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As the Iran war intensifies, stocks are gaining but will still suffer steep losses each week
European stocks were up while U.S. Futures were little changed on Friday, as oil prices stabilized. Global equities are still on course for their steepest drop weekly in a decade - the Middle East conflict is showing no signs of abating. The dollar, which had risen by around 1.4% in the past week, is now 'flat'. Treasuries and Asian stocks both steadied, as investors awaited important U.S. employment data due later that day. Matt Britzman is a senior equity analyst with Hargreaves Lansdown. He said that global markets were looking more positive, even if just a little, today. This was largely due to a drop in oil prices following a volatile energy market week. In early European trading the STOXX 600 index in Europe rose 0.45%, while Germany's DAX grew 0.75%. The FTSE 100 of Britain also increased by 0.48%. The futures on the U.S. S&P 500 index and Nasdaq index were unchanged. Investors were frightened by the possibility that the U.S. and Israel war against Iran could last longer than originally anticipated. They sought safety in cash. The MSCI world stock index is on course to fall 2.6%, the largest weekly drop since March 2025. The traders also began to price in the more hawkish expectations of major central banks. They were frightened by the prospect that inflation would rise if energy prices continue to spike. The yields on U.S. Treasuries jumped 18 basis points, the highest in almost a year, and the dollar is set to make its biggest weekly gain in sixteen months. OIL STEADIES as U.S. mulls action Oil prices stabilized on Friday, as investors weighed up U.S. attempts to limit fuel price increases. This helped ease market concerns over inflation and economic damage. Brent crude futures are roughly stable at $85.60 a barrel, the highest level since July 2024. They are on course for a weekly increase of 18%, the biggest since Russia's full-scale invasion in Ukraine in February 2022. U.S. crude remained flat at $81 per barrel, bringing its weekly gain up to over 20%. A senior White House official revealed that the U.S. Treasury Department was considering actions to curb the rise in energy prices. The U.S. granted a temporary waiver on Thursday to allow India the right to purchase Russian oil. Investors are increasingly concerned that the spike in oil prices will continue, pushing inflation up around the globe, said Jim Reid of Deutsche Bank, the global head of macro-research. He said: "The truth is that we continue trading competing headlines with risk appetite swinging in and out over the past 24 hours." High-Flying Trades TUMBLE MSCI's broadest Asia-Pacific share index outside Japan rose by 0.2% but was expected to drop?6% this week. This would be its biggest weekly?drop in six years. South Korea's Kospi is on track to have its biggest weekly drop in six years, with a 10.5% decline. This is part of an ongoing trend where previously high-flying investments are now falling as investors look to reduce their exposure to global markets. The U.S. dollar paused Friday, but it was still on course for a gain of up to 1.4% on a weekly basis. This was boosted by the demand for safe havens and lower expectations about rate easing in the U.S. The euro, still vulnerable to an increase in energy costs, is expected to drop 1.7% this week. Investors now expect the Federal Reserve to ease by 40 basis points this year, down from 56 bps last week. Investors expect the European Central Bank to raise rates before year's end. At 8:30 am ET, 1330 GMT, the U.S. government will release potentially market-moving data. This includes non-farm payrolls. ET). The yield on the benchmark 10-year U.S. Treasury bonds was last stable at 4.15%. Gold spot was unchanged at $5,106 per ounce in other parts of the world, but it was heading for a weekly decline of 3%. Reporting by Harry Robertson, Rae Wee and Jamie Freed in Singapore. Editing by Muralikumar Anantharaman and Kate Mayberry.
