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ROI-Global trade in rude health? McGeever: Yes, with a catch
Global trade doesn't cool in the shadow of tariffs, wars on trade, real wars, and energy shocks. It's heating. How durable is it when the price, and not volume, is what's stoking up the flames? Recent trade data, from the U.S., China and other major economies, shows that cross-border commerce has grown at a faster rate than economists expected. In many cases the price increases were the primary cause of increased activity and surprising export figures. This reflects the spike in inflation caused by the Iran War, particularly on the oil and energy markets. This was especially true in the U.S. where exports reached a record of $327 billion last month, driven by shipments from a wide range of products. In fact, the goods surplus shrank to its lowest level since 2020. This is good news for the U.S. economic system, since the declining deficit could contribute to the growth of the economy in the second quarter. This could have been primarily due to the high prices of oil, fuel, and other energy products. This raises the issue of how durable this improvement is. It's clear that it isn't just the price that does all the work. The physical export volumes of Canada have returned to their previous levels before Donald Trump was elected to the White House by the U.S. in November 2024. This has sparked trade tensions with the neighboring countries. According to CIBC, the exports of April were only second to those in February last year when companies were preparing for Trump's looming duties. Base effects are another factor that may be affecting headline trade figures. The slowdown in trade during the first half of the year as Trump's tariff wars began is now used to compare year-over-year figures. This suggests that it's too early to predict a?trade revival. HAPPY CHIPS DAY! The price is also an important factor in Asia's trade boom. However, the soaring demand for AI is also fueling the sizzling numbers. China, the largest exporter in the world, saw its total exports rise 19.4% in May. Pantheon Macroeconomics says that sales of high-tech goods accounted for 12 percent of this. While the value of integrated-circuit exports has more than doubled in the last year, export volumes have only increased by 2%. This suggests that the headline figure is inflated because the price was high. The same thing is happening in other sectors. However, Beijing policymakers and critics will continue to focus on headline dollar figures, particularly the large one, China's total 12-month rolling trade surplus of more than $1 trillion. Taiwan's AI export surge was even more impressive. Exports rose in May more than expected to the second highest level by value ever, up almost 52% compared to a year ago. Price was again a major factor. TSMC, the world's largest manufacturer of advanced chips that power AI applications and a major global supplier to Nvidia and Apple, is located in Taiwan. Chips, computer equipment and software, as well as other high-tech products, have seen a surge in price over the last year, largely due to an explosion in demand. Goldman Sachs Global Institute estimates that AI-related investments will reach $7,6 trillion by 2031. SURPRISING RESILIENCE Global trade has shown a remarkable resilience, which few observers could have imagined possible in the face of volatile market conditions. Trump's "Liberation Day tariffs" triggered a global trade war, which may have ended decades of internationalization. Geopolitical rifts also threaten trade flows, notably in Middle East. The 'AI frenzy' is largely responsible for the booming global trade. The demand for these applications has been increasing, a large part of trade in AI products is cross-border and many have been exempted from tariffs. The question is, can this continue? Could the rise in AI compute costs curb demand eventually? Could major powers seek to reduce AI supply chains in order to minimize national security risks? The AI boom is unlikely to fade away, which suggests that trade activity may remain resilient, despite tariffs, protectionism and deglobalization. Everything seems to be dependent on the outcome of this tech story, just as it is with other parts of the global economic system. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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South Korea demands fair treatment from EU on new steel import tariffs
His office reported that South Korean President Lee Jae Myung had asked the European Union to "consider" the Korean steel producers as the bloc prepares to raise import tariffs starting July 1. The president's office released a statement saying that Lee made this request at a meeting with European Council President Antonio Costa and European Commission Presiden Ursula von der Leyen in Belgium on Wednesday. The office reported that Lee requested the EU ensure that 'South Korean steelmakers' can access the'market of the bloc' on terms as favorable as those offered to their competitors. He cited South Korea's position as a strategic free trade partner to the EU. The European Parliament voted in 'May to reduce tariff-free imports of steel?by almost half, from levels in 2024?to 18,3 million metric tons per year. Tariffs of 50% will be applied to volumes above this level. This is an increase from the current 25%. Eurofer data shows that in 2024, South Korea will be the second-largest steel exporter into the EU, with 3.3 million tons of finished steel products.
