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The oil price outlook is weakened by OPEC+ and lingering trade worries
A poll revealed that analysts have revised their oil price predictions down for the third month in a row as OPEC+'s soaring supply and the uncertainty surrounding the impact of trade wars on fuel demand continue to weigh on prices. In a survey conducted by 40 economists and analysts, a forecast of Brent crude at $66.98 per bar in 2025 was lowered from the $68.98 estimate made in April. U.S. crude, however, is forecast to be $63.35, which is lower than last month's $65.08 estimate. According to LSEG, prices have averaged around $71.08 and $67.56 so far this year. Tobias Keller is an analyst at UniCredit. He said that while tensions between the U.S. Keller said that "on the supply side oil prices are heavily influenced by OPEC+'s production decisions while geopolitical tensions... continue to pose risks of disruption and volatility in price." Eight OPEC+ member countries began to unwind their output cuts in the first quarter of this year. They agreed on higher-than-expected increases for May and July, totaling 411,000 bpd. Sources have said that the members could decide to increase output for July during a Saturday meeting. The move is "driven by a desire not to support oil prices, but rather punish members who do not comply." Compliance will be difficult to enforce, particularly in Kazakhstan", said Suvro Sarkar. Lead energy analyst at DBS Bank. Analysts polled by predict that global oil demand will grow an average of 775, 000 barrels per day by 2025. Many cite elevated trade uncertainty and economic slowdown risk as the main concerns. The International Energy Agency forecasted a 740,000 barrels per day average growth in 2025. Norbert Ruecker is the head of Economics & Next Generation Research at Julius Baer. He said that with U.S. and China oil consumption constrained by fuel-efficiency gains, economic insecurity and the shift towards electric mobility, the "growth of demand" comes primarily from the resource countries themselves. The war between Russia and Ukraine continues to increase the geopolitical risks for oil. Analysts claim that markets have priced in uncertainty. Sarkar said that "potential de-escalation and the possibility of lifting Russian oil sanctions could further lower prices."
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Nigeria offers tax reductions on oil to reduce costs
The Nigerian president Bola Tinubu signed an executive order that introduces a framework based on performance for operators in the oil sector. This is designed to tie tax incentives to cost savings that can be verified. The new Upstream Petroleum Operations cost Efficiency Incentives order 2025 will provide tax relief to operators who implement cost reductions that are industry standard in shallow-water, onshore and deep-offshore fields. The tax credit will not exceed 20% of the operator's tax liability. Tinubu stated in a press release that "This Order sends a message to the world: We are building an efficient and competitive oil and gas industry for Nigerians." It is about creating jobs and securing the future of Nigeria. Analysts believe that success is largely dependent on the implementation. President Tinubu stressed the importance of aligning government agencies in his announcement. Clementine Waltlop, director of Horizon Engage's sub-Saharan Africa division, said that if Nigeria succeeds in this area it could have a significant impact on the country's appeal to investors. This order is an important part of the ongoing reforms by the government to boost competitiveness in the sector. In order to increase the appeal of offshore drilling, Nigeria last year offered a 25% allowance on gas-utilisation investments for equipment and plants for both new and ongoing projects. It also began streamlining its contracting process. While these incentives haven't resulted in new investments, they have encouraged a few farmers to return to their existing fields. (Reporting and editing by David Evans; Isaac Anyaogu)
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S&P reduces Volvo Cars' rating outlook citing US tariffs and competition in China
S&P lowered its outlook on Volvo Cars' BB+ rating to "negative" on Friday from "stable". The company said that the increased competition in China and the U.S. Tariffs were harming the growth prospects of the company. Last month, the Swedish automaker, owned by China's Geely in majority, retracted its earnings guidance. It also announced cost-cutting measures, including the layoff of 3,000 workers, mostly white-collar, due to a drop in demand. S&P stated in a press release that "the negative outlook for Volvo Cars reflects the company's large exposure to U.S. tariffs on imports, and its increasing marginalisation on the Chinese market." We expect Volvo Cars to face pressure on its profitability and cash flow generation in 2025-2026. This will be partially alleviated by an extensive cost-cutting programme. In 2024, the United States will account for 16% of Volvo Cars' sales. China will be responsible for 20%. Volvo Cars only produces one model in the United States and imports the rest. This leaves the company at greater risk of U.S. Tariffs than its European counterparts. S&P also said that a proposed ban by the United States in 2027 on automakers controlled a Chinese entity weighed on outlook. A U.S. Court temporarily reinstated new tariffs on Thursday, after a U.S. district court ordered their immediate suspension the day before. (Reporting and editing by Terje Solsvik, Tomasz Janovowski)