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Singapore's Aster declares Force Majeure due to disruption of raw material supply
Aster Chemicals and Energy, a major Singapore refiner and petrochemical company, has declared force majeure regarding supplies. The reason given was a disruption in raw materials due to the Middle East conflict. The joint venture of trading major Glencore and Indonesia's Chandra Asri operates ?a 237,000 barrel-per-day refinery and 1.1- million-metric-ton-per-year cracker in ?Singapore's Bukom and Jurong Island. The?spokesperson said that "this step is administrative and is a result of a thorough assessment of the potential consequences on our ability to?fulfill obligations to customers." The products were not affected by any?details. The spokesperson responded to a question by saying that the reduced run rate was across all of our plants in order to manage feedstock responsibly and maintain safe operation, but did not comment on the specific rates. Two sources, as well as a letter that was reviewed, said that ethylene and propylene were covered by the force majeure, but the company did not comment. The?two sources said that Aster's Steam?cracker has been running at about 50% since it was restarted in February after a prolonged maintenance period and force majeure last August.
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Asia's options for diversifying energy dependence from the Middle East are limited
Asian energy buyers are scrambling for alternatives, as the Iran War creates an unprecedented disruption in supply. However, the region's options to reduce its heavy dependence on Middle Eastern oil are limited. The top crude-importing region in the world buys 60% its oil and petrochemicals feedstocks from 'the Middle East.' This war, which began with a slew of israeli and american attacks on Iran a week ago, has driven up?global fuel prices and threatened to hurt economic growth. Refiners in Southeast Asia, China, and other parts of Asia, are unable to get Middle Eastern crude. They are forced to look for alternatives, which can take weeks or even months, and some have cut production. China, Thailand and Vietnam suspended the export of oil products this week while Vietnam stopped crude exports to Australia. Alternative sources are not without their drawbacks. These include distance, refinery configurations and long-term contracts. Orders need to be made three months ahead of time for oil that is shipped from West Africa or the Americas. Comparatively, it takes about 25 days for the oil to reach China through the Strait of Hormuz. The refineries must also adjust their operations to accommodate the change in crude grade. If you add a new crude to the refinery you must change the cutoff point (boundaries that separate crude into different products). You must change the gasoline blend. You have to make a number of changes. Adi Imsirovic is the director of Surrey Clean Energy, and he said that it was a lot of work. He said: "This is the reason why diversification in many countries has been poor." Energy Aspects analyst Richard Jones stated that some governments might seek diversification on the margins but many Asian refiners were tied to Middle East contracts. He said that it was not possible to replace even a small portion of the 16 million barrels of Middle Eastern crude oil arriving in Asia each day with supply from the Atlantic basin. BIG?ASIAN CUSTOMERS In Japan, where 95% of the oil it imports comes from the Middle East, after Moscow invaded Ukraine, old refineries are optimized for Middle Eastern crude. Refiners are reluctant to invest in upgrading their facilities so they can compete with new sources, such as Canada's heavy TMX. MuyuXu, senior analysts at Kpler said that Japanese refiners may blend lighter WTI crude or West African crudes with heavier grades of crude from the Americas in order to approximate the characteristics Middle Eastern medium-sour. She said, "The caveat is however the logistical complex and refinery operational risk." Japan has a near-term stockpile that can last approximately 250 days. China, the world's largest importer, has smaller reserves, about 78 days worth, but a much more diverse supply profile. It sources roughly half its oil from Middle East countries, including Iran, which is where it has always been the biggest buyer. China buys oil from Russia, despite the western sanctions. It also purchases from mainstream producers. India, which has only 25 days worth of oil reserves and relies on the Middle East for more than half of its oil needs, is scrambling to come up with alternatives. Washington gave it this week a one-month reprieve from buying Russian oil following pressure by President Donald Trump to reduce its purchases of Russian oil. "GET SOLAR PANELS" The market for liquefied gas is smaller and more competitive. The war in the Middle East has caused the No.2 producer Qatar to temporarily halt its production. India is now rationing gas for industrial customers. Michal Meidan is the head of China energy at the Oxford Institute for Energy Studies. He said that the situation could result in fuel switching and demand destruction. She said that South Asian countries should limit their gas consumption and adopt the Chinese model, which relies on coal and renewable energy. Tim Zhang, founder and CEO of Singapore's?Edge Research said that Asia could diversify or increase its use of conventional fuels, such as nuclear energy, renewables, and other non-fossil sources. Surrey's Imsirovic says a prolonged disruption may prompt governments to rethink their dependence on Middle East oil. It's going be like something similar to the Asian Currency Crisis. He said that people would have to seriously rethink their decisions. Buy some solar panels in sunny Asia and an electric vehicle. "End of story."
