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US and European stocks fall after Iran war fuels oil rally and bond sales
The dollar rose on Thursday as oil prices surged amid supply concerns and intensifying combat on the sixth day in the U.S. and Israeli war against?Iran. Iran's campaign continued as Tehran fired a volley of missiles towards Israel and threatened to retaliate "wherever" they were after a U.S. strike. A strike was made on a ship that was far away from the battlefield. U.S. president Donald Trump claimed the right to decide who leads Iran next, as U.S. jets and Israeli planes bombarded areas in the country. Gulf cities also faced new attacks. Investors were encouraged on Wednesday when the U.S. announced that it would protect vessels in the Strait of Hormuz. This is where around one-fifth of all oil and LNG are shipped. As the conflict intensified, more oil tankers were attacked in Gulf waters. Iranian drones also entered Azerbaijan raising the possibility that the crisis could spread to other oil producing states. Initial assessments indicate that an Iranian remote-controlled boat loaded with explosives was targeting a Bahamas-flagged oil tanker anchored near Iraq’s Khor al Zubair Port. After a large explosion, a second tanker was anchored off Kuwait and taking in water. It also spilled oil. The Iranian crisis has created a cloud over our heads. Mona Mahajan is the head of Edward Jones' investment strategy and asset management. She said that there was no way to know how long this crisis would last or what its total impact would be. However, she did note that previous Middle East crises were usually short-lived. Mahajan cited the reports of attacks on tankers to say that investors were unnerved by the "very significant move higher in oil price" on Thursday. Stocks on Wall Street continued to fall in the afternoon trading. At 2:54 pm, the Dow Jones Industrial Average dropped 1,047.28?points, or 2.15 %, to 47692.13, while the S&P500 fell 82.82?points, or 1.21 %, to 6,786.42, and the Nasdaq Composite lost 241.42?points, or 1.05 %, to 22,567.15. MSCI's global stock index fell 8.65 points or 0.84% to 1,022.94. The pan-European STOXX 600 closed lower by 1.29% while Europe's FTSEurofirst 300 fell 33.00 points or 1.35%. MSCI's Asia Pacific Price Index rose by 2%. South Korea's KOSPI closed almost 10% higher. The index, under pressure because of the country's dependency on imported oil has erased much of Wednesday's record decline after President Lee Jae Myung activated a $68 billion fund to stabilize the market. There is more hesitation today because there are concerns about the possibility of the oil price going up. The bottleneck in the Strait of Hormuz is a hot topic, said Kristina Hooper, chief market strategist for Man Group. Hooper noted that while traders are reacting to the latest headlines coming out of the Middle East, the current market "attention span" is only as long as a gnat. She warned investors of possible volatility following Friday's U.S. Non-Farm Payrolls Report, as investor concerns about labor-market risks due to artificial intelligence are growing. You could change the mood in a matter of minutes with a single economic statistic. She said that we could see this tomorrow when the jobs report is released. The dollar recovered from a short pullback in currencies on Wednesday, as investors sought out safe-haven assets. The dollar index (which measures the greenback against a basket including the yen, euro and yen) rose by 0.51%, to 99.31. The euro fell 0.52% to $1.1572. The dollar gained 0.5% against the Japanese yen to 157.81, while the pound fell 0.38% to 1.3321. Bitcoin fell by 3.23%, to $70,980.07. Ethereum fell 3.39% to 2,077.74. Bond yields in the U.S. Treasury rose for a 4th?straight?day on fears that higher oil prices may increase inflation and impact Federal Reserve policy. The yield of the benchmark U.S. 10 year notes increased 6 basis points from 4.082% to 4.142% on Wednesday. Meanwhile, the yield on 30-year bonds rose 3.1 basis point to 4.7508%. The yield on the two-year notes, which moves typically in line with expectations of interest rates for the Federal Reserve rose by 5.4 basis points from 3.543% to 3.597%. As the war disrupted shipping and supplies, some Middle?Eastern major producers cut production. According to Vortexa and Kpler ship-tracking data, around 300 oil tankers remain inside the Strait of Hormuz. Traffic has been largely stopped since the weekend. U.S. crude ended the day up by 8.51% or $6.35 at $81.01 per barrel. Brent was up 4.93%, or $4.01, to $85.41 for a barrel. Gold prices are reversing gains made on Wednesday due to higher Treasury yields, and a stronger dollar. Spot gold dropped 1.34%, to $5 066,39 per ounce. U.S. Gold Futures dropped 1.24% to an ounce of $5,056.60. Spot silver dropped 2.79% to an ounce of $81.08.
