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US diesel futures hit a 2-year high due to Middle East supply disruptions
U.S. Diesel?Futures surged above $3 per gallon for the first since November 2023 on Monday, as 'Iran responded to U.S. & Israeli attacks on the country with strikes on regional?production?centers & disrupting shipping through the Strait of Hormuz. Analysts and traders say that diesel prices are most vulnerable to the conflict in the Middle East, because this region is the largest supplier of fuel. Also, inventories were depleted after a harsh winter when demand for power and heating was high. The distillate fuel oil is the critical issue. Energy economist Philip Verleger told clients that these stocks were below the normal range. U.S. Diesel?futures closed nearly 12% higher than U.S. Crude and Gasoline futures on Monday. Both settled more than 6% higher and almost 4% higher respectively. Government data shows that the U.S. distillate fuel oil stock, which includes diesel and heating oil was at 120.4 million barrels on February 20. This is more than 5% less than the average of the past five years. Prices test TRUMP's support The rising domestic fuel prices will be a major test for President Donald Trump’s decision to attack Iran, just months before the midterm elections scheduled for November. Voters are likely to have a primary concern about the rising costs. On Monday, gasoline prices at the pump surpassed $3 per gallon for first time since November. Diesel prices are on the rise, which could have a negative impact on U.S. manufacturing and farmers' budgets as planting season begins. Alex Hodes is the energy director for Oasis, a Kansas-based fuel provider. He said that farmers would be the ones to suffer from any increase in diesel prices. He said that fuel is the least expensive of all major expenses for farmers, but also one of the most scrutinized. Verleger stated that the U.S. Diesel prices are also more vulnerable to extreme price changes than they were in the past due to the explosion of data centers across the country. These centers are willing to pay more for diesel fuel to generate electricity than other companies. Verleger stated that the prices at the New York Harbor Spot Market could "jump" from $2.70 to $4 per gallon in the next four week as data centers across the mid-Atlantic begin hoarding fuel. Ritterbusch and Associates stated in a report that refiners are likely to switch their production schedules so as to favor diesel products over other products. This could help 'limit some of these price increases. Ritterbusch stated that the sharp rise in prices will also slow down industrial and freight demand. (Reporting and editing by Niall Williams in New York, with Shariq Khan reporting from New York)
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Lula's term will see Brazil mobilize more than $50 billion in sustainable investment
Former international affairs secretary Tatiana Rosito said that the Brazilian government plans to mobilize over?250 billion Reais ($48.4 Billion) in sustainable investment during President Luiz Inacio Lula's four-year current term. 2026 will be centered on consolidating initiatives currently underway. Rosito said that Brazil had assembled a wide range of financial instruments to be showcased at its G20, BRICS, and COP30 leadership. She added that the priority is to deliver results and attract capital, rather than creating new tools. Rosito says that Brazil's recent push for policy has helped it regain its status as a global player. Peers now see Latin America's largest economy moving from rhetoric to action. The key efforts include the creation of national ecological transformation guidelines and issuing sovereign sustainable bonds abroad. EcoInvest, which uses public funds to attract private investment into green projects, was also launched. Rosito also pointed to the Brazil Investment Platform for Climate and Ecological Transformation, which lists sustainable projects that are seeking funding. Brazil, after unveiling the platform under its G20 presidency in 2024, helped create a hub for similar initiatives during its COP presidency of last year. This was to encourage cooperation among Global South countries on climate and sustainable finance. Rosito stated that more than 15 countries, including Colombia Nigeria and South Africa have announced plans to create their own platforms. She described Brazil's sustainable finance push as "an innovative system that was built from scratch, which is enabling tangible investments and supporting emerging strategic sectors." Rosito said that the topic of sustainable development has been "almost erased" in some parts of the international forum circuit. This includes the G20, which is under the U.S. Presidency this year. He argued Brazil and its partners must continue to advocate for the importance of the issue. Mathias Alencastro will succeed her at the Finance Ministry, according to a report on Friday. He was previously an advisor to Finance Minister Fernando Haddad.
