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Oil prices rise as tariff concerns and Russian supply threats compete for attention
The oil prices remained unchanged on Friday, after dropping more than 1% the previous session. Traders were digesting the impact of the new U.S. higher tariffs which may curb economic activity and reduce global fuel demand growth. Brent crude futures were up 4 cents or 0.06% to $71.74 per barrel at 1201 GMT. U.S. West Texas Intermediate Crude rose by 1 cent or 0.01% to $69.27. Brent prices will still rise by 4.9% this week, while WTI prices will climb by 6.4%. This is after U.S. president Donald Trump threatened earlier in the week to impose tariffs on Russian crude buyers, particularly China, India and South Korea, to get them to stop their war against Ukraine. Investors were focused more on Trump's new tariffs, which are largely higher, that will be imposed on U.S. trade partners on August 1. Trump signed an Executive Order on Thursday that imposed tariffs of 10% to 41% for U.S. imports coming from Canada, India, and Taiwan. These countries failed to meet his August deadline to conclude trade agreements. Analysts have warned that the new levies could limit economic growth because they will increase prices and reduce oil consumption. There were signs on Thursday that the existing tariffs in the U.S. are already pushing prices up. The U.S. is the largest economy and the biggest oil consumer. Inflation in the United States increased in June, as tariffs increased prices of imported goods like household furniture and recreational products. The data supports the view that the price pressures will increase in the second half and the Federal Reserve won't cut interest rates until October. The higher borrowing costs could also limit economic growth. Trump's threat to impose secondary tariffs of 100% on Russian crude buyers has supported the price because there was concern that this would disrupt oil trade and remove some oil off the market. In a note published on Thursday, JP Morgan analysts stated that Trump's warnings of sanctions against China and India for their continued purchases of Russian crude oil could put 2,75 million barrels of Russian oil exported by sea at risk. Both countries are among the top three crude oil consumers in the world. Analysts said that the Trump administration will find it impossible to sanction the second largest oil exporter in the world without driving up oil prices.
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RPT-Indian state refiners pause Russian oil purchases, sources say
Industry sources claim that Indian state refiners stopped buying Russian crude oil last week, as the discounts have narrowed in this month. Donald Trump has also warned other countries against purchasing oil from Moscow. India, which is the third largest oil importer in the world, is the top buyer of Russian crude by sea. This revenue stream for Russia, as it continues to wage war against Ukraine, has been vital for the country. Four sources familiar with the refiners’ plans to purchase Russian crude have told us that the country's state-owned refiners, Indian Oil Corp., Hindustan Petroleum Corp., Bharat Petroleum Corp. and Mangalore Refinery Petrochemical Ltd., have not purchased Russian crude for the last week or so. IOC, BPCL HPCL MRPL, and the Federal Oil Ministry did not respond immediately to'comments. Sources said that the four refiners buy Russian oil regularly on a delivery basis, and they have also turned to spot markets as a source of replacement oil - mainly Middle Eastern grades like Abu Dhabi's Murban oil and West African crude. Reliance Industries, a private refiner, and Nayara Energy are owned in majority by Russian entities, including Rosneft. They have signed annual agreements with Moscow, and they are the largest Russian oil buyers for India. Trump announced 100% tariffs against countries that purchase Russian oil, unless Moscow agrees to a major deal of peace with Ukraine. Sources say that Indian refiners have withdrawn from Russian crude due to the decline in Russian exports, and a steady demand. This is because of the Western sanctions imposed against Moscow for the first time in 2022. Even buyers who adhere to the price cap are concerned that the latest EU curbs will complicate international trade, including fund-raising. India reiterated its opposition against "unilateral sanction". Trump announced on Wednesday that a 25% tariff would be imposed on all goods imported from India starting August 1. He also said that negotiations are ongoing. He warned against possible penalties for the purchase of Russian oil and arms. Trump reduced the deadline for imposing secondary sanctions on buyers of Russian goods to 10-12 from 50 days, if Moscow fails to agree to a peace agreement with Ukraine. About 35% of India’s total supplies are supplied by Russia. In the first half 2025, private refiners purchased nearly 60% of India’s average 1.8 millions barrels per day Russian oil imports, while state refiners, which control 60% of India’s total 5.2 million bpd refinery capacity, purchased the rest. Reliance bought Abu Dhabi Murban oil for loading in October of this month. This was an unusual move from the refiner.
