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Oil prices rise on Gulf risks as Asia stocks continue AI boom
The Asian share market?firmed up on Monday, as demand for all things AI continued. This was offset by a lack of progress made in Gulf peace talks that tempered optimism about a reopening of the Strait of Hormuz. Oil prices rose. Although Washington and Tehran are working on a deal, Donald Trump has remained silent about their progress. Pete Hegseth, the Defense Secretary, said on Saturday that the U.S. is ready to resume attacks against Iran if no deal can be reached. Israeli advances into Lebanon to fight the Iranian-backed Hezbollah militants did not help ease tensions in the area. Michael Feroli, JPMorgan's head of U.S. Economics, said: "While uncertainty remains, the acute risks phase for the global economic should be over once tankers begin to move again." Oil prices will likely remain high for some time as inventories are rebuilt and supply infrastructure is repaired in the Middle East. Brent crude rose 2.1% to $93.02 per barrel on the back of a lack of news, while U.S. Crude added 2.6% to $89.61. Asian stock markets continue to be supported by semiconductors and AI gear. Japan's Nikkei has risen another 1.1% after gaining almost 5% in the previous week, reaching all-time-highs. South Korea gained 4.4% after a surge of 8% the previous week. Taiwan also rose almost 6%. MSCI's broadest Asia-Pacific share index outside Japan rose 1.6%. Samsung Electronics shares jumped nearly 10% on Monday, adding to gains made on Friday. The company announced that it has started shipping samples of the latest high-bandwidth?memory (HBM) chip to customers. Data showing South Korea's Exports grew at their fastest annual rate in over four decades in the month of May, hitting a record $87.75 Billion. Nvidia's Jensen Huang will kick off the Computex show in Taiwan with a speech on AI on Monday. He is expected to elaborate on the latest product efforts of his company as well as Taiwan's role as a leader in the industry. A survey showed that factory activity in May was at a standstill, causing blue chip stocks to fall by 0.3%. PAYROLLS ARE COMING SOON! In Europe, EUROSTOXX50 futures fell 0.1% while DAX and FTSE futures both remained flat. S&P futures rose 0.3% while Nasdaq Futures firmed up 0.5% following last week's record-breaking gains. The gains are narrowly based, with only 21 of 500 stocks achieving'record highs. Tech stocks rose almost 16% during May. Consumer discretionary, healthcare, and consumer staples all managed to gain less than 2%. Bond markets continue to be hampered by the inflationary pressure from oil. The 10-year yield in the United States has risen 3 basis points, to 4.470%. The markets indicate that the Federal Reserve may have to raise rates by year's end to avoid rising prices being baked into inflationary expectations. This week, a number of Fed members will be speaking. Also of note are the ISM survey on manufacturing and the May payrolls data. The market forecasts a steady increase of 85,000 jobs, which will keep the unemployment rate at 4,3%. Any further increase would reduce the chances of an increase. The dollar has remained relatively stable due to the hawkish outlook of the?market. However, the?Japanese yen and euro have been hampered because they are heavily dependent on energy imports. The dollar was slightly firmer against the yen, at 159.45. However, bulls were hesitant to risk Japanese intervention if the 160.00 barrier was breached. The euro was $1.1645 after spending the last week in a tight range between $1.1585 to $1.1661. Gold was down 0.3$ at $4,523 per ounce on commodity markets. It has found little support either as a safe-haven or to hedge against inflation. (Reporting and editing by Lincoln Feast, Sonali Paul and Wayne Cole)
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Chinese coking coal reaches 19-month supply high
