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Mainichi reports that Japan's Taiyo Oil will receive cargoes of oil from Russia’s Sakhalin-2.
The Mainichi?daily?reported?on?Saturday, citing Japan’s Ministry of Economy, Trade and Industry. After the invasion of Ukraine by Russia in 2022, Japan has stopped buying oil from Russia. A?U.S. The Sakhalin-2 Project, which produces?mostly liquefied gas, is exempt from U.S. Tokyo is looking for alternative oil sources after the U.S. Israel war against Iran has largely cut off imports from the Gulf. The Gulf was Tokyo's primary oil source until the Middle East conflict began in late February. Gazprom, the Russian state-owned gas company, is the controlling shareholder of?Sakhalin-2 Oil and Gas Project. Mitsui & Mitsubishi are also shareholders. Mainichi, citing an official from METI, reported that cargo is set to arrive in the Ehime Prefecture, located in western Japan. Japan has also obtained supplies from the U.S., and other destinations that bypassed the Strait of Hormuz. METI and Taiyo Oil did not respond to a request for comment immediately.
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Japan and Vietnam look to deepen partnership in energy and minerals
Sanae Takaichi, the Japanese Prime Minister, pledged on Saturday to strengthen bilateral relations with Vietnam. Energy?cooperation, and vital minerals were at the forefront of his commitments, during a?meeting with Vietnamese Prime Minister Le Minh Hung. According to Vietnamese government data and customs, the pledge was made as "new" Japanese investment in Vietnam dropped 75% on an annual basis to $233 millions in the first three months, while bilateral trade grew 12.3%, to $13.7 billion, over the same time period. The two leaders discussed how to deepen the Comprehensive Strategic Partnership, established in?2023, with a focus on energy, critical mineral, artificial intelligence and semiconductors, as well as space. After the meeting, Takaichi informed reporters that "the two sides have identified economic security as a priority area of bilateral cooperation". She added, "With regards to critical minerals... both parties agreed to strengthen their close coordination in order to ensure stable supply and strengthen supply chains." Vietnam and Japan have signed six agreements in a joint effort that covers infrastructure, agriculture, digitalisation, technology and climate action. Japan is still one of Vietnam's biggest foreign investors. Many Japanese multinationals have large manufacturing plants in the country. Vietnam is seeking assistance from Japan and other nations for oil supply as conflict in the Middle East drives prices up and disrupts supply chain. Hung stated that under the Power Asia Initiative, which is a $10 billion initiative to "support Asian countries in their energy independence", Japan will help arrange crude oil supplies for Vietnam’s Nghi Son Petrochemical Complex and Refinery. Takaichi is also scheduled to meet Vietnam’s Party Secretary and president To Lam on Saturday afternoon. He will also deliver a key note speech at Vietnam National University. This marks a decade since Shinzo Abe, Japan's former prime minister, introduced the "Free and Open Indo-Pacific Strategy". Her speech is expected to focus on?autonomy for regional nations and resilience. Hung stated that Vietnam supported Japan's regional initiative, the Free and Open Indo-Pacific Vision. This vision is aligned to?the ASEAN Outlook for the Indo-Pacific?, and is in accordance with international laws. It also "contributes positively" to peace, stability and cooperation, as well as development, throughout the Indo-Pacific region.
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Takaichi, the Japanese PM, will meet with Vietnamese leaders in Hanoi
Sanae Takaichi, the Japanese prime minister, will meet To Lam, the leader of Vietnam in Hanoi on Saturday. The two countries are trying to strengthen ties in light of a sharp decline in Japanese investment in Vietnam. A Japanese official in the foreign ministry said that both sides will discuss ways to strengthen a Comprehensive Strategic Partnership, established in 2023. The focus of their discussion is on energy, technology and critical minerals, as well as regional stability. Japan is still one of Vietnam's biggest foreign investors.?Many Japanese multinationals operate large manufacturing facilities throughout the country. According to data from the Vietnamese government, new Japanese investment pledges fell by 75% in the first three months of this year, falling to $233 millions. The official stated that Takaichi will discuss with Vietnamese companies the difficulties they face, such as delayed payments for completed work and difficulty gaining access to major infrastructure projects. Last year, Japan announced that it was withdrawing from a nuclear project in?Vietnam due to an excessively strict construction schedule. Days before the trip, Hanoi announced that it would reconsider a ban of?petrol powered motorcycles within its city center, a policy which had been criticized by Honda. According to Vietnamese customs data, despite investment concerns, the bilateral trade has been strong. It grew 12.3% compared to a year ago to $13.7 billion in the first three months. Takaichi will also meet with her Vietnamese counterpart Le Minh Hung and deliver a speech on 'the evolution of Japan's 'Free and Open Indo-Pacific Strategy" at the Vietnam National University before heading to Australia. Reporting by Khanh Vu and Tamiyuki in Tokyo, editing by Tom Hogue.
