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Oil prices fall as investors consider the possibility of US intervention in Iran/Israel conflict
Oil prices fell on Thursday, as investors were hesitant to make new investments after U.S. president Donald Trump's mixed signals about the country's possible involvement in the ongoing Israel/Iran conflict. Brent crude futures dropped 37 cents or 0.48% to $76.33 per barrel at 0110 GMT, after rising 0.3% during the previous session, which was marked by high price volatility. Prices fell as much as 2.7%. U.S. West Texas Intermediate Crude for July dropped 28 cents or 0.37%, to $74.86 per barrel. It had risen 0.4% the previous month despite a drop of up to 2.4%. The August contract, which is more active, was down 21 cents or 0.29% to $73.29 per barrel. Tony Sycamore said that traders are still waiting to see if the next step in the Israel-Iran conflict will be a U.S. military strike or peace negotiations. Sycamore stated that the former could cause prices to increase by $5, while peace talks may lead to a decline of about the same magnitude. Trump told reporters on Wednesday that he could decide to have the U.S. join Israel's missile attacks against Iran. On Thursday, the conflict entered its seventh day. Analysts say that direct U.S. involvement in the conflict would escalate the conflict and increase the risk of an attack on the energy infrastructure. Iran is OPEC’s third largest producer. It extracts about 3.3 millions barrels of crude oil per day. The Strait of Hormuz is a vital waterway that transports 19 million barrels of oil per day (bpd) and its products. There are widespread concerns about the impact of the fighting on trade. The U.S. Federal Reserve held interest rates at the same level on Wednesday, but penciled in two rate reductions by the end the year. Jerome Powell, the chair of the Federal Reserve, cautioned that rate cuts will be "data dependent" and said more consumer inflation was expected as a result of President Trump's import tariffs. Lower interest rates could stimulate the economy and increase demand for oil. However, this could also lead to an increase in inflation. (Reporting and editing by Christian Schmollinger; Colleen howe)
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Australian shares fall to 2-week lows as gold and miners stocks drop; Fed keeps rate
Australian shares fell to a new two-week low on Thursday morning, as miners and gold stocks were weighed down. Investor sentiment was dampened by the cautious tone of the U.S. Federal Reserve regarding rate cuts. By 0039 GMT the S&P/ASX 200 Index was down 0.2% to 8516.2, its lowest level since 6 June. The benchmark index ended Wednesday 0.1% lower. Investors around the world viewed the Fed as being steadfast in its rate setting, even though the U.S. central banks has left the door open to two reductions this year. Jerome Powell, Fed Chair, struck a cautious note when he stated that the Trump administration's proposed import tariffs would increase prices for consumers. Iron ore prices dropped on a slowdown in demand from China, the world's largest steel consumer, and the miners fell back 1% on the stock exchange, reaching their lowest level since 2 May. BHP Group, a mining giant, fell 0.5% and Rio Tinto, a miner of iron ore, lost 0.1%. The yellow metal's price fell 1.7% after the Fed suggested a slower pace for future rate cuts. The Financials subindex rose 0.3%, while the "Big Four banks" gained between 0.2% to 0.7%. In corporate news, National Australia Bank was forced to pay A$751,200 for alleged violations of the Consumer Data Rights Act. NAB shares rose by 0.7%. Despite a rise in oil prices, energy stocks fell by 0.7%. Woodside Energy, a major oil and gas company, fell by 1.2% while Santos, a smaller competitor in the industry dropped by 0.3%. New Zealand's benchmark S&P/NZX 50 Index was mostly unchanged at 12,600.23. The central bank has more time to decide when to reduce interest rates if the economy grows faster than expected.