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Sources say that Asia is increasing its imports of US WTI oil as Middle East prices increase.
Trade sources say that Asia will increase imports of U.S. West Texas intermediate crude in the fourth-quarter after Middle East oil price increased and opened arbitrage window. They said that the price gap between light-sweet U.S.WTI oil and Middle East crude benchmarks Dubai & Murban has narrowed this month due to strong demand in Asia for high-sulphur oils. WTI's Arbitrage to Asia has been open for the last week for cargoes that arrive in early November. This was stated by June Goh, senior analyst at Sparta Commodities. Sources said that U.S. oil producer Occidental sold WTI crude to Japanese refiner Taiyo Oil. One source said that the cargo was sold for a premium of $3.50 per barrel over October Dubai prices, and would be delivered in October. A Singapore-based trader stated that WTI crude oil could be sold at a price 50-75 cents per barrel less than Murban oil of similar quality to North Asian refiners, depending on the suppliers. Two other traders claim that WTI is 30 cents less expensive than Murban light-sour grade. The trade is also enabled by the falling costs of a large crude carrier that can send 2,000,000 barrels from the Gulf Coast in the United States to Asia. The daily tanker rates of SSY on LSEG Workspace show that the costs for a VLCC shipping U.S. crude oil to China, Singapore, and West Coast India dropped by $200,000 on Wednesday to $6.5, $5.5, and $5.35, respectively. Sources confirming the benchmark said that Murban's supplies have also been tightened as Abu Dhabi National Oil Co has reduced its exports of its flagship grades by diverting oil to its own refinery. Goh stated that "we anticipate more Asian buyers will secure WTI cargoes, especially as Murban looks expensive while taking the opportunity to diversify their portfolio against AG (Arabian Gulf crude)." She said that the threat of U.S. president Donald Trump to impose secondary duties on countries who buy Russian oil also supports Middle East crude price. Indian refiners will look to purchase oil from Gulf to replace Russian supply, she added. Trump shortened the deadline by which Moscow must make progress in a peace agreement with Ukraine or face secondary tariffs of 100 percent for its oil customers within 10 to 12 business days. This reflects his growing frustration over Russia's actions. China, India, and Turkey are the main importers of Russian crude. Reporting by Florence Tan in Singapore and Siyi LIu in Houston, Arathy Sommesekhar at Houston; editing by Tom Hogue and Philippa Fletcher
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Miner Vale Q2's net profit drops by 24%, but exceeds analyst expectations
The Brazilian miner Vale announced on Thursday that its net profit for the second quarter of 2014 was down 24% from a year ago to $2.12 Billion, but still exceeded analyst expectations. LSEG polled analysts who expected Vale to report a net profit of $1.44 billion for the June quarter. Vale's net income a year earlier was boosted due to the divestment by its PT Vale Indonesia subsidiary. The revenue of the miner in April-June this year was $8.8 billion, which is exactly what analysts expected. The key iron ore division of Vale saw revenue declines compared to the previous year, due to lower sales volumes and prices. However, copper and nickel revenues grew. The average realized iron ore price in the first quarter was $85.1/ton, down more than 13% compared to a year earlier. These lower prices led to a drop of 15% in adjusted earnings before taxes, depreciation, and amortization (EBITDA), totaling $3.39 billion. Due to increased output and efficiency measures, the total cost of each category decreased by 10%, 60%, and 30% from last year. Vale said that it also spent $200 million less in the third quarter of 2018 than it did a year earlier, allowing it to stay on track for its guidance of $5.9 Billion by 2025. The company announced that it had also obtained a preliminary license for the Bacaba Copper Project, which is intended to prolong the life of Sossego Complex. Vale also started commissioning this month a second onca Puma furnace, where it hopes to begin nickel production by the end of the year. (Reporting and writing by Andre Romani, Marta Nogeuira and Daina Beth Solon, editing by Natalia Siniawski and Brendan O'Boyle, Cynthia Osterman and Brendan O'Boyle)
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Tariffs increase US operations, but Gerdau's adjusted profits fall by nearly 9%.
