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Source: Thyssenkrupp CEO Lopez will get contract extension.
A person with knowledge of the matter has said that the contract of Thyssenkrupp's CEO Miguel Lopez who was appointed two years ago will be extended by the supervisory board next week. Lopez, who assumed the role of CEO on June 1, 2023 has overseen two significant steps in the transformation of the company: the listing of Thyssenkrupp’s hydrogen unit and the sale of 20% of its steel business by Czech billionaire Daniel Kretinsky. Thyssenkrupp, under his leadership also accelerated its efforts to spin-off its defence division TKMS. The company unveiled plans for a holding model that would allow all of its divisions to be opened to outside investors. The person stated that at a supervisory committee meeting on June 20, Lopez’s contract which expires May 31, 2026 is expected to be extended. Members of the committee will also likely approve the planned spinoff of TKMS. Lopez's aggressive approach towards Thyssenkrupp’s revamp has attracted the ire powerful labour leaders. These hold half of the seats in Thyssenkrupp’s supervisory board, but they cannot block an extension as Chairman Siegfried Russwurm is able to cast a decision if there's a deadlock. Thyssenkrupp issued a statement in which it said: "We confirm that the Supervisory board will address this issue in due time." The German weekly Welt am Sonntag was the first to report on the contract extension. (Reporting and writing by Friederike Hine, editing by Miranda Murray; Friederike Steitz)
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Oil prices jump over 7% following Israel's attack on Iran
The oil prices rose over 7% to multi-month highs on Friday after Israel launched airstrikes against Iran. This triggered Iranian retaliation, and raised concerns about disruptions in Middle East supply. Brent crude futures rose $4.94 or 7.12% to $74.30 per barrel at 1442 GMT after reaching an intraday peak of $78.50 - the highest level since January 27. U.S. West Texas Intermediate Crude was up $6.94% or $4.72 at $72.75. It reached its highest level since January 21, at $77.62, earlier in the session. The gains on Friday were the biggest intraday movements for both contracts in 2022 after Russia's invasion caused a spike of energy prices. Israel announced that it had launched a long-term operation on Friday to stop Tehran from building atomic weapons. It said the first targets were Iran's ballistic missile factories, nuclear facilities and military commanders. Iran has promised to respond harshly. U.S. president Donald Trump called on Iran to reach a deal with regard to its nuclear program, in order to stop the "next attack already planned." The National Iranian Oil Refining and Distribution Company stated that oil refineries and storage facilities were not damaged and continue to be operational. Nikos Tzabouras is a senior market analyst with Tradu.com. He said that the main concern was whether or not the recent developments would have an impact on the Strait of Hormuz. Tzabouras wrote in a Friday morning note that "sustained upside" would require disruptions of physical flows, such as damage to Iran’s oil infrastructure or blockade of Strait of Hormuz – a major global chokepoint. Around a fifth (or 18-19 million barrels of oil per day) or fuel, condensate, and oil are transported through the Strait. Ole Hansen, analyst at Saxo Bank, said that no change has yet been observed in oil flow. Hansen stated that the risk of an energy supply disruption is low, and will likely reduce over time, unless Iran decides it wants to draw other nations into the conflict. Analysts said that Iran and its neighbors could be forced to pay a high price if the Strait of Hormuz is blocked, as it relies on this waterway to transport oil to Asian markets. Iran's oil exports are all sea-based, so its economy is heavily dependent on free movement of goods and ships through the seaway. Analysts at JP Morgan said that cutting off the Strait of Hormuz could be detrimental to Iran's sole oil client, China. On other markets, stocks plunged and investors rushed to secure assets such as the U.S. Dollar and Swiss Franc. Reporting by Erwin Seba and Georgina McCartney; Editing by Stephen Coates. Rachna uppal, Kim Coghill. Chizu Nomiyama, David Gregorio.