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Ternium, a steelmaker, wants a stronger USMCA in the face of tariffs
Ternium, an American steelmaker with a large business in Mexico, demanded on Wednesday that the terms of a trade agreement for the region be strengthened ahead of a review. This was despite the current challenges posed by steel tariffs levied by President Donald Trump's government. Why it's important Steel products are subject to a 50% tariff on all shipments from Mexico into the U.S., but shipments from Mexico under the U.S. Mexico-Canada (USMCA), trade agreement, are exempted from tariffs. Last week, it was reported that the U.S. is negotiating with Mexico to reduce or remove steel tariffs for imports of a certain amount. CONTEXT Some officials think it could happen sooner. The USMCA agreement is due for review in 2019. Ternium, in a presentation made to analysts on Wednesday in New York, pushed for stricter "rules" of origin as part of this review to protect the area against unfair trade. Steelmakers accuse China of dumping, a practice in which it sells its product overseas below the market value. Products can travel through another country to reach their final destination. This makes their origin difficult to determine. KEY QUOTE Analysts at J.P. Morgan wrote to clients that "while management acknowledges adverse effects on global economic growth, they see the U.S. tariffs as beneficial for globalization over the long term." By the Numbers Ternium reported that the U.S. sent 2.28 million more metric tons of steel to Mexico in 2024 than Mexico did to the U.S., despite the fact that the U.S. had previously accused Mexico's government of over-supplying its domestic steel market. What's Next? Management stated that Ternium aims to increase its market share on the local Mexican market in coming years. It said that Chinese imports are continuing to pressurize the Brazilian market. The analysts at J.P. Morgan said that Ternium may also purchase the remaining shares in Brazil's Usiminas. However, this is not a top priority for the moment. (Reporting and editing by Kylie Madry.
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Rio Tinto settles Mongolian mine dispute for $138.75 Million
Rio Tinto has agreed to pay $138.75m to settle a lawsuit in which investors accused the Anglo Australian mining giant of fraud by hiding problems with the $7 billion underground expansion at the Oyu Tolgoi Copper and Gold Mine in Mongolia. The preliminary settlement for the proposed class-action was filed with the U.S. District Court of Manhattan late on Wednesday, and it requires the judge's approval. The lawsuit was filed on behalf of Montreal-based Turquoise Hill Resources shareholders between July 2018 and the end of July 2019 when Rio Tinto owned the majority of that company. Investors led by Chicago-based Pentwater Capital Management. The settlement resolved all claims against Jean-Sebastien Jacques who was the former Rio Tinto CEO and stepped down from his position in March 2021. Court documents show that all defendants admitted wrongdoing but settled in order to avoid the uncertainty, cost and burden of litigation. Rio Tinto and Pentwater have declined to comment. Turquoise Hill was a single asset company that owned 66% of Oyu Tolgoi, while the Mongolian government held 34%. Pentwater alleged that Rio Tinto, Turquoise Hill and others fraudulently assured the Oyu Tolgoi Mine was "on schedule" and "on Budget", even though it fell up to two-and-a half years behind schedule and ran $1.9 billion above budget. Rio Tinto acquired the remaining 49% of Turquoise Hills in 2022 for $3.3 billion. This allowed the company to fully integrate the mine into its portfolio. The lawsuit was partly based on allegations made by Richard Bowley who worked in the mine. He claimed that Rio Tinto knew of problems with the expansion long before they publicly announced them. Rio announced that it could incur an additional $1.9 billion in capital expenditures for 2019 and estimated total capital expenditures between $6.5 billion and $7.2 billion. Court documents show that lawyers for the shareholders intend to ask for legal fees up to 13% (or about $18,000,000 excluding interest) of the settlement, plus expenses up to $2.6,000,000. In re Turquoise Hills Resources Ltd Securities Litigation U.S. District Court Southern District of New York No. 20-08585.
