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Concerns over the escalating tensions in Middle East cause oil prices to rise
The oil prices rose Friday due to?fears that military tensions in the Middle East would escalate after?Iran released video of commandos board a cargo vessel in the Strait of Hormuz, and reports that Tehran's air defenses had engaged 'hostile targets. Brent crude futures increased $1.23 or 1.17% to $106.3 per barrel at 0107 GMT. West Texas Intermediate futures climbed $1.07 or 1.12% to $96.92. The benchmark oil contracts both rose more than 3% and $5 per barrel on Thursday after reports of air defences engaging targets above Tehran and a power battle between Iran's moderates and hardliners. U.S. president Donald Trump stated that Iran might have stocked up on its weapons "a little bit" during the ceasefire of two weeks, but that the U.S. army could destroy it in a single day. Haitong Futures stated in a recent report that the ceasefire phase was increasingly resembling a war preparation phase. It said that if U.S.-Iran negotiations fail to reach a breakthrough by the end April, and the fighting resumes, oil prices could rise to 'new highs for this year. Iran posted video on Thursday of commandos storming a cargo ship in a speedboat after peace talks collapsed, highlighting its control over the Strait of Hormuz where 20% of the world's oil and gas normally flows. Trump stated that, as investors and governments look for a lasting?peace around the globe, he will not set a 'timetable' for ending the conflict in Iran. He also said he wants to make a "great deal". When asked how long he would be willing to wait for an enduring?peace agreement with Iran, he replied: "Don't hurry me." Mingyu Gao is the chief researcher at China Futures for energy and chemical products. She said that prolonged disruptions to the Strait of Hormuz may push global crude and refined-product inventories down below seasonal lows of five years by late May or early June. This would add a premium of supply risk back into oil price. Trump announced on Thursday in a post to social media that Israel and Lebanon?agreed?to extend their ceasefire for a period of?three weeks following a meeting at the White House Oval Office between high-level representatives from both countries. Israel had warned before the announcement that it was prepared to resume attacks against Iran. (Reporting and editing by Shri Navaratnam, Helen Clark and Sam Li)
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Asia's refinery cuts are intensifying due to the war in Iran, putting jet fuel and diesel supplies at risk
Analysts and refinery sources say that Asian refining output is expected to fall in April and may as 'crude imports have hit a decade-low and the Iran War forces refiners into processing lighter grades. This will reduce diesel and jet fuel production by at least 1 million barrels a day. The Strait of Hormuz closure has had the greatest impact on Asia. This region, which accounts for 37% of global refinery output, and normally sources two thirds of its?crude? from the Middle East. Run cuts at refiners have exacerbated the tight fuel supply in the area and kept prices high. Kpler's preliminary data shows that crude imports into Asia will fall by 22% annually to 20.40 million bpd, which is the lowest level in 2016. This is despite refiners buying sanctioned Iranian oil and Russian oil on the sea, and paying record prices for alternatives from the Middle East. The International Energy Agency reported that Asian refineries had to reduce their runs to 29.4 mbpd by 2.7 mbpd, and they are expected to further decrease to 28.6?bpd, and then 28.5 bpd, in April and may, respectively. Consultancy Energy Aspects predicts that crude processing will drop to 28,4 million bpd by April and 28,7 million bpd by May from 30.4 millions?bpd during March. Amir Abu Hassan is a senior oil analyst with consultancy FGE NexantECA. He said that the deepest cuts would occur in April, as Middle East crude supplies continued to be short. Alternative barrels are only expected this week. Some analysts predict that the recovery will begin in June. However, this depends on the resolution of the conflict which keeps the Strait of Hormuz wide open. North Asian Refineries China, which has the largest refining industry in the world, has curtailed fuel imports since last month in order to maintain domestic supplies. The IEA estimates that Chinese refinery output was 14 million bpd for March, down slightly from 15.2 millions bpd during February, and at 14.8 million bpd per year on average through 2025. The Chinese research firm Horizon Insight estimated China's throughput to be 13.4 million BPD in the week ending April 17 - down from 15.4 millions