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SpaceX debut is all the rage as oil prices plunge on Gulf peace hopes
Oil fell and global stocks rose on Friday, as investors waited for the highly anticipated debut of Elon Musk’s SpaceX at Wall Street’s opening. The European stock market gained over 1.5% after strong gains in Asia. Wall Street futures indicated gains between 0.4% to 0.5%. Oil futures fell more than 3% on Friday after U.S. president Donald Trump suggested that a peace agreement could be signed this weekend. However, Tehran claimed it hadn't made a decision about a deal. On Friday, a Western source said that a memorandum could be signed between the United States of America and Iran on Sunday to end the war. Trump has said repeatedly that a deal to end the Iran war is close since mid March. Michael Nizard said that the market was able to grasp the fact that diplomacy?was proceeding productively. Nizard said, "The market is still very sensitive to the peace deal and Trump's many and varied declarations." "Today, the (potential) for peace is well under-priced," Nizard said. Nizard stated that the huge SpaceX IPO?has also the potential to set a tone for global markets given its allocation to everyday investors who can make more immediate decisions. "This is an important market event... The retail market is important to gain momentum." Musk became the first billionaire in the world after the SpaceX IPO, which raised a record-breaking $75 billion. The rocket and spacecraft maker is now valued at $1.77 trillion. Fear of Inflation If confirmed, the Middle East peace agreement would be the biggest diplomatic breakthrough to date?to end a three-month war that sent energy prices soaring around the world. On Thursday, the European Central Bank raised interest rates for nearly three years to curb war-driven inflation. The final inflation data for several European countries, including France and Spain, showed that inflation increased in May. Meanwhile, official?data revealed that Britain's economy contracted by 0.1% in the month of April -- its first decrease since August. Prices of oil fell on the expectation of a forthcoming agreement. Brent crude futures dropped 3.4% at $87.35 per barrel. Treasuries were able to hold onto their gains as markets trimmed bets on a Federal Reserve rate hike this year due to hopes for a peace agreement in the Gulf. The yields on two-year Treasury bills were the lowest at 4,062%, while 10-year Treasury rates were at 4.8839%. After overnight losses, the dollar was essentially flat. After a 0.4% decline in the previous session, it rose by 0.1% to 160.15?yen. The yen is still close to 160, which many traders see as a "line in the sand" and are on alert for any intervention by Japanese authorities. Friday, precious metals fell. Gold spot fell 0.2%, to $4,206 per ounce after a 3.5% overnight jump. (Reporting and editing by Stella Qiu, Kevin Buckland, Andrew Heavens).
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Gasoline shortages in the US during summer driving season cause problems
The U.S. is rushing into the peak driving season of summer, just as gasoline prices are rising. The soaring summer demand for American automobiles hasn't stopped U.S. refining companies from prioritizing lucrative jet and diesel fuel production to backfill global shortages due to shipping disruptions in the Strait of Hormuz. Since the beginning of the Iran War, the Strait of Hormuz has been closed to nearly a fifth?of global oil flows. Analysts are warning that a shortage is imminent as U.S. demand for gasoline has been strong despite the fact that U.S. gas prices have risen by 40% since the start of the war, and hovered above $4. Some analysts worry that U.S. refining plants may not be able run at full capacity due to the recent increase in unplanned outages. By the end of Memorial Day weekend, the cushion of gasoline supplies that had been built up during the winter months when demand was low in the U.S. evaporated. The peak U.S. summer vacation season typically runs from early September to the end of May. According to government statistics, in the first week of this month, gasoline inventories fell to their lowest seasonal level for a decade - just 215.1 millions barrels. Since the start of the war, inventories have fallen by over 34 million barrels. Distillate fuel oil inventories fell to a record low of 23 years in May. This leaves the supply vulnerable to further shocks. Analysts warn that the total demand for U.S. produced?fuel this summer could reach 9.5 millions barrels per day. Fuel makers can currently produce 9.2 million barrels per day. "Balances are going to be tight, because the (refining) margins and incentives still support jet fuel. And we know that Middle Eastern refiners won't return soon," said Sumit Ritolia. The negliding child, GASOLINE The U.S. refiners are less dependent on Middle Eastern crude oil than their Asian and European counterparts. They can maximize the distillate production to achieve strong margins. The EIA reported this week that the average four-week production of jet fuel in the United States surpassed 2,000,000 barrels per day, for the first ever time. In May, the U.S. export 54.65 millions barrels of jet and diesel fuel. This is the highest number in data from?Kpler dating back to 2017. In May, the country exported 22,52 million barrels more gasoline than it did in April. "This has made gasoline the forgotten stepchild in the refinery schedule," said Tamas Variga, an analyst at PVM oil Associates. In the past, the U.S. relied on imports from Europe to help ease regional gasoline shortages. This option has become logistically more difficult