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Treasury yields rise for the fourth consecutive day as oil prices increase inflation risk
U.S. Treasury Yields rose for the fourth consecutive day on Thursday, as the war in Iran intensified. This fueled concerns about inflation and dampened expectations of Federal Reserve rate cuts. U.S. 'crude' jumped 8.91%, to $81.29 a barrel, and Brent climbed 5.17%, to $85.61 a barrel. This was due to the fact that more oil tankers were attacked in Gulf waters, and the U.S. - Iran war intensified. Iranian drones have entered Azerbaijan and are threatening to spread this crisis to other oil producers. Since the start of the war last week, crude prices have risen by more than 18%. The yield of the benchmark 10-year Treasury bill in the United States rose by 5 basis points, to 4.132%. It had previously reached a high of 4.15%. Over the last four days, the yield has risen by more than 17 basis point. This is its largest four-session increase since early July. Michael Green, chief strategist at Simplify Asset Management of Philadelphia, said: "The spike in gasoline prices in response to the Middle East events are clearly a cause for concern for those who expect a Fed reaction function." The curve is primarily driven by the fear of inflation, which has people reducing their expectations for Fed cutbacks. According to LSEG, the markets are pricing in a Fed cut of 40 basis points this year. This is down from 50 basis points just before the war started. The 30-year bond yield increased 2.6 basis points, to 4.743%. It had previously reached 4.772%. This was its highest level since February 12. CME's FedWatch Tool shows that the expectation of a Fed meeting in June to cut at least 25 basis point has dropped from 47.4% last week and 75% one month ago. The U.S. Treasury yield graph, which is closely watched as an indicator of expectations for the economy, showed a positive part measuring the difference between the yields of two-year and 10-year Treasury bills. This was 54.4 basis points. The Fed is less likely to need to lower interest rates if recent economic data shows that price pressures are still present and the labor market is stable. Initial jobless claims for the week ending February 28 were flat at 213,000 seasonally adjusted, which was slightly lower than the 215,000 estimates of economists polled. The Labor Department also reported that import prices increased 0.2% in January, which was in line with expectations after a 0.2% increase in December. This followed an upwardly-revised 0.2% rise in December. A decline in energy prices was more than offset a surge of capital goods prices. The Labor Department also reported that worker productivity fell to a 2.8% annualized rate in the fourth-quarter from a 5.2% rate in the third-quarter, which was?upwardly reviewed. Unit labor costs rose at a 2.8% rate after a 1.8% decline. The data comes just before Friday's "key government payrolls" report which will also influence expectations about the direction of Fed policy. The yield on the two-year U.S. Treasury, which moves typically in line with expectations of interest rates from the Fed, increased 4.4 basis points, to 3.587%. Over the last four sessions, the two-year yield has jumped nearly 22 basis points. This is its biggest four-day increase since mid-May. Fed officials recently stated that it would take time to evaluate the impact of Iran conflict on monetary policies. On Wednesday, Governor Stephen Miran told Bloomberg TV that the war did not change the need for interest rate cuts. Richmond Fed President Tom Barkin said that high inflation and recent job numbers could shift the Fed's risk outlook. After closing at 2.5%, the breakeven rate for five-year U.S. Treasury inflation-protected securities (TIPS) reached its highest level since January 30. The 10-year TIPS Breakeven Rate was at 2,303% last, which means the market expects inflation to average 2.3% per year over the next decade.