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French utility EDF and Centrica eye UK Government deal on Sizewell B Nuclear Plant Extension
A spokesperson for EDF said on Wednesday that the French company and UK-based Centrica were prepared to invest?about PS800 million ($1.07 billion) in order to extend the life of Britain's Sizewell B Nuclear Power Station to 2055, from 2035. Sizewell B, located on the North Sea Coast in Suffolk, supplies almost 1.2 gigawatts to the grid and is the only pressure-water reactor in Britain. A spokesperson for the French utility said that it was looking to?agree on a framework' with the UK Government. EDF said that the volatility in the energy markets has increased the need to secure a model suitable for reducing commercial risks, and enabling investment decisions. Centrica holds a 20% stake in the UK's nuclear generation business of EDF Energy, which includes Sizewell B. EDF's British branch had stated in January that a life extension of the plant was technically possible and that negotiations were underway with the UK for the necessary investment. Bloomberg News reported, citing a source, that EDF, Centrica and the government were close to negotiating a draft agreement to extend life of the plant. According to the report, companies are close to a heads-of-terms agreement with Department for Energy Security and Net Zero. An announcement is expected in the next few weeks. Bloomberg reported that under the terms discussed, Sizewell B would receive approximately PS70 per megawatt hour of electricity generated. The UK Department for Energy Security and Net Zero, as well as Centrica did not immediately respond to requests for comments on the report.
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Hawaii looks at suspending gasoline tax as prices rise
Hawaii Governor Josh Green said he was considering a pause in the state's gasoline tax due to the surge of prices at the pump three months into the Iran War. Gasoline prices on the island are among the highest in the United States. They average $5.58 a gallon - up $1 over last year's price of $4.48. Gas prices are soaring. Green stated in a press release that he was considering a temporary halt on the state and local taxes on gasoline for a part of summer to provide some relief to consumers. His office stated that the governor is evaluating?various options including executive actions. The state uses the revenue from taxes to maintain its infrastructure, such as roads and bridges. The American Automobile Association estimates that the average national gasoline price per gallon is $4.15. This is up over $1 from one year ago. The national average is still higher than 2025 but has dropped from $4.52 last month. California, Washington and Hawaii are the states that have been hardest hit, with an average price per gallon ranging from $5.07 to $5.83, according to AAA. In these states, the averages ranged from $3.64 to $4.68 per month a year earlier. Only a few states, including Indiana and Georgia, have taken concrete measures to provide relief. Utah passed a bill that reduced the state tax by 15% between July and December. The conflict is preventing oil from flowing through the Strait of Hormuz. Before the conflict, about one-fifth of the daily supply of oil in the world passed through this strait. Carl Davis, Research Director at the Institute for Taxation and Economic Policy said that "high energy prices are a worldwide problem and there is no way to fix it." Even if they suspend the gas tax, we will still pay a lot more than before the war began. Gas prices are too high to fix with a holiday. According to an Ipsos/May poll, more than 6/10 Americans believe that their household finances have been affected by higher gas prices. CNBC shared data from 'Moody's Analytics' that showed the average U.S. family has spent an extra $450 on fuel since the Iran War began on February 28. According to Moody's, this figure could rise to nearly $2,000 after a year if the conflict continues. Donald Trump, the U.S. President, has said that he expects gas prices will drop once the conflict ends. Even if U.S.-Iran agree on a peace agreement, oil industry experts believe that fuel prices will continue to be under pressure, even after the conflict ends. It will take many months for Middle East production to return to prewar levels. (Reporting and editing by Donna Bryson in Washington, Sanjeev MIglani, and Jasper Ward)
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Albania protests continue to grow as opposition to Kushner Resort persists
On Wednesday, thousands of Albanians took to the streets in Tirana's capital city for the largest protest yet against the construction of a resort planned by Donald Trump's son-in law Jared Kushner. The project is 'expected to cost about 5 billion euros.' It has sparked outrage among Balkan citizens because it is located near a wetland that protects flamingos, seals, and sea turtles. But also, there was a perception of a lack of transparency in the plans designed by the foreign investors. The crowd stretched for half a mile down one of the main boulevards in the city. Protesters chanted, "New Albania", and held signs saying "Albania isn't for sale". "The Zvernec project is a project... without transparency. This is the culmination of the events that have taken place in Albania over the past 35 years. "Enough is enough",?said Leand Lakrori, a protester. The protests represent the latest test of Rama's leadership. He has been in office since 2013, and many blame him for not doing enough to eradicate widespread corruption and improve basic services such as healthcare. Rama said in an interview with this week's newspaper that the project will go forward and be completed properly. He says that he has also made significant progress in reducing corruption, including the creation of an?special prosecutor's office (SPAK), which has launched a number of high-profile cases over the past few years. As well, violence broke out earlier this year when protesters called for the resignation of Rama’s deputy Belinda Balluku over allegations of?corruption. Rama dismissed?Balluku but mistrust still remains. "I'm here protesting, to end this saga of Albanian government. Fabio Bracaj said that the two parties are always the same. "We want to see a new era... a better country." Kushner's and Ivanka Trump's idea for the resort was born when they fell in love with Albania on a yacht a few years ago. Last month, protests broke out at a development site near Zvernec after developers built a fence to surround some land. Since then, the fence has been removed.