BPD in the week prior to the start of the war on February 28. Horizon Insight analysts stated that the Chinese run-cuts are mostly at state owned refineries which have increased yields in transportation fuels to the detriment of naphtha used for petrochemicals and energy security. Hassan, of FGE, said that the utilisation rate for refineries in South Korea and Japan will drop from its normal level around 70 to 80 percent to 65 percent by late April or early May. According to data from the Petroleum Association of Japan, Japan's refineries were operating at 68% of their designed capacity in April. Hassan stated that the average refinery utilization rate in Singapore's energy hub has been below 50%. This is down from the usual 70%, Hassan added. Nithin Prakash, an analyst with Rystad energy, reported that Indian crude production fell by 13% in April compared to February. LESS MEDIUM-SOUR CRUDE, MORE LIGHT GRADES COMING According to Vortexa, of the 12 million barrels per day of crude oil that could not reach Asia due to the closure of the Strait of Hormuz in March, 8 million were medium density with high sulphur, or medium sours. Most Asian refineries have been designed to process medium sours to maximize diesel output. As a replacement, Asian refiners bought light West Texas Intermediate and medium-sour Mars from the United States, Kazakhstan's light-sour CPC Blend, and sweet West African crude oil. These grades typically produce more gasoline or naphtha. Vortexa data show that the share of Asia's crude oil slate containing light-sweet crude has reached a record-high of 21%. This is up from just 11% in February. DIESEL, JET ?FUEL OUTPUT LOSS Middle distillates, such as diesel and jet-fuel, have been lost at Asian refineries due to the switch in crude grades. Middle East crudes produce 60 percent of middle distillates compared to 40 percent for WTI. Rystad's Prakash stated that a 1%-2% drop in Asian refining yields could result in a loss of between 250,000 and 500,000 bpd diesel and jet fuel supply. This, combined with the export restrictions imposed by some governments, and refinery run reductions, could reduce diesel and Jet Fuel availability in the short term by up to 1 million bpd. Sumit Ritolia (Kpler's Modelling and Refining Manager) estimated that the total middle distillate supplies losses in April were between 1.8 and 2.0 million bpd. Most of this diesel. He added that a lighter crude slate would lead to a lower use of secondary units, such as hydrocrackers and cokers, which are designed to upgrade residual gasoline into diesel.
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Australian shares fall as concerns over the Middle East weigh; Suncorp rises
Australian shares fell on Friday, and are on course for their worst week in more than a month due to uncertainty over a lasting peace agreement in the Middle East. However, insurer Suncorp has bucked the trend after securing a reinsurance policy. By 0034 GMT, the S&P/ASX 200 Index had dropped 0.2%. If losses continue, the benchmark is set to drop nearly 2%, making it its worst week since last March 16. After a meeting of high-level officials at the White House, Israel and Lebanon?extended a ceasefire for a period of three weeks. However, markets are still uncertain whether a lasting deal will be reached. Miners lost 0.6%. Lithium producer IGO fell 11.5% after announcing lower annual production and increased cost forecasts for Greenbushes lithium mine. The project is 51% owned jointly by Tianqi?Corp002466.SZ> and has the highest-grade ore reserves of any hard rock lithium mine in the world. Fortescue, the world's third largest miner, saw its shares rise 0.1% after it reported a 5% increase in iron ore shipment during the third quarter, despite missing estimates. The sub-index was further weighed down by gold stocks after they fell 0.8% as the price of the precious metal hit a new low. The shares of Evolution Mining fell 1.3% and Northern Star Resources dropped 1.5%. Suncorp, on the other hand, rose 9.5% after it secured reinsurance coverage of up to A$2.4 billion ($1.71billion) over a five-year period. The insurer also projected a growth in gross written premiums of 3% by fiscal 2026. Suncorp's performance helped the financials index to remain stable, but gains by top banks were offset. Commonwealth Bank of Australia dropped 0.4% while Westpac fell 0.5%. Energy stocks grew?0.5% as producers benefited from the surge in?oil price. Woodside Energy and?Santos, an oil and gas company, both gained 1.2%. The benchmark S&P/NZX 50 Index in New Zealand was unchanged at 12,884.19.
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Goldman predicts that Gulf oil production will rebound in a few months following the reopening of Hormuz.