Chinese coking coal rose on Monday, reaching a 19-month high. A provincial-level meeting of mine safety in 'coal-rich Shanxi' reinforced the supply concerns that were stoked following production halts last month at some mines. According to an official WeChat post on Sunday, Shanxi in northern China held a meeting Saturday regarding a special campaign to correct safety risks and hidden hazards in coal mines. Officials in China's largest coal hub have pledged to take a "zero tolerance approach" and to identify and punish all illegal acts, including hidden tunnels, frauds in safety monitoring, and illegal mining outside the allowed area and layers. A fatal mine accident that occurred in late May at the Liushenyu Mine, Shanxi, killed at least 80 people. This triggered a series of mine safety inspections, which led to several mines suspending production, and fueling fears about a shortage of supplies. Analysts at broker Xinhu Futures wrote in a report that the'severity and extent of the accident are especially extensive, leaving little room for a rapid resumption of production in the near future. By 0345 GMT, the most traded coking coal contract at Dalian Commodity Exchange rose 6.65% to $1370.5 yuan (about $202.50) per ton. The contract reached its highest level since 2024, at 1,384 Yuan. The DCE coke contract that was most active jumped?4.55%, to 1,987.5 Yuan per ton. It had previously reached its highest level since?November 8th 2024 (?2,008.5 Yuan). Prices of iron ore fell amid expectations that there would be a glut in supply due to increased shipments and seasonal slow demand. The most active DCE contract fell 0.32% to 780 yuan per ton. Meanwhile, the benchmark July Iron Ore at the Singapore Exchange dropped 0.51% to $104.7 per ton. The Shanghai Futures Exchange steel benchmarks mostly rose. The rebar price rose 0.6%. Hot-rolled coils gained 0.71%, and wire rod climbed by 0.95%. Stainless steel dropped 0.6%. $1 = 6.7678 Chinese Yuan (Reporting and editing by Subhranshu S. Sahu in Beijing, Amy Lv reporting from Shanghai)
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Russell: It's not about altruism, but economics that's driving China's crude imports to slump.
China's seaborne crude oil imports fell to their lowest level in nearly 10 years in May as a result of the Iran War, which led to a dramatic restructuring of operations at the world's largest?oil exporter. According to Kpler, the data collected by commodity analysts shows that seaborne crude arrivals were down from 8,10 million barrels per days (bpd), in April. This is the lowest level since October 2016. Kpler recorded imports at just over half of the 11,39 million bpd for February, the last month before the U.S.-Israeli attack on Iran. Media and market commentary frame the collapse in China's imported crude as helping Asia adapt to the loss of 10 million barrels per day of crude due to the closure of the Strait of Hormuz. Beijing is not being altruistic, but it's a side effect of the changing dynamics in price and supply. The conflict in Iran is clearly the main cause of the decline in China's oil supplies. But the real challenge is to understand what China does to adapt to this loss of up to 10% of global crude supply. First, China's imports are being cut back as usual when prices increase sharply. In the aftermath of Russia's invasion in Ukraine in February 20,2022, Brent crude futures rose to a peak of $139.13 per barrel in March. China's seaborne exports fell from 10,84 million bpd a month in January 2022 down to 8,07 million bpd a month in June 2022. China is not unusual in seeing a swing in imports of up to 2,000,000 bpd per month in response to price changes. However, the drop in arrivals between February and May this year was 5.5,000,000 bpd. The drop in prices is not the only factor. The closure of the Strait of Hormuz has also made it difficult for Chinese refiners to obtain crude oil from their usual sources, particularly those who were cut off. Kpler reports that imports from Iraq dropped from 790,000.00 bpd a month earlier to only 60,000.00 bpd a month later in May. Imports from Kuwait also fell from 522,000.00 bpd bpd bpd bpd bpd bpd bpd bpd ppd bpd bpd bpd bpd bpd bpd RUSSIAN CRUDE The drop in seaborne arrivals of Russian products in May was the lowest since August, and down from 1,96 million bpd. Prior to the Iran War, China was the sole major buyer of Russian crude oil which had been under Western sanctions ever since the invasion and occupation of Ukraine. The administration of U.S. president Donald Trump has eased the sanctions against Russian oil to address the shortage of crude created by their war with Iran. India, Asia's largest buyer, has returned to purchasing Russian crude. Arrivals of 2,17 million bpd were a record and more than double the 1,07 million bpd that was in February. China's crude imports in May fell by a staggering amount, largely due to higher prices and issues with supply. However, it is