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Gold falls on inflation fears as high oil prices, stronger dollar and concerns about inflation weigh
The gold price?fell? on Thursday as investors tried to gauge the direction of conflict from stalled U.S. Iran talks. As of 1135 GMT, spot gold was down by 0.9%, at $4,696.71 an ounce. U.S. Gold Futures for June Delivery fell 0.8% to $ 4,714.0. The dollar grew, making greenback bullion prices more expensive for holders?other currencies. Meanwhile, benchmark 10-year U.S. Treasury Yields rose to a one-week-high, increasing the opportunity costs?of holding bullion that does not yield. Ole Hansen is the head of commodity strategy for Saxo Bank. He said that gold continues to be influenced by the oil market. Iran has seized two'ships' in the Strait of Hormuz, tightening its grip on this strategic?waterway. This comes after U.S. president Donald Trump announced that he would be halting all attacks indefinitely and there was no sign of a restart of peace talks. The Iranian officials have not confirmed that they agreed to an extension of the ceasefire. They accuse Washington of violating this truce by continuing to blockade Iranian trade via sea. Brent crude oil prices rose to $100 per barrel due to the stagnated peace talks, and both nations' continued restrictions on trade across the Strait. The likelihood of interest rates remaining high is increased by higher crude oil prices. Gold is often viewed as an inflation hedge. However, as rates rise, the appeal of gold diminishes as it offers no return. A poll of economists revealed that the U.S. Federal Reserve is likely to wait at least six more months before reducing?interest rates in this year, as energy shocks caused by war reignite inflation. Hansen continued, "The current consolidation is more of a pause caused by rate uncertainty rather than a structural change. We maintain that gold will 'likely' reach a new?record-high later this year or early in?2027." Spot silver dropped 3.9%, to $74.63 an ounce. Platinum fell 3.2%, to $2,007.98. This is a new low for both metals. Palladium fell 4.8% to $1,470.79. This is a two-week high.
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Israeli strikes kill four people in Gaza, doctors say
Palestinian officials said that Israeli airstrikes on Gaza killed at least 4 Palestinians on Thursday. Local medics confirmed that one person was killed and several others injured in a'strike' in Khan Younis, a town in the southern Gaza Strip. Israel's military claimed it targeted militants who were transporting munitions and posed a danger to Israeli soldiers. Health officials reported that three others, including an?rescue worker were also killed in a separate attack in Maghazi. This is a 'Palestinian Refugee Camp in Deir al Balah, central Gaza. Israel's military did not comment immediately on the strike. Israel has carried out numerous strikes in Gaza since a ceasefire brokered by the U.S. came into effect last October. Israel and Hamas both accuse each other of violating ceasefires. No mechanism exists to enforce the ceasefire. Since the ceasefire began, more than 780 Palestinians and four Israeli soldiers have been killed in Gaza. In Gaza City's Al Shifa Hospital - the largest medical facility in the territory - relatives stood with mourners to bury five people, including three children, killed by an Israeli airstrike against a town in northern Gaza on Wednesday. Mohammed Baalousha said that there was no 'ceasefire', no truce and nothing else. "There is no safety in any area." Israel's military has not made any comments on the attack. Reporting by Nidal Al-Mughrabi from Cairo and Dawoud Ab Alkas from Gaza; editing by Alex Richardson
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Sources: BHP adopts new Chinese Iron Ore Price Index in agreement to end dispute
BHP Group has agreed to use a Chinese iron ore price index for one of its flagship products as part a deal with?China that ends a long-running dispute. Three sources familiar with the matter confirmed this. BHP, world's third largest iron ore supplier announced on Wednesday it had completed negotiations on a contract with China Mineral Resources Group. This ended the dispute resulting from the bans on BHP supplying the essential ingredient for steel production. The agreement was not disclosed by BHP or CMRG, the Chinese state iron ore purchaser. According to an investor, BHP executives informed them that the new contract would last until the end the financial year?2027. Two of the three sources confirmed that the settlement for BHP's Jimblebar Fines, a medium-grade ore, would be based on the weighted average four indices, including the equivalent U.S. Dollar value of China's COREX 61 percent iron ore "portside" index. This index will have a 26% weight, they said. The sensitivity of this issue led to all?sources requesting anonymity. BHP has declined to comment. CMRG didn't immediately respond to a comment request. The Argus 61% index for seaborne fines, Mysteel's 61% index for seaborne fines and the dollar value of Mysteel's 61% index portside are also used. BHP IS THE SECOND MINERAL TO ADOPTION COREX INDEX BHP used to settle Jimblebar contracts for Chinese clients by using a fixed price, or a combination of Argus seaborne indexes and Mysteel. COREX (Beijing Iron Ore Trading Centre Corp) launched their iron ore portside indicator last September to play a part in pricing iron ore imported worth $123 billion by 2025. BHP is Australia's second miner to adopt the COREX index after Hancock Prospecting. China lifted its partial ban on purchasing iron ore from Hancock in September last year, according to reports. It did not provide a reason. Hancock didn't immediately respond to an inquiry for comment. Industry insiders say that global?miners have been reluctant to use COREX due to its short data history, and because it is based on portside transactions instead of the seaborne market?used in other indexes. One source said that BHP would offer 1,8% off per iron ore ship on contracts for a term, in addition to a freight discount on certain large ships.
