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Trump says a new refinery is planned near the US border.
Donald Trump, the U.S. president, announced plans on Tuesday for a new oil refinery in Brownsville. He thanked Reliance Industries, an Indian energy company, for its contribution to the project. Trump announced the project as U.S. motorists are reacting to the spike in gas prices after the U.S. - Israel war with?Iran. He also made the announcement while Republicans and Democrats prepare for the midterm elections, which could determine the party that controls Congress during the final two years of Trump’s presidency. America First Refining stated in a press release that, once operational, a 168,000 barrel per day (bpd), refinery, to be built in Brownsville, along the U.S.Mexico border would offset $300 billion of the U.S. Trade Deficit. John V. Calce is the chairman and founder America First Refining. He said that this project represented a historical step forward in American energy production. "For the first half-century, the United States will build a refinery specifically designed for American shale oils." Because they were designed in the past 40 years for heavy, sour, lower-cost crude oil, which is denser and contains more sulfur, many U.S. Gulf Coast refining plants are unable process light, sweet crude from fracking fields. Calce praised Trump's administration for its energy policy, which emphasizes the production of U.S. crude by domestic refineries. Reliance is India's largest company in the private sector. It was only identified as a global supermajor in Trump's America First statement, but Trump named it in a Truth Social post, stating that he had made a 9-figure investment at a 10-figure valuation. Reliance has also signed a "binding 20-year term sheet" (offtake agreement) with America First, meaning that the company will purchase products produced by the refinery. America First said it plans to begin construction 'in the second quarter this year. Need Industry Experts Question Analysts questioned the need for another refinery along the U.S. Gulf Coast. Eight of the ten largest refineries in the United States are already located there. Five of the biggest refineries in America are located in Texas. John Auers of Refined Fuels Analytics said that initial announcements by the Trump Administration are full of hyperbole. In a Truth Social post about the project, Trump stated that the America First refinery will "fuel U.S. market, strengthen our nation security, boost American production of energy, deliver billions in economic impact and be the cleanest refining plant in the world." Tom Kloza of Kloza Advisors LLC, principal analyst, stated that Gulf Coast refineries are more competitive than plants located in other parts the United States. Kloza: "If Brownsville was indeed the site for the construction, I would presume that they were looking at an export refining facility." There is not much demand in the local area and no pipelines to transport Brownsville products elsewhere. Kloza stated that U.S. refineries were the largest supplier of heating oil and motor fuels to South America. They also have lower prices for natural gas and crude oil. Auers emphasized Reliance's history of refinery. The largest oil refinery on earth, Jamnagar in India, is operated by the company. He said, "Let's wait and see." "Reliance has been a very successful business." According to the company's website, Reliance has interests in oil refinery and petrochemicals as well as retail, new energies, digital services, and media and entertainment. Two California refineries with a combined production capacity of 284,000 barrels per day (bpd) will permanently cease operations in 2025. They cite the strict regulations California has imposed on fossil fuel industries. In the last decade, the 'cost of construction or additions to refineries of new refineries has averaged around $40,000 per barrel of capacity or $6.7 billion for about 168,000 barrels. According to the U.S. Energy Information Administration's report, the U.S. refinery capacity was 18.4 millions bpd by the end of 2024. This is expected to increase through a gradual increase in capacity until the 2030s.