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IMF: Angola's debt will reach ceiling in the medium term
The International Monetary Fund (IMF) projected on Friday that Angola’s public debt will reach its maximum in the'medium term. They urged the government to use any windfall oil revenues to reduce debt and build buffers, as declining oil production is weighing on its fiscal situation. The recent rise in oil prices improved Angola’s access to the international market and is expected to provide a temporary counterbalance to Angola’s declining oil revenue. The IMF stated that gross financing needs are projected to increase, with the public debt exceeding the limit set by the Fiscal Sustainability Law on the medium-term. The fund concluded its "Article 4" review by saying that Angola must continue to consolidate its finances and manage its debt prudently as the declining oil revenues weigh on the medium-term economic outlook of the country. Due to the U.S. and Israeli war against Iran, Southern Africa will benefit from higher oil prices. Brent crude currently trades above $100 per barrel, despite the fact that its budget for 2026 used a reference oil price of $61. IMF said that Angola’s future growth would depend on its ability to diversify, because a'structurally low oil revenue continues to constrain the public finances and the external balances. Angola does not seek a lending program from the IMF, but it receives 'technical support to improve tax revenues, analyse expenditures, and determine other reforms necessary. The African Development Bank is one of the?sources that could help. Reporting by Abu Sultan from Bengaluru, and Mrinmay dey from Mexico City. Additional reporting by Nilutpal Timsina, Sfundo Parakozov and William Mallard. Editing by Tom Hogue and William Mallard.
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Trump rallies seniors to support Republicans in Florida
Donald Trump, in his first event outside the White House after an apparent assassination, defended the Iran War, attacked Democrats, and deflected critics of?his economy record, all to boost?struggling Republicans election chances. Trump, speaking to seniors in The Villages'?sprawling? and deeply conservative retirement community The Villages, credited the signature tax law passed last summer for lowering Social Security levies. He also praised his administration's plans to make GLP-1 drugs for weight loss available to Medicare patients beginning in July. Trump stated that he wouldn't withdraw military forces "early" from Iran, only to have the issue arise three years later. Trump, despite his naval blockade and more than two months of strikes, has not been able to convince the Islamic Republic of Iran to denuclearize or reopen the Strait of Hormuz. Trump's campaign-style event, held in his adopted state of Florida, comes at a time when his approval rating is at a new low between his two terms. Some Republican congressional candidates, even though he's not on the ballot in November's midterm election, face steep odds. According to an Ipsos survey, more than 6/10 voters disapprove Trump's performance. His 34% approval rate is the same as the low point of his first-term. Trump's second-term is plagued by economic issues. This week, the average U.S. gas price reached its highest level since nearly four years as the U.S. - Iran conflict continued with no end in site. Commerce Department data released on Thursday showed that inflation in March grew at the fastest rate in three years. 'LETS NOT TALK" ABOUT IRAN Trump's speech seemed to acknowledge his need to appeal voters on economic issues. He largely glossed his ongoing war against Iran, even though foreign policy had otherwise dominated Trump's political attention in the past few weeks. Trump said, "Let's wait until the war is over before we talk about anything." His economic claims have misrepresented some of his policies. For example, the president claimed that taxes on Social Security were eliminated, but in reality, his signature legislative package included a new tax break for seniors, which his administration hopes to offset taxes on benefits. According to nonpartisan analyses, the effects were marginal. According to Urban-Brookings Tax Policy Center, less than half of households who receive Social Security benefits still owe taxes on those benefits. Trump's speech in a charter-school gymnasium was based on themes that "lifted" his 2024 campaign. Trump, in addition to discussing immigration and the economy, frequently attacked Democrats personally and raised divisive issues such as the participation by transgender athletes at school sports, and critical race theory. PRESIDENTIAL SECURITIES IN FOCUS Trump only briefly mentioned the attack on Saturday at the White House Correspondents' Association Dinner. The alleged attacker, who was armed with multiple guns and knives, was seated in the ballroom, just yards away from Trump and other senior officials. Security personnel subdued him. Trump joked, "I should have been indoors in a safe facility, where I could quickly, safely and beautifully play out my tenure, destroying all that stands in our path, like bad countries who want nuclear weapons." Trump said that the incident was proof of the need for his controversial new "White House Ballroom", even though it would have been too small for Saturday's event. The new ballroom would not be able to provide the security needed for all the events that presidents host around the globe. Trump's Friday remarks at the retirement community were followed by a speech to civic and business leaders from across?Florida at Palm Beach. He then attended the PGA Cadillac Championship in his Trump National Doral golf resort near Miami. Florida is a Republican state in general, but several of its congressional districts are expected to have a very competitive election this November. Just a few days ago, at Trump's request, the Florida state legislature approved new congressional districts that favored Republican candidates. The new districts will likely give conservatives 24 of Sunshine State's total 28 seats in U.S. House of Representatives. Reporting by Jacob Bogage, Gram Slattery, and Colleen Jenkins; Editing by Trevor Hunnicutt Alistair Bell, Stephen Coates and Colleen Jennicutt
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The yen dominates currency trading, causing global markets to float.
