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After the oil selloff, we await progress on Strait of Hormuz flow
Tuesday, oil prices recovered after a sharp drop the previous session. This was supported by a tempered optimism about the U.S.-Iran Peace Talks. Investors awaited more clear signs of progress on restoring crude flow through the 'Strait Of Hormuz. Brent crude futures rose 24 cents or 0.38% to $78.15 per barrel. U.S. West Texas Intermediate was up 33 cents or 0.46% at 0026 GMT. Prices dropped more than 3% after the United States granted Iran 60 days of sanctions relief following initial peace talks. Officials also reported that the hostilities had ceased in Lebanon as a result of the wider agreement. The development came after a weekend which appeared to have put the week-old agreement in danger, with threats by U.S. president Donald Trump that he would restart the war if Iran disrupted the shipping through the Strait of Hormuz following Tehran's declaration of the strategic waterway as closed. Tim Waterer is the chief market analyst for KCM Trade. He said that there was a "prevailing" scepticism about oil prices, which stemmed from a deep-seated distrust between Washington and Tehran. This suggests that any return to prices comparable to those of pre-war will be delayed, rather than immediate. Trump stated in a Monday post on Truth Social that Iran would agree to weapons inspections as a way to ensure "nuclear integrity." Trump told reporters that if Iran didn't follow through on their agreement or they weren't behaving properly, he would do whatever he had to. Waterer said that the market had already priced in optimism about the Strait of Hormuz and its potential reopening. However, traders are now taking more of a measured approach while they wait for concrete evidence to show the deal is going to hold and traffic will return. Ship-tracking data showed that two crude tankers carrying just under 2,000,000 barrels of oil passed through the Strait of Hormuz Monday. This was a sign of increased traffic after Sunday's lower flows due to concerns about?passage of the waterway. The Department of Energy reported on Monday that U.S. crude oil stocks in the Strategic Petroleum Reserve dropped to 331.2 million barrels, the lowest level since June 1983. This was due to the tightening of supplies following the U.S. - Iran conflict. Reporting by Pranav Mathur in Bengaluru, editing by Jacqueline Wong
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Viva Energy will run Geelong Refinery with no alkylation unit until 2027
Australia's Viva Energy said Tuesday that its alkylation?unit?at the?Geelong Refinery?will remain offline?"and?has?been isolated from refining activities. Fuel retailer Viva Energy expects that the refinery will operate without an alkylation unit until 2027 based on its current assessment of the damage caused by a fire in April. According to preliminary information provided by the company, the fire was caused by a rupture of a section of piping in the alkylation system. The fire that broke out at the largest of Australia's refineries on the 15th April disrupted fuel production as the nation faced fuel shortages because of the war in Iran. Viva stated that the 'unit's' isolation would affect the refinery’s ability to convert liquefied petrol gas (LPG), and 'that options are being assessed to either'repair' or'replace' the unit. The company said that the work to restart a key residue?catalytic-cracking unit (RCCU), as well as other units, has been completed. These and related units will be returning to service this week. The 'firm's shares fell as much as 1.9% in early trading to A$2.09, their lowest price since June 16. (Reporting by Shivangi Lahiri in Bengaluru; Editing by Subhranshu Sahu and Rashmi Aich)
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Mayors of cities from London to Melbourne are seeking to reduce the burden of data centres on electricity and water
City leaders have announced that mayors of 40 cities, including London and Phoenix, have agreed to collaborate to reduce the strain on the electricity grids and water supplies, as well as the local communities. The 'global' surge in computing power is driving billions of dollars of investment into new sites. This has sparked protests from countries like the United States, South Africa, and Britain. The Global Urban Data Centres Pact is set to be unveiled on Tuesday during London Climate Action Week. It aims to establish standards that will ensure data centres are more efficient and use all resources efficiently. The rules will be tailored to the local conditions - cooling requirements in Iceland are different from those in Manila - but the mayors say the framework should guide planning and permitting decisions as well as negotiations between companies and governments. Melbourne Lord Mayor Nicholas Reece stated that around 50 major data centers already operate in the City and are projected to account for approximately 10% of local energy demand by 2030, and up to 20% by 2040. Reece stated that "data centres