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Concerns about Iran's supply disruption drive up oil prices
The price of oil edged up on Tuesday as concerns about Iran and possible supply disruptions overshadowed the possibility of an increase in crude?supply coming from Venezuela. Brent futures rose 28 cents or 0.4%, to $64.15 per barrel, by 0101 GMT. They were hovering close to a two-month peak?achieved?in the prior session. U.S. West Texas Intermediate Crude rose by 28 cents or 0.5% to $59.78. This is the highest price since December 8, which was reached earlier in the session. Iran, a major producer of oil in the Organization of Petroleum Exporting Countries (OPEC), is experiencing its largest anti-government protests in many years. Donald Trump, the U.S. president, warned of possible military action if the violence perpetrated against the protesters was lethal. Trump is expected to meet with senior advisers to discuss options regarding Iran on Tuesday, according to a U.S. official. The U.S. President said Monday that any country doing business with Iran would be subject to a 25% tariff on all business conducted with 'the United States. The development is important for the?oil market as Iran is a major producer sanctioned and any escalation in tensions could disrupt supply, or add geopolitical risks. Barclays stated in a report that "unrest in Iran added approximately $3-4/barrel to the geopolitical premium on oil prices." The markets are also concerned about the additional supply of crude oil that will hit the market as Venezuela is expected to resume exports. Trump announced last week that, following the ouster President Nicolas Maduro's, the government in Caracas was set to deliver up to 50 million barrels (oil) to the U.S., which would be subject to Western sanctions. The global oil trading houses are ahead of the U.S. energy majors in the race to control Venezuelan crude flow. Geopolitical tensions have escalated in other places as Russian forces launched Kharkiv, located in the northeastern part of Ukraine, was one of two cities attacked early Tuesday morning, according to Ukrainian officials. The United States has a wide range of Trump administration The Federal Reserve has redoubled its attacks against the Federal Reserve. This has heightened concerns about the independence of the central bank and increased uncertainty regarding future economic conditions and the oil demand. (Reporting by Anushree Mukherjee in Bengaluru; Editing by Jacqueline Wong)
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Johnson & Johnson's $1 Billion loss from the robotics takeover is reduced by Delaware's top court
Johnson & Johnson persuaded Delaware's highest Court to dismiss part of a $1 billion damages award due to its breach of a 2019 agreement to buy Auris Health - a manufacturer of surgical robots. In a?unanimous ruling on Monday, Delaware’s Supreme Court set aside a part of the September 20,24 award made to former Auris investors who claimed that Johnson & Johnson had failed to support Auris’ iPlatform Technology and was too slow in gaining regulatory approvals for bringing?devices onto the market. After recalculation, damages and interest could be reduced by several hundred million dollars. Fortis Advisors, the company representing the shareholders, has accused J&J for fraudulently?inducing Auris into accepting payments contingent upon achieving certain'milestones' instead of receiving more money upfront. The deal valued Auris's shares at $3.4 billion. Justice?Abigail LeGrow, in an 87-page ruling, rejected a Delaware Chancery Court judge's conclusion that Johnson & Johnson was under an implied obligation to seek approval for an iPlatform abdominal procedure product by the end 2021. The Supreme Court upheld the majority of Vice-Chancellor Lori Will’s findings and ordered that she recalculate damage. Johnson & Johnson of New Brunswick, New Jersey said that it was evaluating the next steps. The company stated that it was pleased with the decision of the court to reverse the trial judge's improper substitution for its subjective opinions the parties' carefully negotiated agreement regarding milestone regulatory requirements. "We are disappointed the court did 'not follow the contract language in allowing the remainder of the trial courts decision to stand." Philippe Selendy is a lawyer at Fortis. He said that the ruling showed?that Johnson & Johnson had "inexcusably violated the merger agreement" and deprived Auris of its transformative, life-saving, surgical robot. It also revealed the J&J fraud against Auris.