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Mining minister: Investor interest in Greenland has increased following Trump's threats
Since the emergence of a?U.S. President Donald Trump has repeatedly threatened to annex Greenland, according to a senior Greenlandic government official. Naaja H. Nathielsen, Greenland’s Minister for Business and Mineral Resources, stated that the UK, Canada, and European Union countries have shown the most interest. She said, "On the investor's side, we saw an increase in interest in investing." She said that although Trump expressed an interest in purchasing?Greenland many years ago, it has been "hectic" over the last two months. The Arctic island is a strategically located, mineral-rich autonomous?territory. Trump has 'intensified his rhetoric about gaining control of Greenland in 2025, and even this year. He claimed that Denmark is incapable of protecting Greenland from Chinese and Russian influences. Greenland sent a delegation of more than 20 mining companies to the Prospectors and Developers Association of Canada's mining conference, which is taking place in Toronto until Wednesday. Benjamin Gallezot is France's delegate to the interministerial committee for metals and ores. He said that France would be willing to take a small equity stake in a mining project in?Greenland in order to help develop it. Nathanielsen stated that Greenland is easing tax and permitting laws to encourage investment. She denied that Greenland "faces a significant risk from China", noting that only "two Chinese companies have mining licenses and that both are inactive." Nathanielsen said, "So?that?is not a high success rate for Chinese investments." She stated that although China is an important exporter for Greenland she does not see the country as a danger.
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Brazil's Petrobras increases fertilizer production in order to reduce Middle East dependency
Brazilian oil giant Petrobras has increased its nitrogen fertilizer sales in Brazil to help reduce the supply risks as tensions in Middle East threaten the delivery of a key source for the country's imports. Petrobras said that its Bahia and Sergipe units, which resumed operations recently, had reached 90% capacity. The factories are able to supply 12% of Brazil’s urea needs. Urea is one of the most common fertilizers used around the globe to grow crops such as corn, wheat and rice. It's also commonly used for sugarcane,?coffee, sugarcane, and sugarcane. Brazil is increasing its urea production, but it is still heavily dependent on the Middle East. Brazil imported 7.7 million tonnes of urea last year. About?35% came from the Middle East. Tomas Pernias, StoneX analyst of market intelligence, said that the increase in urea in Brazil could help reduce the uncertainty in the market for nitrogen fertilizer due to our dependence on imports. The U.S.-Israeli air attacks against Iran this weekend have already pushed up prices, which is bad news for Brazilian farmers. According to trade data, Iran accounted for about 2% (or urea) of Brazil's supply in the past year. Oman, Qatar and Saudi Arabia are also major regional suppliers of urea to Brazil. Jeferson Souza, an analyst at Agrinvest Commodities, said that the price of urea had been a problem for corn growers even before the conflict. In a social media post, he stated that the outlook was more difficult than it was when the conflict in Ukraine started in?2022, because corn prices are higher and domestic credit is more abundant. Petrobras has stated that it will supply 20% of Brazil's total urea needs when production resumes at its Parana facility. When the Mato Grosso plant is operational by 2029, this could reach 35% of Brazil's urea demand. (Reporting and additional reporting by Ana Mano, writing by Ana Mano, editing by David Gaffen.)
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US gasoline crosses the $3-per-gallon mark as a test of Trump's Iran War
Analysts say that the average U.S. gasoline price surpassed $3 per gallon on Monday for the first time since November as the conflict in the Middle East intensified. This is a major test of public support for President Donald Trump's decision against?Iran. Tehran's response to U.S.-Israeli strikes on oil production in neighboring nations and ships in Strait of Hormuz has disrupted the global supply of oil. Brent crude has risen by more than 5%, to almost $77 a barrel. Fuel prices are also rising in line with feedstock costs. As Trump and the Republicans prepare for the November midterm elections, higher prices at gas stations are a serious risk. Many Americans struggle to keep up with the rising cost of daily goods. A /Ipsos survey found that nearly half of the respondents said they were less likely to back Trump's Iran campaign if gas and oil prices rose in the U.S. Mark Malek is chief investment officer of Siebert Financial. He said that gasoline prices have a psychological impact. They are the inflation numbers that consumers see daily. Analysts predict that every increase in crude oil price of $10 per barrel will result in a 25-cent increase at the pump. Malek warned that refinery problems could cause fuel prices to rise even more. According to a OPIS database, the average retail gasoline price reached $3 per gallon on Sunday. Tom Kloza said that due to the current crisis they could reach $3.25 a gallon this week. GasBuddy data shows that U.S. gas prices rose for four straight weeks prior to the attack on Iran. Refiners were transitioning to summer-grade motor gasoline, which is required by environmental regulations but costs more to produce. GasBuddy analyst Patrick De Haan said that the conflict would exacerbate?the?increases. De Haan stated that "in the coming week, gasoline prices will likely face increased upward pressure due to seasonal trends continuing and as markets navigate through this changing geopolitical environment."
