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Macron will host G7 leaders to discuss Iran crisis and energy prices
The French President's Office announced that Emmanuel Macron will hold a conference call on Wednesday with the leaders of the?Group?of Seven to discuss the Iran crisis and the rising energy prices. The G7 is weighing up how to react to the sharp rise in oil prices caused by the U.S./Israel war on Iran. The G7 energy ministers did not agree on Tuesday to release strategic oil reserves, but instead asked that the International Energy Agency assess the situation before acting. Standard oil prices surged to almost four-year heights on Monday, but plummeted by 11% on the following day after U.S. president Donald Trump said the Middle East war could be over soon. U.S. officials 'also weigh steps to keep oil flowing in the Strait of Hormuz. This includes?providing a naval escort for commercial vessels, and backing up?war?risk insurance for tanks, to reassure shippers, and to prevent further disruption to global energy supply. The G7 is made up of the United States, Canada and Japan. France is currently the?G7 Chair.
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Sources say that Brazil's Petrobras will auction 20 million liters (liters) of diesel amid reports of shortages.
Two sources with knowledge of the matter said that Petrobras, the Brazilian state-run company which owns the oil industry in Brazil, plans to auction 20 million liters of diesel to the state of Rio Grande do Sul to address shortages. They said the auction would take place on Wednesday. The U.S. and Israel attacks on Iran are causing a spike in diesel prices, which is the most immediate and serious threat to Brazil's agricultural sector. Producers harvesting record soybean crops and planting corn cannot afford to delay. The initiative, according to a source who spoke under?conditions of anonymity, is necessary to "try and calm the market nerves." Petrobras refused to release more diesel to distributors after their prices had reached a record-breaking discount in comparison to international benchmarks. Petrobras was afraid of supplying fuel at a low price, only to have distributors store it and then resell it when the government-owned firm raised prices. A public auction would encourage competition and prevent such a situation. The source stated that "the auction is a way to sell products at higher/different price levels." It doesn't affect?all of the volume sold but it partially covers the gap with the international markets. Petrobras didn't immediately respond to a comment request.
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The Revolutionary Guards have elevated Iran's new, silent leader.
Senior Iranian sources claim that Iran's Revolutionary Guards pushed through the selection of Mojtaba Khamenei as its new supreme ruler, seeing him as an improved version of his father, who would support their hardline policies and bludgeoning aside the concerns of pragmatics. Sources said that the Guards, who were already very powerful, have become even more so since the start of the war. They quickly overcame misgivings from senior politicians and clerics whose opposition delayed the announcement by hours. Khamenei had not yet issued a statement on Tuesday night, almost 48 hours after he was selected during a war in which more than 1,000 Iranians were killed. The three sources, including a reformist ex-official and an insider, believe that Khamenei’s appointment, which was engineered by the Guards may lead to a more aggressive foreign policy and harsher internal repression. Two of them expressed concern that the Guards dominance of the system could further transform the Islamic Republic, reducing its support base to a thin veneer and leaving less room for addressing complex threats. NEW LEADER MAY HAVE BEEN WOUNDED IN STRIKE Mojtaba Khmenei, despite being a powerful backroom operator who spent decades running his father's offices, is an unknown figure to many Iranians. He may even have been injured in the U.S. and Israeli strikes that killed his dad. An anchor on state television appeared to confirm the widespread rumours that Khamenei had been injured, describing him a "janbaz", "wounded veterans" of Ramadan War (as Iran refers to?the current war). Has not been able confirm his condition. This, and his fears about security after the assassination of his father on February 28, may explain his silence ever since the Assembly of Experts announced on Sunday night that they had chosen him as the supreme leader of the country. The Guards, and the office of the supreme leader, also known as beyt (the "supreme leader"), are the most visible holders of authority. They operate a parallel influence system across the bureaucracy. There were no doubts about who was in charge on Saturday, when President Masoud Peshkian - part of the triumvirate mandated by the United Nations to govern during the interim between leaders - was forced to apologize to Gulf States for his attacks. Sources said that senior guards were furious with his apology. One of three senior sources who claimed that the Guards now run Iran said, "the late Ayatollah Ali Khamenei was able to reign in "the corps by balancing their views against those of the political and clerical elitists within the system." Source: Even if the new leader is able to lead, the Guards could now have the final word in major decisions going forward. Alex Vatanka, senior fellow at Washington, D.C.'s Middle East Institute, said that Mojtaba is owed his position by the Revolutionary Guards, and therefore he will not be as supremely powerful as his father. BLUNT GUARDS Message TO BACK KHAMENEI It