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Israel killed Khamenei on November 1, the defence minister said
Israel's Defence Minister,?Israel?Katz, said that Israel made the decision in November to kill Iran’s?Supreme leader Ali Khamenei and planned to execute the operation six months later. Khamenei died in the early hours of Saturday's U.S. and Israeli air campaign, the first time a top leader of a nation has been assassinated by an airstrike. Joint air assault nears the end of its first week, after the opening salvos killed leaders and set off a war in the region, with Iranian attacks on Israel, the Gulf, and 'Iraq', and Israeli attacks on Iran's ally Hezbollah?in Lebanon. Katz, a reporter for Israel's N12 TV News, said: "We were already gathered with the Prime Minister in a very strict forum in November and the Prime Minister (Benjamin Netanyahu), set the goal to eliminate Khamenei." He said that the timing had been?set at mid-2026. Katz explained that the plan was shared with Washington after the protests in Iran. Israel was concerned the clerical leaders of Iran might attack Israel and U.S. assets?in the Middle East. Israel has stated that its goal is to eliminate any existential threat posed by 'Iran's nuclear program and 'ballistic missile programme, and to bring about a regime change. Iran's ruling class has not yet shown any signs of stepping down. Reporting by Maayan Bell; Editing and proofreading by Alistair Bell
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Trump on increasing gas prices during Iran Operation: "If they increase, they will rise"
In an exclusive interview, President Donald Trump stated that he is not worried about the rising U.S. gasoline prices due to the escalating?Iran conflict. He said the U.S. military operation was his top priority. When asked about the increased prices at the pumps, he replied: "I'm not?concerned about it." "They will drop quickly when this is done, and if prices rise, then they will rise. But this is more important than a small increase in gasoline prices." Trump has set a timeline of four to five weeks for the military campaign against Tehran. However, political and military analysts have questioned this timeline, pointing out that the U.S. government has not yet articulated its end goal, while the conflict continues spreading to the region and beyond. Trump stated in the interview that he did not intend to tap into the Strategic Petroleum Reserve. He also said he is 'confident' the Strait of Hormuz will remain open, as it is the main channel for oil shipping around Iran. The global oil price has risen by 16% since Saturday's war began, as Middle East supplies have been disrupted. AAA, an American travel agency that tracks fuel costs, reports a 27-cent increase in the national average price of gas since last week. The current national average has risen 15 cents since a year ago. Trump claimed that costs "haven’t increased very much." The president's tone has changed since he praised the fall in gas prices during his "State of the Union" address last month. He also spoke at an energy rally in Texas that was held just hours before U.S. airstrikes were launched. House Speaker Mike Johnson and other Republican leaders have also dismissed concerns over rising gas prices. However, the party's midterm election campaign will focus on achieving economic success. Political analysts believe that a rise in gas prices may hurt Republicans during the November elections if voters punish them for the high cost living. Steve Holland reported, Bo Erickson, Jarrett Renshaw and Nia William edited.
