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IEA: World oil demand will continue to grow this decade despite China's peak in 2027
The International Energy Agency announced on Tuesday that global oil demand would continue to grow until the end of the decade, despite a peak in China's top importer in 2027. Cheaper gasoline and a slower adoption of electric vehicles in the United States will support oil consumption. The IEA which advises industrialised nations did not alter its prediction that oil demand would peak in this decade. This is a stark contrast to the view of the producer group, the Organization of the Petroleum Exporting Countries, who say consumption will continue to grow and have not predicted a peak. A table from the IEA annual report in Paris shows that oil demand will reach a peak of 105.6 million barrels a day (bpd), by 2029, and then begin to decline in 2030. Global production capacity will rise by over 5 million barrels per day (bpd) to 114.7 millions bpd in 2030, according to the IEA's annual report. Conflict between Israel and Iran highlighted the risks to Middle East oil supplies, which helped send oil prices up by 5% on Friday to over $74 per barrel. The IEA stated that the latest forecasts indicate ample supplies until 2030 if no major disruptions occur. Fatih Bilo, IEA's Executive Director, said in a press release that the oil market will be adequately supplied in the coming years. Birol stated that recent events have brought to light the geopolitical threats to oil supply. China's oil consumption has slowed down after decades of being the world leader in global demand. It is also facing economic challenges and a major shift to electric vehicles. According to the IEA, oil consumption in the world's second largest economy will peak in 2027 due to a boom in EV sales, high-speed rail, and trucks that run on natural gas. The IEA predicted in February that China's demand may already have peaked for fuels used for air and road transport. The IEA has said that China's total oil demand in 2030 will only be marginally higher than it was in 2024. This is compared to the growth of 1 million bpd predicted in last year's IEA report. The IEA reported that lower gasoline prices in the United States and slower EV adoption have increased the 2030 oil forecast by 1.1 millions bpd compared to the previous prediction. Donald Trump, the U.S. president who returned to office in 2017, has been demanding lower oil prices from OPEC and taking aim at EVs by signing resolutions that were approved by legislators. (Editing by Tomasz Janovowski)
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Putin's energy point person says that more oil is needed globally
The Russian energy point person for President Vladimir Putin said that the world needed more oil, and OPEC+ was ready to make adjustments if necessary amid the conflict between Israel & Iran and a trade dispute. Crude oil prices have increased in recent days due to fears of a major Middle East war after Israel attacked Iran and U.S. president Donald Trump encouraged people to leave Tehran. Alexander Novak, Russian Deputy Premier Minister, said that the risks of disruptions in supply through the Strait of Hormuz and the global economic recovery as well as the trade wars launched by Washington had created volatility on the oil markets. "Historically, low prices have prompted an increase in demand for oil due to the continued competition between global fuels. In general, the world needs more raw materials," Novak said in an interview with the Vedomosti paper. He said that OPEC+ nations were "in constant communication, monitoring the situation on the market and are prepared to respond flexibly and quickly to any change in market conditions." Novak said, "If necessary in the future, the parameters of the transactions can be adjusted to ensure an optimal ratio between supply and demand." (Reporting and writing by Vladimir Soldatkin, Felix Light; editing by Barbara Lewis/Guy Faulconbridge).