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AI stocks lift Japanese shares, as oil supply concerns ease
Investors bought down stocks and worries about oil supplies due to the Middle East conflict were eased. The Nikkei rose 2.3% as of 0220 GMT to 55,512.21, while the Topix increased 1.8% to 3,513.66. Naoki Fukuwara, Shinkin Asset Management's senior fund manager, said that investors were buying at lower prices, especially in areas that had been heavily sold off and where there are signs of a rebound. Price action has also been strong. Artificial intelligence-related shares, which suffered a heavy loss on Monday due to pessimism about the U.S. and Israeli war against Iran, were the top performers of the Nikkei benchmark index. Resonac, a chemical and advanced-materials company, saw its shares soar by 11.3%, making it the biggest gainer in the index. SoftBank Group, a tech investment conglomerate, also saw shares rise 7.8% after a 9.2% surge. Fujikura, a cable and optical fibre manufacturer, also saw a 6.4% increase. The Nikkei Index saw 195 advancing stocks and 30 declining ones. Investors are also looking for direction on the oil market after recent sharp swings. The Wall Street Journal reported that the International Energy Agency had proposed to release the largest amount of oil reserves ever released in order to lower 'crude prices. The energy ministers of the Group of Seven countries reaffirmed their readiness to take steps necessary to ensure global energy supply on Tuesday. Early Wednesday trading saw oil prices fluctuate. Brent?futures LCOc1 were up 23 cents or 0.26% at $88.03 per barrel by 0156 GMT. Fujiwara said that if crude settles at current levels then stocks are "probably" a good opportunity to buy. He said that if oil rises above $100 again, the stock market would be under pressure and it will need to look for a bottom. (Reporting and editing by Rashmi aich; reporting by Satoshi sugiyama)
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WSJ reports IEA is preparing for the biggest release of oil ever
The Wall Street Journal reported that the International Energy Agency had proposed to release the largest amount of oil'reserves ever released in order to counter supply disruptions caused by the war against Iran. Brent futures were trading?up?11 cents or 0.13% at $87.91 per barrel at 0129 GMT. U.S. West Texas Intermediate traded 7 cents higher, and was last up 0.08 percent at $83.52 per barrel. Both contracts fell immediately after the WSJ article, reversing gains made in WTI. The WSJ reported that the IEA proposed drawdown would be greater than the 182,000,000 barrels of crude oil that IEA members countries released in two releases, in 2022, when Russia began its full-scale invasion in Ukraine. The IEA - and the White House - did not respond immediately to a request for comment. According to the Pentagon and Iranians, the U.S.-Israeli airstrikes on Iran Tuesday were the most intense of the war. U.S. Central Command reported that the U.S. Military also "eliminated 16 Iranian mine-laying ships near the Strait of Hormuz, on Tuesday. U.S. President Donald Trump had warned that any mines placed in the Strait of Hormuz by Iran should be immediately removed. Trump has said that the U.S. will escort oil tankers through the Strait of Hormuz if necessary. Sources say that the U.S. Navy is refusing requests for military escorts from the shipping industry because the risks of attack are too high. Tony Sycamore of IG Sydney said that they expect crude oil to remain volatile and driven by headlines, trading in a range between $75ish-$105ish for the next few sessions. The two contracts fell more than 11%, the biggest percentage drop since the year 2022. This was a day after Trump declared a rapid end to the conflict and after they had risen to their highest session high of $119 per barrel on Monday, which was the highest since June 20, 2022. Since then, G7 officials have gathered online to discuss the potential release of emergency stockpiles of oil to help soften the blow to markets. On Wednesday, French?President Emmanuel Macron is hosting a video conference with other G7 leaders to discuss the impact the conflict in the Middle East has on energy and the measures that can be taken to deal with the situation. A source said that the Abu Dhabi state oil company ADNOC shut down its Ruwais Refinery after a drone struck a facility in the complex. This is the latest 'energy infrastructure disruption caused by the U.S. and Israeli war against Iran. Shipping data shows that Saudi Arabia, which is the world's biggest oil exporter has increased its supplies through the Red Sea. However, they are still well below the levels required to compensate for the fall in flows out of the Strait of Hormuz. The Kingdom is counting on the port of Yanbu, located in the Red Sea to boost its exports and avoid steep production cuts. Iraq, Kuwait, and the United Arab Emirates all reduced their output due to the U.S./Israeli war against?Iran. Wood Mackenzie, an energy consultancy, said that the war could cause crude oil prices to rise to $150 per barrel if it cuts the supply of Gulf oil by 15 million barrels a day. Morgan Stanley stated in a report that "even a quick solution probably implies weeks of disruptions for the energy markets." Market sources cited American Petroleum Institute data on Tuesday to confirm that U.S. crude oil, gasoline, and distillate stockpiles fell due to higher demand last week.
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WSJ reports that IEA is proposing the largest oil release ever from strategic reserves.