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EU promotes temporary energy subsidies but costs could balloon
The European Union will propose targeted measures to 'avoid further strains on fragile public finances' when it outlines looser rules for state aid next week. Nine European finance officials and economists warned, however, that the combination of voter pressure and right-wing populist gains, coupled with fuel duty reductions and price caps, could lead to a ballooning in state aid costs and fiscal costs as long as the war continues. The European economies are facing a third shock in six months, following the COVID epidemic and an energy crisis caused by Russia's invasion. The governments of France, Italy and Spain are also under pressure to protect consumers from price increases, as elections will be held in France, Finland, Greece, Slovakia, Finland, Greece, and Spain next year. Alfred Kammer, head of the European Department at the International Monetary Fund, said that after the pandemic and Russian gas crisis, people expect the government to act whenever a crises occurs. He said, "This crisis is external and affects everyone on the planet. But there are still bailout expectations." According to the Jacques Delors Energy Centre 22 of the EU 27 countries have 'already implemented protective measures that cost more than 10 billion euro ($11.7 billion). These include VAT and excise taxes reductions, delayed increases and price cap. According to the think tank Bruegel, these measures - which include 3.5 billion euro in energy VAT reductions in Spain and a 1.6 billion euro energy tax reduction in Germany – rely largely untargeted tax cuts on fuel. "Despite what some governments claim, these measures 'are not really temporary. They are likely to stay in place until the crises is over which could take a long period of time. "Some of the COVID temporary measures are still in effect," a senior euro zone official stated. According to the International Energy Agency, the conflict is the biggest energy crisis that the world has ever seen. According to the European Commission, disruptions in Middle East oil and natural gas supplies have added 24 billion euro to the EU's total fossil fuel import bill during the first 50 day of the conflict. KNEE JERK REACTIONS Vs STRUCTURAL RESFORMS The Commission proposed on Wednesday changes to the electricity tax, coordination of summer gas refilling and possible obligations to?states for holding jet fuel stocks. Avoid impulsive, costly reactions that may provide a short-term fix but do not deliver structural changes necessary to buffer future energy price shocks. It is planned to relax state aid rules next week, retroactively to March, and for a period of time up to the end 2026. This will allow governments to subventionise fuel prices and fertilisers in the most affected sectors, such as farming, fishing, and road transport. Analysts?warn governments that they will be unable to withdraw their support if war continues. Dan Jorgensen is the EU Energy Commissioner, and former Danish energy minister. He said: "I understand national circumstances and pressures will lead you to make decisions that you wouldn't normally make." He said: "We understand and will help facilitate in certain instances. But we must insist that this is very targeted, and temporary." Oil prices will remain high even if the conflict is resolved soon and the Strait of Hormuz opens again. The fiscal cost of these emergency measures quickly adds to large amounts, said Elisabetta Cornago an analyst with the Centre for European Reform. Phuc Vinh Nguyen of the Jacques Delors Energy Centre urged EU-wide actions to reduce energy consumption to ease pressure on supply and prices. "We are facing more fiscal and budgetary restrictions .... Nguyen stated that public finances will not be sustainable in the long-term.