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How long can Wall Street ignore Trump's "visible hand"? McGeever
If the record high U.S. stocks prices accurately reflect the investors' assessment of Trump 2.0's first year, it is a glowing scorecard for the most intervening government in decades. The U.S. President, who has become the "activist in chief" of the markets, is yet another example of how the world's economy has gone topsy-turvy. He is questioning and even renouncing the global norms of the last 40 years. Under Donald Trump's leadership, the U.S. Government has taken direct equity stakes and demanded that CEOs be fired. It also tried to dictate compensation for CEOs. The government was assured of a cut in the exports of Big Tech chips, as well as a desire to fire Federal Reserve officials. Trump also ordered the purchase $200 billion in mortgage-backed securities and directed U.S. companies to conduct business in Venezuela. He tried to stop defense firms from purchasing back shares until they increased production. And he called for an annual cap on credit card interest rates, as his Justice Department threatened to indict Fed Chair Jerome Powell. That's all in the last week. INEFFICIENT MARKET HYPOTHESIS? Imagine an alternate future in which Kamala Harris had won the U.S. Presidential election in 2024 and was approaching her first year in office. She would have pursued a similar controversial set of unorthodox policy. Would the markets shrug this off so easily if Kamala Harris won in 2024? Investors would likely have reacted strongly to the news. There has been almost no turmoil in the real world since Trump's "Liberation Day", tariff announcement, which took place in April. Last year was indeed a record-breaking year for stocks, and other asset classes. According to HFR, hedge funds, which are not a fan of government interference in the private and free market, saw their assets under management reach $5 trillion. William Henagan is a research fellow with the Council on Foreign Relations. He agrees that it's a bit of a "conundrum", given the Trump administration's interventionist approach towards Wall Street and Main Street. Henagan asserts that investors don't necessarily perceive the market interventions to be a substantial erosion of the rule of law or property rights which underpin the financial markets and economic system. Perhaps public markets aren't the most efficient or all-seeing. Investors ignore erosion of these fundamentals at their peril. CASE FOR THE DEFENSE The answer to the question "How confident are you in the market?" is usually binary. Investors are confident in the market structure and financial system as long as they remain so. Government intervention in the market economy is not a new thing, and it is also not a bad idea. Many sectors are in favor of it. It can be necessary for reasons like national security, energy safety, or providing a social security net. A year into Trump's second tenure, the "visible" hand of the president can be felt by many parts in USA Inc., pushing aside the invisible market hand posited by Adam Smith, an eighteenth century economist. Trump's capriciousness is still capable of causing volatility, however. Lockheed Martin shares fell 7% on Wednesday night after Trump announced he would stop defense companies from paying dividends or buying back stock. They then recovered 8% after-hours when Trump demanded that the defense budget be increased by 50% to $1.5 trillion. The broader market is continuing to rise, apparently unaffected by what has been the most interventionist government in decades. Wall Street did lag behind its global counterparts last year, but not by much. This could be a sign of Trump's visible hand unnerving investors. But, at least for now, there is no flashing warning light. You like this column? Open Interest (ROI) is your indispensable 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.
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Officials in Ukraine claim that Russian missiles have struck Kyiv and killed one person in Kharkiv.
Ukrainian officials reported that Russian forces attacked two of?Ukraine?s?largest?cities early on Tuesday morning, killing one in Kharkiv, a city located to the northeast. Tymur Tkachenko is the head of Kyiv’s military administration. He said that missiles were attacking the capital. Mayor Vitali Klitschko confirmed that air defences are in operation. Witnesses heard "explosions" in the city but no word was immediately available on injuries or damage. Oleh Syniehubov, the Regional Governor of Kharkiv (which is 30 km from the Russian border, and is also a popular Russian target), said that one person had been killed in an attack on a outskirts. Syniehubov claimed that three people had been injured. Reporting by Valentyn OGIRenko in Kyiv, Lidia Kelly in Melbourne, and Ron Popeski. Editing by David Gregorio.
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After over a decade, Australia's Lynas rare earths CEO will retire
After 12 years, Lynas Rare Earths, an Australian company, announced that its Chief?Executive Officer and Managing Director, Amanda?Lacaze was retiring. Lynas, in a press release, said that the board had already started a search for a new leader to take over as 'the world's largest producer of rare earths outside China. The company said that Lacaze will remain with them until the end of the current fiscal year to ensure a smooth transition. Lacaze became the chief of the company in 2014, after working as a nonexecutive director for the miner. Lynas has become a dominant player in the production and sale of rare earths elements under her leadership. The stock price has increased more than 12 times since she became CEO. According to LSEG, its market capitalization has risen from A$15 'billion ($10.06 bn) to A$15 'billion (about $10.06 mn). Lacaze was previously the managing director of marketing for Telstra, Australia’s largest telecom company, and held positions at Nestle.
