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China's heavy dependence on Iranian oil
China is the largest buyer of Iranian oil, accounting for approximately 13.6% of the purchases made by the world’s biggest crude importer this year. This leaves Beijing exposed to any disruption in supply caused by conflict in the Middle East. Beijing, the world's largest oil importer and buyer from Venezuela, has been able to reduce its import bill by billions of dollars in recent years. How much Iranian oil does China buy? China purchases 90% of the Iranian oil shipped, but this is limited due to U.S. Sanctions aimed at cutting funding for Tehran's Nuclear Programme. According to Kpler, China bought an average of 1,38 million barrels of Iranian oil per day in the first half of this year. According to Kpler, China imported about 14.6% more than it did last year in Iran. Who are the main Chinese buyers of Iranian crude? Teapots are independent Chinese refiners that cluster mainly in Shandong Province. They buy Iranian crude because of the discount it offers compared to barrels from non-sanctioned countries. Teapots are a small part of the Chinese refinery industry, and their margins can be negative. Recently, a tepid demand for refined products has led to a squeeze on these margins. Traders and experts claim that China's large state oil companies have not bought Iranian oil in 2018/2019. How much cheaper is Iranian oil? Three traders reported that Iranian light crude was trading at $3.30 to $35 a barrel less than ICE Brent, for July deliveries. This compares to discounts of about $2.50 in June. Teapots slowed the buying, and sellers were looking to reduce inventories. According to traders, Iranian oil is currently trading at a discount of $7-8 per barrel compared to Middle East oil that has not been sanctioned. DO U.S. Sanctions Have an Impact? Washington re-imposed sanctions on Tehran in 2018 and, since Donald Trump took office in January, his administration has imposed new sanctions against Iran's oil industry. Reports state that Trump's sanctions include penalties on three Chinese Teapots. This has caused several independent mid-sized businesses to reduce their purchases, fearing being designated. According to one trader, non-sanctioned Iranian oil has replaced around 100,000 bpd in China this year. What is Beijing's position on the Iran Oil Trade? Beijing defends its trade relations with Iran and rejects unilateral sanctions. The traders who import Iranian oil into China usually label it as coming from another country, like Malaysia, which is a major hub for transshipment. Since July 2022, Chinese customs records have not indicated any oil being shipped from Iran. Reporting by Asia Energy Team, written by Tony Munroe and edited by Saad sayeed
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Gold drops to a two-week low after Israel-Iran ceasefire reduces demand for safe-haven gold
Gold fell more than 1% on Tuesday to reach a two-week-low, after President Donald Trump announced a ceasefire agreement between Israel and Iran. This announcement diminished the appeal of gold as a safe haven. As of 0852 GMT spot gold fell 1.2% to $3326.87 per ounce after reaching its lowest level since the 11th of June earlier in session. U.S. Gold Futures fell 1.6% to $3339.40. "Gold prices have been trending down today due to a shift in risk appetite as optimism increases over a possible end to hostilities within the Middle East," Ricardo Evangelista said, senior analyst of the brokerage firm ActivTrades. I don't think that the gold price will drop below $3,000 in the near future. "I see $3,300 as a significant support level." After the ceasefire was announced, oil prices fell and global stock markets rose in the hopes that it would herald the end of the war. Israel Katz, the Israeli Minister of Defence, said that he ordered his military to attack Tehran on Tuesday in response to a alleged violation to the ceasefire. The markets await Jerome Powell’s testimony to the House Financial Services Committee, which is scheduled for later today. Powell has been cautious in his recent comments about any rate cuts that may be coming soon. In an environment with lower interest rates, the appeal of non-yielding gold tends to be more prominent. Investors expect 57 basis point cuts in Fed rates by the end this year. ANZ stated in a report that "gold price is likely consolidate before staging a rally towards $3,600/oz at year's end." We expect the price of gold to reach its peak in 2025. This will be followed by a gradual drop in 2026, as global trade uncertainty and economic growth prospects improve. The price of spot silver fell 0.1%, to $36.08 an ounce. Platinum rose 1.4%, to $1.312.58, and palladium dropped 0.6%, to $1.070.49. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Vijay Kishore)
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Prices of EUROPE GAS have fallen by over 10% following the news that Iran and Israel had reached a ceasefire
The wholesale gas prices for the Dutch and British front months fell by more than 10% Tuesday morning, following the news that Iran had agreed to a ceasefire with Israel. This removed the risk premium that the market had built in due to potential disruptions of oil and gas supplies. LSEG data shows that the benchmark Dutch front-month contract for the TTF hub dropped by 4.61 Euros to 36.63 Euros per megawatt hour (12.41/mmBtu) or 12.41 euros/MWh by 0818 GMT. The contract has fallen to its lowest price since June 12, the morning of the first Israeli strike on Iran. A trader explained that Tuesday's decline was due to the news from Israel that it had agreed to U.S. president Donald Trump's proposal of a ceasefire between Iran and the United States. The daily market report by consultancy Auxilione stated that "at the open today, we have seen a tremendous sigh relief as more than 10% of the price levels were eroded." They warned that any breach of the ceasefire by either party would immediately bring back concerns to the market. Israel said that Iran had already violated the ceasefire, and it would be responding. Gas prices were at an 11-week high before due to fears that hostilities would lead to the closure of the Strait of Hormuz and lock in 20% of the global supply of liquefied gas (LNG). The oil price also fell sharply on Tuesday. Arne Lohmann, GRM's chief analyst said that the talk of a Hormuz Strait closing and a broader war threat has faded completely for the moment. A trader stated that gas prices could fall even lower, to levels not seen before the war, due to the high LNG supply, and the need to unwind some long positions by market participants. The Dutch day-ahead contracts fell by 5.25 euros, to 35.92 euro/MWh. Meanwhile, the British contract dropped 10.75 pence, to 84.50 pence per therm. The benchmark contract on the European carbon markets was up 0.31 euros at 73.58 euro per metric ton. Nora Buli, OSLO, and Nina Chestney edited the story.