The global shares were stable on Friday. U.S. technology?stocks rallied again and investors remained focused on currency markets, after the yen briefly rose against the dollar for the second consecutive day. In a matter of minutes, the dollar dropped as much as 1% in relation to the yen on Friday. This came a day after Tokyo authorities allegedly intervened to support the currency. The last time it was down on the day, at 157.03, was 0.3%. Mike Brown, Pepperstone's senior research analyst said that the move was "clearly - so far at least - much more modest" than yesterday's dollar-yen movements. Atsushi Mmura's comments and the rise of the yen sparked speculations among currency traders that Japan would be stepping up its intervention. The FTSE 100 closed down by 0.1%. Most of the major European markets were shut for holidays. S&P 500 and Nasdaq both rose 0.3% to close at record highs, Friday. The gains were attributed to strong earnings and a drop in crude oil prices. The indexes had their biggest monthly percentage gains for years in May trading. Apple shares rose by?3.3% Friday after the iPhone manufacturer reported sales growth that exceeded estimates for its third quarter. Earnings optimism boosted global shares to their highest monthly gain since 2020, despite the fact that oil flow remains disrupted through the Strait of Hormuz. Iran said on Thursday that it would retaliate with "long, painful strikes" if Washington re-intensified its?attacks on the strait and reasserted its claim. An?official of the United Arab Emirates said that Tehran cannot be trusted with any unilateral agreements it makes regarding the Strait of Hormuz. This is a sign of the deep mistrust between all parties as the efforts to end war in the Middle East remain at a standstill. Brent crude fell 1.7% to $108.51 per barrel. JAPAN DRAWS LINE FOR YEN Investors remained alert to any further actions from Japan's Ministry of Finance. In a note published on Friday, Saxo's market strategists said that the?market would look for actual interventions rather than stern warnings, and if the U.S. spoke out in support of Japan's action. The euro fell 0.1% to $1.1718, and was a long way from its three-week low of $1.1655. The pound fell 0.2%, to 1.3569, after hitting a 10-week-high earlier. The pound was down 0.2% to 1.3569 after earlier hitting a 10-week high. Christine Lagarde, President of the European Central Bank (ECB), said that board members were debating whether or not to increase rates. She noted that the data collected over the next six week would determine the decision. Analysts at Citi wrote in a report that "the?messages communicated during the?press conference give us a distinct impression that governors are unanimous that they will raise policy rates on the next meeting, scheduled for June 11." We find no reason to change our expectations of consecutive rate increases in June and July." This was after the Federal Reserve made a shift to a more hawkish stance on Wednesday. The markets have since given up hope of a rate reduction in this country. The pivot has left the 10-year Treasury yield up 7 basis points for the week, but down from a high of 4,436%. (Reporting and editing by Wayne Cole, Sam Holmes Thomas Derpinghaus Barbara Lewis Colin Barr Andrew Heavens).