Goldman Sachs stated on Thursday that Gulf oil production has been severely curtailed due to the Iran conflict. It is likely to recover in a few months, after the Strait of Hormuz reopens fully, but it could take significantly longer. In April, the?bank estimated that?about 14.5 millions barrels of crude oil per day from Gulf production - about 57% of supply before war - were offline. This was mainly due to precautionary shut-downs and stock-management rather than damage to oilfields. Strait of Hormuz is responsible for?about one fifth of the global oil flow under normal circumstances. Therefore, a prolonged disruption could have significant effects on global energy markets. Goldman stated in a research report that, in the absence of new attacks on oil infrastructure, a safe and sustainable reopening would allow production to be returned relatively quickly. This is supported by spare capacity in Saudi Arabia and the United Arab Emirates. Logistics and well performance will limit any recovery. The bank reported that the Gulf's empty tanker capacity has fallen by 130 million barrels or 50%. This will limit the speed at which oil producers can export once they resume. Prolonged 'well shut-ins' can also reduce flow rates. This is especially true in reservoirs with lower pressures. Workovers are required before production can be fully recovered. Goldman said that the longer production is curtailed, then the slower recovery will be. The Bank of International Settlements said that recovery prospects differed across countries. Iran and Iraq faced greater risks because of reservoir characteristics, infrastructure challenges and sanctions. Saudi Arabia, however, could ramp up production faster. Goldman noted that an average of external forecasts suggests Gulf producers could recover?about 70% of their?lost production within three months? and?around 80% within six months?. However, Goldman warned against a prolonged shutdown, which would increase the risk of long-term damage to supply. (Reporting and editing by Neil Fullick in Bengaluru, Anmol Choubey)
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Fortescue increases spending on green energy and maintains shipment forecast
Fortescue, an Australian mining company, announced on Friday that it would continue to invest in green energy as a way to 'insulate itself from the volatility of global oil markets. Its full-year shipment forecast remained unchanged. Iron ore is the fourth largest producer in the world. Its plan to reduce fossil fuels faster than its competitors will give it an advantage as global miners face inflationary pressures due to wars in the Middle East. Dino Otranto, Fortescue Metals & Operations Chief Executive Officer said: "We are already reaping the benefits of decarbonising our operations." "We are fundamentally changing how we run our business by reducing our dependence on fossil fuels at a time when energy supplies are becoming increasingly uncertain." Fortescue announced that it will invest $680 million in the development of new green energy infrastructure for Pilbara. This is a continuation of a previous commitment to accelerate the roll-out of a green energy off-grid system to eliminate fossil fuels. Fortescue shipped 48.4 metric tons of iron ore during the three-month period ending on March 31. This was just a little bit less than Visible Alpha's consensus estimate of 48.6 metric tons, but still higher than the reported 46.1 metric tons a year ago. The Perth-based miner maintained its fiscal 2026 forecast at 195 to 205 millions tons but reduced Iron Bridge shipment guidance to 9 to 10 million tonnes on a 100 percent basis. This is compared to the earlier estimate of between 10 and 12 million tons. The shipment of iron bridge project by Fortescue in Western Australia increased 33.3% in the third quarter to 2,000,000 tons. However, production and shipments decreased due to weather disruptions caused by Tropical Cyclones Mitchell & Narelle. The miner also noted a?rise in costs. Hematite operations exported 46.4 million tons compared to 44.6 million last year. C1 unit costs increased by more than 4%, to $18.29 for wet metric tons. Fortescue warned that a $10 per barrel change in Brent crude oil can affect its hematite ore C1 unit costs by $0.20 per wet-metric ton if all other factors are constant. (Reporting from Sneha Sunny and Sherin Kumar in Bengaluru. Additional reporting by Melanie Burton. Editing by Vijay Kishore and Maju Samuel.