and economically less viable. Fuel supplies in Europe are also limited, and freight rates are rising due to the Strait of Hormuz blockage. Tom Kloza is the chief energy advisor at Gulf Oil. He said that even if the export rate stays where it is, and doesn't increase to meet the urgent needs of other countries, gasoline inventories could drop by 2 to 3 million barrels a week during summer crunch times. Even if refineries run at full capacity, the refined product supply is still tight. Analysts wonder if refiners can continue to run their plants at high speeds to maintain these margins. U.S. refiners operated their plants at 95.3% capacity during the first week of June, which was the highest level in almost a year. Raul Calzada is a refining analyst with Energy Aspects. He said that there are already reports of planned maintenance for the fall being postponed or re-defined. Calzada said, "If you delay maintenance, you may have to pay later." According to IIR Energy, cracks are beginning to appear. April saw the most unplanned refinery outages on average in the past five years. This equates to roughly 483,000 barrels of crude oil processing capacity per day being offline. Reporting by Nicole Jao, New York; editing by Liz Hampton and David Gregorio
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Experts say that El Nino is a global threat, but it will likely help Argentina's crop production.
Climate specialists say that while El Nino conditions can 'hurt harvests around the world, it is more likely to boost agricultural production in Argentina during the second half of the year. The Climate Prediction Center of the United States said on Thursday that El Nino conditions would intensify in the second half 2026. El Nino is a phenomenon that causes ocean water to warm in the equatorial Pacific, causing lower rainfall across Asia and Australia. It also raises concerns about global food shortages and increased prices because of droughts. Climate specialists say that in Argentinia, an exporter of corn, soybeans and wheat, this phenomenon tends to increase the intensity and frequency of rain, which is generally favorable for crop growth. German Heinzenknecht is a meteorologist with the Argentine Applied Climatology Consultancy. He said that the upcoming season of 2026/27 will be characterized by El Nino. According to official data, the last intense El Nino was in the 2015/16 cycle. Argentina had the second largest soybean harvest?in its history at 59.1 millions metric tons. The average corn yields were 7% higher than average?of the past 10 years. Climate specialist Eduardo Sierra said that El Nino can produce very high yields in the agricultural heartland. In Argentinia, corn planting will start in September while soybean planting will take place in October. According to the Rosario Board of Trade the country's producers have already begun sowing the 2026/27 crop of wheat, which is expected to reach 20 million tons. This would be Argentina's third largest harvest of cereal. (Reporting and writing by Maximilian Heath, Leila Miller, Edmund Klamann; editing by Edmund Klamann).
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Norsk Hydro declares new force majeure on Qatar aluminium
According to a notice received by?on Saturday, Norsk Hydro declared a second case of force majeure for?aluminum sales from Qatar. This was after the Qatalum joint-venture?had unexpectedly terminated its marketing agreement with Norsk Hydro. Hydro, which holds a?50%?share in the Qatalum project, which produces 648,000 metric tonnes per year, along with Qatar Aluminum Manufacturing Co, also known as Qamco issued a force majeure order in early March, after the Middle East war interrupted the gas supply to the plant and Qatalum began a shutdown. The?force majeure clause - which exempts parties from any liability in the event of a failure to supply due to circumstances beyond their control, remains in effect even though Qatalum received enough gas to operate 60% of its capacity. Hydro issued a second notice of force majeure to its customers Friday in relation to?its contractual arrangements with Qatalum. The force majeure notice stated that Qatalum had notified Hydro of its termination of the agreement whereby Hydro markets and sells Qatalum Metal. Hydro also disputed Qatalum’s right to terminate the contract. The notice stated that "despite Hydro's attempts to have Qatalum retract its termination notice, Qatalum refused to do so. Qatalum informed Hydro that it would not deliver metal in accordance with the relevant agreements." Hydro will not be able meet its obligations to deliver under the contract even if conditions in the Middle East improve. Donald Trump, the U.S. president, said 'on Thursday that a peace deal could be signed with Iran this weekend to end a three-month war. Uncertainty surrounded the termination of this agreement by?Qatalum. Qamco and Qatalum, both 51% owned by QatarEnergy and Qatalum, didn't immediately respond to emails and calls seeking comments on Friday. The notice stated that it was impossible to estimate the full duration of force majeure, but Hydro would do its best to minimize disruptions to customers. (Reporting and editing by Barbara Lewis; Tom Daly)
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Poland will select a partner for a second nuclear reactor in 2027