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Russia maintains oil supplies, but says it has no new OPEC+ initiative
The Kremlin announced on Thursday that Russia maintains a?flow of its 'oil? to?world-wide markets, thereby helping limit the impact the crisis triggered from the Iran war. However, it does not have any specific initiatives to suggest within OPEC+. "At this time, we are?contributing to stabilizing the prices and minimizing any consequences of the global energy crisis. "Russia continues to supply oil," Kremlin spokesperson Dmitry Peskov said in a daily conference call with journalists. "Demand increases, but the oil supply on the market does not increase, it actually decreases. He said that there are "no other initiatives" on the agenda. According to the International Energy Agency (IEA), the world is experiencing the worst energy crisis in history due to the aftermath of the war in Iran. Rising oil prices are fueling inflation. Russia is a major player in the 22-nation OPEC+, which includes Iran. Since the beginning of 2025, only eight countries have participated in monthly production decisions. The 'next' meeting will be held on May 3. OPEC+ agreed to increase its oil production quotas in early April by 206,000 barrels a day for the month of May. This modest rise will largely be on paper, as OPEC+'s key members have been unable to boost their production because of the U.S./Israeli war against Iran.
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American Express exceeds profit expectations as wealthy customers continue to spend
American Express's first-quarter profits surpassed Wall Street expectations on Thursday as its affluent clients spent money on discretionary purchases and travel. The backdrop is dominated by high interest rates, and concerns about inflation spikes due to higher gasoline prices. However, AmEx's customer base is more financially flexible. Billed Business, which is a measure for total spending with AmEx cards on an exchange-adjusted base, increased 9% to $428 Billion. In the third quarter, its revenue increased 10% to $18.9 Billion. AmEx shares rose 1.2% on premarket trading following results. American Express has increased its marketing investments, digital capabilities and reward programs in recent years to attract Gen Z customers who are 'long-term cardholders. Stephen Squeri, CEO of the company, said that "Card Member Spending grew 9%, FX-adjusted. This is the highest quarterly increase?in three?years, driven by strong demand and engagement?with our premium products." Profit for the company was $4.28 per share during the three-month period ending March 31. This compares to $3.64 a share a year ago. According to LSEG estimates, analysts had on average expected $4.02. AmEx's quarterly results are closely followed as they provide an early indication of spending trends at U.S. credit card companies. AmEx's strong results indicate that luxury and high-end consumers are still spending in this current economic climate, which is good news for consumer goods companies and retailers catering to the segment. The company put aside $1.3 billion in consolidated provisions for losses on credit during the third quarter. This compares to $1.2 billion one year earlier. Provisions are a good indicator of the credit performance and economic outlook. Higher provisions usually indicate that a lender has built a buffer against possible loan losses in case customers default. (Reporting by Manya Saini in Bengaluru; Editing by Devika Syamnath)
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American Express exceeds profit expectations as wealthy customers continue to spend
American Express's first-quarter profits surpassed Wall Street expectations on Thursday as its affluent clients spent money on discretionary and travel purchases. The backdrop is dominated by high interest rates and concerns over a spike in inflation due to increased?gasoline prices. However, AmEx's customer base is more financially flexible. Billed Business, which is a measure for total spending with AmEx cards on an exchange-adjusted base, increased 9% to $428 Billion. In the third quarter, its revenue increased 10% to $18.9 Billion. American Express has increased its investments in digital capabilities, marketing and reward programs to attract Gen Z customers. Stephen Squeri, CEO of the company, said that "Card Member Spending grew by 9%, FX-adjusted. This is the highest quarterly growth in 3 years. It was driven by strong demand and engagement with our premium products." Profit for the company was $4.28 per share during the three-month period ending March 31. This compares to $3.64 per share one year ago. According to LSEG estimates, analysts had been expecting $4.02 on average. AmEx's results are closely followed as they provide an early indication of spending trends at U.S. card firms. AmEx's strong results indicate that high-end and luxury?buyers will continue to spend in this environment. This is good news for retailers and consumer products companies that cater to this?segment. In the third quarter, the company put aside $1.3 billion for credit losses. This compares to $1.2 billion from a year earlier. Provisions are a'measure of credit performance' and a 'prognosis for the economy. Higher provisions indicate that lenders are building up a buffer against possible loan losses in case customers default. (Reporting by Manya Saini in Bengaluru; Editing by Devika Syamnath)