not clear how the country will adjust to this massive drop. Refiners are likely to have changed their product mix in order to maximize the production of middle distillates, such as jet fuel and diesel. Light distillates, which are used in petrochemicals and plastics production, is likely to be affected by the shortage. China's Strategic Petroleum Reserve (SPR) is unlikely to be tapped yet, as the refineries are using commercial stocks of crude and refined products. This sharp decline in refined products exports from 777,000 to 463,000 bpd is keeping fuels more available on the domestic market. The problem is, commercial inventories are unlikely to last for an extended period of time. This means that China will have to eventually do one of the following three things or a combination. It must either increase crude imports, reduce refinery processing rates or tap into SPR. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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Asia stocks rely on AI boom to offset Gulf risk
The Asian share market rose on Monday, as the 'boom in AI and all things AI' continued to drive demand. This offset a lack of progress made in Gulf peace talks that shook optimism about a reopening of the Strait of Hormuz. Oil prices also rose. Although negotiators from Washington and Tehran appear to be working on a deal, Donald Trump has remained silent about their progress. Pete Hegseth, the Defense Secretary, said on Saturday that the U.S. is ready to resume attacks against Iran if no deal can be reached. Israeli advances into Lebanon to fight the Iranian-backed Hezbollah militants did not help ease tensions in the area. Michael Feroli is the head of U.S. Economics at JPMorgan. He said that while there are still uncertainties, the acute risks for the global economic should be over once tankers start moving again. Oil prices are likely to stay high for a while as inventories are rebuilt and supply infrastructure is repaired in the Middle East. Brent crude rose 1.9% to $92.89 per barrel due to the lack of new information, while U.S. Crude added 2.4% to $89.46. Asian share markets continue to be supported by semiconductors and AI related gear. Japan's Nikkei has risen 0.5% after rising almost 5% last week, reaching all-time highs. South Korea gained 1.3% after a surge of 8% the previous week. Taiwan also grew by almost 6%. MSCI's broadest Asia-Pacific share index outside Japan rose 0.2%. Nvidia's Jensen Huang will kick off the Computex show in Taiwan with a speech on AI on Monday. He is expected to elaborate on the latest product initiatives of his company as well as Taiwan's role as a leader in the industry. PAYROLLS ARE COMING SOON! In Europe, EUROSTOXX Futures declined by 0.3%. DAX Futures fell 0.2%, and FTSE Futures dropped 0.5%. S&P futures rose 0.2% while Nasdaq Futures firmed up 0.4% following last week's record-breaking performance. The gains are narrowly based, with only 21 of the 500 stocks reaching record highs. Tech stocks rose almost 16% during May. Consumer discretionary, healthcare, and consumer staples all managed less than 2%. Oil's inflationary?pulse continues to stifle bond markets, as U.S. 10 year yields have risen 3 basis points to 4,470%. The markets indicate that the Federal Reserve will need to raise rates by year's end to avoid rising prices being baked into inflationary expectations. This week, a number of Fed members will be speaking. Also of note are the ISM manufacturing survey and the May payrolls data on Friday. The market forecasts a steady increase of 85,000?in employment. This will keep the unemployment rate at 4,3%. Any further increase in employment would reduce the chances of an increase. The market's hawkish view has kept the dollar largely steady. However, the reliance of the Japanese yen and euro on energy imports is a hindrance to these currencies. The dollar was slightly firmer?on the Japanese yen, at 159.42. However, bulls were hesitant to risk Japanese intervention if the 160.00 barrier was breached. The euro was $1.1645 after spending the last week in a tight range between $1.1585 to $1.1661. Gold was unchanged at $4,535 per ounce on commodity markets. It has not been a popular safe-haven asset or hedge against inflation. (Reporting and editing by Lincoln Feast; Reporting by Wayne Cole)
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As Israel intensifies its incursion in Lebanon, oil prices are up more than 2%.