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Citgo's profit for 2025 grew by 48%, to $452 millions, on higher margins
Citgo Petroleum, a U.S. refiner, reported an increase of 48% in its net profit last year to $452 millions. This was due to improved refining margins as well as a record-breaking crude processing rate of 760,000 barrels / day. If the U.S. Treasury Department approves the transaction, the seventh largest U.S. refining company, owned by Venezuelan, will be 'taken over by an Elliott Investment Management affiliate following a court ordered auction last year to pay creditors. Citgo's annual total throughput increased from 811,000 to 833,000 barrels per day (bpd) with a crude usage rate of 92% in 2018. This is up from 93% crude utilization and 811,000 bpd in 2024. After completing expansions, the company ended last year with an 829,000-bpd total refining capacity at its three refineries located in Texas Louisiana and Illinois. Citgo's liquid assets decreased to $2.45bn at the end of December after it reduced gross debt by $1.8bn, compared with $3.8bn a year ago. The annual marketing sales increased to 430,000 bpd, up from 421,000 in 2024. In a press release, Carlos Jorda, the chief executive of a company in Spain said: "As we look forward, we are focused on advancing commercial and operational excellence initiatives whilst maintaining fiscal discipline." He added that "record-breaking performance at our Lake Charles, Lemont, and 'brand momentum' refineries, as well as the strongest results for lubricants in almost two decades, underscores the resilience of our company." Citgo's?fourth-quarter net income was $268 million compared to a loss of $146 million in the same period in 2024. Earnings before interest, tax, depreciation, and amortization rose from $2 million to $507 millions in the?fourth quarter of 2024. Citgo's refinery in?Corpus Christi (Texas) completed a major system overhaul during the fourth quarter. It implemented several projects that improved rates and distillate production, according to Citgo.
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Sources: Indian refiners buy Russian oil to replace Iranian oil when the war in Iran affects supplies
Six sources with knowledge of the matter claim that Indian refiners have purchased millions of barrels from 'prompt Russian crude cargoes' to help the nation navigate a?oil shortage? triggered by conflict in the Middle East. The U.S. government has been pressuring New Delhi for months to stop buying Russian barrels in order to cut down on the money that Moscow uses to fund its war efforts in Ukraine. India's crude oil stocks are only enough to cover 25 days of its demand. India imports about 40% of its crude oil from the Middle East via the Strait of Hormuz. India was the largest buyer of Russian crude oil after Moscow's invasion of Ukraine in 2022, but its refiners began to reduce their purchases due to pressure from Washington. New Delhi avoided 25% tariffs by cutting its Russian oil purchases and reached an interim trade agreement with the U.S. Uncertain is whether India has been allowed to increase its Russian purchases in order to compensate for possible Middle Eastern supply loss. Sources close to the situation said that India approached Donald Trump, the president of the United States, and asked for permission to import Russian crude oil due to the conflict with Iran. Emails seeking comment from India's oil ministry and foreign ministry were not responded to. The White House or the U.S. Treasury Department didn't immediately respond to emails seeking comment. Sources say that Indian Oil Corp., Bharat Petroleum Corp., Hindustan Petroleum Corp. and Mangalore refinery and Petrochemicals Ltd. are in talks with traders to ensure the prompt delivery of Russian cargoes. Sources claim that Indian refiners bought 20 million barrels? of Russian oil so far from traders. According to industry sources, HPCL and MRPL received Russian oil for the last time in November. Three of the sources said that traders were selling Russian Urals at a premium to Brent of $4 to $5 per barrel for delivery to Indian ports between March and April. The traders reported that this is in contrast to a discount of around $13 per barrel on cargoes purchased in February. HPCL bought two cargoes at a discount of $13 before the war began on February 28. One of the traders who sell Russian oil to India said that the problem is not the price but the availability of molecules. Sources said that Reliance Industries approached him and his company to purchase?Russian oil cargoes'. Two sources who were directly involved in the matter earlier today said that Indian refiners had already "started" tapping Russian oil from vessels anchored off their coast to compensate for the loss in Middle Eastern crude. After-hours emails to Indian refiners were not responded to immediately.
