. Prices are still below that peak. The return of oil prices above triple-digit levels poses a threat to a market that has little margin for error. Reduced inventories and limited spare capacities leave the supply vulnerable to further disruptions. According to Vortexa's estimates, the 'Iran war' has caused oil exports to be missing by about?10m barrels per day or 10% of global oil demand. The IEA predicted that global oil production would drop by?4.3m bpd or 4% this year, despite some producers, including the United States and Canada. Analysts say that with emergency stocks depleted, and millions of barrels per day already off-line, the market is less able to absorb disruptions now than at the beginning of the war. "I believe the market is trying treat this increase in energy prices like a one-off. It's not. This is structural. It is not going to disappear, and I would say that it's a part of what i would call a security premium. It's only going grow bigger", said Jeffrey Currie.
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IAEA board draws line under previous Syrian nuclear activities
Board of Governors of the U.N. Nuclear Watchdog, a 35-nation group of nations, passed a resolution Wednesday that drew a line under 'Syria’s secret nuclear activities' during the Assad regime. The International Atomic Energy Agency (IAEA) demanded that Syria disclose its nuclear activities after?Israel bombed the site in eastern Deir al-Zor province in 2007. In 2011, the IAEA board reported that Syria had violated its obligations to prevent proliferation of nuclear weapons. This was then forwarded to the U.N. Security Council. The IAEA and Syria have pledged to cooperate after the 2024?overthrow Bashar al Assad. In a confidential report sent to member states last week, which was seen by, the IAEA stated that it had answered all of its questions regarding the issues initially reported to the board. The resolution passed on Tuesday said Syria no longer did not comply with its obligations. The resolution text submitted by Egypt, Jordan Morocco and Saudi Arabia stated that "(the board) welcomes transparency?and cooperation from the Syrian Arab Republic. It commends its actions taken to resolve its non-compliance." Diplomats said that the resolution was passed by consensus, which means no one objected. IAEA's report confirms that it is "very likely" that the bombed site contained a nuclear reactor and said the fuel was manufactured in Syria. IAEA discovered around 73 metric tons of natural uranium in Syria, mostly in the form of fuel rods. The IAEA is overseeing the material, and Syria says it will remain in Syria.
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GRAPHIC-Brent Oil Tops $100 As Middle East Conflict Intensifies, Stoking Supply Fears
The price of oil topped $100 per barrel for the first time in six weeks on Wednesday as an increase in fighting between U.S. forces and Iranian forces heightened concerns about supply coming from 'the -region. This also raised fears over inflationary pressures, and increased energy costs for businesses and consumers. Brent, the global benchmark for oil, has increased by 25 percent since early last week as hope fades of a permanent solution to the six-month old U.S./Iran conflict. This week, the rally intensified after Iran-backed Houthi attacked Saudi energy installations and set them ablaze. The increased risk of disruptions spreading across the Gulf region was heightened by the attacks. The break of oil above $100 indicates that global markets are becoming more vulnerable due to months of supply losses caused by disruptions in oil exports via the Strait of Hormuz, and inventory reductions. Oil investors have expressed their views about the impact of this latest escalation of violence in the Middle East unambiguously, said Tamas Varga of oil broker PVM. They are voting with their dollars, and this vote strongly suggests that until the Strait of Hormuz is reopened and oil flows again unhindered, supply and demand will not align in the near future. Brent futures are still far from the $126 level that was reached earlier in the conflict. However, sustained prices above $100 per barrel would have a significant impact on the energy market, increasing transport and manufacturing costs and reigniting inflation concerns. OIL STOCKS are low Some key oil consumers have seen their oil stocks depleted after six months of reduced Middle East oil exports due to the conflict in Iran. The United States also has a?drawn heavily from its Strategic Petroleum Reserve which is now at its lowest level in 1982. After years of releases from former President Joe Biden, and President Donald Trump to cushion consumers from high fuel costs, the reserve now contains 289.7 millions barrels. Trump's Republican Party faces a threat from persistently high gas prices over $4.00 per gallon. The party will be fighting to maintain a narrow majority in both chambers of Congress at the November midterm elections. International Energy Agency (IEA), the West's energy watchdog announced in March that 400 million barrels of emergency oil reserves had been released. The agency also stated that the global economy has large stocks. Around three-quarters of this amount has been released. According to the IEA, total global oil reserves, including all types, such as commercial stock, U.S. stocks, Chinese stocks, and stocks on the water, appear fairly secure. Yet, many of these are in transit, have been sold to buyers, or are held in countries like China that don't provide much information on their available reserves. OIL FLOWS FROM THE MIDDLE ESTATE STILL DISRUPTED Brent prices have remained below their peak of $126 per barrel in April. The return of oil prices above triple-digits poses a threat to a market that has little margin for error. Reduced inventories and limited spare capacities leave the supply vulnerable to further disruptions. According to Vortexa's estimates, the Iran War has caused oil exports of 10 million bpd - or about 10% of global oil demand - to be lost. The IEA predicted that global oil production would drop by 4.3m bpd or 4% this year, despite some producers, such as the United States and Canada, increasing their output. Analysts say that with emergency stocks depleted, and millions of barrels?a day already off the market, the market is less able to absorb?new disruptions?than it was at the beginning of the war. "I believe the market is attempting to treat this increase in energy prices as an anomaly. It's not. This is structural. It is not going to disappear, and I would say that it is part of a security premium. It's only going grow bigger," said Jeffrey Currie.
