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IEA warns that Middle East oil disruptions will hit Europe in April
Fatih Binol, the head of the International Energy Agency, said that oil supply disruptions from the Middle East would?rise? in April. They will begin to?impact? the European economy because the Strait of Hormuz is closed. He added that more than 12 million barrels have been lost due to the attacks by Iran on energy?assets and the restrictions on shipping through Strait since the U.S./Israel war against Iran began. "The loss of oil in April will be double the loss of oil in March. On top of that, the loss of LNG... The loss of?oil in April will be twice as much as the oil loss in March, on top of the loss?of LNG... He added that losses are expected to increase?in April since many of the oil and LNG cargoes which arrived in March had been contracted before war, and they continued on their way. Birol stated that the biggest problem was the lack of diesel and jet fuel, which had already affected Asian countries, but would soon affect Europe. He added, "We're seeing it in Asia. But soon, I believe, in April or may, we will see it in Europe." Birol reiterated that the IEA is considering a new release of strategic reserves, after its members released a record 400 mln barrels of oil. Birol stated that the current disruption in oil and LNG supply is worse than both the 1973 and 1979 oil crises, and the loss of Russian Gas volumes due to Moscow's invasion in Ukraine in 2022. He added that about 40 energy assets in the Middle East have been damaged and will take some time to recover. Birol stated, "We're heading for a major, massive disruption that will be the largest in history."
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Japan and France agree to intensify coordination in the Hormuz and Iran war
Sanae Takaichi, Japan's Prime Minister, said that Japan and France agreed to work closely together to bring an end to the U.S. - Israeli war with Iran and to reopen the Strait of Hormuz to oil and gasoline tankers. Takaichi, after talks in Tokyo with French Emmanuel Macron on industrial and security cooperation, said: "Because of the challenging international situation, I think it is important that the leaders of Japan & France deepen their personal ties - and make our cooperation stronger." Japan, France, and other countries are dealing with rising energy costs as the conflict in the Middle East enters its fifth week. If the conduit that carries about a fifth of the world's oil and liquefied gas does not reopen, there could be a shortage of petroleum products. Japan, which gets 90% of its oil normally from the Middle East has started to draw on its own oil reserves in order to cushion the economic impact. Macron, speaking alongside?Takaichi said that he shared the same position as hers on the necessity of restoring freedom of navigation to?the Strait. France held discussions with dozens countries to seek proposals for a mission aimed at reopening the waterway after the conflict is over. Japan said that it could consider sending minesweepers but the scope of any role would be limited by its constitution. Both leaders said that they would pursue closer security ties in the Indo-Pacific region and have signed agreements on cooperation with critical mineral supply chains and civilian nuclear technology.
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Dollar drops as gold nears 2-week-high amid hopes of an end to the Iran war
On Wednesday, gold was near a two-week-high - after a month that saw its largest monthly loss for nearly 17 years. The U.S. Dollar and Treasury yields fell on signs of a de-escalation of the war against Iran. Gold spot rose by 1.2%, to $4,723.35 an ounce, at 0958 GMT. It had earlier reached its highest level since the 19th of March. U.S. gold futures for April delivery rose 1.5% to $4749.90. U.S. Secretary of State Marco Rubio and President Donald Trump said that?the war against Iran could be close, signaling the potential for direct talks with Tehran and a winding-down of the conflict without a deal. Trump will give an update on Iran at 9pm EDT on Tuesday (0100 GMT Thursday). "It's a positive sentiment?after another Donald Trump statement...?We have seen that the U.S. Dollar index has weakened, and the euro has firmed up against the dollar. Futures for bonds and interest rate cuts are both up, which indicates that the opportunity cost to hold gold has decreased," said Quantitative commodity Research analyst Peter Fertig. Gold priced in greenbacks is now less expensive for those who hold other currencies. Benchmark yields on 10-year U.S. Treasury notes fell to a two-week low. Gold prices fell by more than 11% during March, the steepest monthly drop since October 2008. This was due to rising oil prices which have fueled inflation fears. Investors are less interested in non-yielding gold due to expectations that monetary policy will be hawkish. Fertig said that the market has shifted its narrative on gold as a safe-haven at times. If it's more about inflation, gold and equities could both suffer because the markets fear this would force central banks to?keep interest rates on hold for the Fed. Other than that, silver spot fell by 0.8% at $74.50 an ounce. Platinum rose 0.5% to $1958.75, and palladium dropped 0.2% to $1473.75. (Reporting by Ishaan Arora in Bengaluru; Editing by Arun Koyyur)
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Find the 'off-ramp' for MORNING BID AMERICAS