Poland plans to choose a partner and confirm the location of its second nuclear plant by 2027, said its deputy energy minister on Friday. He was presenting an updated plan for nuclear capacity in Poland. As Poland moves away from its coal-based power fleet, the program predicts that it will eventually have 6-9 gigawatts in nuclear?power plant?capacity. Construction of the first plant will begin in 2020. The plant is expected to start supplying electricity in 2036. Wojciech Wrochna said at a press conference that "this schedule is achievable". Poland has chosen Westinghouse Electric, a U.S. company, to build its first nuclear power plant along the Baltic Sea Coast. Consultations have begun for the selection of a partner in the second plant. Candidates from the U.S.A, France, Canada, and South Korea are invited. The Energy Minister?Milosz Motyka said at the same conference that Warsaw has ceased to be in dialogue with South Korea regarding the project because potential South Korean partners have not replied to the invitation. Wrochna stated that the government expects a selected partner to?provide funding for the project. He said: "The assumption for the second project is that we're moving away from the project that's financed by the taxpayer." Belchatow and Konin are the preferred sites in central Poland for the second nuclear plant. (Reporting by Marek Strzelecki; Editing by Jan Harvey)
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Sources and documents indicate that Brazil refiners fuelled a terrorist group designated by the United States.
According to documents and a source close to the issue, Brazilian refineries have sold more than 100 million liters (or gallons) of naphtha allegedly to a company under investigation for an alleged fraud scheme that involves a criminal group designated as a terrorist organisation by the U.S. Documents from the oil regulator ANP reveal that Riograndense was a major supplier. It is a refinery located in southern Brazil, owned by Petrobras (the state-run oil company), Braskem, and Ultrapar. According to a source close to the investigation, the solvent producer Petrodansk received the naphtha. They were accused by the state of Sao Paulo of diverting the fuel to gas stations as part of a scheme to smuggle fuel and launder money. The scheme was allegedly linked to First Capital Command, Brazil's biggest criminal gang. The investigation of Petrodansk, its supply chain and the new U.S. crackdown on the group and its suspected sources is exposing the dangers to major players in Brazil's energy sector. The United States has designated the PCC as a Foreign Terrorist Organization. This designation opens the door for stiffer penalties to be imposed on companies that work directly or indirectly with this gang. However, these tougher sanctions do not apply to activities prior to the terrorist designation. Riograndense shipped most of its shipments of naphtha to Petrodansk between 2023 and 2024, without the chemical markers required by regulators to prevent fuel fraud. Documents from ANP confirm this. Riograndense claims that the irregularity was due to an unintentional operation failure, which has been corrected. Petrodansk didn't respond to requests for comments. The firm posted a message on social media denying any wrongdoing and stating that "all clarifications will come at the right time." Petrobras, Ultrapar and others said that Riograndense was run independently and they were not informed of any investigation by Sao Paulo prosecutors. Braskem didn't respond to a comment request. Riograndense stated that it had blocked sales to Petrodansk by October 2024, after due diligence revealed potential compliance issues. However, it did not provide any details. The firm added that they met all the legal and regulatory requirements for Petrodansk to supply before then. MASS MONEY CHANNELING PCC was formed in a Sao Paulo jail three decades ago. It has since grown to be South America's biggest drug trafficking group. The PCC also operates money laundering operations in the formal economy including real estate, fintech startups, and the fuel sector. The Centre for Ethics and Compliance, FGV EAESP Business School, said that "Unfortunately, the risk is very real in Brazil today of companies doing business inadvertently with clients connected to the PCC." The U.S. Office of Foreign Assets Control has placed PCC on its Specially Designated Nationals List for 2021. This means that firms risk violating U.S. sanctions if they transact in any way with PCC which has a U.S. link. Matteson 'Ellis, the head of the Latin America law practice at U.S. firm Miller & Chevalier, explained that the new terrorist designation increases the severity of the consequences for such business ties. It expands jurisdiction and adds the risk of U.S. civil?liability and criminal prosecution if material support is provided, as well as the potential forfeiture assets. Ellis continued, "Civil forfeiture" is a power the U.S. Government regularly exercises. Ellis cited the recent seizure of two ships that were bound for Mexico from Asia, and which the U.S. claimed contained precursor materials to meth production. Washington closed down two commercial bank and a brokerage last year because of their links to Mexican cartels that were designated as terrorists. FUEL SECTOR EXPOSED Experts have warned of the risks to Brazil's financial sector, which relies on the U.S. market for global access. However, the Brazilian energy industry has become a hub for drug gangs to launder money. In August, an investigation by the Brazilian police targeted fraud schemes linked to PCC involving fuel sales worth $10 billion. Caldic was one of the targets. It is a global chemical distributor owned by Advent International, a U.S. private-equity firm, and now under investigation by Brazilian authorities. Court documents obtained by the. Because naphtha has a lower tax rate than gasoline, Brazilian criminals often mix the two illegally in order to increase