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LME copper set to rise at its fastest pace since September due to tightening supply
Copper prices in London were unchanged on Friday but are on track for their largest monthly increase in eight months, due to tighter supply. This is highlighted by the premium of nearby copper contracts compared with those further away. The benchmark three-month copper price on the London Metal Exchange was unchanged at $9,570 per metric ton as of 1006 GMT. The contract has risen 4.8% in May so far, and is on track to have its best month since September. Prices are supported by the decline in stocks at LME-registered storage facilities The lowest level in nearly a year, with a drop of 45% from mid-February. The Shanghai Futures Exchange monitored copper inventories in warehouses rose 7.2% during the week. The premium for COMEX copper over the LME benchmark is still high, which attracts more metal to COMEX owned warehouses. "The LME Copper is facing a little squeeze because the COMEX stock keeps going up and the LME stock is declining," said Dan Smith. Spread between cash LME and three-month copper contracts Closed on Thursday at $51.6 per ton, the highest premium since November 2022. This indicates concerns about supply. Smith said that the premium, or backwardation as it is also known, reflects the uncertainty surrounding the supply of copper from the Kamoa-Kakula mine in the Democratic Republic of Congo. This mine is the largest copper producer in Africa, and one of the largest in the world, Smith explained. The industrial metals as a whole were under pressure, with the dollar strengthening and the market losing optimism following a recent court ruling which reinstated tariffs that President Donald Trump had imposed. China's Futures Markets are closed until 3 June for the Dragon Boat Holiday, which has reduced the overall trading volume. On the demand side, Saturday's official purchasing managers index (PMI), which is a measure of metals consumption in China, will be the main focus. A poll shows that China's factory output likely declined for a second consecutive month in May. LME aluminium dropped 0.3% to $2.443.50 per ton. Zinc fell 0.4% to 2,663.50; lead lost 0.2% at $1.958; tin declined 1.8% to $30.655 while nickel increased 0.2% at $15.395. (Reporting from London by Polina Devlin; Additional reporting in Bengaluru by Brijesh Patel; Editing by Jane Merriman).
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Iron ore pessimism subsides despite looming Simandou supply
Analysts and traders agree that the prospects for iron ore price are improving due to a smaller than expected global surplus in this year. However, new supply coming from the massive Simandou project, located in Guinea, remains a downside risk on a longer-term basis. More than a dozen analysts and traders interviewed at this week's Singapore International Ferrous Week said that their forecasts of oversupply for this year have been reduced from 50,000,000 tons to between 20,000,000 and 30,000,000 metric tons. The reason is that demand has been resilient this year, thanks to strong steel exports. Buyers stocked up on steel amid signs of a global trade war escalating while cyclones in Australia disrupted the supply. Official data revealed that in the first four month of 2025 China's imports of iron ore fell 5.5% on an annual basis, while its crude steel production increased 0.4%. Iron ore price Steel prices have remained well above $90 a ton. Below that price, high-cost miner struggle to make a profit. This is despite the trade tensions between two of the world's largest economies, which have raised concerns about the future outlook for steel demand. Analysts and traders have revised up their bearish pricing scenarios from $75 to $85 per tonne at the beginning of the year. Analysts say that the medium term demand for Iron Ore will remain strong because China's new fleet of blast-furnaces will need iron ore for another decade. According to the current life cycle of equipment in China, there won't be a big reduction in blast furnaces by 2035. This means that iron ore will remain at a high level," Long Hongming said in a speech delivered on Tuesday. SIMANDOU Simandou is one of the largest high-grade ore mines in the world. It will begin shipping ore to the market by November. This entry should exacerbate the glut on the global iron ore market starting 2026. The increasingly hostile attitude by the military government of Guinea, which has recently cancelled 129 exploration permits for minerals and is in a standoff against Emirates Global Aluminium, caused concern among traders, analysts, and steel mills attending the conference in Singapore. Participants asked whether the government’s aggressive stance would affect the smoothness of the project’s ramp-up to its full production level of 120 million tonnes a year. Simandou is the joint venture of Rio Tinto (the world's biggest iron ore mining company) and Chinese companies, including China Baowu. China Baowu is the largest steel producer in the world by production. Reporting by Amy Lv, Hongmei Li. Mark Potter edited the article.