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Venezuelan gov't, Shell sign oil deals, state television says
State television reported on Thursday that Venezuela's acting president Delcy Rod has signed oil deals with Shell, without providing any details. Rodriguez is hosting U.S. The state-run channel VTV showed images of Interior Secretary Doug Burgum, who was in South America. Burgum and other attendees were dressed in suits. Shell didn't immediately respond to our request for a comment. In a post on Telegram, TV FANB, an independent state TV?channel focusing on the armed services, said that "Acting President Delcy Rod led the'signing of agreements with Shell, the international oil company," This strategic alliance reaffirms Venezuela's status as a reliable and safe destination for foreign investments, driving the growth of the hydrocarbons industry and the nation’s economic stability. Burgum, the head of the U.S. National Energy Dominance Council and also the president of the?South American Energy Dominance Council has praised Rodriguez's efforts to open up the South American nation to foreign investment in oil and minerals. This praise is similar to that given by the?U.S. President Donald Trump. Burgum is second cabinet secretary who has visited Venezuela since the January U.S. raid that captured President Nicolas Maduro. ?U.S. Energy Secretary Chris Wright made a visit to Venezuela in February. Venezuelan lawmakers passed a sweeping oil law in January that lowered taxes, increased the decision-making authority of the oil ministry, and gave autonomy to private producers. Sheila Dang reports from Houston.
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Treasury yields increase for the fourth consecutive day as crude prices raise inflation risk
U.S. Treasury Yields rose on Thursday for the fourth day in a row, as the war in Iran continued. This fueled concerns about inflation and its impact on Federal Reserve Policy. U.S. crude jumped 5.5% - to $78.77 a barrel on Thursday, while Brent jumped up to $84.36 a barrel, up 3.64% for the day. This was due to the fact that more oil tankers were attacked in Gulf waters, as the U.S. vs. Iran war intensified, and Iranian drones invaded Azerbaijan. Since the beginning of the war last week, crude prices have risen by roughly 16%. The yield on U.S. benchmark 10-year Treasury notes rose 4.7 basis point to 4,129%, after reaching a three-week peak of 4.148%. "The spike in gasoline prices in response to the Middle East events is a major concern for those who expect a Fed reaction function," Michael Green, chief market strategist of Simplify Asset Management, Philadelphia. The curve is primarily driven by people's fears about inflation. According to LSEG, the markets are pricing in Fed cuts of 40 basis points this year. This is down from 50 basis points just before the 'war' began. The 30-year bond yield increased 3.5 basis points, to 4.752%. It had previously reached 4.772%. This was its highest since February 12. CME's FedWatch Tool shows that the expectation of a reduction?of 25 basis points or more at the June meeting has fallen to 35.8%. This is down from 47.4% last week and 75% one month ago. The U.S. Treasury yield chart, which measures the difference between the yields of two-year and 10-year Treasury bills, as a measure of economic expectations was positive by 55.7 basis points. The recent economic data also indicates that price pressures are still present, while the labor markets remain stable. This makes it less likely that the Fed will see the need to lower interest rates. Labor Department reported that weekly initial claims for unemployment were at 213,000 seasonally adjusted, which was slightly less than the 215,000 estimated by economists polled. The Labor Department also reported that import prices increased 0.2% in January, which was in line with expectations. This followed a 0.2% increase in December, but this had been revised upwards. The yield on the two-year U.S. Treasury, which moves typically in line with Fed expectations, increased 3.1 basis points, to?3.574%. Fed officials recently stated that it would take time to evaluate the impact of the Iran conflict on monetary policies. On Wednesday, Governor Stephen Miran stated on Bloomberg TV that the conflict had not changed the need to cut interest rates. Richmond Fed President Tom Barkin said that the high inflation rate and the stronger recent jobs numbers could change the Fed's outlook. The five-year U.S. Treasury inflation-protected securities (TIPS) brokeeven rate was 2.533% on Thursday, after closing on Wednesday at 2.5%. The 10-year TIPS Breakeven Rate was at 2.29% last, which means the market expects inflation to average 2.3% per year over the next decade.
Americas and Africa heavy crude oil prices rise as Iran conflict disrupts Mideast market
The price of heavy crude oil produced in Americas soared to multi-year-highs on Wednesday as U.S. and Israeli attacks on Iran slowed down the exports of Middle East-produced oil. Prices also jumped in Europe and Africa for heavier grades.
Brent crude is at its highest level since January 2025.