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Investors grapple with Middle East curball scenarios
Investors struggled to determine whether the Middle East conflict is a marginal risk centered around a power struggle in Iran or a long-term war that could have ramifications on global trade and inflation. Donald Trump, the U.S. president, stoked confusion by suggesting that the U.S. Israeli and Iranian strikes on Iran that killed Supreme Leader?Ayatollah Ali Khamenei at the weekend could continue for weeks. Oil was the most dramatic market reaction, with prices that spiked then dropped sharply. Bitcoin rose, European stock markets fell, but U.S. indices were flat or higher. Government bond yields also rose. Joerg Kraemer is the chief economist at Commerzbank. He also believes that this scenario is most likely. J.P. Morgan analysts said that they expect a decline of one to two weeks in the prices of riskier investments, but this will create a "buy-the-dip" opportunity once the market has gotten over the initial pullback. Iran has retaliated against Gulf cities. Airlines have halted flights, and tankers transporting oil and other products have suspended transit through the Strait of Hormuz. Due to the complexity of the Islamic Republic’s ruling system, the biggest risk to?markets comes from the uncertainty about what will happen next in Iran. Oil prices, which have been rising for several weeks now, are dependent on what the oil producing countries do and the effects of the tanker passage through the Middle East. This has a huge impact on inflation and bonds around the world. The market scenarios assumed that the impact would be minimal, as it was during the "12-Day War", which took place in Iran in June last year, and not the spike in 2022 oil prices caused by Russia's invasion in Ukraine. Brent crude rose 6% to $77, a gain of?nearly 30% this year. However, it remains below the $100 analysts predict would be reached in an extended conflict. Analysts at TS Lombard stated that they were concerned about a possible repeat of the 2022 market, when both bonds and equities were pushed down as markets pondered long-term implications for energy supply. "The situation is still very fluid, but we remain committed to our original view that this is more of a squall than a full-blown oil crisis which will tip the global economy towards a sustained regime of stagflation." IS HISTORY A REPEATING FORMULA? Investors trimmed their rate-cut bets at major central banks, citing the inflationary implications of higher oil prices. U.S. Treasury rates shot up, with the 2-year yields set to make their largest daily gain in 4 months. This was due to a decline in expectations of a Federal Reserve rate reduction in June. The yields on Germany's 10-year Government Bond, the benchmark for the euro zone, are set to see their biggest jump since December. Barclays analysts wrote in a Saturday note that "history strongly argues in favor of selling the geopolitical premium when hostilities begin." What worries us is that investors may have learned about this pattern and are underpricing scenarios where containment fails. Other factors could also exacerbate the selloff if the conflict escalates, including existing concerns about the artificial intelligence boom or private credit markets. Mohit Kumar of Jefferies, an economist who was already critical last week about the markets' complacency on geopolitical issues, said: "We expect further market downside in the coming days." "At some future point, we would be willing to purchase the dip. But that seems far away for now." Analysts predict that Iran won't be able disrupt the trade in the Gulf and its impact on the oil price will be limited. Ed Yardeni of Yardeni Research in New York said: "We wouldn't... be surprised if any S&P 500 sell-off on Monday morning turned into a rally driven by expectations that oil prices will drop?once this latest Middle East conflict ends." Gold could also double on Monday. He said that bond yields could fall because of both the safe-haven market and future oil price prospects.
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How has the Strategic Petroleum Reserve been used by US presidents during wartime?