Early trading on Monday saw oil prices rise by more than 2 percent after Israel ordered troops to advance further into Lebanon, in the midst of a battle against Hezbollah, an Iranian-backed militant group. This was despite a ceasefire that had been announced more than six weeks earlier. U.S. crude?futures?rose by $2.37, or 2.71%, to $89.73 per barrel as of 0028 GMT. Brent futures increased $2.16, or 2.37%, to $93.28 per barrel. This increased fighting came just days after the U.S. held Israeli-Lebanon talks in Washington, and dimmed expectations of a U.S.-Iran ceasefire agreement extension. Brent and WTI had both risen by 1.8% and 1.7% respectively on Friday. The Israel-Lebanon war is the most significant spillover from the Iran War. Hezbollah started firing drones and rockets into Israel on?March 2, to support its Iranian ally. Both sides reached a truce in mid-April, but continue to fire. Donald Trump, the U.S. president, said Friday that he will soon make a decision?on the proposed deal to extend the ceasefire announced by Iran in early April. This would give negotiators time to find a lasting solution to the dispute over Iran’s nuclear program. Israel is a key player in any deal of this kind, and Iran has said that Hezbollah should be included. Tony Sycamore, IG's analyst, said that concerns about mines are growing in the Strait of Hormuz - a key shipping lane for oil and gas - according to a IG?note. This could delay the process of reopening strait, and cause the oil market to receive relief more slowly even after the strait is reopened. Sycamore stated that even if an agreement is reached it will not result in a flood supply. On Friday, an Axios reporter said that Iran dropped more mines into the strait in the previous week. This was shortly after U.S. defense secretary Pete Hegseth had stated that the attempt to place more mines would constitute a breach of the ceasefire. Hormuz, a conduit that carries about a fifth global oil and natural gas flows, has been effectively closed by Iran since the conflict began in February with U.S.-Israeli airstrikes. The concerns over the supply of oil and gas outweighed China's mediocre economic data over the weekend. This showed stagnant factory activity. The stalling factory activity and a decline in exports have added to the concerns that China's economy is losing its momentum. (Reporting and editing by Edmund Klamann, Stephen Coates and Colleen Waye)
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Tesla retracts notice of termination on graphite deal with Australia's Syrah
Syrah Resource, an Australian company, said that Tesla had withdrawn its notice of intent to terminate the?graphite deal. This ended a long process of negotiation in which both companies extended a deadline for resolution four times. Syrah planned to provide 8,000 metric tonnes of graphite-anode materials over a period of four years from its Vidalia facility in the United States. The 2021 contract covers the state of Louisiana. The Vidalia plant is the only large-scale vertically integrated producer of anode material outside China. This helps reduce U.S. dependence on Chinese supplies that dominate the market. The market is dominated by Chinese suppliers. Graphite can be found in the lithium-ion battery that powers electric vehicles. Tesla, led by Elon Musk, issued a default notification in July 2025 citing issues of conformity with samples of active anode materials (AAMs) delivered from Vidalia. Syrah, in a Monday statement to the ASX, said that Tesla has now accepted the miner's?demonstration of?it producing AAM samples conforming and?made a sufficient?progress. Tesla, according to Miner Syrah, has the right to cancel the'supply agreement' if the final qualification of Vidalia AAM is not achieved. Tesla and Syrah agreed in March to extend the deadline for resolving the alleged breach of their graphite agreement by a fourth time to June 1.
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As Israel intensifies its incursion in Lebanon, oil prices are up more than 2%.
Early trading on Monday saw oil prices rise by more than 2% after Israel ordered troops into Lebanon to continue the fight against the Iranian-backed Hezbollah militants, despite the ceasefire that was announced a little over six weeks ago. As of 1112 GMT, U.S. crude futures rose $2.17 (2.48%) to $89.53 per barrel. Brent futures rose by $1.93, or 2.12%, to $93.05 per barrel. Brent and WTI settled down 1.8% and 1.7% respectively on Friday as a result of the increased fighting. This was just a few days after the U.S. hosted Israeli and Lebanon peace talks at Washington. Israel-Lebanon war is the largest spillover from the Iran conflict. Hezbollah started firing rockets into Israel on March 2, to support its Iranian ally. Both sides agreed to a ceasefire mid-April, but they have continued to exchange fire. Donald Trump, the U.S. president, said Friday he will soon "decide" on a proposal to extend the ceasefire announced with Iran in early April. This would give negotiators time to "seek an end to the conflict permanently and find a resolution to the dispute over Iran’s nuclear program." Israel is a key player in any deal. Iran has said that Hezbollah should be included. Tony Sycamore, IG's analyst, said that concerns about mines are growing in the Strait of Hormuz - a key shipping lane for oil and gas - in a?note. This could delay the reopening of the strait, and cause the oil market to receive relief more slowly even after the reopening. "Even if an agreement is reached, there won't be a flood in supply," Sycamore stated. Axios?reporter stated on X on Friday, that Iran dropped more mines earlier in the week. This was shortly after U.S. Defence Secretary Pete Hegseth?said that laying more mines would violate?the ceasefire. Hormuz is the conduit for a fifth or more of global oil and natural gas flows. Iran has closed it effectively?since U.S. The weekend's?weak economic data from China, which showed stagnant factory activity, was overshadowed by concerns over supply. The stalling of factory activity and a decline in exports have added to the concerns that China's economy is losing its momentum.