is constitutionally the Assembly of Experts that chooses the leader, but it has been influenced by other power brokers in the two elections of new leaders since the Islamic Revolution of 1978. Ali Akbar Hashemi Rafsanjani was the influential politician who ruled the day after Ayatollah Khomeini's death in 1989. Rafsanjani told the assembly Khomeini had whispered Khamenei to him as he lay dying. All five sources agreed that this time the Guards were the kingmakers and their messages were much more blunt. The Guards argued that the war demanded a quick process, and they chose a candidate who would defy the United States. Ayatollah?Heydari said on state TV that because their hall in Qom, a seminary city, was bombed, they had to meet in an undisclosed place. Some members were not able to attend or be informed of the votes. He said that the body had reached its "quorum" of two thirds without specifying exactly how many people were present. Mojtaba Khmenei was supported by 85-90%. The figures did not show the unanimity that the Guards had hoped for. CONCERNS ABOUT HARDER LINE Two sources said that a group of ayatollahs disliked the apparent succession by hereditary line and were afraid of alienating even supporters of the ruling regime. One source said that behind the scenes, some clerics, and members of the establishment, were pushing for an alternative during numerous discussions in the last week. The reformist former official, however, said that the Guards had allegedly threatened Khamenei critics. Insiders in the Islamic Republic said that the Guards contacted the members of the assembly to raise objections but they ultimately felt compelled by the situation. All five sources confirmed that Khamenei was initially intended to be appointed on Sunday morning but the announcement came later in the evening due to the opposition he faced. One official said that as the head of the beyt under his father for many years, Mojtaba had developed very close relationships with the Guards. This was especially true of the second-tier officers who replaced the top commanders killed in war. The reformist ex-official said that the result will be an international and domestic policy which moves in a more revolutionary direction, with the Guards finally gaining what they have been seeking for years: total control. (Reporting and writing by Parisa hafezi, editing by Cynthia Osterman).
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US stocks fall, oil prices drop as Wall Street weighs contradictory messages about Iran
After a?U.S. Donald Trump said that the Middle?East conflict could "end soon" despite the fact that?the?U.S. Israel and the United States pounded Iran's airspace with heavy strikes. The U.S. stock market lost momentum, losing early gains and sliding into negative territory. The Dow Jones Industrial Average dropped 0.07%. The S&P 500 fell 0.2%. And the Nasdaq composite was little changed. The oil prices have fallen by over 11%. Brent futures LCOc1 dropped $11.16, or 11 %, to settle at $86.70 a barrel. U.S. West Texas Intermediate CLc1 crude oil settled at $83.45 per barrel, down by $11.32 or 11.9%. Both benchmarks suffered their biggest one-day percentage drop since March 2022 after rocketing to four year highs the day before. Trump's comments late on Monday instilled optimism into the?markets but contrasted to events in Iran where hardliners rallied around new Supreme Leader Mojtaba Khmenei, and the Revolutionary Guards announced a blockade against oil exports until U.S. Sameer Samana of the Wells Fargo Investment Institute's Global Equities and Real Assets department wrote in an e-mail that WTI crude prices would ultimately revert between $65 and $75. This revealed a strong economic and corporate earnings backdrop. Samana stated that "we would continue to look past those near-term headlines as we see the conflict lasting weeks/months without changing the future outlook in a meaningful way." A Global Rebound? On Tuesday, a stronger investor sentiment led to a rebound in Europe and Asia. Government bond yields fell and expectations for interest rates shifted. After three consecutive days of declines, the STOXX 600 Index in Europe has recovered some gains. However, it ended up with a gain of 1.65%. MSCI's broadest Asia-Pacific share index outside Japan rose by around 3%. Money markets reduced the likelihood of an?European Central Bank interest rate hike in this year after it was already priced in on Monday. The benchmark German 10-year bonds was also little changed, at 2.86%. Analysts at BlackRock Investment Institute wrote that "market pricing indicates weeks of disruptions and not just days or months." Market pricing indicates that there is a possibility of a stagflationary event, but this is not a certainty. The yield of the 10-year Treasury note in the United States rose by 1.8 basis points, to 4.152%. It had risen earlier in the day. The CME Group's FedWatch tool shows that traders are betting on when the Federal Reserve will cut rates next. According to this tool, the first rate reduction is not expected until July. Analysts at ING said that bond yields are still at worrying levels. Expect nominal yields to drop for a while on a reverse trade. In a note to clients, they warned: "Don't expect bonds to rally dramatically structurally." The U.S. Dollar Index?held modest gains on Tuesday against major currencies as investors' appetites for riskier assets remained low. Bitcoin increased by 1.58%, to $70,094, while gold was up about 1.15%. (Reporting from Lawrence Delevingne, Sophie Kiderlin, and Gregor Stuart Hunter, in Boston; editing by Mark Potter, Tomaszjanowski, Emelia Sithole-Matarise, and Nick Zieminski.