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The FOREX Dollar falls as US inflation data holds off rate hike
Dollar fell on Wednesday, after data revealed that U.S. consumer prices rose to their highest level in 3 years in May. The reading, however, was in line economists' predictions, and did little to increase?the odds of a Federal Reserve interest rate hike this year. U.S. consumer prices rose at their fastest rate in three years, as the Iran War increased the cost of gasoline and energy products. Bureau of Labor Statistics of the Labor Department announced on Wednesday that the Consumer Price Index had increased by 4.2% over the 12-month period ending in May. This is the biggest gain since April 20,23. The economists polled had predicted the CPI to increase 4.2% on an annual basis. Karl Schamotta is the chief market strategist for Corpay, a Toronto-based company. He said that the Federal Reserve has not yet been able to use the soaring prices of energy in its core measures. The dollar index (which measures the U.S. dollar against six other currencies) was down 0.1% at 99.875, but still not far off the two-month-high of 100.214 that was reached on Monday. Schamotta stated that traders are preparing for a neutral statement from officials at the Federal Open Market Committee meeting next week, and have modestly reduced expectations of a rate increase by year's end. The traders of short-term U.S. rates have backed away from betting that the Federal Reserve will raise interest rates as early as September. However, they remain confident that an increase in rate is coming by October. According to a large majority of economists polled, the Fed will keep its key rate unchanged for the remainder of 2026. Jason Pride, the chief of investment strategy and research for wealth management firm Glenmede, stated in a report that "after three months of high energy costs, there has been no meaningful pass-through" to core goods. This is the most important data in the report today that shows the Iran shock has not spread to a generalized episode of inflation. Even so, traders were on edge. U.S. president Donald Trump announced on Wednesday the United States would attack Iran "very strongly" if a peace deal was not reached. He also revealed that the U.S. Military secretly escorted vessels carrying more than 100,000,000 barrels of crude oil out of Strait of Hormuz to moderate global oil prices. The Yen remains in focus A Bank of Japan rate increase at its policy meeting on June 16 is almost completely?priced-in, which means that it will not trigger a significant turnaround in the yen's weakness even if it occurs. Tony Sycamore said that a hawkish comment from Governor (Kazuo Ueda) would be needed to signal the BOJ's next hike could move from December to September – with the?possibility a third increase before the end of the year," Tony Sycamore wrote in a note. Without that, or something similar the Ministry of Finance will likely have to use its chequebook again to defend the currency. The Japanese yen remained steady at 160.475 against the dollar. It continues to hover near the 160 level, which is widely considered a "line in the sand" for official intervention. According to a poll of economists, the BOJ is likely to raise its key rate in this month's quarter and again next year. This will bring borrowing costs up to 1.25% at the end of the calendar year. DOLLAR SOFTNESS On Wednesday, the Bank of Canada kept its benchmark rate at the same level. Governor Tiff MacKlem said that the central banks would not hesitate to increase rates to control inflation. The pound was 0.1% stronger against the dollar Wednesday as investors closely watched the latest escalation of tensions between Iran and the U.S. ahead of the UK GDP data on Friday. The leading cryptocurrency, bitcoin, was almost flat on the day. It now stands at $61,949. (Reporting and editing by Kevin Buckland; Will Dunham, Jan Harvey and Kevin Buckland; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in London; Reporting by Saqib Ahmed Iqbal; Additional reporting and editing by Sophie Kiderlin and Satoshi Sugyama in Tokyo)
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Trump: 'I love inflation' as prices increase amid Iran war
Donald Trump on a Wednesday appeared to be embracing data that showed a rise in inflation of more than 4%. He told reporters that he "loved the inflation" and reiterated his belief prices would fall once the Iran War ended. When asked about U.S. data that showed consumer inflation increased in May at the fastest rate in three years, and if it could hurt his fellow Republicans months before November's midterm elections, Trump replied: "I love inflation." Trump then explained that he approved a plan to secretly move oil tanks through the Strait of Hormuz due to concerns about higher costs and inflation. Trump stated that his calculation was successful and that the operation was a success. Trump stated that the oil will drop back to its previous level when the war is over. It's going down. It will fall like a stone. Trump called the war against Iran a diversion and described it as a "national security issue" because the closing of a key