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China tightens restrictions on BHP cargoes, resulting in a rise in iron ore prices
Prices of iron ore rose on Friday as China, the world's largest consumer, tightened restrictions on purchasing some seaborne cargoes. This sparked concerns about supply that outweighed falling demand. The most traded?iron ore on China's Dalian Commodity Exchange (DCE) ended daytime trading 1.38% higher, at 772 Yuan ($111.90), a metric tonne. This contract has risen 2.54% in the past week. As of 0725 GMT, the benchmark April iron ore contract on Singapore Exchange rose 1.53% to $101,55 per ton. The contract is up 3.24% this week. Both contracts reached one-month highs during the session. People with knowledge of the situation said that China's iron ore 'buyer' told traders to purchase fewer seaborne shipments of BHP's flagship product, including Mac fines and Newman Fines, this week, as a contract dispute that has lasted for months continues. China has already banned domestic steelmakers and traders to buy BHP's Jimblebar fins since September, and in November extended the ban to include another BHP brand called Jinbao fins. BHP, the third largest iron ore producer in the world and a major supplier of the global market, has been cited by traders as the cause for concern over the availability of some seaborne cargoes. The gains were however limited due to a faltering market and lingering production limitations at North China's steel mills. Mysteel, a consultancy, reported that the average daily hot metal production, which is a measure of iron ore consumption, fell by 2.4%, to its lowest level since December, to 2,28 million tons on March 5. According to a report presented at the annual parliament meeting, China reiterated their commitment to combat overcapacity, which could reduce demand for feedstocks. Coking coal and coke, two other steelmaking ingredients, rose by 1.86% and 0.47% respectively. The majority of steel benchmarks traded on the Shanghai Futures Exchange advanced. Rebar gained 0.26%. Hot-rolled coils gained 0.31%. Wire rod increased 0.06%. Stainless steel fell 0.49%. $1 = 6.8992 Yuan (Reporting and editing by Rashmi Cheema and Sonia Cheema; Beijing Newsroom, Ruth Chai, and Lewis Jackson)
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India orders refiners in order to increase LPG production
A government order revealed that India has invoked emergency powers to increase production of LPG in order to prevent a shortage after supply disruptions caused by the Middle East Crisis. Last year, the world's second largest importer of LPG consumed 33.15 millions metric tons of LPG. This is a mixture between propane and butane. About two-thirds (or 85-90%) of LPG is imported, and most of it comes from the Middle East. The order, issued late Thursday night, asked all oil refiners to "maximise their propane and butane supplies and use them for the production of LPG". The government has asked that producers make LPG and propane available to the state refiners, Indian Oil Corp., Hindustan Petroleum Corp. and Bharat Petroleum Corp. for distribution to consumers. Government data showed that there are 332 million LPG users in the country. Reliance Industries Ltd. would be forced to reduce the production of?alkylates (a component of gasoline blend) by requiring propane and butane to be diverted for LPG. According to LSEG, Reliance exported about?four alkylates per month last year. The government also ordered refiners to stop diverting propane and butane from petrochemical production. A trade source stated that diverting propane and butane to LPG production would hurt margins for petrochemical firms who?make products like polpropyline?and alkylates?, since they sell better than LPG.