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Dalian iron ore prices steady as traders evaluate mixed Chinese macro-data
Dalian iron ore prices were little changed Tuesday, as traders assessed mixed macroeconomic indicators and the resilient steel demand of top consumer China. The day-trade price of the most traded September iron ore contract at China's Dalian Commodity Exchange was 699 yuan per metric ton. As of 0704 GMT, the benchmark July iron ore traded on Singapore Exchange had fallen 1.24% to $92 per ton. Analysts at ANZ say that iron ore prices fell after data revealed that China's steel output dropped in May. The National Bureau of Statistics reported on Monday that China's crude-steel output fell 6.9% in May from a similar period a year ago to 86.55 millions tons. Official data released on Monday showed that new home prices in China dropped in May, continuing a two-year stagnation. This highlights the challenges facing this sector, despite several rounds policy support measures. Retail sales, which are a measure of consumption, have picked up, providing temporary relief in the midst of a fragile truce between China and the United States. Galaxy Futures, a broker, stated that while blast furnace production peaks, profits are high and steel mills do not feel the need to reduce production. According to Mysteel, as of June 12th, 60% of China's blast furnace steel mills reported positive margins. Mysteel data revealed that the volume of iron ore arriving at ports fell by 8.62% on a weekly basis to 23,85 million tonnes as of 13 June. Coking coal and coke, which are both steelmaking ingredients, increased by 0.7% and 1.0%, respectively. The benchmark steel prices on the Shanghai Futures Exchange were flat. Hot-rolled coil and rebar both gained 0.13% and 0.17% respectively, while stainless steel and wire rod were down almost 0.5%. (Reporting and editing by Harikrishnan Nair Rashmi aich; Michele Pek)
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Thames Water's crumbling assets are a sign of the challenges ahead as it fights to survive
The sheer volume of waste entering Thames Water’s Mogden Sewage Works in southwest London, overwhelms the 90-year old concrete tanks. This forces the utility to pump excrement directly into the River Thames 15 times per year. The plant, hidden by trees, is a symbol of the crisis in Thames, which provides water and sewage to 16 million people in southern England. The company, which was privatised in 1989 and is now heavily indebted, struggles to survive let alone deal with the crumbling infrastructure in its care. The U.S. Private Equity firm KKR walked away this month from a plan of injecting 4 billion pounds ($5.4billion) of equity. This leaves Thames' fate in senior creditors who are now negotiating a deal to rescue the water regulator Ofwat. The group, which includes investment-grade banks and hedge funds, has offered to write off 20% of their debt in exchange for a new environmental and investment regime. If there is no deal, the British Government - which already struggles with limited public finances – may be forced to take over a company that polluted waterways and paid dividends and bonuses for its former owners and managers. Investors are unnerved by the prospect of a collapse. This could increase borrowing costs for upgrading UK infrastructure such as electricity grids, transport systems and other UK infrastructure. The rescue plan would have its own financial and political costs. Creditors believe that turning around the company will require some leniency in the fines and penalties of 1.4 billion pounds Thames Water expects to receive from the regulator Ofwat, and the Environment Agency during this five-year period. A senior creditor in the plan said that "time is running out" and added that Ofwat had listened to their proposal now after months without engagement. We're just asking for a small amount of movement, and we are there. The creditor who spoke anonymously because the talks were private is one of over 100 creditors who hold debts totaling more than 17 billion pounds ($17.7billion) and are willing to invest in places like Mogden. Dave Chowings of Mogden Plant Manager, described the magnitude of the challenge during a recent site visit. He pointed to storm tanks that were the size of Olympic-sized swimming pools and said, "All this concrete is 90 years older." It's time to rebuild." DOOM LOOP KKR spent months assessing the amount of money needed to upgrade plants such as Mogden. Martin Young, a water industry consultant, said that Ofwat was at a critical moment when it came to finding a solution. It had been criticised for not being able to prevent the scandal. If they don't change, we run the risk being trapped in this doomsday loop. "That's a doomsday loop for Thames but you can also extend it out to the larger industry," he said. Ofwat announced that it has begun reviewing the submissions of senior creditors, including their turnaround plan, approach to financial stability and proposals for governance. A spokesperson stated that "our focus is to assess whether the plans are real, achievable and will bring substantial benefit for customers and the environmental," The government referred to an earlier statement that said Thames was stable, and it was closely monitoring the situation. POLITICALLY TOXIC The failures at Thames, according to critics, are the