are the largest thing to hit the energy grid since air conditioners in the 1950s... Where the rollout of the air conditioners took decades, this happens in just a few years." He said that the centres could use up to 20 billion litres a year. This is equivalent to about 4% of the water supply in the city. "Race to the Bottom" Reece stated that investment in data centres is happening at a "breakneck pace", which outpaces regulation. This puts cities at risk of "a race to the bottom", as governments compete for investment and sometimes ignore environmental scrutiny. Phoenix Mayor Kate Gallego stated that the city and its surrounding area had 225 data centres planned or existing, with plans to double electricity consumption. Gallego stated that utilities which experienced decades of steady growth are now experiencing growth comparable to the last century in just a few years, driven by AI-related computing requirements. She said that the demand for electricity was unprecedented. She said that this has led to disputes centered on noise, land usage and safety risks associated with battery storage. There are also broader concerns regarding the installation of infrastructure in residential areas. London Mayor Sadiq khan, on the other hand, stated in a statement, that AI and digital infrastructure will play "a significant role in the future success?of cities across the globe... Residents are entitled to expect growth be managed responsibly". According to the World Economic Forum, data centres are responsible for 2.5% - 3.7% of greenhouse gas emissions globally. This is more than aviation. Their electricity consumption has been increasing faster than global power consumption. Barcelona, Chennai, and Boise, in the U.S. State of Idaho, are among the cities that have signed up. C40 Cities coordinates the initiative, which is a network of more than 100 of the largest cities around the world working together to combat climate change. Reece stated, "We don't want the smart city race to destroy the planet." (Reporting and editing by Emelia Sithole Matarise; reporting by Simon Jessop)
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Oil prices fall as worries about rates offset optimism over Iran talks.
As expectations for a rise in interest rates pushed up U.S. Treasury Yields, global stocks were mostly flat Monday. Oil prices fell as optimism about progress?in U.S.Iran talks was offset. U.S. Vice-President JD Vance stated in Switzerland that Iran has agreed to let nuclear inspectors enter the country. The conversations about the inspections could begin as early as this week. Treasury Department of the United States authorized Iranian crude oil, petrochemicals and petroleum products sales through August 21. This eases decades-old sanctions as the United States moves toward a final deal with Iran in exchange for nuclear inspections and a free transit through Strait of Hormuz. Wall Street's benchmark S&P 500 index and the Nasdaq both finished lower due to a decline in consumer discretionary and communication services stocks. The Dow finished higher. The Dow Jones Industrial Average fell 0.37%, the S&P 500 dropped 0.37%, and the Nasdaq Composite declined 1.32%. The STOXX 600 index in Europe rose by 0.58%. MSCI's global stock index fell by 0.03%. Gerry Sparrow, Chief Investment Officer at Sparrow Capital Management, stated that the markets are driven by the Fed's hawkish view and lower expectations of new Fed Chair Kevin Warsh moving to start cutting rates. Sparrow stated that the market was surprised by the action of the new Fed Chair, as they had expected him to be more lenient on interest rates. Last Wednesday, the Federal Reserve held interest rates at their current level. However, policymakers are expecting a rise in borrowing costs this year due to growing concerns over inflation that is above the 2% target set by the U.S. Central Bank. The yield on the benchmark U.S. 10 year notes increased 5.78 basis points to 4.50%. Brent crude futures settled lower by 3.38% at $77.90 a barrel, a far cry from their peak in May of $126.41. Sparrow stated that "the progress in peace negotiations is good. But the only negative surprise was the fact that the new Fed didn't seem to be a bit more accommodating during its latest announcement." UK POUND RISE AFTER STARMER'S RESIGNATION The pound rose after Keir Starmer, the Prime Minister announced his resignation. This paved the way for Britain to elect its seventh leader in ten years. The pound recovered from earlier losses to be up?0.11%, or $1.3244. Andy Burnham, the former Manchester mayor, is expected to succeed Starmer. However investors believe that a key question for UK bond markets nervous about Brexit will be who will become finance minister. The euro fell 0.36%, to $1.1427 after reaching a three-month high on Friday of $1.1418. The dollar was up 0.19% to 161,58 yen. Only the threat of Japanese intervention prevented it from reaching its 40-year high in 2024 of 161.96. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.17%. Gold spot rose by 0.72%, to $4190.17 per ounce.