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Bloomberg News reports that Dow is considering exiting its $20 billion partnership agreement with Aramco.
Bloomberg News reported that Dow was considering a reshuffle of its portfolio as it reshuffled its business in the face of a prolonged industry downturn. Dow shares were up almost 3% on premarket trading following a report that said Saudi Aramco may use this opportunity to purchase Dow's share and increase their ownership in Sadara Chemical Co. The report stated that other strategic or financial investors may also bid on Dow's shares. However, no final decisions had been made. Dow and Aramco didn't immediately respond to requests for comment. The chemicals industry has been impacted by a number of factors, including stagnant demand in Europe, increasing production costs, changing regulatory requirements, and persistent global oversupply. The U.S. and Israeli war against Iran has put further pressure on chemical makers, as it has disrupted oil flows and petrochemicals. Sadara Chemical temporarily halted production earlier this year citing disruptions in the supply chain due to war. In April, Dow said that it would stop recognizing losses for the Saudi joint-venture once liabilities had reached obligations as per accounting rules. The U.S. chemical giant's exit of Sadara could be a significant?shift? in the firm's priorities for its region. Sadara has a complex located in Jubail, Saudi Arabia. Its annual production capacity is more than 3,000,000 metric tons of chemicals and plastics. Dow has also been reevaluating its ownership of non-core assets throughout its global portfolio. Dow began a strategic review in 2024 of certain European assets. In January, it had reduced its workforce by 13% as part of a major restructuring that aimed to boost profitability.
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Oil tops $100 and stocks fall as Middle East tensions increase
Brent crude prices soared above $100 per barrel on Wednesday as the escalating conflict engulfing the Middle East fueled fears of energy-driven inflation and sent global stock markets tumbling in advance of a number major central bank decisions. Brent crude futures rose by as much as 3%, reaching a session-high of $100.95. This was the first time the price has surpassed the symbolic level since July 24. After Iran claimed it had fired ballistic missiles on a U.S. military base in Jordan, and both sides claimed they had attacked vessels, oil supply concerns from the region were raised. The latest rise in energy prices has caused concern that higher inflation may prompt central banks around the world to tighten monetary policy for longer. U.S. Stock Index Futures dropped about half a percentage,?setting Wall Street Indices up for a 3rd consecutive day of losses. The pan-European STOXX 600 Index dropped 1.5% at 1123 GMT. It is on track to experience its largest percentage drop in two months. Manish Kabra, Societe Generale's multi-asset strategist, said that $100 is a round figure, a psychological one, but for developed markets, the break-even price of oil is higher. "We believe crude oil needs to reach $150 in order to cause a significant drop in demand." Kabra warned that if the price margins of refined products do not decrease, "then?diesel costs go up with a tendency to have a trickle down impact on inflation and service." U.S. Diesel prices reached a record-high last week, as global supply constraints intensified following the?wars? in Ukraine and Iran that affected refineries in Russia & Middle East. Diesel is used widely in trucking, farming and industrial activity. Higher prices could impact the economy. The euro rose ahead of Thursday's ECB policy announcement, as markets were expecting an increase amid inflationary pressures caused by the Iran War. The currency reached a high of $1.16493, which is higher than the previous week's. As traders exited their short positions, the yen rose to a near seven-month high against the dollar. The expectations are building for a faster Bank of Japan rate increase and a possible rush of Japanese capital repatriation. Japan and the Eurozone are both energy importers. U.S. INFLATION TESTS The benchmark yield for global borrowing costs is the 10-year U.S. Treasury. It traded at 4,808%. It reached a three-year high last week of 4.818% as traders increased expectations of tighter monetary policies. The U.S. consumer and producer price reports that are due to be released this week are expected to be a true test of these bets. Policymakers are looking for more evidence that inflation is continuing its downward trend. The odds of a U.S. Federal Reserve?quarter point hike or a holding on Wednesday next week are close to 60%, but the BOJ is almost certain?to increase by a quarter point two days later. The yen gained around 0.4%, reaching 153.350 to the dollar. It is now moving back toward its previous session high of 152.89. Market players reported that it had risen by around 4% in the last five sessions. Hawkish comments made by?BOJ officials were ostensibly responsible for this move, which then snowballed when breaks of 'key levels' triggered more buying. The pound rose 0.1% to $1.3558. The Bank of England will announce its latest decision on Thursday of the following week. Economists predict that the key rate for the rest of the year will remain unchanged. Gold rose 1.1% to $4,403 per ounce.