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M&A boom unlikely to be disrupted by Japan's increased oversight of foreign investment
Experts say that the Japanese plan to allow authorities to order foreign investors retroactively to divest acquisitions aims to protect major companies and supply chains. However, it is unlikely to reduce increased M&A activity. Japan proposed Wednesday amendments to the foreign investment screening laws that would give authorities the?option of forcing foreigners to sell their investments deemed as posing risks to national and economic security. The proposals are being made as the administration of 'Japanese' Prime Minister Sanae Takayichi steps up its efforts to reduce risks posed by an inflow foreign money into Japan's economy and control over major supply chains. Currently, foreign investors who wish to purchase stakes in Japanese firms outside sectors critical to national or economic security do not have to notify the government beforehand, so officials are unable to intervene. These new powers are targeted at high-risk investors, such as those who might work with foreign powers for intelligence gathering. Since 2017, Chinese companies are required to?cooperate with the country's spy agencies. The period in Japan during which transactions may be reviewed rétroactively is around five years. Nicholas Benes of the Board Director Training Institute of Japan said, "Japan wants to prevent Chinese companies from purchasing top-quality Japanese technology and companies." A government source stated that the proposed changes include stricter requirements on indirect investments made by foreign parents in Japanese companies. This is to bring Japan up to par with its allies, such as the U.S.A, Britain, and Germany, in terms of security. According to documents from the Ministry of Finance, these countries can order divestitures retroactively. Benes, an expert in corporate governance, said that "in principle, this doesn't stand out as it is similar to other countries' practices." FIRST MAJOR OVERHAUL EVER SINCE 2019. Japan is making its first major overhaul of its foreign investment screening laws since 2019. The threshold for reviewing stock purchases by foreign entities has been lowered from 10% to 1%. The 1% threshold is a significant increase in the number of pre-transaction submissions that the Japanese government must deal with compared to other countries. However, the revisions will reduce the scope of the businesses subject to review. Yohsuke Higashi, a partner and M&A attorney at Mori Hamada and Matsumoto said that the scope of pre-transaction filing requirements needs to be significantly narrowed in order to achieve a balance. This is because post-closing interventions will be permitted and indirect investment requirements will be introduced. He said that Japan should also put more resources into enforcing the risk-mitigation requirements attached to approvals, and catching risky deals through post-closing intervention. The review team was overloaded. I understand the need to prioritize more important cases. Another lawyer who worked on inbound investment deals, but declined to be identified, as they weren't allowed to speak publicly, agreed. The changes to the foreign investments rules are a result of corporate governance reforms that were led by the Japanese government. These reforms?led to an increase in overseas interest in Japan, and helped to push the stock exchange to record highs. According to LSEG, inbound M&A activity jumped 45% compared to a year ago to $33 billion. Experts say that the proposed changes will not have a significant impact on foreign investment. Higashi stated that the changes will not discourage M&A involving Japanese companies or other direct investments in Japan. Yuki Kanemoto is a senior research scientist at the Daiwa Institute of Research. She also predicts little impact. He said that the relatively low number of cases that were formally rejected could lead some to believe Japan was more permissive at the moment than Europe or the United States. "But I suspect that there are a number of cases where an effective rejection was made behind the scenes." Japan has only rejected one deal in 2008 under its Foreign Investment Screening Law - the attempt to purchase Electric Power Development by London's Children's Investment Fund. (Reporting and editing by Sam Nussey, Thomas Derpinghaus and Anton Bridge. Additional reporting by Makiko Yamazaki)
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FT reports that Italy is seeking damages of over $8 billion from ArcelorMittal for the ILVA Steelworks.
Financial Times reported 'on Monday' that the state-appointed administrators at Acciaierie d'Italia's Steel Plants are seeking 8?billion euro ($8.17 billion), in damages, from ArcelorMittal. The report stated that Acciaierie d'Italia, formerly known under the name ILVA has filed a lawsuit against the steelworks for alleged mismanagement. This complaint was made to a Milan court this month. Adolfo Urso, Italy's Minister of Industry in December, said that the plant commissioners would file a claim for damages against ArcelorMittal. The plant was taken over by the government in early 2024. The FT reported that "the forensic due diligence... carried out by the Commissioners showed that the 'company's financial... imbalances were?the result... of a wilful, precise, and long-term strategy aimed at systematically transferring financial resources to the parent company from the company." ArcelorMittal, and Italy's Economy Ministry?didn't immediately respond to an inquiry for comment. The steelmaker announced in September of last year that it had received 10 bids, but only two bidders, Azerbaijan’s Baku Steel Company and Azerbaijan Investment Company as well as India’s Jindal Steel International, were interested to purchase all the assets. ADI is a major headache to Italian Prime Minister Giorgia Melons because it is unable to maintain its production due rising energy costs and a?weak market.