result of decades of political and regulatory failures, as successive governments have focused on reducing customer bills rather than driving investments. It would be toxic to the political system if Thames Water were given the special treatment that the creditor group wants in terms of regulation. Ash Smith, from the campaign group Windrush Against Sewage Pollution, said that the terms demanded by creditors proved that nationalisation was only the answer. He said that customers had grown tired of business owners who based their model on the ability to break the law. The senior creditors' 20% "haircut", which threatens to wipe out junior debt holders has angered them as well. Tradeweb data shows that the Thames Water 2040 bond has been bid at 68.99p on the pound. Thames is a big challenge for whoever takes it over. Mogden has struggled with the population growth and weather changes associated with climate-change. Thames spent 100 million pounds on the site over five years, and will spend the exact same amount in the next five. Four of the storm pumps on the Titanic were manufactured in the 1930s, but it's getting harder to locate people who can maintain them. Thames Water's Chief Executive Chris Weston wrote to a legislative committee on May 30, "Historically, the funding for our asset replacement has not been enough to offset our assets deterioration." Customers want clean rivers but don't want to pay for mismanagement. Laura Reineke is a 52-year-old charity worker who works for Thames Water. She said, "I think water has been cheap for far too long, but I am not willing to pay what we have already paid for." ($1 = 0.7362 pounds)
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Volvo Group and Daimler to form technology joint venture to reduce costs
AB Volvo, a European truckmaker rival, and Daimler Truck, a European truck manufacturer, hope to reduce costs and rely less on suppliers through collaborating on implementing a software defined vehicle program. Like automakers, truck and fleet manufacturers are racing to create vehicles with advanced technology while also battling the need to cut costs. Daimler-Volvo's new venture, Coretura, aims to reduce this dependence by developing a software defined vehicle platform. Daimler Trucks CEO Karin Radstrom said that the companies were looking to create a "standard industry". Radstrom stated that they are looking to see how to move away from the current situation where suppliers drive both costs and timelines. They will instead be looking to see what is the next generation software we should bring to vehicles. The Gothenburg venture will initially employ 50 people, and hopes to deliver its first connectivity platform by 2027. Further deliveries are expected towards the end decade. Johan Lunden is a Volvo veteran who has just been appointed as CEO of Coretura. He said, "Everything about the automotive industry revolves around software. He added that software will be a vital tool in achieving future sustainability, productivity and safety goals. Volvo Group and Daimler, while rivals, have worked together on various projects in the past, including hydrogen fuel cell and charging technology. Reporting by Marie Mannes and Jesus Calero from Gdansk, editing by Matt Scuffham
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WGC survey: Central banks prefer gold to dollar as reserves
A survey by the World Gold Council showed that central banks expect to see their gold reserves as a percentage of their reserve increase in the next five year while their dollar reserves will be reduced. Gold demand has increased significantly in the last three years, despite gold's price record-breaking rally. Gold reached an all-time record price of $3,500.05 per ounce in April. This is up 95% from February 2022, when Russia invaded Ukraine. WGC's survey was conducted between February 25 and may 20 and 73 central banks responded. 76% expect their gold to be higher five years from now compared to 69% last year. Nearly three quarters of respondents expect dollar-denominated reserve levels at central banks to fall in five years, compared with only 62% last year. WGC stated in a press release that "gold's performance during crisis times, portfolio diversification and the hedging of inflation are some key themes" driving plans to acquire more gold in the next year. WGC reported that central banks had accumulated over 1,000 metric tonnes of gold each of the past three years. This was a substantial increase from the average of 400-500 tons in the previous decade. WGC stated that "this marked acceleration of the pace of accumulation occurred against a background of geopolitical uncertainty and economic insecurity". WGC's survey shows that 95% of respondents believe central bank gold reserves will rise over the next year. This is up from 81% in the previous survey. The Bank of England continues to be the most popular place for gold reserves. The survey revealed that 59% of the central banks surveyed cited potential trade conflicts and tariffs as being relevant to their management of reserves. The council stated that a greater percentage of respondents came from developing and emerging economies (69%) than those who responded from advanced economies (40%)
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Analysts say that Le Vot and Stellantis' Picat could be included in Renault's search for a new CEO.