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LME launches steel contract using Shanghai Prices on October 27
The London Metal Exchange will launch a contract for steel on October 27 using prices from its Shanghai counterpart, the 'LME' announced -on Wednesday. This is part of China’s efforts to increase its influence on global commodity pricing. In June, the LME announced an agreement with the Shanghai Futures Exchange for the new contract. At the time, the LME stated that trading would start in October. However, it did not specify a date. The SHFE, one of the most liquid steel contracts in the world, will be mirrored on the LME to increase trading volume and attract new customers. The new contract is based on Shanghai Hot-Rolled Coil Steel Futures. MiRan Park is the chief business officer of the LME. She said: "From next week, the LME provides the market with an easy way to access?what's widely regarded as a global benchmark for the sector flat steel. The exchange also outlined an incentive program for market participants who provide quotes for the new contract on its electronic trading platform. China is urging its futures markets to expand internationally and innovate as Beijing seeks to exert greater influence over global commodity prices. Hong Kong Exchanges and Clearing Ltd. owns the?LME.
Brazil targets COP31 agreement to target China as buyer of Carbon Credits
Brazil will use a 'high-level visit' to China next Monday to 'assess if Beijing could become a purchaser of Brazilian carbon credits, and to advance the talks towards a bilateral market agreement that officials hope they can announce at the COP31 climate summit in Turkey this November.
Discussions between top climate officials and carbon-market representatives from both countries will be held in conjunction with meetings at Wuhan, China from September 14 to 18 where a coalition of Brazil-China and EU carbon market jurisdictions that covers roughly 42% global emissions are set to approve a?plan of work aimed at gradually integrating and aligning trading systems.
Reis said that the trip to China would also be a test to see if the Asian nation could "become an ITMO buyer, or a buyer for internationally transferred mitigation outcomes (ITMOs), a type carbon credit which counts towards countries' official emissions under the Paris Agreement.
Reis stated that "if this?happens then Brazil should be the first country to offer high integrity credits."
China is the only country that has signed an official agreement to trade in?ITMOs. It is also the largest emissions trading system in the world.
OFFICIALS ANALYZE ACCELERATING INTERNATIONAL TRADE
Carbon credits in Brazil are currently only traded on voluntary markets where companies can purchase credits to meet their own emission reduction goals.
Brazil, under the legislation passed in 2024 is now preparing its own regulated market for carbon credits, where companies can buy them to reach their official targets of decarbonization. This will allow Brazil to trade internationally via ITMOs.
Reis stated that the plan is to set up a system for verifying credits in international trades by 2031-2035. The government is now considering industry requests for an earlier timeline.
She said, "It's on the table." "Those who are evaluating the submissions think that possibility is viable."
Brazil's carbon credits producers are closely watching the issue, eager to tap into international compliance markets.
COALITION MOVES OUT OF VISION AND INTO IMPLEMENTATION
Officials from Brazil, China, and the European Union will also approve a plan of work for the Carbon-Market?Coalition, which was launched earlier this month to improve compatibility between markets.
According to Brazilian officials, the coalition has already 11 members. It is looking for additional participants from developing countries.
Ana?Paula Cavalcante is Brazil's assistant secretary for carbon market regulation and methods.
She added that "Both the alliance and the closer relationship between China and Brazil can help scale-up carbon markets and unlock investments flows for Brazil, as it seeks reindustrialization around new technologies."
(source: Reuters)