The Wall Street Journal, citing sources familiar with the issue, reported that the 'International Energy Agency' has proposed the 'largest release in oil reserves history to lower a soaring crude price? due to the U.S./Israel war against Iran. WSJ reported that the release of oil would be greater than the 182,000,000 barrels?of crude oil that IEA members countries released in two releases in 2022, when Russia began its full-scale 'invasion' of Ukraine. The Wall Street Journal reported that the IEA will convene an extraordinary meeting with its member states 'on Tuesday. They are expected to 'decide on the proposal - Wednesday. The newspaper reported that the proposal would be approved if no one objected, but even a single country's protest could delay it. U.S. and Brent crude futures fell after the report. The IEA or the White House didn't immediately respond to a request for comment. On Monday, benchmark oil prices rose to almost four-year highs but fell on Tuesday as U.S. president Donald Trump predicted that 'the war in the Middle East could end soon. The G7 energy minsters did not agree on a'release of strategic reserves' Tuesday, but instead asked the IEA for an assessment of the situation. (Reporting and editing by Himani Sarkar in Mexico City, and Tom Hogue.)
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McGeever: The 2007 subprime credit warnings are echoed in the alarms of private lenders.
Each financial market crisis differs, but they all rhyme. Parallels are emerging between the tremors rippling now through private credit, and those that led to the Global Financial Crisis in 2007-09. It's not to say that a replay of the historic crash is imminent. There is a growing danger that the mounting pressure in private credit, which includes?opaque prices, scarce or nonexistent liquid, and high redemptions, could spill over to public markets. BlackRock, a?world-leading?asset management firm with over $14 trillion in assets under management, announced on Friday that it had restricted withdrawals from its flagship debt fund following a spike in redemption requests. Blackstone, an alternative asset manager, had announced a few days before that it raised the redemption limit on its BCRED Private Credit Fund to meet record withdrawals. These alarms are a result of a similar incident at the smaller alternative asset manager Blue Owl, which occurred last month. Also, in late 2018, JPMorgan Chase CEO Jamie Dimon warned: "When you find one cockroach, it's likely there are more." Investors who have a sense for history or were around during the 2000s may find this all a little familiar. BNP Paribas and Bear Stearns blocked withdrawals from U.S. Subprime Funds in 2007 or warned of their problems. A seemingly small risk turned into a global 'financial crisis. The GFC did not fully explode until the U.S. government allowed Lehman Brothers' collapse in September 2008. The crisis was building steadily over the past 18 months. Investors were given early warnings by tremors in subprime funds. It is likely that the reasons for not letting investors withdraw their money are similar to those in 2007. Assets may have fallen in value significantly and would therefore need to be sold with a large loss. The asset manager might be afraid of triggering "a fire sale" in other assets in order to raise the required cash. Or the fund could be struggling to sell illiquid assets. It could be all three. It is difficult to determine the true value of private credit assets because the market has become so opaque and illiquid. Price discovery often evaporates when the market becomes illiquid. A similarity to subprime of 2007 is the belief that private credit, and more generally private markets, do not pose a risk systemic stability. We all know that this was wishful thinking at the time. SUBPRIME RHYME - DO NOT REPEAT This time, is it different? If we look at sheer size, probably. According to Investec, the mortgage-backed securities (MBS) market, which was the cause of the GFC in 2007, it was worth $7.2 trillion, or 5% of all global securities. Private credit is currently worth $2 trillion. This represents less than 1% all global securities. As with subprime lending in 2007, private lenders are not as tightly regulated today, at least compared to the traditional banks, so it is difficult to determine their true impact. Even mom-and-pop investors have become more active. According to Investec, retail investors will hold 16.6% of private credit funds by the end of 2024. This is up from just 5.5% at the beginning of 2020. Fitch Ratings, the credit rating agency, said last week that private credit default rates will reach a new record of 9.2% by 2025. This is up from the previous high of 8.1% set in?2024. These defaults did not include any software companies. Software companies have now become major private lenders. Fears of disruption from artificial intelligence have impacted the software sector this year, causing shares in Blackstone, KKR, and Apollo to drop by up to 45%. Private credit risks are skewed towards the downside. The U.S. is facing a difficult time, with a fragile labor market, the aftermath of the Middle East war, wild volatility on the oil markets, and even the threat of "stagflation." The consensus is that GDP growth and broader asset markets are not threatened by private credit. Barclays strategists note that private credit problems are present, but not so serious as to send the U.S. economy into recession. This is, of course, exactly how subprime mortgages were viewed in 2007. When the liquidity wave 'goes out', you can see who has been swimming naked. Recent events on the private credit markets suggest that more funds will soon be exposed. 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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Macron will host G7 leaders to discuss Iran crisis and energy prices
The French President's Office announced that Emmanuel Macron will hold a conference call on Wednesday with the leaders of the?Group?of Seven to discuss the Iran crisis and the rising energy prices. The G7 is weighing up how to react to the sharp rise in oil prices caused by the U.S./Israel war on Iran. The G7 energy ministers did not agree on Tuesday to release strategic oil reserves, but instead asked that the International Energy Agency assess the situation before acting. Standard oil prices surged to almost four-year heights on Monday, but plummeted by 11% on the following day after U.S. president Donald Trump said the Middle East war could be over soon. U.S. officials 'also weigh steps to keep oil flowing in the Strait of Hormuz. This includes?providing a naval escort for commercial vessels, and backing up?war?risk insurance for tanks, to reassure shippers, and to prevent further disruption to global energy supply. The G7 is made up of the United States, Canada and Japan. France is currently the?G7 Chair.