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Inflation data ahead of the stock market's best month since 2023
The dollar flirted with its first annual rise as traders awaited key inflation data, and assessed Washington's latest tariff bluster. Investors have tried to ride the roller coaster of news this week after a U.S. federal appeals court temporarily restored tariffs that were temporarily blocked by a U.S. district court. The initial decline in European stock prices on Friday was followed by a 0.3%-1% gain despite the unexpected drop in German retail sales. Wall Street futures began to slump again before U.S. inflation data is due later. The main MSCI world index has risen over 5% in the last month, while the dollar is tantalizingly near to its first month of positive growth since 2025. The benchmark 10-year U.S. Treasury rates, which are a proxy of U.S. borrowing cost, rose 0.5 basis points during European trade. On Thursday, they had fallen on the back of weak economic data and an auction for 7-year bonds. Investors were also alarmed by a provision that was not widely publicized in Trump's proposed budget. This would have allowed the government to tax foreign investments up to 20 percent. Elias Haddad, a strategist at Brown Brothers Harriman, said that the One Big Beautiful Bill Act's foreign tax provision was alarming. He added that the uncertainty created by the act raised the possibility of "stagflation" in the United States. The oil prices are on course for a second successive weekly decline on expectations of a further OPEC+ production hike. However, they were still up on the day as well as for the entire month. Investors were also worried about the Japanese debt level and tariff impact. The yen gained as much as 2 percent from its Thursday low and was trading at around 144 dollars per yen in London. The euro and the pound both fell 0.3% and 0.1% to $1.13 and $1.3 respectively. Hong Kong's Hang Seng fell 1.2% in Asia. Apple suppliers were also hit by the U.S. tariff reverse. Blue chips on the mainland also fell 0.5%, despite both posting solid gains for the month. Korean stocks performed even better than the world index, achieving their best month in November 2023. In the meantime, an index that tracks emerging market currencies has gained about 2% in a month. This is the best performance since November 2023. Gold prices on the rise have helped Ghana cedi to rocket by nearly 40% in this month. Rodrigo Catril is a senior FX Strategist at National Australia Bank. He said that Trump's trade agenda was still alive and well, but the legal battle added yet another layer to uncertainty. He said, "The only thing more certain than more uncertainty is more certainty." The Trump administration has said that despite the drama in the courts, negotiations with the top trading partners continue unabated. Treasury Secretary Scott Bessent stated in an interview with Fox News, that he would be meeting with a high level Japanese delegation on Friday evening in Washington. However, he noted that talks with China had "a little stalled".