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China's demand for iron ore cushions the fall, despite a firm outlook on Australia's supply.
Iron ore futures ended a three-day rally Tuesday, despite a stronger outlook for supply from Australia's top producer. However, the resilient steel demand in China helped to cushion the fall. The September contract for iron ore on China's Dalian Commodity Exchange ended the daytime trading 0.42% lower, at 703 Yuan ($97.97). As of 0725 GMT, the benchmark July Iron Ore traded on Singapore Exchange fell 0.71% to $93 per ton. Rio Tinto, world's biggest iron ore producer enters a joint venture to develop the Hope Downs 2 Project in Western Australia. Rio announced in a press release that the two pits of iron ore will have an annual combined production capacity totaling 31 million metric tonnes. Chinese consultancy Mysteel reported that iron ore exports from Australia and Brazil increased by 8.8% during the week of June 16-22. This is the highest level since June 2024. Mysteel data showed that hot metal production, which is a measure of iron ore consumption, increased 0.24% week-on-week to 2.422 millions tons as of 20th June. Analysts at ANZ said that "volumes have remained around 2.4 millions tons since April. This suggests resilience on the largest steel market in the world." Hexun Futures says that the market has not yet priced in the expected lower seasonal demand. Coking coal and coke, which are used in steel production, fell by 1.94% each and 2.03% respectively. The benchmark steel prices on the Shanghai Futures Exchange have fallen. The price of rebar, hot-rolled coil and wire rod dropped by 0.5%. Stainless steel fell 0.28%. $1 = 7.1757 Chinese yuan (Reporting and editing by Lucas Liew, Michele Pek and Sherry Jab-Phillips).
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After the Iran-Israel truce, caution is prevailing.
The London Metals Exchange (LME) and Shanghai Futures Exchange (SFE) saw copper prices rise on Tuesday, as caution reigned following the announcement by U.S. president Donald Trump of the ceasefire between Iran and Israel. As of 0703 GMT, LME's three-month copper rose 0.52% to $9,717.5 a metric ton, and SHFE's most-traded Copper gained 0.4% to $78,640. Trump stated in a post to his Truth Social website that a "complete" and "total" ceasefire would be implemented between Israel and Iran with the aim of ending the 12-day conflict. The commodity market has been unpredictable this year, and traders and investors are likely to wait and see how things turn out. As news of a ceasefire eased fears of supply disruptions, the U.S. Dollar fell and oil dropped to its lowest level in over a week. The greenback price of commodities is cheaper for buyers who hold other currencies. LME Aluminium fell 0.6%, to $2573 per ton. On Monday, it had reached a three-month peak on fears that the conflict could push up energy costs and disrupt supply. SHFE aluminium fell 0.51% to 20 315 yuan. LME Nickel rose 0.48%, to $14,875 per ton. Lead grew by 0.37%, to $2.010.5. Zinc climbed 0.07%, to $2.689; tin fell 0.06%, to $32,675. SHFE nickel fell 0.44% to reach 117,450 Yuan. Zinc rose 0.73% to 22090 yuan. Lead increased 0.5% to 16955 yuan. Tin gained 0.3% at 263,800. Click or to see the latest news in metals, and other related stories. Data/Events (GMT 0800 Germany Ifo Business climate, current conditions, expectations New Jun 1400 US consumer confidence Jun ($1 = 7,1773 Chinese Yuan) (Reporting and editing by Sumana Niandy, Vijay Kishore, Hongmei Li)
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More storms are on the horizon
After days of rain, multiple rivers in China's flood hit province of Guizhou burst their bank. This is the southwest end of the seasonal rain belt which stretches from Japan to China. Congjiang, and Rongjiang, both riverside cities with populations of more than 300,000 people, told their residents to leave the low-lying and fast-rising areas and along the rivers' banks. Since last week, the East Asia monsoon has been bringing heavy rains to parts of China. This is breaking records for rainfall. Scientists warn that while China has experienced summer flooding before, climate change will bring more rain and heavier rainfall. Government officials warn that massive flooding could lead to "black swan events" with severe consequences, such as dam collapses. Local media reported that a viaduct fell on a highway leading to Rongjiang after a landslide