shipping route by Tehran has increased the price of gasoline, fertilizer, and other goods. The Federal Reserve could be prevented from lowering interest rates by higher prices, something Trump has been calling for since he returned to power in the United States last year. Republicans want to keep control of the U.S. House of Representatives, but they are worried that a consumer backlash will hand the reins over to Democrats. The cost of living is a major issue for Americans. Trump won the 2024 presidential elections in part due to his promise to reduce inflation. However, his approval rating has fallen to its lowest point of his career, and this includes his handling of cost of living. The efforts to reopen Strait of Hormuz for tanker traffic to move goods has?so-far stalled. Industry executives and analysts have warned that the coming weeks could bring another oil price shock, severe enough to shake broader financial markets. Even if Trump and Tehran strike a deal soon it will take months for supplies to move, with disruptions predicted through 2026. While Americans are more protected from fuel price shocks than many other countries, higher energy prices could affect consumer spending in the long run. Trump said last month that Americans' financial problems were not a consideration as he pushed for a deal while threatening to attack Iran again: "I do not think about Americans financial situation." I don't care about anyone. "I only think of one thing: we cannot allow Iran to have a nuclear bomb." (Reporting and editing by Scott Malone, Chizu Nomiyama and Bo Erickson)
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Gold falls 3% amid inflation and rate hike concerns as the Middle East escalates
Gold prices dropped?more?than 3% on Tuesday as investors focused on U.S. key data to get clues about the direction of monetary policy. By 2:26 pm EDT (1826 GMT), spot gold had fallen 3.5% to $4,111.95 an ounce. This was its lowest price since March 23. U.S. gold futures for August delivered settled 3.6% lower, at $4133.3. Tai Wong, a metals trader independent, said that the markets are desperate for some good news after Friday's strong payrolls and Trump's earlier threat this morning to 'pay the price'? for not negotiating with Iran. Trump said that Iran took too long to reach a?deal and now would "pay the price." Trump said that the U.S. will attack Iran "very hard" if a peace deal cannot be reached. Iran launched drone and missile attacks against U.S. bases located in Jordan, Kuwait, and Bahrain as a retaliation to American strikes around the Strait of Hormuz on Iranian targets. Since the beginning of the war, in late February 2008, the price of gold has been under pressure due to the rising oil prices and fears about inflation. Gold is often seen as an inflation hedge, but higher interest rates can be detrimental to the metal. According to CME Group’s FedWatch tool, traders are pricing in about a 67% probability of an interest rate increase in the U.S. in December. The U.S. Labor Department reported on Wednesday that the Consumer Price Index, excluding energy and food items, gained 0.2% monthly after increasing 0.4% in April. Investors will have more information to assess the Federal Reserve's policy on monetary policies after the release of the U.S. Producer Price Index, which is scheduled for Thursday. Inflation, central bank purchases, and currency debasement are still concerns that continue to drive gold prices, according to Paul?Wong. He is a market analyst at Sprott Asset Management. Silver spot fell by 0.8%, to $64.83, platinum dropped by 2.6%, to $1681.88, while palladium increased 0.7%, to $1230.41. (Reporting and editing by Paul Simao, Leroy Leo, and Anushree mukherjee from Bengaluru)
Esgian Week 23 Report: Semisub Action in Norway, Australia
Esgian provides an update on semisub activities in Norway and Australia in its Week 23 Rig Analytics Market Roundup.
Report Summary
Contracts
Transocean has announced contract fixtures for three harsh environment (HE) semisubmersibles. Together, the fixtures represent approximately $161 million in firm contract backlog.
Shelf Drilling has secured a 15-month award for the 357-ft jackup Shelf Drilling Tenacious for drilling operations offshore West Africa.
Murphy Oil Corporation has exercised an option to extend the contract for the 12,000-ft drillship Noble Stanley Lafosse for a batch of five wells in the U.S. Gulf of Mexico.
Drilling Activity and Discoveries
South Korea's president Yoon Suk Yeol has approved the Ministry of Trade, Industry, and Energy's plan for deepwater oil and gas exploration drilling in the East Sea.
The Norwegian Offshore Directorate (NOD) has granted OMV (Norge) a drilling permit for an exploration well in the Norwegian Sea. The well 6605/6-1 S Haydn is located in production licence 1194, which is operated by OMV (Norge) in partnership with INPEX Idemitsu Norge and Vår Energi.
China's CNOOC Limited has made a deepwater gas discovery in the ultra-shallow gas plays in the South China Sea. The discovery was made a the Lingshui 36-1 gas field, located in western South China Sea, with an average water depth of approximately 1,500 metres (4921 ft).