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Amazon-backed X-Energy raises more than $1 billion in IPO
Nuclear reactor developer X-Energy (backed by Amazon) announced?on Friday that it raised $1.02billion in its initial 'public offering' in the United States. The Rockville-based 'company' sold 44.3 million shares at $23 each, well above the range of $16 to 19 per share. The IPO is coming as the market regains traction following a short slowdown in March when volatility tied to 'Middle East tensions' and a broader tech selloff left several issuers out of business. Companies are now moving fast to tap investor demand as markets?reach record highs' and risk appetite improves. As electricity demand increases, nuclear power has renewed interest. This is especially true for hyperscalers who run energy-intensive AI and cloud infrastructure. X-Energy was founded in 2009 and develops a?small modular nuclear reactor (SMR technology)?and manufactures advanced nuclear fuel systems. SMRs can be built in a fraction of the time and cost as traditional large-scale nuclear reactors. X-Energy has developed its Xe-100, which uses helium instead of water as a cooling agent. Amazon will invest $500 million to help the company roll out its SMR technology in 2024. The tech giant is looking for reliable, carbon-free energy in order to power its AI-driven data centers. X-Energy originally planned to become public in 2023 through a merger?with a blank-check company backed by Ares Management, but later?scrapped these plans citing unfavorable markets conditions. J.P. Morgan is acting as the joint lead book-running'managers. X-Energy is set to begin trading 'on the Nasdaq on Friday under the symbol "XE". (Reporting from Atharva Singh, Bengaluru; and Natalia Bueno Rebolledo, Mexico City. Editing by Maju Sahu and Subhranshu S.)
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IGO Australia reports revenue increase but cuts outlook for lithium mine
IGO, an Australian company, posted a 45% increase in revenue for the third quarter, driven by higher nickel sales volumes and realized prices. However, IGO forecasts lower annual production at Greenbushes Lithium Mine, as well as higher costs. The miner reported sales revenue of A$119.7 (85.37) million for the quarter, compared to A$82.4 in the second quarter. The Greenbushes lithium project is now expected to produce 1,375-1.425 kilotons spodumene in fiscal 2026. This is lower than the earlier expectations of 1,500-1.650kt. The world's highest-grade lithium ore reserves are found in the project owned by a joint venture between Tianqi Lithium Corp. and the Chinese government. IGO expects to reduce capital expenditure expectations in order to conserve cash. It also expects to see higher unit cash costs due to lower production for 'Greenbushes' during the same period. Greenbushes' production of?Spodumene? was flat in the third quarter due to lower feed grades and recoveries as well as maintenance-related disruptions. The miner has also warned of a sharp increase in fuel prices, which will continue to 'flow through into future periods as the Middle East conflict shocks global energy markets.
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Baker Hughes says Middle East disruptions have affected oilfield activity, despite its high estimates
Baker Hughes, a provider of oilfield services, beat Wall Street estimates for the first quarter profit as strong demand from its industrial and energy technology units offset drilling 'weaknesses' caused by disruptions in Middle East. The IET unit saw a surge in orders due to the increased demand for electricity from data centers and investments in gas infrastructure, liquefied Natural Gas (LNG), and grid equipment. The first-quarter IET order total rose to $4.89 billion, up from $3.18billion a year ago. The disruptions in the Middle East have weighed on oilfield services. Oilfield Services and Equipment (OFSE), a division of the company, was facing pressure. Its revenue fell 7% to $3.24bn in just one year, due mainly to regional disruptions, as well as the sale of its surface-pressure control business. The Middle East/Asia revenue dropped by?19%, to $1.15 billion. Baker Hughes and its peers are yet to see any meaningful benefit from the higher oil prices, following the attacks on Middle East infrastructure and Iran's closure of the Strait of Hormuz. Producers remain cautious in increasing drilling. Even after beating first-quarter expectations, a peer company,?Halliburton, warned earlier this week that disruptions related to the Iran conflict, and the Strait of Hormuz closing, could reduce current-quarter earnings by 7 to 9 cents a share. SLB, the larger rival, which is due to report Friday, has also warned of a possible 6-9 cents?hit citing operational disruptions within the region. According to LSEG data, Baker Hughes?reported an adjusted profit per share of 58 cents for the three-month period ended March 31, compared to analysts' expectations?of 49 cents. The revenue came in at 6.59 billion dollars, which is also higher than the $6.35 billion expected.
BRICS nations raise power emissions to new highs over rest of world: Maguire
The BRICS group of major emerging economies Brazil, Russia, India, China and South Africa emitted a record 1.98 billion metric tons of co2 from power generation during the first quarter of 2024, information from energy think tank Ember programs.
That emissions toll was approximately 500 million heaps higher than the whole emissions load generated by the rest of the world combined and highlights the diverging pollution trends between key fast-growing economies and most developed nations.
