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Russell: The huge increase in the price of jet fuel is a sign that Iran's war will cause more pain.
The sudden increase in jet fuel costs in Asia is a warning sign that the economic impact of the Middle East war is soon to be felt by energy consumers. Jet fuel prices in Asia's main trading hub, Singapore, rocketed by 72% on Wednesday to a record $225.44 per barrel, due to concerns about future supplies, given the disruption of approximately 20 million barrels of crude oil and refined products shipped through the Strait of Hormuz. Jet kerosene - The spot price The price of oil has risen 140% from the closing price of $93.45 per barrel on 27 February, the day before Israel and the United States launched their aerial bombing campaign. The market is not convinced that the U.S. president Donald Trump's efforts to ensure that tankers can transit the narrow waterway, which carries around one-fifth the global oil consumption are worth it. Jet fuel, which is stored in special tanks and has a low inventory level, is the part of crude oil that's most vulnerable to supply disruptions. Due to the surging spot prices, the profit margins for producing a barrel jet kerosene using Dubai crude have jumped up to over $100 per barrel. This level suggests that market participants expect a severe supply in the coming weeks. Jet fuel prices are likely to have risen far more than what would be justified by the worst-case scenario of a prolonged closure of the Strait of Hormuz. It's important to note that Asian refiners are showing signs of increasing stress. Some plants have reported reducing their operating rates in order to conserve crude stocks, while other plants have brought forward maintenance. Two sources familiar with this matter confirmed on Wednesday that India's Mangalore Refinery & Petrochemicals has suspended its fuel exports. About 40% of the refined fuel produced by the state-run refiner in Karnataka's southern state is exported. Other refineries are likely to follow MRPL, particularly those in India. India sources most of its crude oil from the Middle East, and will be battling to find alternatives suppliers on short notice. China has asked companies to stop signing new contracts for the export of refined fuel and try to cancel any shipments that have already been committed. This was reported by several sources in industry and commerce on Thursday. This would have a dramatic effect on regional markets if confirmed, as China has a large crude oil stockpile and spare refining capacities. MEDIUM CRUDE SHORTAGE The oil that doesn't make it through the Strait of Hormuz tends to be medium-sour, which is prized for the higher yield of middle distillates like jet kerosene or diesel. These grades are lighter, and produce more distillates like gasoline and naphtha. Even if refiners maintain their processing rates, it is possible that they will still be unable to meet the demand for middle distillates and end up producing too many light distillates. On Wednesday, the profit margin in Singapore for producing a barrel of gasoil (the building block for jet fuel and diesel) jumped by 30.4% to $47.69. The price of oil has doubled from February 27 when it closed at $21.90 per barrel. It is now at the highest levels since the Russian invasion of Ukraine in February 2022. These margins will soon reach retail fuel costs in Asian countries that have?market pricing on products like gasoline and diesel. Fuel prices rising sharply will cause inflation, affect consumer spending and halt some capital investments. Central banks may even consider raising interest rates. The bigger problem is that, even if the conflict between Iran and the West is resolved in the next few weeks with the result of free movement of vessels through the Strait Of Hormuz the damage caused by the current disruption has now been locked into the supply chains. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. ROI provides data-driven, thought-provoking analysis on everything from soybeans to swap rates. The markets are changing faster than ever. ROI can help you keep up. Follow ROI on LinkedIn, X. These are the views of the columnist, an author for.
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China targets commodity overcapacity again
China said on Thursday that it would take action against overcapacity, particularly in the?steel and oil refining industries?, and other heavy industries. This is a reiteration of some of the promises made last year, as the largest commodity producer struggles with persistent oversupply. According to a report by the national planner, the National Reform and Development Commission (NDRC), the country will reduce its capacity in the steelmaking, oil-refining, and other unspecified sectors in a planned manner. The NDRC said that capacity would also be managed for copper smelting,?the alumina, and coal chemical industries. However, it did not say explicitly that it would be'reduced', like it did with steel and oil refinery. There were no?specific?plans or?numerical?targets for any industry. Beijing has been aiming to reform its steel industry for many years, but this year's language is less specific than the language used at the National People's Congress' last annual meeting. Beijing pledged to restructure its steel sector in March 2025 by cutting production. A number of copper smelters that were planned for late last year have also been shelved. STOCKPILING China relies heavily on the?importation of?raw material such as copper concentrate and iron ore. It has tried to increase domestic?supply in order to reduce these incoming shipments. China announced on Thursday that it will intensify its efforts to explore, stockpile and develop strategic mineral resources. China said that it would also?continue strengthening and building its secretive strategic commodities stockpiles, without providing any details. Reporting by Amy Lv, Lewis Jackson and Tom Hogue; Editing by Christopher Cushing & Tom Hogue
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Media report that a Pakistani man claims Iran forced him to plot Trump's murder.