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Overview of Iran's Energy Industry and Infrastructure
Israel launched strikes against Iran on Friday. It targeted its nuclear facilities, missile factories, and military commanders as part of a long-term operation, which it has warned will be prolonged, to stop Tehran from building atomic weapons. According to the National Iranian Oil Refining and Distribution Company, oil storage and refining plants were not damaged by the attack. Here are some interesting facts about the energy industry of the country, its exports, and the impact that previous Western sanctions had on it. SANCTIONS & OPEC According to OPEC, Iran's oil output peaked in the 1970s. In 1974 it reached a record 6 million barrels per day. This was over 10% of the world's output. The United States first imposed sanctions against Tehran in 1979. Since then, several waves of U.S. sanctions and European Union sanctions have been aimed at the country. In 2018, the United States tightened its sanctions after Trump pulled out of a nuclear agreement during his first term as president. Iran's oil sales fell to near zero in some months. Analysts say sanctions were not enforced as strictly under the administration of Trump's successor, President Joe Biden. Iran was able to evade them. Iran is exempted from OPEC+ production restrictions. Who is the main buyer of Iranian oil? Iran's crude oil exports rose to a multiyear high of 1.8m bpd, the highest level since 2018, due to strong Chinese demand. China claims that it does not recognize sanctions against its trading partners. China's private refiners are the main buyers of Iranian crude oil. Some of these companies have been recently placed on U.S. Treasury's sanctions list. However, there is little evidence that the sanctions have had a significant impact on Iranian oil flows to China. Iran has been evading sanctions for years by hiding satellite positions and transferring ships from one vessel to another. PRODUCTION & INFRASTRUCTURE Iran is the third-largest producer of crude oil in the Organization of Petroleum Exporting Countries. It extracts 3.3 million barrels of crude oil each day, plus another 1.3 millions bpd of liquids and condensate, which totals to about 4.5% of the global supply. According to Kpler it exported 1.8 million barrels per day of crude oil and condensate, which is close to the peak of 2018. The remainder of production was processed in domestic refineries, with a capacity of 2.6 millions bpd. Kpler reports that in May, the country exported LPG and oil products worth 750,000 bpd. According to FGE the country produces 34 billion cubic foot of gas every day. This is 7% of world production. The gas is used exclusively in the domestic market. Iran's hydrocarbon facilities are concentrated primarily in the southwest. For oil, they are located in the Khuzestan Province and for gas and condensate produced from the South Pars Field in Bushehr. Kharg Island is the main port of export for 90% of the crude oil. Analysts believe Saudi Arabia and the other OPEC countries could compensate for a drop in Iranian oil supply by pumping more. Although a number producers are currently raising their output targets, the spare capacity of the group is being strained.
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Investors fearing worst-case Middle East scenarios hunker down
The worst-case scenario for investors, which is a full-blown Middle East war, is now becoming a reality. This will unleash a massive capital flight from risk assets to classic safe havens. Israel said on Friday that it launched an attack against Iranian nuclear facilities and missile factories and killed a number of military commanders. This could be the start of a long-term operation to stop Tehran from building an atomic bomb. Oil, which makes up roughly 30% of the global energy demand, has soared, with gains as high as 14%. Gold and government bonds have also briefly fallen. Airlines led the decline in shares, which were near record highs. Francois Savary is the chief investment officer of Genvil Wealth Management, Geneva. This is one of those situations when everything seems to be under control, but then it isn't. Iran is one the largest crude exporters in the world. Iran also borders the Strait of Hormuz - a crucial choke point through which a fifth of global daily consumption passes. Iran has threatened to close it in response to Western pressure. Donald Trump, the U.S. president, suggested that Iran, who had promised a harsh reaction, was responsible for the attack by refusing to comply with U.S. demands during talks to limit its nuclear program. He urged Iran to reach a deal "with even more brutal attacks already planned". The focus on the markets shifted to the actual implications of the flare up. The likely increase in consumer prices, and the growth that will result from U.S. Tariffs have caused investors and central banks to wrestle with the future direction of interest rates. The Friday strikes by Israel only exacerbated this dilemma, especially given the rise in oil prices to five-and-a half month highs. U.S. Treasuries failed to benefit from the safe-haven effect, with 10-year yields remaining steady at around 4.36%. DOLLAR BACK The dollar, the ultimate safe haven for investors, has once again assumed the role of the most popular currency. Fiona Cincotta, City Index's strategist, said that the dollar was returning to its traditional role as a safe haven. The equities market is descending in the safe haven, risk off trade. This has given the dollar a much needed boost from its lows. S&P 500 dropped 0.7% on early Friday trade, but was still near the record highs set in February. Since Trump's "Liberation Day", April 2, unveiling of tariffs, and his subsequent erratic trade policy, that have shattered the confidence in U.S. investments, the dollar has been trading virtually in lockstep. This relationship started to erode Friday as investors began to embrace the dollar, at the expense, of stocks, cryptocurrency, industrial commodities, and currencies like the Swiss franc, a safe haven currency, and the yen. OIL SLICK Brent crude oil was last up 7%, at $75.54 a barrel. This is their biggest jump in one day since 2022 when energy prices spiked following Russia's invasion. Chris Scicluna is the head of Daiwa Capital Markets' economic research. James Athey, the manager of Marlborough Fixed Income Fund, said that investors could be tempted to jump back into stocks if tensions don't increase. He said that "in general, the markets tend to pass over these types of events fairly quickly. But of course, therein lies a risk of complacency." He said, "The situation is really tense and fraught. Risk assets are still being priced to perfection."