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India's Jindal Stainless warns of possible delays in Middle East shipment
India's Jindal Steel said on Friday that there could be some delays in steel shipments in the Middle East in the near term because of?the conflict? in the region. The Middle East is a small part of the country's export market, but the company remains committed to serving the region. Abhyuday Jindal is the managing director of Jindal Stainless. He said that given the escalating weather conditions, there could be a few?delays? in shipment arrivals. This may be due to the extended?transit times across certain international shipping and airspaces. He said that it would be premature to comment on any type of surcharges. Jindal stated that the company closely monitored the changing geopolitical environment and was prepared to minimize disruptions to its supply chain. "One area of focus is currently the availability 'of certain industrial gasses and raw materials such as dolomite and limestone, sourced (from the Middle East)",?Jindal said, adding that the company maintains a?adequate?stock?levels but was prepared to tap into other sourcing options in order to avoid any impact on production. Several steel companies have also prepared themselves to pay higher gas prices. Reports on Thursday indicated that India's Adani Total?Gas had raised its prices for industrial clients due to a lower supply of gas in the Middle East. Reporting by Neha?Arora; Editing by Mayank?Bhardwaj & Raju Gopalakrishnan
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Bloomberg News: Trump officials are excluding Treasury Oil Futures Trading for the time being
Bloomberg News reported on Friday that the 'Trump administration has ruled out using the Treasury Department to trade oil futures for the time being, citing an individual familiar with the issue. The report stated that officials discussed getting the Treasury Department to get involved but believed its ability meaningfully to affect the market was limited. The global oil prices have increased since the war began with Iran on Saturday, as the conflict has disrupted Middle East supply. Prices fell on Thursday, the first time since six days. This was due to reports that the U.S. The U.S. may intervene on the futures markets. Bloomberg News reported that officials were also hesitant to use the Strategic Petroleum Reserve immediately because it was only 60% full. White House and Treasury officials did not respond immediately to comments outside of regular business hours. ? Could not verify the report immediately. On Thursday, a senior White House official said that the Treasury would soon announce measures to combat 'rising energy costs in the aftermath of the Iran conflict. This could include potential action on the oil futures markets. Details of the plan are unclear, and the White House official declined to give a specifics on the condition 'of anonymity' to discuss 'internal issues. They said they didn’t want to get in front of the Treasury announcement. Reporting by Shubham Kalya in Bengaluru, Editing by Alexandra Hudson and Elaine Hardcastle
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Oil prices are expected to rise as the Middle East war continues. Stocks will be volatile this week.
The slight drop in oil prices Friday provided some respite to battered global shares, but the share markets in Asia were still on course for their biggest weekly decline in six years because the conflict in the Middle East shows no signs of abating. The oil prices are on track to make their biggest weekly gain since Russia's full-scale invasion of Ukraine began in February 2022. However, they have fallen after news broke that the U.S. Government is considering intervening in futures markets in order to curb rising prices. They remained close to 20% higher for the entire week. Brent crude futures were last trading at $84.73 a barrel. This is on track to be a 17% increase in ebb. U.S. crude oil retreated after reaching a 20-month peak and traded at $80 per barrel last, bringing its weekly gains to over 19%. Michael Brown, Pepperstone's senior research strategist, said: "We see markets (consolidating), for a while, cutting around current levels. A 'wait-and-see' approach is taking (precedence)." Investors rushed to cash this week as the U.S. and Israel war against Iran roiled the global markets. They realized that the conflict may last longer than originally anticipated. The traders also priced in more hawkish expectations of major central banks. They were frightened by the prospect that inflation would rise if energy prices continued to spike. The yields on U.S. Treasuries?have risen by 18 basis points, the most they have been in almost a year. Meanwhile, the dollar is set to make its biggest weekly gain in sixteen months. "The range (of plausible outcomes) of the war has expanded, including both?the possible of an extremely constructive resolution and a very destructive one," Daleep Singh said. He is chief global economist for PGIM Fixed Income. Markets are asked to price "a much fatter set" of tails, with little