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Trump's rally in Pennsylvania to celebrate Nippon Steel's 'deal'
Donald Trump, the U.S. president, will be in Pittsburgh, Pennsylvania, on Friday, to address a rally celebrating Nippon Steel’s “planned partnership” with U.S. Steel. This could signal that the final approval of the deal is imminent. The supporters of the deal hope that his visit to the state in which U.S. Steel has its headquarters will bring an end to a turbulent 18-month attempt by Nippon Steel, plagued by union opposition and by two national security reviews. The deal may not be finalized. Trump, who announced the rally on Truth Social on Friday and appeared to endorse the merger in his post, cast doubts on Sunday by describing the deal as an "investment" with "partial ownership", with control remaining with the U.S. Trump will make remarks at the U.S. Steel Plant at 5 pm. Friday, ET (2100 GMT), in the swing state that he won during the election of 2024. The White House said that his remarks were about the "U.S. Steel Deal." Trump has to make a decision by next Thursday, after the Committee on Foreign Investment in the U.S. completed its second review last week. The timeline may slip. The road leading up to the rally on Friday has been bumpy. Nippon Steel made an offer of $14.9 billion to U.S. Steel for December 2023. They wanted to take advantage of the expected increase in steel sales due to the bipartisan Infrastructure Law. The tie-up was doomed from the beginning, as both Biden and Trump insisted that U.S. Steel be owned by Americans. They were trying to win over Pennsylvania voters ahead of the presidential election in November. Former Vice President Kamala Harris who was the Democratic nominee for 2024 when Biden stepped down, said that U.S. Steel must remain domestically-owned. Biden, following a CFIUS review in January, blocked the deal on grounds of national security. The companies filed suit, claiming they had not received a fair review, an accusation that the Biden White House denied. Steel giants saw an opportunity with the Trump administration. The Trump administration opened a 45-day review of the proposed merger in terms of national security last month. Trump's public remarks, which ranged from welcoming the Japanese company to "invest" in U.S. Steel to suggesting that Nippon Steel would have a minor stake, did not do much to reassure investors about a possible green light. Reports last week stated that Nippon Steel was planning to invest up to $14 billion into U.S. Steel operations, including $4 billion for a new mill. This is in response to government requests for more investment. Trump wrote on Facebook last Friday that the partnership would create 70,000 jobs and bring $14 billion dollars to the U.S. economy. This gave new life to prospects for this tie-up. I will be seeing you all on May 30th at US Steel in Pittsburgh for a BIG rally. CONGRATULATIONS! (Reporting and editing by Alexandra Alper, Jeff Mason and Kate Mayberry).
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Pollen Street Lumon abandons takeover pursuit against UK's Argentex
Lumon Acquisitions, a provider of payment services, announced on Friday it would not be making an offer to Argentex following the rejection of an earlier bid by the currency risk management company. Why it's important Argentex was one of the earliest victims of market turmoil brought on by Donald Trump's unpredictable trade policies. The sharp decline in the dollar in late April squeezed the company's finances. CONTEXT Lumon, a British private equity firm, has joined Argentex's former chief executive Harry Adams, and Irish entrepreneur Terry Clune, in abandoning their bid to buy the British company. Adams and Clune said Thursday they also would not be making an offer to buy the company. Argentex rejected bids by Lumon, Adams and Clune as well as IFX Payments. The offer was valued at approximately 3 million pounds ($4 millions). MARKET REACTION Argentex shares, listed on AIM, have fallen 2.3% this year. They've lost over 90% of their value.
Iraq announces it will update its Overproduction Compensation Plan
Iraq reaffirmed Monday its commitment to the OPEC+ Agreement and said that it would present an update plan to compensate any overproduction from previous periods.
Baghdad said that its oil minister Hayan Abdul-Ghani spoke with Saudi Arabian Energy Minister Prince Abdulaziz bin Salman and OPEC Secretary-General Haitham Al-Ghais.
Iraq has said that it will continue to make efforts to compensate for the overproduction, while also taking into consideration the expected handover of oil from the Kurdistan Regional Government.
OPEC+, a grouping of members of the Organization of Petroleum Exporting Countries (OPEC) and their allies, such as Russia is scheduled to increase its supply in April.
OPEC+ has agreed to reduce its output by 5,85 million barrels a day (bpd), which is about 5.7%, in a series steps that have been taken since 2022.
The group has extended its most recent layer of cuts until the first quarter 2025. This is the latest delay due to weak demand, and increased supply outside of the group.
Baghdad awaits the approval of Turkey to resume oil flow from the Iraqi Kurdistan Region after a two year halt that began in March 2022, when the International Chamber of Commerce ordered Ankara pay Baghdad damages of $1.5 billion for unauthorised exports in the period between 2014 and 2018.
Sources have confirmed that the Trump administration has put pressure on Iraqi officials to allow Kurdish exports of oil to resume or else face sanctions along with Iran. Later, an Iraqi official denied the pressure and threat of sanctions.
A senior Iraqi official in the oil ministry told reporters earlier that around 185,000 barrels of oil per day will be exported through the Iraq-Turkey oil pipeline from Kurdistan once oil shipments resume.
Iraq and Kazakhstan both promised compensation cuts in order to compensate for overproduction. Reporting from Jana Choukeir, Baghdad; Ahmed Rasheed, Dubai; writing by Mahal Dahan; editing by Kirby Donovan
(source: Reuters)