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Merz, a German economist, says that the public finances can't offset all of the price increases from Iran war
German Chancellor Friedrich Merz said on Wednesday that ending the war in Iran would be the best way to control energy prices. In response to questions from parliament, he stated that there are "measures" we can take into consideration in order to reduce the pressure but "we cannot offset every price trend by tax measures or funding measures from the federal budget". He said that the best way to control prices is to end the war in Iran. Fuel prices have risen in Germany, as well as other countries since the beginning of World War II. Critics accuse oil companies of taking advantage of the crisis to increase their prices. Merz was skeptical about the calls from his centre-left coalition partners, the Social Democrats, for a tax to be imposed on the "excess profits" of oil firms. He said that the term is practically impossible to define legally. He said Germany worked with European partners to convince the U.S., Israel and other parties to the conflict to find a diplomatic solution. The war has caused the Strait of Hormuz, a vital shipping route, to be largely closed, sending energy costs soaring around the world. He said that "this requires a willingness on all sides including Iran, which is not apparent at the moment." He said that Germany was willing to participate in 'international efforts to stabilize the region' once the hostilities ended, but this would require an UN mandate. (Reporting and editing by Madeline Chambers, Jan Harvey and James Mackenzie)
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Albemarle begins environmental review of Chile lithium extraction project
Albemarle, the largest lithium producer in the world, announced on Wednesday that it had begun the environmental review process for its first Direct Lithium Extraction project (DLE) in Chile. Albemarle stated in a press release that the project was designed to recover twice as much lithium while reducing the amount extracted of brine compared?to the current operations. Albemarle said in a submission to the Chilean Environmental Assessment Agency that if the project were completed, it would require a total investment of $3.1 billion with a useful lifetime lasting until 2045. The initiative is aimed at a?more sustainable and efficient production in the Salar de Atacama,? it said. This location is?one of the richest sources for the metal necessary to make electric vehicle batteries. Albemarle stated that the project would include a DLE facility within Albemarle’s mining concession, up to six processing train at the center of Chile’s salt flats, as well as the construction of an electricity transmission line. According to the filing, net brine extraction would drop from 442 to 342 milliliters/second with just one DLE train in operation and down as low as 142 milliliters/second with all six trains. Miners have long complained about the?water, both fresh and salty, around the vast Atacama flat. Native communities are concerned that mining will deplete the limited?reserves?of freshwater and brine rich in lithium, and reduce its availability to people and wildlife. (Reporting and writing by Fabian Cambero, Inigo Alexander, Cassandra Garrison and Alexander Smith; editing by Cassandra Garrison)
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German Finance Minister sets out reform plans to boost the growth
The German Finance Minister Lars?Klingbeil proposed Wednesday measures to stimulate the slowing economy. These included income tax reforms and a cap on the excess profits of energy companies. "If Germany remains a powerful country, it's up to us alone." "We alone will decide this," Klingbeil added, adding that Europe's largest economy needs?innovation, greater productivity, and technology leadership. He said: "We need to be technological leaders in key areas. We also need competitive investment conditions, a modern industry base, reliable supply chains and functioning capital markets." Germany's export-driven economy has struggled to grow in the wake of the pandemic. Rising competition from China and higher energy prices have put strain on its economic model. The Finance Minister, who is currently working on the budget for 2027, stated that the government will be reforming fiscal consolidation with detailed analyses of revenue and expenditure. "We can't respond to every problem and crisis with more money," said?Klingbeil. INCREASING PRODUCTIVITY AND WORKING HOURS He said that the German labour market was suffering because of high levels part-time employment, tax transfer systems which in some cases "discourage" additional work and incentives for early retirement. "I want to create a new system where willingness to perform pays," said?Klingbeil. In Germany, half of women work part-time. German income splitting lowers tax for couples with unequal earning, but also increases the effective 'tax' on the lower-earners additional work. This is often the wife. Klingbeil suggested that income splitting in its present form be abolished for future marriages. Reporting by Maria Martinez Editing Made by Madel Chambers and Sharon Singleton
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UN urges Libyan authorities release political activist
The U.N. Mission to Libya (UNSMIL), on Wednesday, called on the?Libyan government to'release political activist Al-Mahdi Abdulati. He said he was arrested and detained last week. UNSMIL reported that Abdulati was arrested on March 18 in Misrata. Misrata is located about 200 km east of Tripoli. It is home to the internationally-recognised Government of National Unity. The U.N. Mission said Abdulati had been?reportedly detained by the Internal Security Agency which operates directly under the GNU. Abdulati has been known to criticize the GNU’s performance in public spending and security issues through his Facebook page, as well as interviews with local TV channels. The mission stated that "this detention is not isolated but part of a pattern recurrent among law enforcement and security entities in the country." The statement of?UNSMIL was not immediately reacted to by the GNU or the Internal Security Agency. Since the 2011 NATO-backed uprising, which ousted Muammar Gadhafi as longtime leader of Libya, there has been little peace or stability in Libya. Oil-rich Libya split in 2014 into eastern and western factions, based in Benghazi (the second largest city) and Tripoli. Rival administrations govern each region. The mission called on all Libyan authorities to stop abusive practices, free all those arbitrarily arrested and hold those responsible accountable. (Editing by Ros Russell).