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Oil prices rise after Israel attacks Iran, resulting in a Russian rouble gain
After Israel's major attacks against Iran, the rouble grew against the dollar. This was largely due to a dramatic increase in oil prices, Russia’s main export. Israel claimed it had destroyed nuclear facilities, missile factories, and killed military commanders as part of a possible long-term operation to stop Tehran from building an atomic bomb. The attacks led to a retaliatory response from Iran and a concern about possible disruptions in oil supplies. Brent crude rose 7% to $74.20 per barrel at 1439 GMT. According to LSEG, based on quotes over the counter, the rouble rose 0.4% at 79.70 U.S. dollars. The trading was low as Russia celebrated a two-day holiday. The Russian currency appreciated earlier in the day, but oil prices also retraced some of the gains they had made. The benchmark Russian rouble-based index rose by 0.9% today, led mainly by oil majors. Shares in Rosneft, Tatneft, and Lukoil all increased, respectively, 5.9%, 5%, and 2.7%. Analysts attribute the rise in the rouble's value against the dollar to the ease of geopolitical tensions, especially with the Trump administration, and the tight monetary policies of the central bank, which have reduced the demand for foreign currencies. The rouble gained 0.5% on the Moscow Stock Exchange against the Chinese Yuan, which is the most commonly traded foreign currency in Russia. The central bank uses the yuan to make foreign exchange intervention. (Reporting and editing by Mark Trevelyan; Alexander Marrow)
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Bloomberg News CEO: Ford has a shortage of rare-earth magnets
Jim Farley, CEO of Ford Motor Co., told Bloomberg News on Friday that the automaker is having difficulty obtaining rare earth magnets. China, which controls over 90% of the global rare earth processing capability, implemented new export licensing regulations in April. This tightened supply for Western manufacturers, including those of cars, fighter jets, and household appliances. Rare earths are consumed by automakers, and especially those who focus on EVs. A report says that China granted temporary export permits to the rare-earth suppliers for the top three U.S. carmakers, including Ford. This was done earlier this month. Farley told Bloomberg News that the company is still struggling. Farley stated, "It is day by day." "We had to close factories." "It's a hand-to mouth situation right now." Ford didn't immediately reply to the request for comment. A rare-earth supply shortage had forced the company to shut down its Explorer SUV production at its Chicago facility for a full week in May. Ford shares were trading at a loss of close to 1% this morning. Ford shares have increased by more than 7% in the past year. Western countries are trying to reduce their reliance on Chinese rare-earths by investing into alternative sources, as well as refining capacities in places such Australia, Canada and the United States.
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Wall Street drops as Israel-Iran Conflict hits Risk Attitude
Wall Street's major indexes dropped on Friday, after Israel's deadly attack on Iranian nuclear installations inflamed Middle East tensions and battered the risk sentiment in global markets. Israel warned that these large-scale attacks were just the beginning of a long-term operation to stop Tehran from developing an atomic bomb. Iran has promised to respond harshly. Prices of crude oil soared by nearly 7% amid fears that the conflict in the Middle East could disrupt the supply. Exxon, a major U.S. energy company, rose 1.7%. Fuel costs may rise if there are supply bottlenecks. Delta Air Lines fell 3.7%, United Airlines was down 4.4% and American Airlines was down 4.7%. Lockheed Martin, RTX Corporation and Northrop Grumman all gained between 2.2% to 3.2%. "We are facing major policy uncertainty at home and on top of it, we have geopolitical instability, which is impacting not only oil markets but also the risk premium." said Eric Teal. Chief investment officer, Comerica Wealth Management. Washington claimed it was not involved in the attack, but Donald Trump said that Iran brought the attack upon itself by refusing to comply with U.S. demands regarding its nuclear program. Trump also called on Iran to reach a deal. He said that "the next attacks already planned" would be "even brutaler". The office of Israeli Prime Minister Benjamin Netanyahu said that he would be speaking to Trump later today. 10:13 am At 10:13 a.m. ET, the Dow Jones Industrial Average dropped 659.45, or 1.52% to 42,313.10; the S&P 500 fell 60.38, or 1.0%, to 5,984.88; and the Nasdaq Composite fell 227.71, or 1.16 %, to 19,435.01. Only energy stocks gained 1.2%. Financials fell the most with a fall of 2.1%. Adobe shares weighed on the information technology sector, which lost 1.3%. Adobe's share price fell by 6.6%, despite its raising of its forecast for the full year. The majority of megacaps and growth stocks fell. Apple, Nvidia and Amazon all fell by 1.5%. Visa shares have fallen to a new low, a four-week low. U.S. listed shares of gold mining companies rose in response to a rise bullion price. Newmont rose by 2.2% while AngloGold Ashanti gained 2.1%. The S&P 500 is still 2.6% below the record high it reached earlier in the year. This follows stellar gains in May, driven by positive corporate earnings and a softer stance from Trump on trade. The Nasdaq, a tech-heavy stock, is down about 3.8% from its December closing record high. Investors were calmed by a tame report on consumer prices, data that was softer than expected for producer prices and initial claims of unemployment that were largely unchanged earlier in the week. Federal Reserve policymakers, however, are expected to leave rates unchanged when they meet next week. According to an early estimate, a University of Michigan survey found that consumer sentiment rose to 60.5 in June from 60.5% the month before. On the NYSE, declining issues outnumbered advancing ones by a ratio of 3.88 to 1 and by a ratio of 4.4 to 1 on the Nasdaq. The S&P 500 recorded 8 new 52-week lows, while the Nasdaq Composite posted 18 new highs, and 70 new lowers.