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Gold Reserve group makes bid for Citgo parent
Gold Reserve's subsidiary Dalinar Energy Corporation submitted a better bid on Wednesday for the parent company of Venezuelan-owned refiner Citgo Petroleum, as part of an auction organized by a U.S. federal court. The mining company announced this in a press release. The deadline to improve the bid of Contrarian Funds affiliate Red Tree Investments for Citgo Holding's parent company PDV Holding was set by a federal judge in Delaware on June 18. This bid, worth $3.7 billion, had been selected earlier in the year as the opening bid. The court wants to reach a settlement to compensate companies for expropriations and debt defaults in Venezuela. Compensation of up to $19 Billion is being offered. A court officer who oversees the auction is expected to recommend a winner by 2 July. Sources close to the preparations revealed that other consortia, including affiliates from trading house Vitol as well as hedge fund Elliott Investment Management were also considering bids. Gold Reserve reported that Dalinar Energy’s revised offer, which is based on a combination equity and debt funding, has the support of a consortium, including Rusoro mining and two units from U.S. conglomerate Koch. The revised bid would, if accepted by the Court and completed, satisfy in cash or other non-cash payment, all judgments attached to Gold Reserve's senior waterfall creditors. In a release, the company stated that the revised bid would also satisfy a significant percentage of Gold Reserve’s attached judgment.
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Regime change in Tehran? Putin: Iran consolidates around its leaders
When asked if he agrees with Israeli statements regarding a possible regime change in Tehran, Russian President Vladimir Putin responded on Thursday by saying that Iranian society is consolidating around the Islamic Republic’s leadership. Putin has spoken as Trump Keep the World Guessing As residents of Iran's Capital city began to leave the city after the sixth day of Israel's airstrike, many wondered if the U.S. was going to join Israel in its bombardment of Iranian missile and nuclear sites. Putin said that all sides must find ways to end the hostilities so as to ensure both Iran's rights to nuclear power for peaceful purposes and Israel's unconditional security. When asked about Benjamin Netanyahu's comments, Regime change Putin stated that the military strikes by Israel and the demands of Donald Trump for Iran to surrender unconditionally could have led to the situation in Iran. He also said it was important to consider the goal before initiating any action. Putin, speaking to senior editors of a news agency in St Petersburg in northern Russia, said: "We can see today that in Iran with all of the complex internal political processes going on...there is a consolidating of society around the political leadership of the country." Putin claimed to have personally spoken with Trump and Netanyahu and conveyed Moscow’s ideas for resolving this conflict. He claimed that Iran's underground uranium-enrichment facilities are still intact. "These underground factories exist, and nothing has happened," Putin said. He added that all parties should work towards a solution that protects the interests of Iran as well as Israel. Putin said: "It would seem to me to be appropriate for everyone to seek ways to end hostilities, and to find ways for the parties in this conflict to reach an agreement," In my opinion, a general solution to this conflict can be found. Russian Deputy Foreign Minister Sergei Ryabkov On Wednesday Moscow told the United States to refrain from attacking Iran, as it would destabilise Middle East in a radical way. A Russian Foreign Ministry spokeswoman also warned that Israeli attacks on Iranian nuclear facilities could trigger a nuclear disaster. (Additional reporting by Vladimir Soldatkin in St Petersburg, Russia; Anastasia Lyrchikova, Dmitry Antonov and Darya Korsunskaya, in London, and Guy Faulconbridge/Andrew Osborn in Moscow)
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The US physical aluminum premium drops 7% due to tariff cuts
Metal industry sources reported that premiums for customers buying aluminum on the physical market of the United States dropped by more than 7% Wednesday, as traders speculated on possible reductions in U.S. tariffs on Canadian shipments. Mark Carney, the Canadian Prime Minister, said that he and President Donald Trump agreed that they should work together to conclude a new security and economic deal within 30 day. The price of aluminium sold on the physical market is the same as the London Metal Exchange, plus a premium for the physical market that covers freight and taxes. Trump doubled the aluminium import tariffs from 4 June to 50% in order to encourage investment in domestic production. Metals are used in transport, packaging and the construction industry. The U.S. Midwest duty paid aluminium premium at COMEX dropped to 55 U.S. Cents per lb, or $1,212 for a ton of aluminum, down from 59.34cents on Tuesday. On June 6, it reached a record price of 62.50 US cents, a 190% increase since Trump's second term election in November. Aluminium industry sources claim that the Midwest still has a premium compared to historical norms and that premiums along a maturity curve indicate the market believes that tariffs on aluminum imports will continue at some level. The United States imports about half of its aluminium, the majority of which comes from Canada. In fact, Canada exported 3.2 millions tons of aluminum to the United States in 2013. According to the U.S. Geological Survey, the United States produced over 4 million tonnes of aluminum last year. Most of this was recycled material. LME Aluminium was trading at around $2,550 per ton.