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Sugar prices drop as Trump predicts a de-escalation of the Iran War
Oil prices dropped sharply on Tuesday after U.S. president Donald Trump predicted that the Iran War could be over soon. Dealers stated that the market was focused on the degree to which high energy costs could reduce sugar production in Brazil, where mills are able to adjust their factories to produce more sugar or ethanol depending on the market price for each. The ICE exchange's raw sugar price?futures settled at 14.38 cents per lb after dropping nearly 3% earlier, while the white sugar futures dropped?0.5%, to $418.40 a metric tonne. Petrobras is Brazil's state controlled oil company. It supplies around 80% the gasoline in Brazil. The prices have not yet been increased, but as long as the war with Iran continues, the more likely it will be. The Brazilian gasoline market has a major impact on the prices of biofuel ethanol. The U.S. Department of Agriculture has said that sugar production in the United States will drop as a result of frosts hitting cane fields. Cocoa futures are rising in other soft commodity markets. Prices should be modestly recovering by the end of 2026 according to a survey. London cocoa increased by?5.1% to?2,479 lbs per ton while New York cocoa grew 4.8% to $3.447 a tonne. The Ivory Coast Coffee and Cocoa Council sold over 400,000 tons worth of cocoa export contracts in just 10 days after exporters resumed purchasing for the mid-crop. Arabica coffee dropped 0.4%, to $2.958 a pound, while robusta lost 2.1%, to $3,692 per ton. (Reporting and editing by May Angel; Nigel Hunt, Marcelo Teixeira)
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Wall Street ignores the intense airstrikes against Iran as it advances stocks and oil prices
Wall Street stocks recovered and oil prices fell sharply after U.S. president Donald Trump said the Middle East conflict could "end soon" even as the U.S., Israel and Iran pounded Iran with what both the Pentagon and Iranians?said were the'most intense airstrikes ever. The Dow Jones Industrial Average rose 0.2%; the S&P 500 was up 0.1%, and the Nasdaq Composite gained 0.25%. The STOXX 600 Index in Europe, which had been declining for three trading days straight, recovered some of its earlier gains and finished the day up 1.65%. MSCI's broadest Asia-Pacific share index outside Japan increased by around 3.4%. The price of oil fell by around 10% on Tuesday, after reaching a three-year high the day before. Brent futures CLc1 last traded at around $90 per barrel while U.S. West Texas Intermediate crude (WTI) CLc1 dropped to $85 per barrel. Trump's Monday remarks injected optimism in the markets, which contrasted to?events? in Iran where hardliners rallied around the new Supreme Leader Mojtaba Khmenei while the Revolutionary Guards announced a blockade on oil exports until U.S. Trump stated that the U.S. will hit Iran harder if they block exports. Trump said on Fox News that he could talk to Iran. U.S. defense secretary Pete Hegseth stated Tuesday would be the biggest day of strikes in the campaign against Iran. Sameer Samana of the Wells Fargo Investment Institute, who is in charge of global equities and real assets, stated that WTI crude oil prices will eventually return to a range between $65-$75 per barrel. This would reflect a strong economic backdrop and corporate earnings. Samana stated that "we would continue to look past those near-term headlines as we view the conflict as lasting for weeks/months without changing the future outlook in a meaningful way." A Global Rebound? Investor sentiment improved on Tuesday and led to a rebound in European and Asian shares, while yields on government bonds fell and expectations for interest rates shifted. European indexes started the day higher, following Asia. However, they retraced some of their gains as the day progressed. Germany's DAX added around 1.8% and France's CAC40 gained 2.4%. Money markets have reduced the likelihood of an ECB rate hike in this year after it was fully priced on Monday. The benchmark German 10-year bonds were little changed, at 2.86 percent. Analysts at BlackRock Investment Institute wrote: "Market pricing indicates weeks of disruptions and not days or even months." Market pricing suggests that there is a possibility of a stagflationary event, but this is not a certainty. The yield of the 10-year Treasury bill in the United States was down by 0.2 basis points to 4.132% at the end of the day, after a sharper