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US Loans 500,000 Barrels of Oil from Strategic Petroleum Reserve
The U.S. Energy Department announced on Monday that a single energy 'firm' had borrowed 500,000 barrels of crude oil, or 1.25% of all the barrels available in the latest allocation under the Trump Administration's efforts to reduce fuel prices. In March, the Trump administration released 172 million barrels of oil from the SPR as part of a coordinated effort with the International Energy Agency. The goal was to reduce fuel prices which spiked following the U.S. and Israeli war against Iran that began on February 28. U.S. has so far granted contracts for the loan of approximately 133 million barrels. On June 10, the Energy Department announced its latest offer of a?SPR. It said it wanted to lend energy companies up 40 million barrels. The Energy Department announced on Monday that Vitol, an energy trader, was awarded a contract to purchase 500,000 barrels. The companies that borrow the oil must return it in its original volume, plus a premium of up to 24 percent as extra oil. The Department of Energy says the system will "stabilize markets without costing taxpayers in the United States." Energy Secretary Chris Wright has said that 35-40 million barrels extra of oil will be returned to the U.S. taxpayers this year and next as premiums. Oil prices have dropped as concerns about supply eased following the signing of a 60-day ceasefire agreement between Washington and Tehran. U.S. Vice President JDVance said on Monday that progress had been made with Iran in the talks and that the Strait of Hormuz was now open for trading energy. Reporting by Ismail Shakil, Editing by Andrea Ricci
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Oil prices fall as worries about rates offset optimism over Iran talks.
The global stock market was mostly flat Monday, while oil prices dropped. This was due to a combination of 'expectations' that higher interest rates would be imposed on the U.S. Treasury. U.S. Vice-President JD Vance stated in Switzerland that Iran has agreed to let nuclear inspectors enter the country. The conversations about the inspections could begin as early as this week. Treasury Department of the United States authorized Iranian crude oil, petrochemicals and petroleum products sales through August 21. This eases decades-old sanctions and pushes towards a final peace agreement with Iran. In exchange for?commitments to nuclear inspections and free passage through Strait of Hormuz. Wall Street's benchmark S&P 500 index and Nasdaq fell on?the?day, dragged lower by consumer discretionary and communication services stocks. The Dow rose. The Dow Jones Industrial Average increased by 0.13%. The S&P 500 dropped by 0.46%. And the Nasdaq Composite was down 1.32%. The STOXX 600 index in Europe was up by 0.58%. MSCI's global stock index fell by 0.08%. The apparent progress in peace talks has helped Asian stocks to rise overnight. MSCI's broadest Asia-Pacific index outside Japan closed up by 0.82%. Gerry Sparrow is the chief investment officer of Sparrow Capital Management. He said that markets are driven by the Fed's hawkish view and a reduced expectation that new Fed Chair Kevin Warsh will begin to cut rates. Sparrow stated that the market was surprised by the action of the new Fed Chair, as they expected him to be more lenient on interest rates. Last Wednesday, the Federal Reserve held interest rates at their current level. However, policymakers are expecting a rise in borrowing costs this year due to growing concerns over inflation that is above the U.S. Central Bank's 2% target. The yield on the benchmark U.S. 10 year notes increased 5.78 basis points to 4.50%. Brent crude futures settled lower by 3.38% at $77.90 per barrel, a far cry from their peak in May of $126.41. Sparrow stated that "the?progress of peace talks was good, but the only disappointment was that the new Fed didn't seem to be a bit more accommodating during its most recent announcement." UK POUND RISE AFTER STARMER'S RESIGNATION The pound rose following the resignation of Prime Minister Keir. This paved the way for Britain to elect its seventh leader in ten years. The pound recovered from earlier losses to reach $1.3243, up 0.06%. Andy Burnham, the former Manchester mayor, is the "favorite" to succeed Starmer. However investors say that a key question facing nervous UK bond markets will be who will become finance minister. The euro fell 0.38%, to $1.1424 after hitting a low of $1.1418 on Friday. The dollar rose 0.14% to 161.51 yen. Only the threat of Japanese interference prevented the currency from reaching its 40-year high in 2024 of 161.96. The dollar index (which measures the greenback in relation to a basket including the yen, the euro and other currencies) rose by 0.18%. Gold spot rose by 0.76%, to $4192.46 per ounce.