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IEA is ready to tap into emergency oil reserves, but OPEC does not see the need
The West's energy watchdog announced on Friday that it is ready to release its oil reserves if the market experiences shortages as a result of Israel's attack against Iran. This statement was criticized by OPEC, which claimed the statement only created fear on the market. In recent years, the Organization of Petroleum Exporting Countries (OPEC), which represents some of the top oil producers in the world, and the International Energy Agency (IEA), representing oil consumers, have clashed over global oil demand trajectory and the pace of the transition to a clean energy economy. Fatih Birol, the IEA head, said that although the oil market is well-supplied, the agency will be ready to respond if necessary. He added that the agency’s oil security system holds 1.2 billion barrels in strategic and emergency oil reserves. OPEC Secretary-General Haitham Al Ghais criticized Birol's statements, saying that they "raise false alarms and project a sense fear on the market by repeating the need to possibly use oil emergency stock". He claimed that there was no change in the dynamics of the market or supply to "require unnecessary measures". The oil prices rose sharply on Friday after Israel launched a series of attacks across Iran, claiming it had destroyed nuclear facilities and missile factories as well as killed a number of military commanders. This could be the beginning of a long-term operation to stop Tehran from building an atomic bomb. The oil prices rose 7%, the biggest daily increase since 2022, when Russia invaded Ukraine. After the Russian invasion of Ukraine in early 2022, the United States and its allies in coordination with IEA tapped the last emergency oil reserves. This decision was heavily criticized by OPEC at the time. Market participants are concerned that the situation could escalate, resulting in damage to Iran's or its neighbours' energy infrastructure, and a possible blockade of Strait of Hormuz. In September 2019, Iran supported Houthi militias launched a drone strike on Saudi Aramco’s Abqaiq Oil Processing Plant, knocking out 5.7 million barrels per day of Saudi oil production and sending the market into frenzy. The diplomatic ties between Iran and its Gulf neighbours, Saudi Arabia and the United Arab Emirates, have significantly improved since the Abqaiq attack. However there are still concerns about a possible repeat. Helima Croft, an analyst at RBC Capital Markets, said that following the Israeli attack, "oil prices have already spiked...and its ultimate landing will depend on whether Iran revives their 2019 playbook by targeting tankers, pipes, and other key energy facilities in the region."
Gold prices fall on speculation, but there are still hopes for peace talks between Russia and Ukraine
Investors are watching for peace talks, after U.S. president Donald Trump's administration has agreed to hold additional talks with Russia about ending the war in Ukraine.
As of 0338 GMT spot gold fell 0.2%, to $2,928.52 per ounce. This is $14 less than its previous high of $2942.70, which was reached last week.
U.S. Gold Futures fell 0.1% to $2.945.90.
Gold's upside is limited as the first round of negotiations between the U.S., Russia and Ukraine over a potential peace agreement in Ukraine ended without a clear path. However, if they present a solid plan then it would be detrimental for gold, said Ajay Kedia at Mumbai-based Kedia Commodities.
There should be a slight erosion of war premium. The upside is likely to be limited by $2,970, which could act as resistance, and $2,890, which would act as support.
The Trump administration announced on Tuesday that it had agreed to continue talks with Russia about ending the conflict in Ukraine, after the first Russia-Ukraine talks ended without Kyiv and Europe present.
Bullion has traditionally been used as a hedge against inflation and geopolitical uncertainty.
Analysts at ANZ stated that the uncertainty created by Trump's presidency would likely prompt investors to diversify their investments into gold. They added that macroeconomic, geopolitical and trade risks, as well as fiscal and fiscal risks, could boost investment demand in gold.
Bullion prices rose by over 1% during the last session due to concerns about economic growth. This was caused by uncertainty over Trump's tariff plans, which led to a safe-haven flow into bullion.
The Federal Reserve's minutes of its January meeting, due later today, will provide clues as to the interest rate path for the U.S. Central Bank this year.
Spot silver fell 0.9%, to $32.57 per ounce. Palladium and platinum both fell by 1.3%, to $974.32. Platinum was down 1.3% at $974.32.
(source: Reuters)