The Brazilian steelmaker Gerdau reported a 8.6% drop in its adjusted net profit for the second quarter of 2018, compared to last year. This was slightly lower than analysts' expectations, despite a stronger performance by North American operations because of U.S. Tariffs. Gerdau, the largest Brazilian steelmaker in terms of market capitalization with mills throughout the Americas reported a net profit of 864 million reais (154.26 millions dollars) for the three-month period ending June 30. LSEG polled analysts who expected 847 million reais. Gerdau stated in its earnings report that the decline in profits was primarily due to the results of the company's operations outside Brazil and South America, which were partially offset by the currency effects. Gerdau's adjusted EBITDA (earnings before interest, tax, depreciation, and amortization) was 2.56 billion reals, down 2.4%, and in line with analyst expectations of 2.57 billion reals. Gerdau has reported an improvement in its North American operations compared to first quarter. It attributes this to a decrease in imports in the U.S. as a result of higher tariffs, and the supply rebalancing that follows. More than half of the steelmaker's net income comes from North America. Analysts believe that the steel tariffs set by U.S. president Trump will benefit the Brazilian steelmaking industry. Gerdau's net revenue total rose by 5.5% on an annual basis to 17.5 billion reals, while steel sales increased by 4.1%. Analysts estimated a 17.7 bn reais net income. Analysts at JPMorgan, including Rodolfo Anglee, said that the results were mostly neutral. In a note to clients, they said that North America's continued strength in 2Q25 was more than compensating the challenges in Brazil and South America. ($1 = 5,6008 reais). (Reporting and editing by Brendan O'Boyle, Chris Reese and Andre Romani)
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Britain claims that the EU will remove tariffs on steel as part of a quota
As part of the recent agreement to reduce trade barriers and reset ties, Britain announced that the European Union would remove tariffs from key steel products as of Friday. In May, Britain reached the most significant reset in defence and trade relations with the European Union (EU) since Brexit. This included a “bespoke arrangement” to protect UK exports of steel from new EU tariffs and rules. The British government had previously stated that the European Commission will restore Britain's country-specific steel quotas to levels prior to 2022, but it had not specified a date for this action. Jonathan Reynolds, the UK's Trade Minister, said that the removal of tariffs is "yet another step forward" for the UK Steel Sector. The government intervened in order to save British Steel jobs and reached a deal with the United States to avoid their highest steel tariffs. He said that restoring the steel quota would give producers confidence to grow and compete in the market, as well as maintain important export relationships. The agreement allows Britain to export up to 27,500 tonnes of steel per quarter to the EU without having to pay an additional tariff. Gareth Stace said that the restoration of quotas was "excellent news" and added that companies were "plagued with problems" when shipping support beams. Britain has yet to complete negotiations with the United States, after both sides agreed to work together to eliminate steel tariffs for exports from Britain in May. British steel exports are subject to a 25% tariff in the U.S., although it avoided a 50% increase thanks to an agreement with the U.S. However, talks on removing the tariffs have been stalled because of discussions about supply chains and the location where British steel "melts and pours".