The sudden departure of Luca de Meo as CEO of Renault has sparked a search for a successor. Analysts have mentioned longtime insider Denis Le Vot, and Maxime Picat from Stellantis rival as candidates to continue the French carmaker's turnaround. Investors worried about Renault's future with de Meo gone, pushed the shares down by up to 8%. This was the biggest percentage drop in a single day since February 2022. Kering shares, where de Meo will be CEO, rose. Picat, the head of global procurement and supply chains for Stellantis, was in the running to be the CEO at the No.4 automaker in the world. 4 automaker. Antonio Filosa, one of two internal candidates he was competing against, won the race. Le Vot, the executive vice president of Renault, joined Renault after graduating and is now in charge of its Dacia low-cost brand. Analysts from French brokerage Kepler Cheuvreux believe both men are potential successors. JP Morgan analyst Jose Asumendi also noted Renault's "strong" bench of brand managers including at Dacia. He said: "We (...) would also envision external candidates (from other companies) like Stellantis Group, VW Group and Nissan, amongst others." Le Vot and Picat are both French citizens. They did not respond immediately to our requests for comment. Renault has declined to comment about its succession plans. Anyone who succeeds de Meo must be ready to go. While he revitalized Renault and restructured its strategic alliance between Nissan during his five-year tenure as CEO, it faces increasing competition from Chinese competitors. It is also smaller than other manufacturers, so it must rely on partnerships. De Meo's exit will increase concerns over Renault's independence, according to Jefferies analysts. This is a challenge that has always existed in an industry based on scale. Renault was the No. According to Felipe Munoz's data, the 15th largest automaker in terms of sales will be in 2024. This is down from 2023, when it was 14th. It is expected that Changan will surpass BYD in sales. Renault, under de Meo, teamed up with Google, Qualcomm, and China's Geely to make up for the small size of the company, as the auto industry struggles with the high cost of going electric. Although the partnerships have reduced costs, labour unions say they are a threat to in-house knowledge. INSIDER VS OUTSIDER Dacia has been a success under Le Vot, thanks to the Sandero and Duster. The subcompact Sandero, behind the Renault Clio, was Europe's number 2 selling car in April. According to research firm JATO Dynamics, the subcompact Sandero was Europe's No. According to research firm JATO Dynamics, the Duster SUV was ranked No. 7. Le Vot has held previous management positions in Turkey and Russia where he served as chief operating officer between 2011 and 2013, and he ran North American operations for alliance partner Nissan where he managed the launch of the Altima sedan in 2018 Picat spent all his career with PSA, and then Stellantis when the French group merged FCA in 2021. He headed the Peugeot brand in 2012 and oversaw two of the SUVs' bestsellers: the 2008 model and the 3008 model. A Stellantis insider who is familiar with Picat told us that while he did not know whether Picat was interested in a top position at Renault, he "wouldn't be surprised" to hear him speak with the French automaker. Source, who spoke under condition of anonymity as he wasn't authorised to speak publicly about the matter, said that it was normal for a CEO to consider other options after losing the race.
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Australian accused of mushroom killings had no motive to kill, court heard
The lawyer for an Australian woman accused in the murder of three elderly relatives by her estranged spouse using toxic mushrooms in a meal had told the court Tuesday that the victim's motive was not to kill the victims. Erin Patterson has been charged with the murders and attempted murders of Gail Patterson's mother, Donald Patterson's father, Gail's sister Heather Wilkinson as well as Heather's husband Ian Wilkinson in July 2023. The prosecution accuses the woman of scouring for poisonous death caps mushrooms, drying them, and then knowingly serving these mushrooms in portions of Beef Wellington, at her home, in Leongatha. This town has a population of 6,000, about 135 kilometers (84 miles), from Melbourne. Patterson denies all charges that carry a sentence of life imprisonment. Her defence called the deaths "a terrible accident" earlier. Colin Mandy, Patterson's lawyer, said on Tuesday that the prosecution's evidence that the accused and her estranged spouse Simon Patterson's relationship soured over a disagreement about child support was illogical. He told the court that "whatever we call these spats, disagreements, and frustrations," it does not provide a motive for murdering someone's parents. He said that the accused actually had a good working relationship with the Pattersons, and had even loaned hundreds of thousands to Simon Patterson's sisters in order to purchase property. On Tuesday, Nanette Rogers concluded the closing argument of the prosecution by accusing Patterson a trail of calculated deceptions before and after lunch. Rogers said that Erin Patterson had told so many lies, it was difficult to keep track of them. She's told lies after lies because she knew that the truth would expose her. After the closing statement of the defence, Justice Christopher Beale, the presiding judge will instruct the jury on how to proceed before the jury retires to deliberate a verdict. The trial that has gripped Australia for eight weeks and is expected to end later this month.
ADNOC-Led Consortium Makes $18.7B Bid to Buy Australia’s Santos
Australia's second-largest gas producer Santos said on Monday it intended to support an all-cash $18.7 billion takeover bid from an international consortium led by Abu Dhabi's National Oil Company (ADNOC), which wants to grow a global gas business.