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Sources say that Brazil's Petrobras will auction 20 million liters (liters) of diesel amid reports of shortages.
Two sources with knowledge of the matter said that Petrobras, the Brazilian state-run company which owns the oil industry in Brazil, plans to auction 20 million liters of diesel to the state of Rio Grande do Sul to address shortages. They said the auction would take place on Wednesday. The U.S. and Israel attacks on Iran are causing a spike in diesel prices, which is the most immediate and serious threat to Brazil's agricultural sector. Producers harvesting record soybean crops and planting corn cannot afford to delay. The initiative, according to a source who spoke under?conditions of anonymity, is necessary to "try and calm the market nerves." Petrobras refused to release more diesel to distributors after their prices had reached a record-breaking discount in comparison to international benchmarks. Petrobras was afraid of supplying fuel at a low price, only to have distributors store it and then resell it when the government-owned firm raised prices. A public auction would encourage competition and prevent such a situation. The source stated that "the auction is a way to sell products at higher/different price levels." It doesn't affect?all of the volume sold but it partially covers the gap with the international markets. Petrobras didn't immediately respond to a comment request.
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The Revolutionary Guards have elevated Iran's new, silent leader.
Senior Iranian sources claim that Iran's Revolutionary Guards pushed through the selection of Mojtaba Khamenei as its new supreme ruler, seeing him as an improved version of his father, who would support their hardline policies and bludgeoning aside the concerns of pragmatics. Sources said that the Guards, who were already very powerful, have become even more so since the start of the war. They quickly overcame misgivings from senior politicians and clerics whose opposition delayed the announcement by hours. Khamenei had not yet issued a statement on Tuesday night, almost 48 hours after he was selected during a war in which more than 1,000 Iranians were killed. The three sources, including a reformist ex-official and an insider, believe that Khamenei’s appointment, which was engineered by the Guards may lead to a more aggressive foreign policy and harsher internal repression. Two of them expressed concern that the Guards dominance of the system could further transform the Islamic Republic, reducing its support base to a thin veneer and leaving less room for addressing complex threats. NEW LEADER MAY HAVE BEEN WOUNDED IN STRIKE Mojtaba Khmenei, despite being a powerful backroom operator who spent decades running his father's offices, is an unknown figure to many Iranians. He may even have been injured in the U.S. and Israeli strikes that killed his dad. An anchor on state television appeared to confirm the widespread rumours that Khamenei had been injured, describing him a "janbaz", "wounded veterans" of Ramadan War (as Iran refers to?the current war). Has not been able confirm his condition. This, and his fears about security after the assassination of his father on February 28, may explain his silence ever since the Assembly of Experts announced on Sunday night that they had chosen him as the supreme leader of the country. The Guards, and the office of the supreme leader, also known as beyt (the "supreme leader"), are the most visible holders of authority. They operate a parallel influence system across the bureaucracy. There were no doubts about who was in charge on Saturday, when President Masoud Peshkian - part of the triumvirate mandated by the United Nations to govern during the interim between leaders - was forced to apologize to Gulf States for his attacks. Sources said that senior guards were furious with his apology. One of three senior sources who claimed that the Guards now run Iran said, "the late Ayatollah Ali Khamenei was able to reign in "the corps by balancing their views against those of the political and clerical elitists within the system." Source: Even if the new leader is able to lead, the Guards could now have the final word in major decisions going forward. Alex Vatanka, senior fellow at Washington, D.C.'s Middle East Institute, said that Mojtaba is owed his position by the Revolutionary Guards, and therefore he will not be as supremely powerful as his father. BLUNT