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S&P 500 and Nasdaq finish higher, post weekly gains following earnings-heavy weeks
S&P 500 and Nasdaq closed at record-breaking?highs Friday, helped by strong earnings and a drop in crude oil prices. They also turned the page on the?largest monthly percentage gains for years. Tech?strength?put the Nasdaq ahead, bringing the S&P?500 into positive territory. Both indexes have posted their sixth weekly advance, which is their longest run since October 2024. The stock market is about to embark on a historically weak six-month period. According to Fidelity data, since 1945, the S&P 500 gained on average about 2% between May and October. This compares to an average gain of 7% between November and April. Analysts now expect a 27.8% increase in first-quarter earnings year-over-year. This is according to LSEG. Investors were keen to see if the Magnificent Seven, a group of companies that are related to artificial intelligence, had reported their results this week. They also wanted to know when and to what extent the huge investments made in the new technology have started to pay off. This is an increase of 11.7 percentage points from the previous estimate. It's the largest earnings growth since the fourth quarter 2021. LSEG reports that 83% of the 314 companies who have reported results have beaten their earnings estimates and 78% have reported higher revenues than expected. Ryan Detrick is chief market strategist for Carson Group, Omaha. He said: "Today's actions are really the cherry on top of a solid week for investors. Earnings season continues to come out stronger than expected." "At exactly the same time, the S&P 500 had its second-best month since 1950." Detrick said, "It appears that the upward trend could very well continue in May." GEOPOLISM, CRUDE PRICE AND THE ECONOMY The U.S. and Israel war against Iran appears to be stalling, as the Strait of Hormuz closure has pushed up energy prices and stoked inflation fears. The front-month crude contracts eased when it was reported that Iran had submitted a new proposal for negotiation with Washington. Tom Hainlin is a national investment strategist with U.S. Bank Wealth Management, Minneapolis. The data revealed that the U.S. The Institute for Supply Management reported that factory activity increased in April for the fourth month in a row. However, the price-paid component, which is an inflation indicator, jumped to the highest level it has seen in four years. Preliminary data shows that the S&P 500 rose 20.46 points or 0.28% to 7,229.47, and the Nasdaq Composite increased 217.67 points or 0.87% to 25,109.98. The Dow Jones Industrial Average dropped 155.67 points or 0.31% to 49,496.47. Apple shares rose after the company announced a solid forecast for sales, citing strong demand for the MacBook Neo and its flagship iPhone 17. Atlassian's shares surged after the enterprise software company raised its forecast. Both Salesforce and ServiceNow, who are competitors, have gained ground. Roblox's bookings fell after a reduction in the company's annual forecast. Reddit's stock soared after a positive quarterly revenue forecast. Chevron's overall profit fell to its lowest level since five years, despite beating earnings expectations. Both supermajors ended lower.
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NEWSMAKER - The Saudi oil prince's grip on power is put to the ultimate test by UAE's shocking OPEC withdrawal
Saudi Energy Minister Prince Abdulaziz bin Salman is now faced with a new OPEC challenge on top of dealing?with the biggest ever disruption in global oil supplies. Saudi Arabia, and the other members of OPEC's group of oil producing countries, are now unable to use their spare capacity in times of crisis due to the Iran war. The sudden departure this week of OPEC’s fourth-largest 'producer' last 'year, the United Arab Emirates - taking with them spare capacity second only in the kingdom's - poses a daunting test for the new royal Saudi oil minister whose approach has shifted away from careful diplomacy and towards more unilateral decision making. "The UAE has been chafing within OPEC for many years, but never received a fair hearing about its...quota. Now the chickens are coming home to roost," Jim Krane said, a Rice University Baker Institute fellow. Prince Abdulaziz, also known as ABS or ABS, is OPEC+'s OPEC+ leader. His power comes from Saudi Arabian oil reserves and spare capacity. He is not a former energy minister, but a royal who has the support of his half-brother Crown Prince Mohammed bin Salman, de facto ruler. ABS won a price battle with Russia in 2020, when Moscow refused to reduce production at first as demand dropped. Later, ABS told a Saudi documentary that it was a question of "to be or not to - who's the boss?of this industry." He has also consistently ignored former U.S. president Joe Biden’s calls for increased production. ABS, who is now 66 years old, was granted unprecedented powers by OPEC in 2022. They trusted him to call any meeting at any time as their chairman. His demand for market discipline will now meet a "new reality". If the Strait of Hormuz reopens and Gulf oil production returns to normal, the Saudi prince will no longer be able to control an unrestrained UAE that accounted for 12% of OPEC's production last year. Requests for comment from the Saudi government's communications office, Saudi energy ministry, and UAE energy and foreign ministers were not answered. There is little room for debate During the oil market crash in 2020 caused by a pandemic, ABS demanded a historic OPEC+ agreement on production cuts. This led to days of marathon talks until a diplomatic deal was reached involving the United States taking a portion of