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Dollar climbs following US-Iran talks; pound is choppy after Starmer's exit
?The?dollar rose on Monday, as optimism about a possible peace deal was boosted by the first round of U.S. - Iran talks. Meanwhile,?the pound rose in choppy 'trading' after British Prime Minister Keir?Starmer announced that he would resign. After the first round of talks in a budding deal, the U.S. lifted sanctions against Iran for a period of 60 days. Officials reported calm after fighting had led Iran to declare that the Strait of Hormuz was closed. U.S. crude fell 1.84%, to $75.19 per barrel. Brent dropped to $77.93 a barrel, down by 3.29%, on Monday, after the first talks under a budding peace deal. The dollar index (which measures the greenback versus a basket of currencies) rose by 0.16%, to 101. The euro fell 0.36%, to $1.1427. The European Central Bank's Christine Lagarde stated that the inflation shock in the?eurozone is too big to ignore, but not large enough to cause price increases or dangerous second-round effects. POUND RETURNS AS 'POLITICAL UNTRUTH LOOMS Sterling recovered from a session-low of $1.3175 after Labour leader Starmer announced he would step down, allowing Andy Burnham the opportunity to become the seventh Prime Minister in 10 years. Marc Chandler, Bannockburn Capital Markets' chief market strategist in New York said that he thought the bond market vigilantes would act as a safeguard against the next UK government moving too far to the left. The bond market is what will determine the credibility of a new government. The last increase in the sterling price was 0.08%, to $1.3243. The yen is near a 40-year low. After hitting 161.92, the dollar rose 0.14% to reach 161.50, just a few cents shy of the two-year-low reached last week. If the yen breaks above 161,96, it will be at its lowest level since 1986. The Japanese yen experienced several sharp movements in which it briefly strengthened against greenback. Satsuki Katayama, the Japanese Finance Minister, said that after the Bank of Japan increased rates last week as was widely expected, authorities are prepared to react appropriately to currency movements at any time. The yen lost?gains after a series of interventions on April 30. A shift in focus from the Federal Reserve led traders to expect rate increases this year. This has favored the dollar. Chandler warned that "people should be alert for BOJ interventions and perhaps even positive comments from the U.S." BofA Global Research and Deutsche Bank both revised their Fed forecasts on Monday, including rate hikes for September. BofA expects the central bank to raise rates 25 basis points in each of September, October, and December. According to CME FedWatch, the markets now price in a 38.5% probability of a rate increase at the Fed meeting on July. This is up from 6.4% one week ago.
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As Europe heats up, at least 18 people, including two children, have died in France.