Media reported that a Pakistani man who was accused of plotting to kill Donald Trump told jurors Wednesday that he had not "willingly" worked with Iran's elite Islamic Revolutionary Guards Corps in order to devise the alleged plan. Asif Merchant was accused by the Justice Department of trying to recruit Americans in the United States for a plan that targeted Trump and other U.S. political figures in retaliation against Washington's killing Qassem Solimani, the Corps' chief commander. The Corps plays a key role in Iran with its combination of military and economic power, and intelligence network. Merchant told a court in his trial for terrorism charges and murders-for-hire that he was reluctant to take part. He said he did it to protect his family. According to a?letter?sent to the judge of the case from 2024, prosecutors rejected Merchant's?claim citing a?lack evidence supporting a real duress or?coercion. Merchant told the newspaper that he was never ordered to kill anyone in particular, but his Iranian handler had named three individuals during conversations in Tehran. Along with?Trump's name, there was Joe Biden who was the president of the United States at the time, and Nikki Haley who unsuccessfully ran for the Republican nomination in the 2024 presidential election. Merchant's lawyers did not respond immediately to a request for comment. The White House didn't immediately respond to a request for comment. The trial began last week, just days before Trump ordered the strikes against Iran that Israel carried out to kill Supreme Leader Ayatollah?Khamenei as well as top officials of Middle Eastern nation. Trump said, "I got Khamenei before he got to me," when he spoke on Sunday with ABC News about a joint U.S. and Israeli operation that killed Khamenei. Tehran has denied allegations that it targeted Trump or other U.S. officials. Reporting and editing by Donna Bryson, Clarence Fernandez and Jasper Ward.
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China's economic promises lead to a spike in iron ore prices
Iron ore futures rose on Thursday after China, the world's largest consumer, announced a series of economic measures to boost steel and iron ore demand. These included promises?to increase domestic consumption,?"curb overproduction" and energize the housing market. As of 0234 GMT, the most-traded contract for May iron ore on China's Dalian Commodity Exchange was trading 1.93% higher. It was 764 yuan (US$110.95) per metric ton. The benchmark iron ore for April on the Singapore Exchange was $101.04 higher, or 1.34% more. Investors are watching the annual Chinese parliamentary meeting and the 15th five-year Plan to gauge the demand outlook for steel. Beijing's economic growth goal for 2026 is 4.5%-5%. This is a slight drop from the 5% achieved last year, but still within analysts' expectations. Beijing has room to address weak domestic consumption as well as curb overcapacity in industry. The world's largest steel exporter also announced that it would increase efforts to eliminate outdated production capacity, and pledged to strengthen strategic resources reserves. China will also strive ?to stabilise the real estate market, take steps to improve housing supply and better utilise existing housing stock, including ?by purchasing unsold homes for use as government-subsidised housing. The?prolonged housing?market of the country used to be its largest consumer of steel. However, it has now ceded that position to manufacturing. Stimulus aimed at the housing market could boost steel and iron ore consumption. Coking coal and coke both fell by 0.72% and 0.81% respectively. The benchmark steel prices on the Shanghai Futures Exchange rose. The rebar price rose by 0.26%. Hot-rolled coils increased by 0.16%. Wire rod remained stable at 0.99%. Stainless steel rose 0.36%.
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Asian shares rise, led by KOSPI. Treasuries drop as war fears ebb.