In retaliation, Iran has threatened to fire at any vessel that passes through the shipping lanes of Strait of Hormuz near its southern coast. This has effectively shut down the Strait of Hormuz, cutting off around one-fifth of the global oil supply and leaving hundreds anchored nearby.
The price of heavy crude oil produced in Venezuela, Canada, and the U.S. has increased due to a curtailment of Middle Eastern supplies.
Brokers reported that the price of Mars sour oil, a flagship crude produced by the U.S. Gulf of Mexico, and preferred by refiners worldwide, traded on Wednesday at a premium of $5.50 to the benchmark West Texas Intermediate (WTI). This was the highest price since April 2020 and an increase of $1.75 on Tuesday.
Rohit Rathod is a senior analyst at ship tracking firm Vortexa. He said that buyers are rushing to purchase these barrels because they believe the Middle East conflict will continue for a longer time.
Even plants that are not directly affected will see their margins eroded. The refineries in the United States are designed to handle heavier crude and will use it to boost diesel production as a response to higher prices.
The prices of some heavier crudes from Europe and Africa also increased, traders reported. A trader reported that Gabonese grade Mandji is now being offered at $1 per barrel more than physical benchmark Brent. This was up from the steep discount before the conflict.
A trader reported that Europe's Johan Sverdrup bid at dated Brent + 90 cents, which was a sharp increase from the previous deal, at dated Brent minus 3.25 cents, on February 26.
OIL SUPPLY? SQUEEZE
Iraq, OPEC’s second largest producer, said on Tuesday that it could be forced to?cut production by over three million barrels a day in a matter of days if oil tanks cannot freely move to loading points in Gulf. This is according to two Iraqi officials. Two Iraqi oil officials said that if oil tankers cannot move freely to loading points in the Gulf, they may be forced to cut production by more than three million barrels per day within a few days.
The price of Heavy Louisiana Sweet crude oil, produced off the coast of the United States, was $5.25 higher on Tuesday than it had been in 2020. It also closed $1 higher than Light Louisiana Sweet. This indicates a higher demand for heavy grades, which usually trade at a lower price than lighter grades.
Analysts say that the discount between heavy Canadian oil and WTI has gotten tighter by $1.25 per barrel since last week, as buyers from India and China, who are feeling the squeeze of Middle East's supply shortage, will likely turn to Canada, which is one of the largest producers of heavy Canadian crude. Trans Mountain, the pipeline that transports heavy crude oil from Alberta's tar sands up to British Columbia for export, is not yet full.
If the Iran situation persists, we could see a significant uptake in the remaining spot capacity for the Trans Mountain Pipeline within weeks or a month," said Patrick O'Rourke from ATB Cormark Capital Markets.
A source confirmed that Venezuelan heavy crude oil was being sold at higher prices.
FUEL PRICES ARE RISING
The price of motor fuel in the United States, where gas prices are a key political issue, has risen above $3 per gallon, for the first since November. This is a serious risk to President Donald Trump and the Republicans heading into the midterm elections this November.
The price of diesel reached a record high on Wednesday, reaching $3.45 per gallon. The Middle East is a major source of diesel, so the conflict in the region has a direct impact on the price.
Analysts and traders reported that inventories had dropped dramatically after a period when demand was high due to the harsh winter in the United States.
Neil Crosby of Sparta Commodities, an analyst, says that prices for light sweet barrels will start to increase soon because of the shortage. Two traders reported that premiums were already rising for certain grades, including Brazilian light crude to China. Offers?were scarce, and the premium over ICE Brent jumped to $13 or $14 per barrel compared to a $2 to $3 premium before the conflict.
U.S. WTI traded at a discount as high as $8.75 a bar on Wednesday to Brent globally traded, the largest in over three years. This was in anticipation that U.S. supplies would be less affected by global events. Idemitsu Kosan, Japan's second largest refiner, bought 2 million barrels of West Texas Intermediate Crude from SK Energy on Monday for delivery in June.
(source: Reuters)