Although the U.S. does not plan to sell oil from its Strategic Petroleum?Reserve - the world's largest stockpile of emergency oil - presidents have used it in times of crisis to try to control fuel costs for U.S.?consumers. A U.S.-based source confirmed on Monday that the administration of Donald 'Trump does not have any plans to sell oil from the SPR. Analysts said that if the oil prices continue to increase following the U.S. and Israeli attacks against OPEC member Iran, which killed the Supreme Leader Ali Khamenei, as well as other top officials, then the administration may take another look. SPR holds 415.4 millions barrels of mostly sour oil, with a high sulfur content, that is suited to be processed by many U.S. refining plants. The crude oil is stored underground in salt caverns hollowed out on the coasts of Texas & Louisiana. The capacity is approximately 714 million barrels. Here's a look at how the SPR was used in wartime: RUSSIA INVADES UKRAINE Joe Biden, Trump's former president, ordered in March 2022 that 180 million barrels be released over six months. This was the largest ever sale from the emergency stock. Biden and Trump slowly purchased a small amount of oil to start replenishing that stock, but Congress has not provided enough money for this. ATTACK ON SAUDI ARABIA In 2019, the Houthis, a Yemeni group with ties to Iran, attacked Saudi Arabia. This led to the shut-down of over half the country's crude production. Trump, who was then serving his first term, stated that his administration was?ready to tap into the SPR in case of need. This did not occur as the oil production from Saudi Arabia’s Abqaiq and Khurais fields recovered quickly. LIBYA CIVIL WORRAGE Former President Barack Obama released 30 million barrels from the reserve in?June 2011 to counteract disruptions on global markets caused by the civil war in Libya, the oil producer. This sale was coordinated by the Paris-based International Energy Agency and resulted in another 30 million barrels being released from other members. OPERATION DESERT?STORM After the Iraqi invasion, George H.W. Bush sold approximately 21 million barrels in two phases. Bush sold approximately 21 million barrels over two phases. The U.S. had ordered a test sale of 3.9 million barrels in October 1990. After?U.S. In January 1991, after?U.S.
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Petrobras monitors Iran conflict and fuel price before making a decision
Petrobras, the state-owned oil company in Brazil, is watching closely?the fallout of conflict in Iran. It will be monitoring oil prices - which soared on Monday -- for the next seven days before making a decision?on fuel pricing. After the weekend attacks by Israel and the U.S., which killed Iran's supreme ruler, Ali Khamenei, global oil prices?soared?. Brent crude rose up to 13% on Sunday and about 8% at noon Brasilia Time, helping Petrobras shares, which export?crude. One source, who spoke on the condition of anonymity, said that this week would be one of observation and could lead to an announcement next week. However, there are still many uncertainties. Petrobras also needs to monitor the exchange rate as it is a part of the equation for fuel pricing, according to the sources. One person said that a prolonged conflict in the United States could lead to capital flight, and Brazil might become a destination for some flows. He explained that a weaker dollar would offset higher oil prices. Petrobras also monitors the impact of the war on oil and fuel production, as well the logistical bottlenecks caused by the conflict. Concern about the STRAIT of HORMUZ Thirdly, the Strait of Hormuz could be closed. This is where 20% of all the oil in the world flows. Although the strait is not fully closed, there have been reports that over the weekend vessels stopped moving or were targeted. The total closure of the Strait would have a significant impact on global oil flows, and could lead to a major change in shipping routes. Petrobras would benefit, but might have to purchase 'potentially expensive' crude and derivatives in other regions. Petrobras imports crude oil daily to mix with its production. This is another issue that needs attention. Claudio Schlosser, Petrobras Executive Director of Logistics, Commercialization and Markets, says the company still has options and flexibility to compete despite the Middle East conflict. Schlosser said that Petrobras had alternative routes outside of the conflict zones, which gave us security and competitive costs for our operation, while preserving 'our margins. He refused to comment on possible changes in Petrobras fuel pricing. He said that most imports are from outside of the crisis area, and that "the few which do exist" can be redirected. Reporting by Rodrigo Viga Gaier, Writing by Oliver Griffin, Editing by Roberto Samora & Andrea Ricci
REalloys, a rare earths company, receives Pentagon funding
REalloys, a rare earths company, has received a U.S. Department of Defense Contract worth up to $1.7 Million to fund the design of a metal processing facility used to?make magnets and electronic components for weapons.
The Ohio-based firm received the contract from Defense Logistics Agency. It aims to process 300 metric tonnes?per annum of heavy rare earths, samarium, and gadolinium to metal form. This would make the company one of the largest U.S. suppliers of these metals.
Rare earths are first converted into metals before they can be used in?magnets. China has placed export restrictions on rare earths, critical minerals and other minerals.
The DLA, who buys goods for the U.S. Military, has given REalloy a first vote of confidence with the contract. It is divided into two phases and will last 24 months.
REalloys will have to create engineering'schematics' for a modular facility. This is after merging with Blackboxstocks last week. The company has also developed a 'rare earths mine' in Saskatchewan, and it has an agreement to process the minerals with the Saskatchewan Research Council.
The President Donald Trump has ordered the Department of Defense to change its name to the Department of War. This will require the action of Congress.
(source: Reuters)