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Brazil's Petrobras lowers the price of diesel for distributors with cashback system
In a Sunday statement, Brazil's state oil company,?Petrobras?, announced that it would lower the diesel price to distributors starting June 1 by 0.3515 Reais per liter. This follows an announcement from the Brazilian government regarding a cashback program for producers and importers. Petrobras said that the average price it charges distributors for a liter of gasoline will drop to $3.30 ($0.6552) from $3.65 previously. The Brazilian 'government' announced on Saturday a new cashback scheme for diesel producers and importers of 0.35 Reais per liter. This system is also scheduled to begin in June?1. It will compensate for the ending of a tax exemption program. Petrobras said that the lowering of diesel prices would "neutralize" any effect the higher taxes will have on consumers. The government has also established a diesel subsidy in Brazil and renewed tax exemptions on cooking gas, jet fuel, and jet fuel. This is to keep prices down in the year when President Luiz Inacio Lula Da Silva will be seeking reelection. Petrobras announced that it is analyzing the announcement on Saturday of a new diesel subsidy of 1,12 reais/liter. The firm said that "any decision made by the 'company' on this issue?will be immediately disclosed to the domestic market."
Indonesia pledges transparency in its transition to centralised commodity imports
Indonesia has pledged transparency to the state company that will be its sole exporter of important commodities. The transition period from a decentralised system began on Monday, with coal, ferroalloys, and palm oil. On May 20, President Prabowo announced that Indonesia, a resource-rich country, would centralise the control of its exports through a state company called Danantara Sumberdaya Indonesia, which will be overseen and managed by the sovereign wealth fund Danantara. This policy aims to improve tax revenues through tackling under-invoicing, transfer pricing and ensuring proceeds are kept in the country, especially after the rupiah has hit historic lows several times this year.
Dony Oskaria, Danantara’s chief operating officer, said at a press briefing on Sunday that DSI will operate transparently and accountablely. This includes benchmarking?of commodities prices during the transition.
Oskaria stated, "We will make sure that this company is run in a transparent manner and everyone can monitor it."
Indonesia exports thermal coal, nickel, palm oil, and palm oil worth $65 billion. Danantara said that it would honor long-term contracts, but review prices so they don't fall below market level.
Caught off guard: Industry
The sudden announcement of this policy caught businesspeople off-guard and pushed the stock market due to fears that profit margins could be squeezed. Rating agencies also warn that the plan may hurt investor confidence. During the transition, exporters are required to report all their export documents to DSI. Otherwise, the government expects shipments to continue as normal.
Airlangga stated that the government will evaluate the transition in three months and determine its next steps. However, full implementation of the law is expected to begin at the latest by January 1, 2027.
Business?associations have said that they still have questions about the plan. Presidential decrees regarding the export mechanism are yet to be released. Business groups reported that some buyers are concerned about the potential impact of this plan on prices and whether they will need to change third-party suppliers. Business groups said that prices of fresh palm oil?fruit bundles also fell sharply in the face of uncertainty.
Purbaya Yudhi Sadewa, Finance Minister of the Republic of South Africa, said at a press conference that investors would see an improvement in company profitability if they were to price their exports more competitively via DSI.
Oskaria?said DSI operations would at first be backed up by civil service employees from various ministries. Danantara, however, is developing and hiring the technology to monitor exports. Monday marked the beginning of a new policy requiring exporters to retain their earnings in state banks. (Reporting and editing by John Mair; Gayatri Suryo)
(source: Reuters)