Asian shares rose on Thursday, with a drop in U.S. Treasuries signaling a tentative return of risk appetite which has been severely impacted by the escalating conflict?in the Middle East. South Korea's KOSPI index recovered from its steep losses during the previous?session?after a Wall Street rally in hopes that the United States will negotiate with Iran to end hostilities. Gold and oil traded higher. China's growth target was set at a slower pace in an economic plan that is closely monitored. The U.S. Senate backed Donald Trump's campaign against Iran. This suggests that there will be no quick resolution of a war which has roiled the financial markets, transport networks and energy production. In a note, Paco Chow, a dealing manager for Moomoo Australia & New Zealand, stated that "Geopolitical risks can flare-up again very quickly." "The outlook is cautious until oil flows return to normal." The broadest MSCI index of Asia-Pacific stocks outside Japan rose 2.9%. South Korea's KOSPI topped regional benchmarks, with a 10.4% increase. Japan's Nikkei also rose 2.9%. The yield on the benchmark U.S. 10 year?notes increased 2.7 basis to 4.109%. Meanwhile, the yield of 30-year bonds rose 3.1 basis to 4.7479%. On Wednesday, the U.S. and Israel war?on Iran grew dramatically after a 'U.S. A submarine sank a warship of Iran and NATO air defences destroyed a ballistic missile that was fired by Iran towards Turkey. The equity markets of Europe and the U.S. were comforted by Trump's promise to protect shippers, and a New York Times article that Iranian intelligence had contacted the CIA in early wartime to discuss a way to end it. Iran rejected the report later, and in the U.S. the Republican-led Senate blocked a bipartisan resolution to end the air war. Oil prices continued to rise due to concerns about the energy supply. U.S. crude climbed 3.01% to $76.21 a barrel. Brent rose 2.49% to $83.43 a barrel. Spot gold rose by 0.84%, to $5178.42 per ounce. Henry Russell, a London-based economist at ANZ, stated on a podcast that the market is still largely driven by headlines. We're also likely to see more volatility in the future. "We are still seeing energy supply facing constraints, with production facilities being taken offline. More will follow if the conflict continues." China has set its 2026 economic growth goal at 4.5% to 5%. This is a slight drop from the 5% rate achieved last year. However, this still leaves room for efforts aimed at curbing industrial overcapacity, and rebalancing the economy. Beijing released its 15th 5-year plan and pledged investments in high-tech industries as well as a "notable increase" in household consumption. China's blue chip CSI300 index gained almost 1% during early trading. The Shanghai Composite Index also added 0.4%. After recent gains due to safe-haven demand, the greenback has taken a break. The dollar index (which measures the greenback in relation to a basket of currencies) was unchanged at 98.81. The Japanese yen rose 0.2% to 156.75 dollars. Bitcoin fell by 0.78%, to $72,774.53, while ether dropped by 0.94%, to $2,130.43.
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Prices of oil rise as the Iran conflict intensifies
Oil prices rose Thursday as a result of a growing concern about the closure of the Strait of Hormuz. The U.S. Iran war is choking off vital Middle East oil &?gas supplies, while production facilities are limiting output. Brent crude was trading at $83.07 a barrel, up $1.67 or 2.05% by 0141 GMT. U.S. West Texas Intermediate Crude rose by $1.94 or 2.60% to $76.60. The U.S. - Iran war expanded on Wednesday, after a U.S. attack hit an Iranian warship near Sri Lanka. U.S. Senate Republicans also backed Donald Trump's campaign against Iran. They voted against the?bipartisan Resolution aimed at stopping the air war, and requiring Congress to authorize hostilities against Iran. Iraq, the second-largest crude oil producer in the Organization of the Petroleum Exporting Countries (OPEC), has reduced its output by almost 1.5 million barrels per day due to lack of storage and export routes, officials have said. Qatar, the largest liquefied gas producer in Gulf, declared force majeure for gas exports Wednesday. Sources say that a return to normal production levels may take at least one month. The Strait of Hormuz has been a major conduit for energy, accounting for almost a fifth of the global consumption. It is now on its fifth day of near-halting shipping due to the war against Iran and Tehran’s retaliation. The British maritime trade operations agency has reported that a large explosion was heard and witnessed by the captain of a tanker which was anchored 30 nautical miles south of Kuwait’s Mubarak al Kabeer. A small craft could be seen later leaving the area. J.P. Morgan stated in a client letter that Iran has not targeted the most critical energy infrastructure, but it is keeping the shipping risks extremely high. It estimates that approximately?329 oil ships are stuck in Gulf. The report added that "storage capacity in Gulf Cooperation Council nations and current energy prices are factors that limit the U.S.'s campaign." Referring to the political and economic alliance between Saudi Arabia, the United Arab Emirates and Qatar, Kuwait and Bahrain. J.P. Morgan stated that most oil?fields could be restarted within a few days. J.P. Morgan also said that full capacity is usually restored in two to three weeks. The primary constraint is not geology, but rather logistics. (Reporting and editing by Chris Reese, Clarence Fernandez, and Katya Glubkova from Tokyo)