By Mike Dolan April 1st - Mike Dolan, Editor at Large, Finance and Markets, explains what matters today in U.S. markets. The word "off ramp" has been the buzzword this week in relation to the Iran War. And the steep Wall Street rally that took place on the last day of the first-quarter spoke of this relief on Tuesday. Will April's'skies clear'? The S&P's jump was the largest one-day gain in the past year. Below, I'll explain more. Check out my most recent column about how cash beat all classic safe-havens in March. Warren Buffett will tell you why. Listen to the Morning Bid Daily Podcast, where I break down the upside surprise of U.S. Consumer Confidence and discuss the relief rally. Subscribe to our Newsletter Listen to journalists discussing the latest news in finance and markets seven days a week. Finding the 'off ramp' President Trump and Secretary Marco Rubio's signals that the U.S. may be ready to end the war were the ostensible catalysts for the rally. The rally was triggered by reports that Iranian president Masoud Pezeshkian would be willing to talk about a ceasefire if he were given guarantees that the attacks wouldn't happen again. Brent crude was trading at around $103 a barrel in the early hours of Wednesday morning. WTI, however, hovered just above $100. As it stands, however, the missile and drone trade in the Gulf continues. It is possible that the extent of the market's moves on Tuesday was also due to a number of factors, including month-end and quarterly considerations as well as a holiday-shortened work week. Asia's markets also followed suit, with Japan and South Korea posting sharp gains on Wednesday. European markets are also up and Wall Street Futures appear to have maintained their gains before today's bell. Gold climbed to its highest level in nearly two weeks before reversing some of the gains. The dollar slipped against a basket major currencies while the yen remained under the 160 per dollar level. The White House says that President Trump is preparing to address the nation Wednesday evening with an "important update" on Iran. Investors digested the two pieces of U.S. Economic Information - the surprising increase in U.S. Consumer Confidence readings for the month of March and the weaker sounds from the February Job Openings Report. In Asia, the pace of factory activity in March slowed due to rising fuel prices, but South Korea defied the trend, with the fastest growth in over four years. The AI-driven demand for semiconductors boosted South Korea’s export growth, which reached a four-decade-high. ADP is set to release the March payroll update for private sector employees, as well as February retail sales, later today. The Q1 earnings season will be the focus of attention for the next quarter, with the full-year growth expectations seemingly unchanged by the recent energy shock. Chart of the Day Nike's surprise forecast for a drop in sales in the fourth quarter on Tuesday caused its shares to fall more than 9% in extended trading. This was due to persistent weakness in China, and slow progress clearing older inventory. As it clears out its inventory, the company has reduced selling in China. It expects China sales will fall by a staggering 20 percent next quarter. Watch today's events * U.S. ADP March private payrolls (8.15 a.m. ET), February retail sales (8:00 a.m. ET),?March Manufacturing PMIs (10.30 a.m. ET) * President Trump gives an update on Iran (9 pm EDT) Alberto Musalem, a St. Louis Fed and Michael Barr from the Fed of St. Louis, both speak Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. Follow us on LinkedIn, X and ROI. The opinions expressed here are the author's. These opinions do not represent the views of News. News is committed to the Trust Principles and therefore, integrity, independence, freedom from bias, and impartiality.
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Fuel prices in Africa spike as Iran War hits supply
African governments have increased fuel prices sharply as global oil 'prices are surging due to the Iran War. This could spark inflation on the continent. Most African countries import a large amount of petroleum products. This leaves them vulnerable to disruptions in supply. South Africa, the continent's biggest economy, reduced its fuel tax for a month on Tuesday to curb future price increases in April. This came after business and trade union groups pressed the government to act. CONSIDERING FURTHER ACTIONS The National Petroleum Authority in Ghana raised the'mandatory minimum prices floors' for the April 1-15 price window. This pushed petrol up by around 15%, to 13.30 cedis (US$1.21) per litre (0.26 US gallon), and diesel up by roughly 19%, to 17.10 centis. President John Mahama stated on Monday that the government is considering measures to cushion consumers. This includes reducing fuel margins, and reviewing recently imposed levies on petroleum products. He also mentioned the possibility of signing a formal agreement to supply refined petroleum from Nigeria's Dangote Refinery. Ghana imports 70% of its refined fuel. The Energy Regulatory Authority in Malawi (MERA) has increased petrol prices even more, by 34%, to 6,672 kwacha per litre ($3.89) and diesel by 35%, to 6,687 kwacha, as of Wednesday. MERA reported that the price of petrol and diesel increased by 42% and 87%, respectively, between January and March, on a "free-on-board" basis. Suppliers had also switched to a fortnightly average. Tanzania's Energy & Water Utility Regulatory Authority set a new cap on petrol prices in Dar-es-Salaam at 3,820 Shillings ($1.49) a litre, up by 33% since March. Diesel prices also increased 33%, to 3,802 Tanzanian shillings. The regulator said fuel supplies were adequate for the country. VULNERABLE HOUSES Mauritania raised the price of?petrol on Tuesday by 15% and diesel by 10%. Abdallah Ould Souleymane from the Economic Affairs Ministry compared this situation to 1973's oil crisis and said that the government will offset the impact on low-income households by increasing the minimum wage. A finance ministry official said that the Gambia raised fuel prices on Wednesday by 18.79% in petrol and 12.20% in diesel. ?Botswana's and Mali's authorities have announced sharp increases in fuel prices.