information about their likelihood or the paths in between. In Asia, EuroStoxx 50 futures rose 0.95% on Friday. FTSE and DAX futures also increased by 0.5% and 0.8%. Nasdaq Futures gained 0.27% while S&P500 futures increased 0.16%. High-Flying Stocks Tumble MSCI's broadest Asia-Pacific share index outside Japan traded 0.2% higher last week. However, it was expected to drop 6% this coming week. This would be its biggest weekly decline since March 2020. Japan's Nikkei gained 0.6%, but was on course for a weekly loss of 5.5%. South Korea's Kospi is headed for the biggest weekly drop in six years. Even high-flying indexes and technology stocks such as the Kospi fell this week as investors scrambled for profits to offset losses elsewhere. Ben Bennett, the head of Asia investment strategy at L&G Asset Management, said: "When dollar rallies and U.S. Yields rise, funding is tightening. This will often exacerbate wider moves, particularly if leverage is involved." DOLLAR IS THE KING Dollar is one of the few winners in this volatile week that has seen?stocks and bonds, as well as precious metals, fall. The dollar's rally paused on Friday but was still on course for a gain of around 1.5% per week, thanks to safe-haven demands and lower expectations about U.S. interest rate easing. The euro, still vulnerable to a rise in energy costs, is expected to drop 1.8% this week. Meanwhile, sterling will see a weekly decline of 1%. Investors now expect the Federal Reserve to ease by 40 basis points this year. This is down from 56 basis points a week earlier. The odds of a Bank of England rate cut this month are also lower, falling from a near-certainty last week. By the end of the year, it is expected that rates will be raised by?the European Central Bank? In Asia, on Friday, the yield of the 10-year U.S. Treasury benchmark was unchanged at 4.1421% after rising 18 basis points this week. The yield on the two-year bond has increased by 20 basis points for the past week. Spot gold, meanwhile, was unchanged at $5,118.79 per ounce. However, it was on track for a weekly decline of 3% as higher yields and the stronger dollar overshadowed its appeal as a safe haven. (Reporting and editing by Muralikumar Aantharaman, Jamie Freed and Rae Wee)
Oil drops but is set to gain the most since 2022
The oil prices dropped on Friday, the first time since six days. This is because the U.S. government has been considering intervening in the futures markets to curb rising 'prices' and issued waivers to Russian oil buyers to ease the supply constraints caused by the Middle East War.
Brent crude futures fell 95 cents or 1.1% to $84.46 a barrel, while West Texas Intermediate dropped $1.08 or 1.3% to $79.93 at 0440 GMT.
Brent is still up 16.4% while WTI is up 19.2%, making this the biggest weekly gain since Russia's full-scale invasion in Ukraine began in February 2022.
The gains were made after the beginning of the war on February 28, between the U.S.,?Israel and Iran, who have halted the movement of tankers through the Strait of Hormuz. This area is responsible for carrying about one-fifth of daily oil supplies in the world.
Since then, the conflict has spread to the Middle East's key energy producing region. This has caused disruptions in oil production and shutdowns of refineries as well as liquefied gas plants.
Priyanka Sahdeva, senior analyst at Phillip Nova, said that the halting of activities in Hormuz would have a two-fold impact on the oil market: it would make it impossible to store 20 million barrels a day and prevent the flow into the world. This could cause global energy prices to rise.
A senior White House official stated on Thursday that the U.S. Treasury Department will announce measures to combat the rising energy prices caused by the conflict in Iran, including possible action involving oil futures markets.
This would be an unusual move by Washington, to try and influence the energy price through the financial markets instead of physical oil supplies.
Treasury Department also granted waivers to companies on Thursday to allow them to purchase Russian?oil that is stored in tankers. This will ease the supply shortages which are forcing refineries to reduce fuel processing.
First waivers have been given to Indian refiners who responded by purchasing millions of barrels from Russian crude oil cargoes. This reverses months of pressure that they were under to stop the purchases.
Kpler, a ship-tracking company, has gathered data that shows 30 million barrels (including floating storage) of Russian oil is available in the Indian Ocean and Arabian Sea regions, as well as in Singapore Strait.
The recent price increase is still relatively modest compared to other price shocks, such as the one in '2022 after Russia invaded Ukraine and prices rose over $100 per barrel.
Tony Sycomore, an IG analyst, said that it was important to keep this in perspective. Despite crude's nearly 20% increase this month the price is only $3.40 higher than its average for the past four years. Helen Clark reported from Perth, and Sudarshan Varadan in Singapore. Christian Schmollinger edited the story.
(source: Reuters)