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McGeever: Risk of dollar liquidity shock highlighted by Mideast crisis
This week, investors have been rushing to buy dollars amid the turmoil in the Middle East. It is a reminder of the difficult transition from a dollar-centric worldview towards a multi-polar, fractured financial system. Investors are seeking relative safety in the most liquid asset of the world, the dollar. Equity indices, which were the best performers in the first half of the year, are now in a slump: South Korea's KOSPI has fallen by nearly 20% in just two days. The dollar has risen by as much as 2 percent in just two days and Treasury yields have also soared. Matt King, founder at Satori Insights says that this sudden dollar surge has nothing to do with a sudden change in growth or inflation expectations. Money flow is the issue - investors are scrambling for liquidity as they unwind the speculative frenzy that has inflated many markets over recent months. Investors in a foxhole, despite all their fears of dollar devaluation, still need and want dollars. Will Dollar Demise remain 'Glastic'? This raises a wider question about what will happen in future crises, if the erosion of the dollar dominance continues. Since the advent of the Euro in 1999, and China's entry into the World Trade Organization (WTO) in 2001, the dollar has steadily declined as the leader of global trade, finance, and foreign exchange reserves. According to the International Monetary Fund, the U.S. dollar's share in global foreign exchange reserves has dropped to 57% from 70% at the beginning of the 2000s. Because the erosion was smooth and gradual the dollar liquidity continued to rise and the global financial systems built buffers for liquidity squeezes, after the historic shocks in 2008 and 2020. The U.S. alliances and rules-based order that once lubricated the wheels of world markets and the economy with dollar liquidity are now crumbling. In the last year, major trade, political, and military conflicts erupted, making the investment landscape in the world extremely risky. Barry Eichengreen is a professor at the University of California Berkeley and a renowned expert in international capital flows. He will be publishing his book, "Money Beyond Borders": Global Currencies From Croesus To Crypto, on March 17th. Eichengreen examines the 2,500 year history of money and the reasons why certain currencies are important and then disappear. He also assesses the future of the dollar, as well as the role that cryptocurrencies and blockchain will play. He argues that the dollar is still the dominant currency for FX reserves, international trade, finance, and invoicing. However, he worries that the decline of the dollar on these fronts could accelerate. Eichengreen: "I am much more concerned than I used to be in the past." There is no obvious alternative to greenbacks, so we must continue to pray that the transition will be very gradual and seamless. We're now learning, however, that things are not as smooth anymore. "A DELICATE POINT in Time" The last few days were anything but smooth and have shown how desperately the world needs dollars. According to the Bank for International Settlements, 89% of all FX transactions are on one side. This is the highest level in 25 years. The euro is the second most traded currency, accounting for?29% all FX transactions. Additionally, the dollar is responsible for about half of all international payments. According to a Federal Reserve report, if you include intra-eurozone payments in the calculations, this share increases to about 60%. About 55% of bank claims in foreign currencies and international are denominated as dollars, while 60% of liabilities have the same currency. It is estimated that 20% of oil trade in the world now takes place in currencies other than dollars, like the euro or the Chinese yuan. That means that around 80% of the world's crude oil trade is still in dollars. Eichengreen has said that he believes a multi-polar financial and monetary system for the global economy would be beneficial to the world. Just as a diverse ecosystem is healthy for the planet. "But we are not yet at a stage where other sources of liquidity in the global market could replace the dollar. Eichengreen: "We are now at a delicate time." This seems like a bit of an understatement at a time where trade wars, and even real wars, are raging. 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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Missouri's first judge approves Bayer's Roundup $7.25 billion settlement