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Residents report four deaths in Burundi after explosions at an ammunition store
Residents of Burundi said that explosions in a military ammunition shop in the?commercial capital Burundi on Tuesday night resulted in four deaths. The blasts lasted several hours. The army spokesperson said that the electrical short-circuit was responsible for the blasts which sent plumes of smoke high into the air and caused residents to flee. Residents in Bujumbura’s Musaga neighborhood said that the blasts killed two people. One of them was a young girl. "She was right in front of me. I saw her fall as she ran in a crowd of people. "After a few minutes, I realized she had been violently struck by a bomb," said a resident who did not want to be named. A church in the Gasekebuye neighborhood was where another man died 100 meters away. Another resident, who didn't want to be identified, said that the man was at a prayer meeting and had just left the room when he got hit. Gasekebuye resident said that he took the body of his employee to the mortuary, where he saw another victim brought in. The explosions were reported to have lasted for several hours by a Bujumbura resident, who didn't want to be identified and lived 1 km from the store. "There were about six hours of projectiles flying overhead and landing at random. The initial barrage was constant, but it began to slow down around 9 or 10. "The last one I heard was at 1230," the resident said. "We had to take shelter wherever we were." Authorities have not released an official death toll. Evariste Ndayishimiye, the president of Sierra Leone, sent a'message to condolence' on his X-Account but did not give any other details. (Additional reporting from David Lewis in London, Writing by George Obulutsa, Editing by Hugh Lawson.)
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EU changes carbon market to reduce price volatility
After pressure from various governments, including Italy, to change the system in order to reduce soaring energy costs triggered by the Iran War, the European Commission made a proposal on Wednesday. The EU proposal would stop the automatic cancellation of excess carbon allowances in the ETS. Instead, spare permits will be kept in a "special reserve" as a buffer for future supply, and could then be released if the price of carbon spikes. If there are currently more than 400 millions permits in the ETS's "market stability reserve", then the excess will be invalidated. The EU has designed the supply to be tightened over time to reduce emissions. This plan, which was previously reported by?by, is part of an EU response to the surge in energy costs triggered by the war with Iran. The ETS was launched in 2005 and is the main EU policy to reduce CO2 emission. It does this by forcing around 10,000 factories and power plants to purchase permits to cover their emissions. This cost accounts for around 11% in the average electricity bill of EU industry. (Reporting and editing by Bart Meijer, Louise Heavens, and Kate Abnett)
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Trackers report that PetroChina fills Singapore's shortfall in crude oil with crude stored in China.
PetroChina supplied a rare shipment of nearly?2million barrels of crude from its storage facility in China to the refinery it owns half of, located in Singapore. The?firm is attempting to fill'shortfalls caused by the iran war. According to tanker trackers Vortexa & Kpler the tanker New Merit delivered 1.8 million barrels in crude oil to Dalian, northeast China, in mid-March. It then transported it to Singapore Jurong Island, where PetroChina & U.S. giant Chevron run a joint venture refinery. Sources declined to name themselves as they were not authorized to speak to the media. China exports crude oil very rarely. According to Vortexa Analytics, and another trade source, the shipment was Murban crude oil from the UAE. PetroChina is an equity partner in the?Murban oil production. PetroChina declined to respond immediately to a comment request, while SRC refused to comment on the refinery's operations. PetroChina and Chevron alternate quarterly in supplying crude oil to the Singapore Refining Co.'s 285,000 barrels per day plant, according to a source familiar with its operation. SRC, the third refinery in Singapore, processes crude oil primarily from the Middle East. Since early March, the supply of crude oil has been disrupted by the war. Refineries in Asia, which purchase the majority of Middle Eastern oil exports have reduced runs to deal with feedstock shortages. PetroChina Chairman Dai Houliang stated last week that his company is able to maintain its normal oil and gas operations because it does not rely on the supply that passes through the Strait of Hormuz. This has been blocked for over a month.
Wood Mac, a consultancy, says that EGA's Al Taweelah aluminum site has ceased operations following an attack.
Emirates Global Aluminium’s Al Taweelah plant in the United Arab Emirates has halted its operations following a?Iranian missile and drone attack that damaged a power?plant on Saturday, Wood 'Mackenzie' said in a Wednesday research note.
Wood Mackenzie said that the smelter of Aluminium Bahrain (Alba), which was also attacked on Saturday, had "suffered significant damage and will operate with an estimated utilization?of 30 percent".
EGA and Alba said that they would be assessing damage to their sites at the weekend, but did not specify what was affected.
The Wood Mackenzie report on the current conflict in the Middle East and its impact on aluminium supplies was not commented upon by either company.
Wood Mackenzie’s press office stated that its information came from contacts of the consultancy in the Middle East but refused to give further details.
Al Taweelah, in the emirate of Abu Dhabi, is home to a roughly 1.5-million-metric-ton-per-year capacity ?aluminium smelter and an alumina refinery. Alba's capacity in Bahrain of 1.6 million tons per annum makes it the largest single-site aluminum smelter in the world.
Wood Mackenzie stated that the ongoing conflict in the Middle East is creating a 'critical supply crisis' on global aluminium markets. Disruptions could result in a loss of 3-3.5?million tonnes of production?by 2026.
Last year, the world produced a little under 74,000,000 tons of primary aluminum. (Reporting and additional reporting by Polina Devtt, Editing by Emelia S. Sithole-Matarise).
(source: Reuters)