A compounding issue for emissions trackers is a potential deterioration in trade relations between BRICS members and the United States and its allies, and the possibility that BRICS members focus on financial development over decarbonization efforts.
Together, the BRICS nations account for more than 40% of the world's population and around a quarter of the worldwide economy, and so hold considerable influence when banded together.
The bloc was established as a casual club in 2009 to challenge a world order dominated by western economies, and over 40 other nations including Indonesia, Saudi Arabia, Egypt and Kazakhstan have revealed interest in signing up with the forum.
If the present BRICS group opts to integrate ambitious members, the brand-new club could have the means to mostly overlook western financial pressure to reduce pollution, as growing trade and investment within the new BRICS bloc could provide a guard against blowback by western-affiliated trade partners.
HEAVY HITTERS
China and India alone accounted for over 90% of the BRICS emissions total throughout the first quarter, highlighting how focused power contamination is within the BRICS bloc due to high coal usage by Asian countries.
China and India are likewise perhaps the most prominent members of the BRICS, with the power to deliver on trade pacts and to undertake considerable foreign financial investment projects that might entice new members.
As the world's largest power producer and renewable energy developer, China is also an essential gamer on the worldwide phase in regards to current nonrenewable fuel source emissions as well as sustainable energy generation possible.
The nation discharged approximately 5.4 billion tons of CO2 from nonrenewable fuel source power generation in 2023, or approximately 40% of the worldwide overall, which has made China an essential target for global pressure to lower international pollution.
China is likewise by far the world's top clean energy designer and exporter, and intends to control the production and export of tidy energy products over the coming years.
However, Beijing has faced allegations of unfair trade practices including the discarding solar panels, electric cars and other products onto world markets at prices that undercut rival manufacturers.
This has actually led to trade spats with the United States and Europe in the last few years and lengthy disputes at the World Trade Organisation (WTO).
Over the same duration, China has become the top location for exports from countries that deal with western sanctions, consisting of Russia and Iran, providing those nations with critical revenues that further strain China's relations with western powers.
India, the world's second biggest coal user behind China, has likewise frustrated western sanctions efforts by emerging as a. key purchaser of Russian product exports, consisting of crude oil,. coal and natural gas.
India is likewise under growing global pressure to cut. power emissions, but like China is struggling to balance the. energy needs of its fast-growing economy with promises to control. pollution.
India also deals with the difficulty of producing sufficient tasks. for its 1.4 billion population - the world's biggest - which. requires a rapid and sustained growth to its cost-sensitive. manufacturing sector.
Power firms have actually dedicated to sharply increasing energy. products from tidy sources but still count on low-priced coal to. produce over 75% of the country's electricity.
India has actually vowed to reach net zero carbon emissions by 2070. however is deemed highly unlikely to reach that target, given the. withstanding reliance on coal and prepared even more expansions in usage. of the fuel, according to Environment Action Tracker.
GROWTH DRIVE
In addition to China and India, Russia likewise recorded sharp. development in power emissions throughout the very first quarter, while Brazil. and South Africa kept emissions mostly flat.
These emissions patterns put BRICS members at odds with lots of. western countries.
But the fact that each BRICS country is a crucial producer of. several vital products that aid financial growth makes BRICS. membership attractive to other emerging economies.
In addition to surging volumes of low-cost made and. semi-finished goods, BRICS nations produce and export coal, gas,. crude oil, soybeans, corn, rice, metals and rare earth minerals.
Many BRICS countries are also committed to consuming growing. volumes of the majority of nonrenewable fuel sources for the coming decades, that makes. the bloc an appealing trade partner for the similarity Saudi. Arabia and Indonesia which have plentiful fuel products but face. decreasing need for them in western markets.
At present, the still-limited degree of BRICS forum. engagement with other countries suggests that western policymakers. still play an essential role in major choices by the majority of emerging market. federal governments.
Which suggests that western values about the environment may. still prevail and stimulate a power sector clean-up in some. countries.
But if BRICS nations choose to discover new club members that look for. economic development above all else, the decrease of emissions may. take a rear seats to more emissions-laden commercial. expansion.
<< The opinions revealed here are those of the author, a. writer .>
(source: Reuters)