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BBC reports that BlackRock CEO Fink has warned of a 'global economic recession' should oil reach $150.
BlackRock CEO Larry Fink stated that oil prices could reach $150 per barrel and cause "global depression" if Iran "remains" a threat even after the war is over. Fink said on BBC's Big Boss Interview podcast published on Wednesday that if there was a cessation in war and Iran remained a danger, it would be a threat for trade, to the Strait o f Hormuz or to the peaceful coexistence between the GCC region. "We could see a?years where oil prices are above $100, closer to $150, which will have profound implications to the?economy." When asked what would happen if oil stayed at $150 per barrel, he replied: "We'll have a global recession." Since the U.S. and Israeli war against Iran, oil prices have remained volatile. Prices fell 4% after news that the U.S. sent Iran a 15 point proposal to end the war, raising the prospect of a possible ceasefire. The war has almost completely halted the flow of oil and liquefied gas through the Strait of Hormuz. This is a route that typically transports about one-fifth of world crude oil and?gas supplies.
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ROI-Inflation-spooked rates markets have overshot: McGeever
The markets overshoot and the recent dramatic increase in bets placed on higher interest rates due to the Middle East energy crisis is the latest example: although the move was logical, its magnitude remains questionable. The Iran War shows no signs of stopping and the?markets are still in flux. Rates traders may need to take a break and re-evaluate. The abrupt change in global 'rate outlook' reflects concerns about the short-term impact on inflation of the soaring prices for oil and gas. Federal Reserve now has a higher probability of raising U.S. interest rates in this year rather than cutting them. The European Central Bank and Bank of England will also likely increase their rates multiple times starting next month. Zoom in on the shifts in Europe. On February 27, a day before the joint U.S. - Israeli strike on Iran, UK rate futures indicated 50 basis points of ease by the end of the year, or two quarter point rate cuts. This has now changed to almost 75 basis point?of tightening or three rate hikes. It is remarkable to see a 125-basis-point swing in just a few weeks. Euro zone futures are now pricing in two rate increases, from implying the ECB would keep its key rate at 2% throughout the remainder of the year. This hawkish course could be realized. The policymakers have not recovered from the mistake they made in 2021-22 when they misread "transitory inflation". The last two times that they increased?rates when oil was well above $100 per barrel, in 2008 and 2011, they were widely blamed for policy mistakes. Limits of 2022 Comparative Analysis Many analysts draw parallels between the current energy crisis and that caused by Russia's invasion in Ukraine in February of 2022, which helped to fuel "the worst bout of inflation on developed markets in decades." There are some key differences. Interest rates in February 2022 were significantly lower than those at the beginning of this crisis. The G4 central banks' policy rates were close to zero at that time, and the ECB, Bank of Japan, and Bank of Japan were in negative territory. In addition, trillions of dollars in stimulus money for pandemic fighting and the explosion of economic activity following lockdowns also contributed to inflation in 2022. Early 2022, real interest rates were negative. The combination of super-easy fiscal policy and monetary policies meant that inflation was far from temporary. The U.S. inflation rate has not returned to its target despite the biggest hike cycle in over 40 years. Today, fiscal