GUARDS Message TO BACK KHAMENEI It is constitutionally the Assembly of Experts that chooses the leader, but it has been influenced by other power brokers in the two elections of new leaders since the Islamic Revolution of 1978. Ali Akbar Hashemi Rafsanjani was the influential politician who ruled the day after Ayatollah Khomeini's death in 1989. Rafsanjani told the assembly Khomeini had whispered Khamenei to him as he lay dying. All five sources agreed that this time the Guards were the kingmakers and their messages were much more blunt. The Guards argued that the war demanded a quick process, and they chose a candidate who would defy the United States. Ayatollah?Heydari said on state TV that because their hall in Qom, a seminary city, was bombed, they had to meet in an undisclosed place. Some members were not able to attend or be informed of the votes. He said that the body had reached its "quorum" of two thirds without specifying exactly how many people were present. Mojtaba Khmenei was supported by 85-90%. The figures did not show the unanimity that the Guards had hoped for. CONCERNS ABOUT HARDER LINE Two sources said that a group of ayatollahs disliked the apparent succession by hereditary line and were afraid of alienating even supporters of the ruling regime. One source said that behind the scenes, some clerics, and members of the establishment, were pushing for an alternative during numerous discussions in the last week. The reformist former official, however, said that the Guards had allegedly threatened Khamenei critics. Insiders in the Islamic Republic said that the Guards contacted the members of the assembly to raise objections but they ultimately felt compelled by the situation. All five sources confirmed that Khamenei was initially intended to be appointed on Sunday morning but the announcement came later in the evening due to the opposition he faced. One official said that as the head of the beyt under his father for many years, Mojtaba had developed very close relationships with the Guards. This was especially true of the second-tier officers who replaced the top commanders killed in war. The reformist ex-official said that the result will be an international and domestic policy which moves in a more revolutionary direction, with the Guards finally gaining what they have been seeking for years: total control. (Reporting and writing by Parisa hafezi, editing by Cynthia Osterman).
Australian shares continue to recover as metal prices rise, boosting the rally of miners
Investors 'purchased' mining stocks on Wednesday, after a recent sale 'linked to the Middle East War, and stronger iron ore prices and gold prices boosted?the sector.
As of 2339 GMT, the S&P/ASX 200 index was up by 0.2% at?8,713.10. The benchmark closed 1.1% higher on Monday.
After a recent sell-off sparked by inflation fears linked to volatile energy costs, stocks are now on the road to recovery. The Middle East conflict has nearly erased gains from earlier this year. This leaves the benchmark index flat year-to date.
U.S. president Donald Trump predicted that the conflict would end soon, even as Israel and the United States intensified their airstrikes against?Iran. This pushed oil prices up amid fears of supply disruptions.
BHP Group shares rose by 1.1%, while Rio Tinto gained 0.7%.
Lynas?Rare Earths rose as much as 14.8%, its highest level since October 21, after extending the agreement for rare earths supplies with Japan Australia Rare Earths until 2038.
Gold stocks increased 1.6%, supporting mining sub-index. Gold prices rose nearly 2% over night on a lower U.S. Dollar and eased inflation concerns.
The stock of Northern Star Resources gained 2.5% while Evolution Mining gained 0.5%.
Financial stocks rose 0.5%. Among "big four" Australian banks, ANZ Group was the leader with a 1% gain, followed by Commonwealth Bank of Australia which grew 0.8% and?National Australia Bank, which grew 0.7%.
Insurance companies also boosted the sub-index, QBE Insurance gaining 1.4% and Insurance Australia Group gaining 1%.
Oil prices rose, while supplies from the Gulf were constrained. Energy stocks increased 0.5%.
Woodside Energy, the oil and gas producer, and Santos have added 0.3% each.
The technology stocks dropped 1.3% in line with Wall Street overnight decline as investors fretted about the prospect of war-induced economic stagnation.
WiseTech Global fell 2.8%, while Xero dropped 1.6%.
The benchmark S&P/NZX50 index in New Zealand rose by 0.8% to 13,194.21.
(source: Reuters)