profits at gang controlled gas stations. This can damage car engines. When mixed with gasoline, naphtha is nearly impossible to detect. Brazil's oil regulator,?ANP, can detect naphtha with tests to combat illegal blends. According to an ANP document, however, Riograndense did not include this chemical marker in the 116 million of the 139 millions of liters that it sold Petrodansk from February 2023 until September 2024. Riograndense, by sending unmarked naphtha to the ANP, made it impossible to verify if the solvent had been illegally transported to gas stations, according to a source involved in the investigation. Riograndense acknowledged a failure of its marking system in 2024. The firm stated in a press release. It was determined after an internal investigation that the lack in marking was not intentional, but rather a result of an "operational failure". Riograndense has announced that it has restructured and strengthened its due diligence procedures. Source: While there is no investigation of refiners at the moment, this could change if it turns out that Petrobras-backed refineries sold unmarked naphtha. The source said that determining if Riograndense's violation was deliberate is a "great task" for investigators. Riograndense has said that it was not notified about any investigations. Fake Solvent Sales The investigators have a clearer picture about what Petrodansk is said to have done with the naphtha that it received from Riograndense. Petrodansk has been accused of "diversion of petrochemical naphtha" to gas stations within the Sao Paulo metro region between June 2023 and May 2026. This is according to a document filed by state prosecutors in Sao Paulo. Investigators claim that Petrodansk sent 'fake receipts for solvent sales' to dozens shell companies in Brazil while actually shipping naphtha, which was then blended with gasoline at gas stations, to fuel distributors. Investigators have confirmed that several firms which were supposed to receive the solvent don't exist. In one instance, a firm in Sergipe that was run by a drug trafficker on welfare bought 4.7 million liters. Investigators tracked license plates to find trucks that were supposed to be transporting solvent from Sao Paulo and Petrodansk, the two gas stations investigated, remained there.
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Minutes of the meeting show that Danantara Indonesia will not be taking over contracts under the new export plan.
According to the minutes of a Friday meeting between Danantara Indonesia and industry associations, a unit assigned to manage strategic commodity exports won't take over existing customer relationships or contracts, which eases concerns about possible?trade flow interruptions. Investors are spooked at President Prabowo Subianto’s plan to put all strategic commodities in Indonesia under the control of Danantara, Indonesia’s sovereign wealth fund. Danantara Sumberdaya Indonesia met with the Indonesian Employer's Association, the Indonesian Mining Association, the Indonesian Coal Miners Group APBI, the Nickel Industry Group FINI, and the Palm Oil Producer Association GAPKI to discuss the implementation of the plan. The plan was implemented to combat state losses due to under-invoicing or transfer pricing. The minutes of the meeting, verified by two people with first-hand knowledge, state that DSI stressed the fact that the mandate was not intended to disrupt normal trade, but to enhance data-based oversight. Hadi Sugeng, GAPKI's secretary general, stressed the importance of maintaining relationships to discourage buyers from switching to alternative palm oil suppliers like Malaysia or opting for other types of edible oils. DSI has announced that it is building a digital platform for analysing transaction data of exports of strategic 'natural resource commodities' so as to identify evidence of 'under-invoicing objectively on a data basis. According to the government regulations, DSI is responsible for determining a selling price. In the minutes of the meeting, it was stated that DSI plans to develop a transparent methodology for pricing assessment based on industry-standard prices and international principles. The minutes stated that the price fairness assessment would consider factors such as product quality, commodity specs, logistic costs and contract structure. A FACILITATOR NOT A TRADER During DSI's transition -period, which runs from June 1 to December 31 - exporters of ferroalloys, palm oil, and coal are required to report their export activity. Danantara previously stated that after the transition period is over, DSI will'serve as a facilitator by facilitating and supervising exports rather than acting like a trader. The minutes stated that "DSI 'assessed' that the trader -model required significant working capital and different operational capabilities, as well as carrying significant business risks." Unnamed participant at the meeting said that DSI "will merely supervise prices and how they (the seller and buyer) establish prices". He said, "If the contract is reasonable and normal, it's fine to proceed." DSI will evaluate its role on a regular schedule "to determine the effectiveness of the current system and whether future adjustments are needed". An analyst in Jakarta said that the news was encouraging but there are still uncertainties. The analyst said that the explanation was "different" from the government decrees which brought into effect the plan. The regulations issued earlier in the month state that commodity exports will "only be conducted" by the government entity after December 31st 2026. Danantara has not responded to the request for comment on the minutes.