easing earlier that day. The CME Group's FedWatch tool shows that traders are betting on when the Federal Reserve will cut interest rates next. According to this tool, the first rate reduction is not expected until July. Analysts at ING said that bond yields are still at disturbing levels. Expect nominal yields to fall a little on a reversal trade. In a client letter, they warned that bonds would not experience a sudden structural rally. The U.S. Dollar Index, which measures the performance of the dollar against a basket six major currencies, fell slightly, continuing Monday's steep fall. Gold rose by around 1.66%, reaching $5,221 per ounce. Bitcoin increased by 2.6%, to $70,00793.
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White House to Americans - Energy prices will rise temporarily due to Iran
Karoline Leavitt, White House Press Secretary, said on Tuesday that the American public would see oil and gas prices fall rapidly once the joint Israeli-U.S. war against Iran is fully accomplished. Leavitt told reporters that the increase in gas and oil prices was temporary and the operation would result in lower prices over the long-term. Prices of oil on Monday soared to $119 per barrel, their highest level?since June 20, 2022. Supply cuts by Saudi Arabia and other producers have stoked concerns about major disruptions in global supply. Leavitt said that Trump's energy team was closely monitoring the markets and speaking with industry leaders. The U.S. military is also preparing additional options to comply with the President's directive that the Strait of Hormuz remain open. The White House is concerned that the rise in oil prices, following the U.S.-Israeli strikes on Iran for more than a week, will harm U.S. consumers and businesses ahead of the November midterm elections when Trump's Republican colleagues hope to retain control of Congress.
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The rising gas prices due to the Iran war threaten Trump's Republican majority.
In the minutes following?Donald Trump?s State of the Union Address, in which he argued why voters should vote to keep Republicans in control in the November midterm elections?the president boasted about how falling gasoline prices have solved the "disasters" left by his predecessor. Gas prices are up by almost?60 cents per gallon two weeks after the airstrikes against Iran that were launched on February 28th. This sparked a regional conflict which has spread far beyond Iran's border. Trump's and his Republican colleagues' political headaches are quickly becoming a pain at the gas pump. Their narrow majority in the Congress looks more fragile as the midterm elections approach. Crude oil prices were down on Tuesday after Monday's dramatic rise. It remains to be determined where gasoline prices are headed in the nine months before the November 3 elections. Even before the Iran War, U.S. citizens were angry at the high cost-of-living and frustrated by Trump's lack of action to reduce it. /Ipsos surveys show. Jacob Perry, Republican strategist, said: "You cannot hide gas prices." "You can make up all these other things and say that everything is fake. There's a huge sign at every corner that says how bad the situation is. Every commute to work is a reminder." Focus on Affordability in Campaign Democrats have pledged to place affordability at the forefront of their campaigns. To win a majority in the House of Representatives, Democrats need to flip just three Republican seats. However, they have a more difficult path to take in the Senate. Hakeem Jeffreys, the House Democratic Leader on X, said that Trump promised an American Golden Age. "While Republicans are wrecking the economy, gas costs are out of hand, and extremists spend billions on dropping bombs in Middle East," said Hakeem Jeffries, House Democratic leader. House Republicans who are in Florida this week for a policy retreat, where they are discussing their legislative agendas, acknowledge that rising gas prices are an issue that voters are concerned about. However, they cite Trump's claim that the rise will be temporary and say that the administration's plans to increase domestic production of energy would 'lessen the pain'. Austin Scott of Georgia, a Georgian Representative, said: "Everyday that people pay for fuel at the gas stations, we know how much it hurts. "We will do everything we can to correct it." "They understand that it is a temporary issue." TRUMP'S CAMPAIGN IS ABOUT LOWERING PRICES According to AAA, the