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Sources say that Carlyle and Chevron-Quantum are the frontrunners to acquire Lukoil assets.
Sources say that the UAE-based International Holding Company, Chevron, and Carlyle are all competing to buy up the global assets of Russia’s Lukoil as a U.S. deadline for selling them expires next week. Sources say that the United States sanctioned Lukoil in October, and Rosneft its counterpart to force the Kremlin into a peace agreement with Ukraine. They have given Lukoil a deadline of January 17 to sell its $22 billion global portfolio. These assets include refineries, petrol stations and oil fields in Europe and the United States as well as oil fields and refineries in Iraq, Azerbaijan, and Kazakhstan. Lukoil has been forced to shut down its operations in many countries due to the lack of banking lines and sanctions. Iraq also nationalised Lukoil’s largest oil field, West Qurna 2 Lukoil has been holding talks with investors since November, according to four sources in the industry. Carlyle declined comment. IHC has not responded to a comment request. Chevron declined to comment. According to U.S. regulations, once Lukoil has reached a deal with a buyer, the latter must obtain clearance from the U.S. Department of the Treasury’s Office of Foreign Assets Control. Three of four sources stated that OFAC could extend the current general license and allow negotiations between Lukoil?and buyers to continue. Treasury did not immediately respond to our request for comment. A fifth source said that OFAC could decide to issue individual licenses to one or more potential buyers before the deadline of January 17, according to a sixth?source. Treasury has so far blocked two attempts at deals, the first being between Lukoil, a Swiss trading group, and Gunvor, and then Xtellus Partners (the former U.S. branch of Russian bank VTB), in December.
Sources say that Trafigura and Vitol offer Venezuelan crude oil to Indian and Chinese refiners in March for delivery.
On Monday, several sources reported that Vitol and Trafigura had begun discussions with refiners from India?and China about the sale of Venezuelan crude oil for cargoes due to arrive in March.
Global commodities traders confirmed Friday that they had reached agreements with the United States. The?government will help market Venezuelan oil that is stranded, just days after the interim Venezuelan government agreed to export 50 million barrels to the U.S.
Their marketing efforts are expected to accelerate the sale and purchase of Venezuelan oil through the U.S. program, allowing OPEC producers to resume their exports that have been halted ever since President Nicolas Maduro was ousted.
Trafigura CEO says it will load the first cargo for the U.S. in this week.
PETROCHINA INDIAN RIFFINERS
Two sources said that Vitol was approaching Indian refineries to sell oil. One of the sources?said that a trader had offered a cargo to ICE Brent at a discounted price of $8-$8.50 per barrel on a delivered basis.
Sources told us last week that refiners Indian Oil Corp. and Hindustan Petroleum Corp. would be interested in buying Venezuelan crude oil. Both have not responded to our requests for comment.
Reliance Industries said that it would re-consider a return to Venezuelan crude purchases if the sale of Venezuelan oil to non-U.S. customers is permitted by U.S. regulations.
Three sources claim that Vitol, Trafigura, and PetroChina have all approached PetroChina to explore interest. PetroChina was a major purchaser of Venezuelan Merey heavy sour crude oil as well as fuel before the U.S. sanctioned began, they said.
One of them stated that traders should first approach the large state oil traders, rather than teapots. Independent refiners are usually those who buy sanctioned cheap oil in China.
PetroChina didn't immediately respond to our request for comment.
Vitol refused to comment. Trafigura said it provides logistical and marketing support to facilitate the sale Venezuelan oil but declined to comment.
Second-Half March Delivery
A second source confirmed that Vitol and Trafigura have cargoes available for delivery during the second half of march.
Shipping data on Kpler revealed that Vitol had loaded the first cargo of naphtha to Venezuela from the U.S. onto the Panamax-sized Hellespont Protector on Sunday. The ship is expected to arrive in the Port of Jose, Venezuela, on January 28.
Venezuelan heavy crude oil is thinned with naphtha to make it easier to transport and process.
The imminent return of Venezuelan oil has offset fears of a possible supply disruption in Iran that could cap gains on global oil futures. (Reporting from Nidhi verma in New Delhi; Siyi Liu in Singapore, Chen Aizhu in London, and Shariq Khan at New York. Additional reporting by Julia Payne and Shariq in New York. Editing by Jan Harvey.
(source: Reuters)