Mexico's output restrictions, the lone holdout. The two OPEC+ delegates stated that the commitment to unity had become more intense since then. The pair reported that Saudi officials typically notify ministers of smaller OPEC+ producers about the final agreement the night before meetings. One of the delegates said that at a recent meeting, the calls were made first to Alexander Novak from Russia, and then to representatives of the six other countries who had committed to voluntary reductions. Saudi Arabia is the main culprit for output reductions, according to several delegates. The source said that, despite the fact that it was a departure from previous practice, the lack of consultations on major decisions is still a nuisance. She also noted that OPEC+ marginalised its role in the technical expert assessments by late 2022. The delegate, who spoke on condition of anonymity, said: "We appreciate His Royal Highness's efforts to lower the price of oil." While recent events have raised questions about OPEC's future and its alliance with Russia one of the delegates, and another source who is familiar with group thinking, told us that the crisis will ultimately strengthen the cohesion and make decision-making easier. RIVALRY Saudi Arabia's and the UAE’s geopolitical competition erupted at the beginning of the year when fighting broke out between opposing Yemeni factions supported both by Riyadh & Abu Dhabi. Abu Dhabi?demanded a greater output quota in 2021. This was the culmination of a long-simmering dispute between OPEC and Abu Dhabi. After public grievances, a deal was reached to increase oil production by 300,000. Sky News Arabia reported at the time that "It's unreasonable to accept more injustice and sacrifice. We have been patient." ABS, a frustrated ABS, told Al Arabiya "a little bit of rationality and a little bit of compromise will save?OPEC+", stating that he "never saw such a request" in the 34 years he has attended OPEC meetings. Since 2019, the UAE's quota has increased by around 500,000 bpd or 0.5% of worldwide demand, more than any other member. This included an increase in the UAE's goal for June 2023 when Angola, Nigeria and others saw theirs reduced. Angola quit months later in anger. Although the Saudis made concessions, the UAE still left the group on Tuesday. WIDDENING LOSSES The UAE's output and exit targets are of little significance to oil markets as long as the Strait remains effectively closed. The UAE, however, has been able to maintain some supplies via the Gulf of Oman. Saudi Arabia was able to redirect 60-70% exports via a 1981 pipeline constructed during the Iran-Iraq War to the Red Sea. Mazrouei, who was barred from reporting on the OPEC meeting last year by other media outlets, said that the UAE would be ready to increase capacity a further 20%, to 6 million bpd, after 2027 – half the Saudi capacity – a challenge to ABS’s efforts to reign in overproduction.
LME WEEK - Iran War, Supply Shocks on Agenda as Metals Industry Gathers in Hong Kong
The London Metal Exchange's Asia Week conference, which takes place next week in Hong Kong, will be dominated by geopolitics.
The U.S. and Israeli war against Iran has caused a shock to the energy market, which is affecting the outlook for demand of most metals. The blockade of the Strait of Hormuz?has?trapped?large quantities of aluminium, sulphur and sulphuric acids that are used to produce copper and nickel.
In the meantime, governments in Indonesia and Guinea tighten their grip on production through export quotas as well as tax changes. This is a new type of resource nationalism.
Here is a summary of the main themes:
SHFE Internationalisation
Shanghai Futures Exchange has opened nickel contracts for foreign investors since April 22. This is the latest move to open China's commodity derivatives markets to outsiders.
Many companies have expressed interest, even though it's too early to predict the volume increase that this move will bring.
The Chinese yuan is expected to be used more.
NICKEL – FLIPPING? TO DEFICIT
Indonesia, the country that flooded the global nickel markets, now tightens supply by reducing mining quotas, and increasing taxes.
Some producers are also affected by the war's sulphur deficit.
Huayou Huafei's project had to reduce its production by about half from May 1 due to rising costs.
The market is heading for its first deficit since 2021 due to tighter supply.
Nickel is up 17% in this year, trading near its four-year highs.
COPPER – HOW SULPHURIC ACIDS WILL SHAPE TC/RC Talks
The war in the Middle East and China's decision to limit exports in order to lower domestic prices have led to a global shortage of sulphuric acids, which are used in copper mining.
Prices were high prior to the war, and they rose by 5.61% in?April after a drop in 'March due to higher energy prices. This windfall could complicate negotiations with copper miners in the future if they ask for a reduction or want to use their profits to push processing fees down below zero.
Chinese smelters are resistant to contracts with negative fees. However, spot transactions have been?negatively?charged for over a year.
ALUMINIUM - IS A GULF OUTAGE BECOMING A GLOBAL SQUEEZE
Mercuria, a market analyst, has described the Iran War as the "black swan event" for the industry.
Guinea, upstream, is adding a new pressure point by introducing a bauxite import curb.
Prices for semi-finished aluminum billets in Europe have doubled since war began, but prices in Asia are lower due to steady exports from China. LME aluminum is up 17% since the start of the war.
It is unclear how high prices could go. Last week, analysts polled predicted prices for the third quarter to be 11% lower than Friday's close of $3 669 per ton.
(source: Reuters)