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Gold prices remain stable ahead of Fed's decision; platinum soars to a 4-year high
The gold price was little changed Wednesday, as investors waited to hear the Federal Reserve's decision on policy and Jerome Powell's comments. Platinum surged at a four-year high. By 1013 am EDT (1413 GMT), spot gold had fallen 0.1%, to $3386.10 per ounce. U.S. Gold Futures dropped 0.1% to $3.403.50. Marex analyst Edward Meir stated that the markets are currently trading sideways as everyone awaits the Fed's decision, and developments in the Middle East. Iran's Supreme leader Ayatollah Alyatollah Khamenei has rejected the demand of U.S. president Donald Trump for unconditional surrender. Iranians are jamming the highways to flee from the intensified Israeli airstrikes. The Fed will announce its policy announcement at 2 p.m. ET (1800 GMT) and is expected to maintain interest rates as they are. Investors will closely monitor Powell's remarks for clues about the central bank's next course of action. Trump criticized Powell for the decision he had expected to be made not to lower the interest rate and said that the man he placed in the position during his last term did a poor job. Gold is more appealing because of geopolitical tensions, and low interest rates. Prices lost momentum on Monday after reaching a session peak of $3,451.04, which was close to a record high set in April. Goldman Sachs stated in a report that investors are looking for opportunities to catch up. It added: "In our opinion, the recent platinum and silver rallies were primarily speculative in nature and lacked fundamental support." Spot silver fell 0.8% to $36,95 an ounce after hitting its highest level since Feb 2012 earlier. Platinum increased 3.1% to $1.302.17, the highest level since February 2021. The high price of the gold has slowed down Chinese demand for gold jewellery and there is high hope that platinum can be a substitute. If demand in May remains high or increases, then platinum prices will rise; if the April spike was an anomaly, expect a sharp drop, said Tai Wong. Palladium prices were flat in other places at $1,052.25 Reporting by Ashitha and Sarah Shivaprasad from Bengaluru. Jane Merriman edited the article.
Hurricane Erick is expected to intensify rapidly and threaten Mexico's Pacific Coast
Authorities said that Hurricane Erick was rapidly intensifying off the Pacific coast of Mexico and expected to become a major Category 3-hurricane before it makes landfall.
The U.S. National Hurricane Center reported that Erick would be the first storm to hit Mexico in this season. It will bring "life-threatening floods" to southern Mexico on Thursday and later tonight.
The center has warned that Erick could reach hurricane strength as it approaches the southern Mexican coast.
Erick, with maximum sustained winds of 140 kph (85 mph), is located about 255 km (about 160 mi) away from Puerto Angel tourist enclave where a hurricane alert is in place.
Mexico's civil defense agency has said that the storm could reach Category 3 strength by landfall.
Laura Velazquez told a press conference held by the president earlier that day, the hurricane was expected to make landfall on Thursday between the states Oaxaca & Guerrero.
Prepare for an Emergency
According to the National Hydrological Center, up to 20 inches (about a 50 cm) of rainfall is expected in Oaxaca y Guerrero.
Both states have started emergency planning with local authorities. According to the authorities, over 18,000 first responders and 500 temporary shelters were activated.
Mexican authorities also coordinate evacuation and care efforts in popular beach destinations including Acapulco.
Claudia Sheinbaum, the Mexican president, urged residents in flood-prone regions to move into shelters or stay inside.
Mexico's Conagua national water commission warned that rainfall could cause landslides, flooding and waves up to 6 meters high. (Reporting and editing by Stefanie Eschenbacher, Rod Nickel, Alistair Bell).
(source: Reuters)