stimulus is on the agenda. Governments from Washington to Tokyo and Berlin are all set to cut taxes while spending heavily on energy and defense. These volumes are not as large as the pandemic-fighting package that was worth at least 10% GDP. GOLDMAN AND CITI STICK WITH US RATE CUT VIEW Goldman Sachs economists and Citi analysts are part of a shrinking group that is fighting the tide of forecast revisions. They also want the Fed to act quickly and raise interest rates in order to curb price pressures. Jan Hatzius, Andrew Hollenhorst, and their team at Citi are sticking to their three-cut call. They claim that any inflation will be temporary, lasting perhaps a few weeks, but the risks for growth and employment are much greater. They expect a temporary shock to the supply that will raise prices, but also deal a greater blow to demand. It's not impossible. The Purchasing Managers' Index data released on Tuesday revealed that the U.S. Private Sector output in March was at its lowest level in 11 months. Activity in the Euro Zone also fell to a 10 month low. In Britain, activity expanded at its slowest rate in six months. The rate markets should be nervous given the magnitude and speed of the energy shock. It will be difficult to justify a rate increase if the economy is slowing down and unemployment is on the rise, even if inflation is higher than target in both Britain and America. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Business lobby: Iran conflict has a negative impact on Italy's economic growth prospects
Confindustria, Italy's leading business lobby, forecast that the economy would grow by 0.5% in this year. This is a reduction from the 0.7% it had predicted in October. It also warned of'strong' 'downside risks' if the Iran conflict continues. The third largest economy in the Eurozone saw its gross domestic product rise by 0.5%, marking the third consecutive year of growth below 1%. Confindustria stated in its bi-annual report that the 0.5% growth scenario for 2026 was based on an "optimistic hypothesis" that?the conflict in Iran would be over by March's end. The business group warned that if the hostilities after the?US/Israeli strikes which began on February 28, should continue through the second quarter of this year, Italy's GDP would stagnate. It said that if the conflict continues into the fourth quarter the knock-on effects on energy prices will push the Italian economy back into recession. Confindustria President Emanuele orsini presented the report and said that the main problem for Italy caused by the war is the spiraling energy costs. He told reporters that the price of a megawatt-hour had risen from 106 to 170 euros, and called for an EU response. He called for a united European energy market and joint EU debt issuance. Confindustria's baseline forecast for the year 2027 is a slight acceleration of growth to 0.6%. Next month, the government of Giorgia Meloni, who forecasted growth for this year at 0.7% last autumn, will update its projections. Confindustria, a leading Italian financial services company, said that Italy's budget, which was 3.1% of its gross domestic product (GDP) last year, just over the 3% limit set by the European Union, will decline to 2.8% this and 2.7% in 2027. The projected Italian consumer price increase, driven by energy costs, will accelerate sharply this year to an average 2.5%, up from 1.5% in 2025. It is expected to ease to 2.2% in the following years. The report predicts that if the Iran conflict continues into the second quarter of this year, Italy's inflation rate will increase to 4.3%. (Reporting By Gavin Jones)
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Markets cheered Trump's talk about Iran negotiations, as European stocks rose, oil fell, and markets cheered the rise of European stocks.