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Edison International's quarterly profits fall as L.A. wildfire investigation continues
Edison International announced a decline in its second-quarter profits on Thursday as it struggled to deal with increased operating costs and investigations related to wildfires that occurred earlier this year in Los Angeles. The Los Angeles area was devastated by multiple wildfires that scorched thousands of acres in January. It is estimated to be the costliest natural disaster in U.S. History. Electric utilities in the region have also come under increased scrutiny. Wildfires that originate on power lines can also cause power outages. Southern California Edison, a subsidiary of Edison International, faces multiple lawsuits alleging that its electrical equipment caused the Eaton Fire, one of the most significant wildfires to occur in the Los Angeles region. While investigations are underway into the cause of Eaton Fire, lawsuits point to SCE transmission equipment in the hills above Altadena for starting the fire. Edison CEO Pedro Pizarro stated on a earnings call that "SCE does not have any evidence pointing towards another possible ignition source." "In the absence of additional evidence, it is possible that SCE equipment was involved in the ignition," Edison CEO Pedro Pizarro said on a company earnings call. The company attributes the decline in earnings primarily to the higher operating and maintenance costs and the net effect of regulatory decisions made by Southern California Edison (SCE). The decrease was also attributed to higher interest costs at the parent company. SCE has said that it will invest $6,2 billion to stop wildfires from being caused or affected by its system. The company plans to also launch a compensation program for wildfires. California has a wildfire insurance fund to protect utilities such as SCE against wildfire liabilities. Bloomberg News reported on Wednesday that California Governor Gavin Newsom proposed legislation to boost the state's wildfire fund with an extra $18 billion. The report stated that electricity ratepayers will contribute half of the money via a monthly charge, while the remaining half will be funded by utility firms who benefit from the fund. This includes Edison International. The company confirmed its forecast of adjusted earnings between $5.94 and $6.34 for 2025. Analysts expect $6.06 per share. The Rosemead-based California company reported a second-quarter net profit of $343m, or 89c per share. This compares to $385m, or $1.14 a share, one year ago. Reporting by Khusbu Jennifer in Bengaluru, and Laila Kerney in New York. Editing by Leroy Leo.
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AES Corp beats second-quarter profit estimates on renewables strength
Utility AES Corporation beat Wall Street expectations for its second-quarter profits on Thursday. This was largely due to higher earnings in the renewables segment, and a reduced tax rate. A global push to find cleaner power sources is driving the company's renewables unit, which has grown significantly since last year. This comes at a time of record-breaking U.S. electricity consumption. According to the U.S. Energy Information Administration, power consumption in 2025-2026 will reach record levels, largely due to Big Tech's increasing investment in artificial-intelligence technologies that are dependent on energy-intensive, data center facilities. The backlog of power purchase agreements, which includes projects that have signed contracts, but are not yet operational, increased to 12 gigawatts from 11.7 GW the previous quarter. Andres Gluski, CEO of Gluski Group, said: "With 1.6 GW signed PPAs for data centers since May's first quarter results, we are a market leader in the segment that is growing the fastest." AES Corp. has signed two long term power purchase agreements to provide 650 megawatts of solar capacity for Meta Platforms' data centers in Texas & Kansas. The renewables unit saw a 4% increase in revenue to $644m, while utilities reported a nearly 6% rise to $954m. The lower margins in energy infrastructure led to a 3% decline in the utility's revenue total, which was $2.9 billion in the second quarter. According to LSEG, the Virginia-based firm posted an adjusted profit per share of 51 cents in the second quarter. This was compared with analysts' estimates of 40 cents. Reporting by Pooja menon, Arunima kumar and Vallari srivastava in Bengaluru. Editing by Anil d'Silva
Heidelberg Materials exceeds expectations in the second quarter with cost control
Heidelberg Materials, the second largest cement manufacturer in the world, announced a second-quarter operating income that was better than expected on Thursday. The company cited price adjustments and strict management of costs.
The company's poll predicted that the group's RCO would be 1.03 billion euro, but it actually rose to 1.05 billion.
Dominik von Achten, CEO of Dominik von Achten, said that our cost-management system has been particularly effective during the second quarter.
The company has also confirmed that its full-year RCO forecast is between 3,25 billion and 3,55 billion euros. This is based on the assumption that the demand for construction will stabilise.
The CEO said that despite the fact that demand is volatile in certain regions, it is stabilising in core markets.
Construction industry sales have been declining in recent years due to high energy and inflation prices.
The company responded by saying that it would continue to adhere to strict cost management and make price adjustments in order to meet its 2025 target.
Von Achten said, "Our ongoing Transformation Accelerator program is progressing exactly as planned and with additional increases in savings has helped us improve our earnings again." The exchange rate is $1 = 0.8751 euro. (Written by Miranda Murray and edited by Rachel More, Subhranshu Sahu).
(source: Reuters)