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China copper smelters are on the hunt for more sulphuric acids profits.
Sources and analysts in the industry said that Chinese copper smelters were buying more sulphuric acids to take advantage of lucrative margins from sulphuric acid. This has helped offset losses due to falling processing fees. Multiple sources familiar with the situation have confirmed that at least six smelters, including Jinchuan Group in China, which is the world's biggest refined copper producer, increased their purchases of pyrite during this year. The mineral pyrite, which is also called "fools gold" because of its yellow, shiny appearance that looks like real gold, contains a high level of sulphur and is usually present at low levels during the smelting processes. Sulphuric Acid, once an unimportant byproduct from copper smelting has seen its price increase by more than 500% over the past three years. This is due to a tighter supply as a result of the Russia-Ukraine conflict and a growing demand for batteries in electric vehicles. IRAN WAR FUELS PRICE RALL Smelters now choose to 'process more pyrite' to capitalize on a price rise fuelled by an Iran war that has disrupted the Gulf shipments, which supply about half the world’s seaborne? sulphur. According to Argus data, the 1,500 yuan ($222), per metric ton, profit that consultancy Oilchem estimates from a tonne of sulphuric acids offsets a?loss incurred in processing a tonne?of concentrated purchased on the spot markets, which were running at around $115 last weekend. This new strategy also gives smelters a way to feed their furnaces when concentrate is in short supply, and it avoids costly shutdowns. It highlights how the increased reliance on acids profits is changing copper market conditions amid a long-term decline in processing fees. "Years before, buying pyrite was rare. From 2026 onwards, "more and more smelters will be doing this... only acid is now profitable," said a Chinese copper-smelter manager under condition of anonymity as they and other sources weren't authorised to talk to media. China's imports for unroasted pyrite increased 13.5% on an annual basis from January to April, reaching 391,916 tons. This is the highest amount of imports in the first four months of any year since 2014. The volume of concentrate imported in April was far less than the 9.9 millions tons purchased between January and April last year. However, concentrate imports fell by 0.8% from the previous year. Analysts believe that a faster use of pyrite may lead to a reduction in copper production and concentrate consumption. Some smelters claim they cannot?process the complex raw materials, and so are not in the race for pyrite. A trader from an international trading firm said that diversification away copper?concentrate was also hampered due to technological limitations. However, Chinese smelters are making investments which allow them more pyrite or gold concentrate. $1 = 6.7630 Chinese yuan
Copper prices rebound on optimism about US-Iran Peace Deal
Copper prices rose on Friday as hopes of a quick peace agreement between the U.S.A. and Iran eased concerns about a slowing economy and rising inflation.
Benchmark 'three-month copper' on the London Metal Exchange gained 1.6%, to $13,704 per metric ton at 0925 GMT. This ended two days of losses which saw copper reach its lowest level in three weeks.
The price of copper fell on Thursday, amid the worst violence between Iran and the U.S. since the two sides signed a ceasefire agreement in April.
Prices reversed when U.S. president Donald Trump stated that a peace agreement could be signed as soon as this weekend. Iran, however, said no decision had been taken on the pact.
Ole Hansen is the head of commodity strategy for 'Saxo Bank' in Copenhagen.
The market is betting that the inflation fears are about to end. It's not that it will collapse, but it could at least prevent it from increasing further."
The Shanghai Futures Exchange's most traded copper contract rose by 1.2%, to 104660 yuan (15,474.24) per ton.
Metals joined the other markets in reacting to this news as oil prices fell and global stocks rose.
LME Aluminium lagged behind copper. Prices rose 0.3%, to $3,513 per ton, as a peace agreement would ease pressure on smelters located in the Gulf. These smelters have been affected by disruptions and this has pushed up prices.
The LME Cash Contract premium over the Three Month Futures
The sharp narrowing... highlights a 'unwinding' of extreme geopolitical risks premiums, and speculative positions as the market reassessed both the duration and extent of supply disruptions," explains Rupankar RM.
Nickel gained 1.1% at $17,880, and tin increased 1% at $53,400.
(source: Reuters)