The judge of a state court in Missouri gave the initial approval on Wednesday for a $7.25 billion settlement that would resolve thousands lawsuits alleging Bayer Roundup weedkiller causes cancer. Judge Timothy Boyer of St. Louis has given preliminary approval to a deal between a German?company? and attorneys who are seeking to represent people across the country who claim Roundup exposure is the cause of their non-Hodgkin lymphoma. The agreement is designed to resolve the majority of the approximately 65,000 claims that are still pending before federal and state courts. Boyer refused to heed the request of other lawyers to delay his decision to allow them to review the agreement. Boyer said the proposed payout was "significant", but he will hear from those affected before making a final decision at an August hearing. Plaintiffs claim that Roundup’s active ingredient, glyphosate causes cancer and that they developed non-Hodgkin’s lymphoma or other types of disease after using it at home or in the workplace. Bayer, who acquired Roundup as part of its $63 Billion purchase of Monsanto agrochemicals in 2018, said that decades of studies had shown Roundup and Glyphosate to be safe and not cause cancer. The proposed deal does not require Bayer's admission of liability or wrongdoing. A COMPANY MAY BACK OUT According to court records, the initial approval triggers an agreement provision that requires Bayer to pay $500,000,000 into a fund in 10 days, to cover costs like notifying the class members of the deal. It also opens up a window where class members can object to the deal and opt out. The company may?backout if too many plaintiffs refuse to?participate. Bayer's Chief Executive Bill Anderson stated on a conference call with investors that Bayer requires "the vast majority" of plaintiffs to be involved. Bill Dodero is Bayer's senior Vice President and General Counsel. In a press release, he said that the company was "confident" that the well-financed and long-term class settlement plan supported by plaintiffs' lawyers would be approved by the court. Christopher Seeger, an attorney who helped negotiate the settlement, and is seeking to represent the entire class, stated in a press release that Boyer’s ruling was a significant step forward and came 'as the U.S. Supreme Court weighed a case which could have a major impact on the litigation. The U.S. Supreme Court will hear arguments late in April on a case which could severely limit litigation if the court agrees with Bayer and says that federal law regulates what pesticide manufacturers put on their labels. The company claims that the state court claims that it failed warn about Roundup’s risks were barred because the US Environmental Protection Agency has not found such a risk and does not require such a warning. Future Claims Covered The settlement, if approved, would create a program that pays claimants over a period of 21 years. It is meant to settle claims for both those who have already sued as well as those who were exposed before the agreement was made and who are diagnosed with cancer in the future. Two groups of lawyers representing more than 20 000 Roundup claimants urged Boyer not to grant preliminary approval. They expressed concern about the way the deal would restrict the ability to sue people who had been exposed to Roundup, but had not yet developed cancer. Boyer stated on Wednesday that if lawyers need more time, they can ask for it during the approval procedure. Paul Napoli is one of the attorneys who expressed concerns over the deal. In a statement, his firm said that it was "concerned" about how this decision would unnecessarily lengthen the claims process, and delay the justice and fair compensation for the thousands of people who have been injured by Monsanto Roundup.
Reliance shares lead the rise in Indian stocks after a three-session decline
Indian shares rose in morning trading on Thursday. A rebound in Reliance, and a rally in global stocks helped the market. Risk appetite had improved after the war in the Middle East, which had dragged down shares for the remainder of the week. As of 10:02 a.m. IST, the Nifty 50 index was up 0.61% to 24,631.3, and the BSE Sensex gained 0.54%, reaching 79,530.98.
Over the last three sessions, both benchmarks dropped by about 4%.
Avinash Gorakshakar is the director of research for Profitmart Securities. He said that while the markets may have staged a partial rebound after the recent sharp fall, it's not a trend reverser as the overhang caused by higher crude prices still remains.
Gorakshakar stated that the pullback in the Middle East conflict has created more attractive entry points for domestic sectors.
Fourteen out of 16 major sectors posted?gains. Small-caps, which are more focused on domestic markets, rose by about 1%.
Reliance Industries, the index heavyweight, rose by 3% following a drop of 4.5% over the previous three sessions.
Analysts led by Dayanand Mittal at JM Financial said: "We think the recent correction in Reliance's stock price is overdone. The recent spike in crude and liquefied gas prices won't negatively impact Reliance." Reliance's share price and that of upstream oil companies like ONGC and Oil India drove energy and oil and -gas indexes 2% upwards. MSCI's broadest Asia-Pacific index outside Japan rose by?2.6% after falling?8.6% in the previous three sessions. After overnight gains on Wall Street following a New York Times article stating that 'Iranian Intelligence operatives indirect reached out to CIA a Day?after attacks, the rise was followed by gains in the next day. U.S. officials are sceptical about the prospect of a near-term deescalation. Crude oil prices rose 3.2% to $84 per barrel after ending Wednesday with little change. Higher oil prices are usually negative for India, the third largest crude importer in the world.
Ramky Infra, a stock that rose 13% among stocks after receiving a large order of 14.02 billion rupees. (Reporting and editing by Vivek M and Bharathrajeswaran, Sumana Nandy and Sonia Cheema; Harikrishnan Nair).
(source: Reuters)