The Norwegian Ocean Industry Authority (Havtil) has given Aker BP consent for exploration drilling in block 6507/5 in the Norwegian Sea.
Walter Oil & Gas has received approval to drill an exploration well on Ewing Bank Block 953 in the US GOM with Seadrill 12,000-ft semisub Sevan Louisiana.
Demand
Reabold Resources continues to seek partners for its remaining UK licences, P2605 and P2504 (both 100%).
Shell subsidiary Shell Offshore Upstream South Africa B.V. has applied to drill up to five exploration and/or appraisal wells on Block Northern Cape Ultra Deep (NCUD), a block off the west coast of South Africa in water depths of 2,500 to 3,200 m (8,202 to 10,500 ft).
TotalEnergies and partner APA Corporation are one step closer to making the final investment decision for the Block 58 development. The FID is expected in the fourth quarter of 2024, and the companies are targeting the first oil in 2028.
Mobilisation/Rig Moves
ADES' 400-ft jackup Admarine 501 is being towed to Bahrain's Arab Shipbuilding and Repair Yard Company (ASRY).
Stena Drilling 10,000-ft drillship Stena Forth is en route to Las Palmas in the Canary Islands, where the rig will undergo regulatory surveys.
Diamond Offshore’s 10,000-ft semisub, the Ocean GreatWhite, has mobilised from Kishorn Port and returned to the West of Shetland area to resume its contract with bp, which was paused in early February 2024 due to an incident related to the rig’s lower marine riser package (LMRP).
Environmental activists from Greenpeace have occupied Borr Drilling’s 400-ft jackup Prospector 1 in the Dutch sector of the North Sea, preventing the rig from starting its contract with ONE-Dyas.
Following a protest by Greenpeace activists, which prevented the installation of Borr Drilling’s 400-ft jackup Prospector 1 and the beginning of a contract with ONE-Dyas, a Dutch court has ordered the suspension of operations until a hearing on appeals has been held.
Diamond Offshore's 6,000-ft semisubmersible Ocean Apex has completed its contract with Inpex in Australia and is now en route to start P&A work for Santos.
Other News
Abu Dhabi national oil company ADNOC has signed an agreement to award a 3% participating interest in the SARB and Umm Lulu offshore concession to Azerbaijani state oil company SOCAR.
Deltic Energy has been given more time to secure funds for its share of costs on the Shell-operated Licence P2252 and the upcoming Pensacola appraisal well.
Equinor is selling its 19.5% interest in production licences PL 048E, which is the Eirin field, and PL 1201 to PGNiG Upstream Norway.
Shelf Drilling North Sea has received notice from Havtil (Norwegian Ocean Industry Authority) that its application for an Acknowledgement of Compliance (AoC) for the 500-ft jackup Shelf Drilling Barsk has not been accepted.
Ventura Offshore announced Wednesday the first day of trading of the company's shares on Euronext Growth Oslo, under the ticker code “VTURA”.
Transocean has moved to acquire the remaining interest in a joint venture that owns the 10,000-ft 6th Gen semisub, Transocean Norge.
Waldorf Production UK plc and the wider Waldorf group have been pursuing options to address their ongoing liquidity challenges. However, the ultimate parent company is filing for administration.
Singapore-based Keystone Offshore has entered a Memorandum of Understanding (MOU) with the drilling company of China National Petroleum Corporation (CNPC) Offshore Engineering Co. Ltd (CPOE) for strategic cooperation to promote offshore asset transaction and utilisation jointly.
Eco (Atlantic) Oil & Gas Ltd. has signed an agreement to farm in and acquire a 75% working interest in Block 1 offshore South Africa from Tosaco Energy, becoming the operator of the block.
Major contract awards and capital commitments for the NEO Energy-operated Buchan Horst project in the UK North Sea are now expected in 2025, following the receipt of fiscal clarity in the UK after the election, according to Jersey Oil & Gas, one of the project’s partners.
Hungarian company MVM Group has entered into a sale and purchase agreement with Azerbaijani state owned company Southern Gas Corridor CJSC for the acquisition of a 5% stake in the production sharing agreement for the Shah Deniz offshore field in the Caspian Sea and a 4% stake in Azerbaijan Gas Supply Company Limited, which markets natural gas from Shah Deniz.
The Norwegian Ministry of Energy has announced three areas in the North Sea for companies to apply for exploration licences related to CO2 storage on the Norwegian continental shelf.
About two years after making a comeback to the Oslo Stock Exchange (Oslo Børs), offshore drilling contractor Seadrill Limited is now delisting its common shares from the exchange.
(source: Reuters)