Santos shares jumped 11% by the close on Monday, but that was well short of the 28% premium offered against their previous close, which analysts said reflected risks that the deal may not win regulatory approval in Australia.
ADNOC's investment arm XRG with Abu Dhabi Development Holding Company (ADQ) and private equity firm Carlyle proposed to offer $5.76 (A$8.89) per Santos share. The stock last traded at A$7.72.
Taking into account net debt, the deal gives Santos an enterprise value of A$36.4 billion, which would make it the largest all-cash corporate buyout in Australian history, according to FactSet data.
"For ADNOC, this is in line with their aggressive growth plans," said Kaushal Ramesh, vice president, gas and LNG research, at Rystad Energy.
The takeover bid emerged as oil prices reached multi-week highs as Israel and Iran traded air strikes, sparking concerns oil exports from the Middle East could be widely disrupted.
With Santos in its fold, the XRG-led consortium would gain control of two Australian liquefied natural gas operations - Gladstone LNG and Darwin LNG, as well as stakes in PNG LNG and the undeveloped Papua LNG. Santos' interests in Papua New Guinea are considered its most prized assets.
The company is also developing an oil project in Alaska, Pikka, due to start producing in mid-2026.
XRG said in June it aims to build a gas and LNG business with capacity of between 20 million and 25 million metric tons a year by 2035. Santos last year sold 5.08 million tons of LNG, with more than 60% of that from Papua New Guinea.
"What ADNOC really wants is the LNG assets, since they are inside the Asia Pacific basin. Since their plan is to expand in LNG, they will want assets close to where the future of demand lies," Rystad's Ramesh said.
Australian Treasurer Jim Chalmers, who makes the ultimate decision on major takeovers based on advice from the Foreign Investment Review Board, declined to comment on whether he had any concerns about an ADNOC-led takeover of Santos.
"It would be a big decision," he said in an interview with Australian Broadcasting Corp TV.
Santos said the latest offer came after it had rejected two previous proposals made by the consortium in March at $5.04 and $5.42 per share that were not made public.
Its board said if a binding offer is made it "intends to unanimously recommend that Santos shareholders vote in favour of the potential transaction, in the absence of a superior proposal."
The XRG consortium said it was negotiating to carry out due diligence with Santos on an exclusive basis before formalising the offer which would need at least 75% support from Santos investors.
"The proposed transaction is aligned with XRG's strategy and ambition to build a leading integrated global gas and LNG business," it said in a statement.
XRG, which was set up in November, last month acquired a stake in an offshore gas block in Turkmenistan. ADNOC has also struck several international deals for assets to sit under XRG, including gas and LNG interests in Mozambique.
Regulatory Hurdles Could Be Steep
Santos said the deal required approval from Australia's Foreign Investment Review Board (FIRB), Australian Securities and Investments Commission, National Offshore Petroleum Titles Administrator, PNG Securities Commission, PNG Independent Consumer and Competition Commission and Committee on Foreign Investment in the United States (CIFIUS).
XRG said it would maintain Santos' headquarters in South Australia, in a move to try and appease some regulators.
MST Marquee senior energy analyst Saul Kavonic said FIRB approval "may be a major risk to the deal" as Santos controls significant critical energy infrastructure in Australia.
Any spin-off of domestic infrastructure assets to potentially satisfy regulators would be difficult, as the facilities are saddled with decommissioning costs, he said.
Santos rejected a $10.8 billion offer from private equity-backed Harbour Energy in 2018 and walked away from talks with its bigger Australian rival Woodside Energy WDS.AX last year to create a possible A$80 billion oil and gas giant, saying it would look for other ways to bolster its value.
In February it reported a nearly 16% fall in underlying annual profit in 2024 and cut its dividend by 41%.
While Santos has long been a takeover target, Kavonic said a competing bid "is very unlikely as only ADNOC may be willing to pay such a premium to realise their global LNG ambitions."
($1 = 1.5425 Australian dollars)
(Reuters - Reporting by Scott Murdoch in Sydney and Emily Chow in Singapore, additional Shivangi Lahiri in Bengaluru; Editing by Kim Coghill and Sonali Paul)