As a heatwave gripped Europe on Monday, breaking temperature records across several cities, at least 18 people died in France. Forecasters in Britain said temperatures in June could be higher than ever before, as schools in France closed their doors or changed their schedules. Bordeaux, France's west wine country, saw its temperature rise to 41.9 degrees Celsius. This is a new record for the region. In central France, it reached 41.2 C. This was higher than the previous record set in 1947. Climate Monitor shows that Europe is the continent farthest away from its historical norm for Monday. A report from the World Meteorological Organization in April found that Europe is warming up at a rate more than twice as fast as the rest of the world. TWO CHILDREN PERISH IN A HOT CAR A prosecutor from Carpentras in southeast France said that first responders in Carpentras were unable resuscitate the two children who were unconscious in their family car outside their home. According to a local government official,?Sophie Brocas, late Sunday night, three elderly people aged 80-95 died in Bordeaux due to heat related illnesses. Jerome Boulanger, a spokesperson for the French Civil Safety service, said that 13 drownings were reported between Sunday and Monday. Last year, drownings in France increased by 172% during heatwaves when swimmers sought to cool down. Clair Barnes is a research associate at Imperial College, London, who specializes in extreme weather, climate and climate change. She said that the heatwave in Europe takes the form of an Omega block, which has a bulge in the middle of the letter and cooler air on either side. It's drawing hot air from North Africa and the Sahara up, which is why we're experiencing this intense heat. "It's slow-moving and there's no breeze, no wind to provide some relief," she said. Climate change is causing heatwaves and storms to intensify, driving temperatures up and causing increased rainfall, said she. UK HEAT WILL BREAKING JUNE RECORD SET INS 1976 Met Office, Britain’s national weather forecaster said Monday that a heatwave lasting four days could easily push temperatures over 39 C in some places, breaking the record set by 35.6 C in June 1957 and 1976. Only a few short weeks ago, Britain's record for the highest temperature in May was broken. Lewis Jennings said, while walking through central London: "Thirty six degrees will be disgusting." Meteo-France's preliminary data indicates that Paris is expected to reach its highest temperature in June with a mercury reading of 38.4 C. Ruben del campo, spokesperson of Spain's AEMET Weather agency, said that temperatures are between 5 - and 10 - degrees above average for this time of the year. In some northern areas, they may even be more than 10 - degrees above average. RED HEATWAVE ALERTS ACROSS ITALY Italy issued heatwave alerts on Monday for 12 cities. Utility?Iren is doubling the number of workers and adding generators in Turin to deal with sporadic power outages as the grid becomes overloaded, according to a spokesperson. Romaine de Jägere, the founder of the Centre for the Rehabilitation of Animals 'Living in the Wild Refuge in Temploux, Belgium, explained that birds such as swifts and swallows who nest in the eaves of rooftops have been affected most by the abnormally high temperatures. "Temperatures on the roofs can reach up to 60 degrees Celsius at times." De Jaegere added that 150 animals had been taken in by the shelter in the past three days. Reporting by Lewis Macdonald in Paris and Makini in Gdansk; Emma Pinedo and Giancarlo Navich in Milan; Sarah Young in London and Zoran Mikletic and Andrew Heavens in Brussels. Writing by Charlie Devereux. Editing by Alexandra Hudson.
US gasoline prices fall for the sixth consecutive week
The U.S.-Iran diplomatic relationship has resulted in a reduction of gasoline prices for Americans. This is the sixth consecutive 'weekly drop, and a 15% decrease from the peak reached in May.
According to GasBuddy, the?national average gasoline price fell by 14.1 cents per gallon in the past week. It was $3.85 a gallon on Sunday.
Prices fell in the majority of states. GasBuddy data revealed that gasoline prices dropped by 25 cents per gallon over the last week in Colorado, 22 cents in Arizona, and 21 cents (per gallon) in Ohio. This drop could ease the pressure on 'U.S. Donald Trump and other Republicans. The Republicans are fighting to maintain a narrow majority in Congress during the midterm elections this November. They have also been criticized by consumers for high prices.
StoneX analyst Alex Hodes stated that a price reduction should help to ease inflation. Hodes warned that expectations of the return of normal?energy flow through the Strait?Hormuz, off Iran, are "large assumptions" and could lead to setbacks.
Supply risks persist despite the fact that Iran closed the Strait of Hormuz again over the weekend. Transits remain below the levels before the conflict began in late February.
GasBuddy's head of petroleum analyses, Patrick De Haan, says that there is no?significant risk? of a gasoline price spike as long as certain vessels continue to pass through the strait.
He added that if the U.S.-Iran relations deteriorated, this could "quickly" change.
Recent price drops could be reversed by tighter supplies due to refinery outages, and the approaching Atlantic hurricane season. TotalEnergies shut down the refinery, which produces 238,000 barrels per day, in Port 'Arthur, Texas last week after a lightning strike knocked power out. The 'full restart' is expected to be completed within seven days. On Sunday, a fire broke out at Marathon Petroleum's 631,000-barrel-per-day Galveston Bay Refinery in Texas City, Texas. Reporting by Nicole Jao, New York; editing by Cynthia Osterman
(source: Reuters)