knocked down concrete columns. One section of road was sent crashing into the hillside. Video shared on social networks showed a cargo truck whose driver was perched dangerously over the edge as the section in front of it collapsed. Many highway sections in Guizhou were affected by landslides and cave-ins. Flooded streets in cities like Rongjiang paralysed traffic, and low-lying zones including underground garages and basements of shopping malls were submerged. State meteorologists predict that more rain will fall in the coming days. They warn provinces including Guizhou which have been hit by storms that overlapped to be on guard. On Tuesday, temperatures in provinces to the north of the seasonal rainfall belt, such as Henan and Shandong, as well the capital Beijing were just below 40 degrees Celsius. In a report released on Monday by the World Meteorological Organization, under the United Nations, it was noted that Asia is warming twice as quickly as the average global rate, causing more extreme weather conditions and a heavy burden on the region. (Reporting and editing by Saad sayeed; reporting by Ryan Woo)
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Wall Street Journal, June 24,
These are the most popular stories from the Wall Street Journal. These stories have not been verified and we cannot vouch their accuracy. C&S Wholesale Grocers has agreed to purchase SpartanNash, for approximately $1.77 billion including debt. The company is looking to expand their supply chain while keeping grocery prices low, as inflation worries are on the rise in America. After the companies agreed not to collaborate on boycotts based on political motivations, the U.S. Federal Trade Commission has allowed Omnicom Group to purchase Interpublic Group. New York plans to build the largest nuclear power plant in the United States, marking its first new major facility for more than 15-years. It is also a test of Donald Trump's promise that he would expedite permits for such projects. U.S. Semiconductor Supplier Wolfspeed signed a restructuring agreement with top creditors in order to reduce debt of approximately $4.6 billion through bankruptcy. Hormel Foods announced that former CEO Jeffrey Ettinger would return to Skippy Peanut Butter as interim CEO for 15 months beginning July 14. The U.S. Supreme Court cleared the way on Monday for the Trump Administration to quickly deport certain migrants back to their home countries.
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Adani, the Indian billionaire, says that no one in his group has been charged with US FCPA violations
Adani Group chairman Gautam Adani denied on Tuesday any wrongdoing as a response to U.S. accusations of bribery. He told shareholders that no one from the group had been charged under U.S. Foreign Corrupt Practices Act. Adani stated at the annual general meeting of the company that "despite all the noise no one in the Adani Group was charged with violating FCPA or conspiring against justice." He said that the Adani Group had never given up, despite the constant scrutiny and storms. Adani, along with several other executives, were indicted by U.S. authorities on November 28, alleging that they had paid bribes for Indian power contracts, and misled U.S. investor. The Adani Group rejected the allegations and said that it was cooperating in legal proceedings. Since Hindenburg Research 2023, which alleged that the group was using tax havens in an improper manner, the Securities and Exchange Board of India has been investigating Adani Group and 13 of its offshore investors. The group has always denied any wrongdoing. The company is building the largest renewable energy park on earth in Khavda (western India) and aims to have 50 gigawatts of renewable power installed by 2030. Adani Group said it expects a combined total of 100 gigawatts in power generation by 2030 with its thermal, renewable, and pumped-hydro assets. Adani announced an unprecedented capital expenditure plan. The group said it expects to spend between $15 billion and 20 billion dollars annually in the next five-year period. Sethuraman NR in Bengaluru and Hritam Mukerjee, editor Anil D'Silva.
A mountain of asset sales loom after oil megamerger period
U.S. oil and gas companies could deal with an uphill struggle to sell about $27 billion of properties to fund investor payouts over the next few years as the greatest wave of energy megamergers in 25 years nears the end of regulative reviews.