The European stock indexes rose on Wednesday and the oil price fell on the day, as a result of reports that the U.S. was seeking a ceasefire lasting a full month with Iran, despite the fact that Iran had rejected the idea. U.S. president?Donald Trump said to reporters on Tuesday that he was?making progress? in negotiations for an end to war. This raised hopes that oil would be exported again from the Persian Gulf. The news of the ceasefire plan and the fact that the U.S. sent Iran a 15 point plan for discussion was welcomed by traders. According to Iranian state media, Iran has denied direct talks and a military spokesman claimed that the United States was negotiating with themselves. Markets made modest gains in Asian trading. The STOXX 600 index rose 1.4% at 1036 GMT, but this was not enough to offset the 7.3% decline in the STOXX 600 for the month of March. London's FTSE 100 rose 1.1% for the day. Amelie Derambure is a senior multi-assets manager at Amundi. She said that the mood was positive. The market is now trading on the belief that peace talks, or a possible ceasefire might be imminent. Derambure stated that traders are positioning themselves in order to not miss out on the "relief rallies" that may occur when markets increase on positive news. She added, however, that more convincing news is needed to sustain this move. Some analysts warned against expecting that the war would end quickly. In a research report, ING's head of global markets Chris Turner said that it was probably too soon to expect a big drop in the price of energy or a softer dollar in this week. OIL EASES AND BOND Yields Fall Brent crude futures fell 5.2% to $99.01 per barrel and the U.S. West Texas Intermediate crude prices fell 5.1% to $87.62 per barrel. Iran said "non-hostile ships" could cross the Strait of Hormuz as long as they coordinated with Iranian authorities. However, the waterway which carries approximately one-fifth of the world's crude oil and gas supply is effectively closed. The yields on European government bonds fell in a move sparked by Italian bonds, which were?particularly hit since the start of the war due to Italy's dependency on fossil fuel imports. The benchmark German 10-year yield was 2.9724%. The euro fell by 0.1% to $1.1598. The data showed that German business morale dropped sharply in march, due to the Iran War, which made companies more sceptical and threatening the recovery of Europe’s largest economy. The dollar index rose to 99.333, indicating a slight increase in the U.S. Dollar against a basket currency. The yield on the 10-year U.S. Treasury note was 4.3302%. As oil prices fell, gold?prices increased. The war has caused the worst energy crisis in history, sparked inflation fears around the world and killed thousands. On Wednesday, Gulf Arab countries told the U.N. that Iran is an existential danger. BlackRock CEO Larry Fink said to the BBC that oil could reach $150 per barrel, causing a global economic recession. (Reporting and editing by Tom Westbrook, Elizabeth Howcroft)
Savannah CEO sees lithium rate rebound by start of Portugal project
Londonbased Savannah Resources anticipates the rate of lithium to rebound by 2027, when it hopes to start commercial production at its mining task in Portugal, CEO Emanuel Proenca said on Friday.
Rates of lithium, which is used in batteries for electric cars and appliances, have actually fallen more than 80% in the past year mainly due to overproduction from China and a drop in demand for electric automobiles.
The success of jobs like Savannah Resources' in Portugal is viewed as a crucial test of Europe's ability to lower its dependence on imports from China and other nations of lithium and other products essential to the green shift.
The fundamentals are more powerful than ever. The marketplace will very likely come back into deficits (of supply) from 2027 onwards and that really fits extremely well with what we are doing and with our timeline, he told industry experts.
Savannah anticipates to bring the Barroso project onstream as. early as possible in 2027, he included.
Acknowledging that the duration of depressed rates was. lasting slightly longer than we would anticipate, Proenca expected. worldwide lithium need to grow by 2.6 times in the next seven. years with a velocity from 2027, which will be really. hard to satisfy by supply.
His confidence in a healing echoes that of Jakob Stausholm,. CEO of Rio Tinto which stated on Wednesday it would buy. U.S. based Arcadium Lithium for $6.7 billion in a deal. that would catapult it to end up being the world's third largest miner. of the metal.
On issues about demand for EVs, Proenca stated the EV market. was still growing at a strong rate.
Last month, Savannah delayed the planned production start. by a year to 2027, citing a change of government in Portugal.
The new centre-right government took control of in April after the. collapse of the previous Socialist administration, in part due. to a scandal over declared illegalities in its management of. a number of investment jobs, including lithium.
The company wants to develop 4 open-pit mines in the. northern Barroso area to extract enough lithium each year for. about half a million EV batteries.
The task has actually dealt with strong opposition from regional homeowners. and ecologists and Proenca stated at least one group of. land holders was still opposed to it, but that should not restrain. the job.
(source: Reuters)