average national gas price on Tuesday was $3.54 per gallon. This is up 19% from when the war started. Trump's plans to examine several options to curb oil prices are a sign that the White House is concerned. This includes releasing crude oil from strategic reserve, limiting U.S. imports, and waiving certain federal taxes. Trump announced on Monday night that the U.S. will waive some oil-related sanctions. He did not provide any details. The White House announced that Trump will discuss the economy on his Wednesday trip to Ohio and Kentucky. Gas prices could be particularly harmful for a President who won the White House largely because he promised to curb inflation, lower energy rates and reduce the cost of living. Rep. Warren Davidson (a Republican from Ohio) said that the increase in gas prices was a concern for the midterm elections. He said, "The economy will always be a major issue on the ballot." "The president has done a lot of great things for the economy, and we'll have to see what happens." "IF THEY RISE THEY WILL RISE" Trump's response to the rising prices is unlikely to calm Americans' fears. In a recent interview, Trump stated that he was not concerned about the rising gas prices. He predicted they will drop when the Iran conflict is over. He repeated his claim on social media at the weekend. "Short-term oil prices" are a "very little price to pay" in order to ensure global security. Trump's changing rationales regarding the Iran war have made it harder for him to argue the disruption of the?U.S. The disruption to the?U.S. economy has been deemed not worth it. The administration has not provided evidence that Iran posed an immediate danger, and Trump had himself insisted last year that U.S. attacks "obliterated'?the country’s nuclear weapons program. John Feehery is a Republican strategist who said, "I do not think people are that concerned about Iran." "I believe they are concerned about the price of their gasoline. "I think they care about their gas prices." "This better be quick, is all I can add," he said of the war. (Reporting and editing by Scott Malone, Alistair Bell and Scott Malone; Additional reporting and editing by Nicole Jao and David Morgan)
Iran Conflict clouds Brazil Budget Review
Two sources familiar with the discussion said that Brazil's government is facing an additional challenge when it prepares to update its economic forecasts. Market volatility and uncertainty linked to the conflict in Iran will complicate projections for this year's budget management.
Within two weeks, the Finance Ministry is expected to release new forecasts on 2026 GDP growth, inflation and inputs for government's bimonthly revenue and expenditure report.
The first report for the year is due on March 24. It will assess revenues and expenditures against the approved budget, and determine if a spending freeze would be necessary to comply with fiscal regulations.
The source said that if the war does not end and refineries and production are disrupted, or even halted, it will have a medium-term impact, citing inflation and monetary policies.
The budget for this year assumed a GDP growth rate of 2.4% and inflation of 3.6%. Brent crude oil was?averaging around $65 per barrel at the time, with a 5.76 reais-to-dollar exchange rate.
Oil prices have been wildly fluctuating since the conflict began less than two weeks ago. They briefly reached $120 per barrel last week, before reversing to $83 on Monday.
Brazil's real fell last week, but since then has strengthened. It is currently trading at around $5.14 per dollar. Brazil's Treasury stated last week that oil up to $85 per barrel could have a positive fiscal effect, but warned levels above $100 would start to create real inflationary pressure.
Brazil's largest export is oil, and higher prices increase government revenue through royalties and dividends paid by the state-controlled company Petrobras. Concerns about inflation stemming from the conflict have boosted bets on the central bank beginning its long-awaited ease cycle with a 25-basis point cut instead of 50.
Brazil's debt burden would increase if interest rates were to rise, since nearly half of its large public debt is tied to the benchmark Selic rate, which has been at 15% for the past two years.
Third source from the economic team confirmed that a prolonged conflict could worsen debt dynamics and offset direct revenue gains due to higher oil prices. (Reporting and writing by Bernardo Caram, Marcela Ayres, Alistair Bell).
(source: Reuters)