The share buybacks and dividends are required to entice financiers back to an industry that lots of have actually avoided over volatile returns and pressure to decarbonize portfolios. Energy stocks represent simply 4.1% by weight of the S&P 500, a 3rd of their 2011 share as tech and healthcare financial investments took off.
But finding brand-new owners for these homes is unlikely to be quick or simple, bankers and analysts warn. There are less institutional and European oil purchasers interested, and a lack of all set cash to fund these deals. The personal equity companies that once purchased Big Oil's cast-offs have turned to energy transition, social effect and sustainable financial investments.
The scale of mergers has been extraordinary with $180. billion from six offers given that October. Driven by a rush to include. oil reserves that can be tapped in the future, most of these. offers are expected to finish up this year and will let loose a burst. of oil wells, pipelines, offshore fields and facilities. bundles onto the marketplace. The absence of ready buyers suggests. sales will require time and might develop into asset swaps, instead of. cash sales.
Three acquirers - Chevron, ConocoPhillips. and Occidental Petroleum - have actually vowed to raise between. $ 16 billion and $23 billion combined from post-closing sales. Exxon Mobil, the leading dealmaker, has not divulged a. divestiture target. But it has actually raised $4 billion each year in. sale earnings since 2021.
In addition to less private-equity and worldwide. buyers, more extensive regulative evaluations have actually slowed the. marketing kickoff. Some financial investment lenders believe the. divestitures might run well into next year.
STRIKING THE MARKET
Exxon, which bought Pioneer Natural Resources for $60. billion in May, wishes to offer a collection of standard oil. and gas residential or commercial properties across the Permian Basin, to focus on greater. development assets, a representative verified.
Conoco is primed to offer Western Oklahoma gas homes. gotten in its $22.5 billion offer for Marathon Oil, and. Chevron likely will put a few of Hess' Asia offshore possessions. along with its Canadian and U.S. gas bundles now on the block,. people acquainted with the matter stated on condition of anonymity. due to the fact that regulatory reviews are underway.
Occidental has actually readied a sale of West Texas shale possessions. that might fetch $1 billion, and could include offshore Gulf of. Mexico and Middle East assets when its CrownRock acquisition. closes, state experts.
Exxon confirmed it is exploring a sale of choose. conventional oil properties in West Texas and New Mexico consistent. with our strategy to continuously assess our portfolio. It has. not set a new property sale target because the Leader offer.
Conoco and Occidental decreased to discuss their possession. sales targets.
A Chevron representative stated after the Hess closing we're. going to add some properties that are going to be extremely appealing. to other business. It might produce $10 billion to $15 billion. in pre-tax profits through 2028.
HURDLES REMAIN
These are not the best assets in the market, stated Luis. Rhi, a portfolio supervisor at asset management firm Barrow Hanley. Global Investors, who believes the business can afford to sit. pat till the marketplace for assets improves.
There is a genuine disconnect between the possessions available and. the dollars raised to purchase those properties, David Krieger,. co-managing partner at Houston energy investment company Covalence. Investment Partners. Dry powder for oil and gas investing is a. fraction of what it used to be, he stated.
Europe's oil majors, burned by previous ventures into U.S. shale,. are not apt to return, said Brian Williams, handling director at. financial investment bank Carl Marks Advisors. They have actually finished their. education and have mainly exited U.S. shale, he stated.
Smaller sized private-equity backed firms lack the capital for. these offers, state energy consultants. In 2023, simply 78% of announced. oil deals were below $1 billion in expense, compared to 94% in. 2019, according to M&A advisory company Petrie Partners.
There are not a great deal of sub-$ 1 billion acquisitions. occurring, stated Todd Dittmann, who has actually invested in energy for. several years, mainly just recently for Angelo Gordon & & Co. There is an exit issue in energy personal equity and. partners are not happy about it, he said.
WHO'S LEFT?
Closely-held oil business including Hilcorp, which. specializes in purchasing mature fields, smaller publicly traded oil. manufacturers, and Asian and Middle East investors are best. positioned. Japanese companies just recently have revealed more interest. in U.S. gas, state bankers.
Hilcorp, founded by billionaire Jeffery Hildebrand, is. munching at the bit to get a take a look at Big Oil's cast-offs, stated. an individual familiar with the business.
Somewhere else, We continue to see interest from parts of. the globe outside Europe-- Asia, Middle East and other areas--. where there is cravings to be included and release capital, stated. Bruce On, a partner in Ernst & & Young's strategy and transactions. group.
Many residential or commercial properties in the leading U.S. shale field will be traded. away or kept for their capital, said Andrew Dittmar, director. of M&A at energy analytics firm Enverus.
There is going to be a great deal of ammo for swaps and. trades in West Texas and New Mexico, he said.
(source: Reuters)