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Sasol, a South African company, wants to export green jet fuels to the EU
A senior executive at the South 'African petrochemical firm Sasol said that the company has received certification for its sustainable aviation fuel from a German agency. This will allow it to export to the European Union. TUV SUD in Germany awarded ISCC Plus sustainability certification to Sasol's SAF, which is made using cooking oil and vegetables oils at its 108,500 barrels/day?Natref facility. Sasol stated that the agency also certified sustainable chemicals produced by Sasol's sister Secunda compound. Sarushen Pillay is Sasol's Vice President of Strategy and Technology. He said that South Africa had a large amount of used cooking oil. This was collected and then exported to Rotterdam, in the EU, where it would be reprocessed into SAF. Now, we'll be able to succeed in South Africa." He didn't say when Sasol hopes to begin exports to Europe. As a result of the U.S. and Israeli war against Iran, jet fuel supplies have been severely crimped worldwide. The EU is among the most affected regions. Natref is currently converting to a hybrid bio-refinery and is dependent on crude oil demand. It is targeting between one and two million litres of fuel this year. This will increase to 16 million litres in 2027, and 100 million litres up to 2030, as Sasol strives to reduce its carbon footprint. Pillay stated that if Secunda is included, we could be looking at 200 millions litres SAF by 2030. Sasol, Africa's worst industrial polluter, has partnered with De Beers and?Anglo American to use high-oil yielding Solaris crops as a biolipid source for its SAF production portfolio. $1 = 16.5539 Rand (Reporting and editing by Susan Fenton).
The biggest global oil supply disruptions ever
International Energy Agency stated that the closing of the Strait of Hormuz caused the biggest disruption in global oil markets history. The agency said supply is expected to drop by around 8 million barrels per day or 8% in March. In response, the member countries of the agency agreed to release 400 million barrels from their strategic stockpiles in order to stabilize oil prices and compensate Middle East production loss.
Here's a list of previous oil supply disruptions:
The 1973-1974 Arab Oil Embargo
The Arab oil embargo was initiated by the Yom Kippur War which began in October '6, '1973, with coordinated attacks against Israel.
Arab producers, acting through the Organization of Arab Petroleum Exporting Countries, ordered a 5% immediate reduction in production. This was followed by a further 5% monthly reduction. This was done to put pressure on Western nations in order to get Israel to withdraw its occupation of Arab lands since 1967's Six-Day War.
According to declassified documents from the U.S. National Security Council prepared for President Richard Nixon, the embargo was estimated to leave the United States with a shortage of 2-3 million barrels a day. The total shortage in embargoed countries is around 4.5 millions bpd.
According to U.S. Government records, OAPEC announced its embargo against the U.S. on October 17, 1973. It remained in effect until March 1974.
Crude oil prices almost quadrupled from $2.90 a barrel prior to the embargo, to $11.65 per barrel by January 1974. The U.S. Government prepared fuel rationing programs, ordered industries switch from oil to coal, pushed to increase domestic production, and advanced emergency legislation. In 1974, the crisis led to oil-consuming countries establishing the International Energy Agency to coordinate their responses to supply interruptions.
The Iranian Revolution of 1978-1979
The political turmoil in Iran led to the fall of Shah Mohammad Reza Pahlavi’s government and Ayatollah Khamooni's rise. Iranian oil production dropped sharply from 4.8 million barrels per day (bpd) to 7% of the global supply by January 1979.
The oil prices started to increase rapidly around mid-1979. They?more than halved between April 1979 - April 1980 due to fears of more disruptions and speculation, as well as strong global demand.
The crisis was a major factor in rising inflation rates in the U.S. Paul Volcker became chairman of the Federal Reserve in August 1979. The 'central bank' adopted aggressive monetary tightening measures to combat inflation. These policies ended the stagflation cycle, but combined with the oil crisis, they pushed the U.S. into a severe economic recession.
The Gulf Crisis of 1990-1991
The Iraqi invasion of Kuwait, and the embargo imposed by the United Nations on Iraqi and Kuwaiti crude oil, removed 4.3 million barrels per day from global markets.
Before the war, Iraq exported about 2.7 million barrels per day (bpd) and produced about 1.8 millions bpd. Together, these two countries accounted for almost a third Gulf oil production and exports.
Brent crude prices rose from $17 per barrel to $36 in October 1990. Prices then fell after the end of the war in February 1991. The IEA activated their Co-ordinated Energy Emergency Response Contingency plan, preparing 2.5 million bpd to be available on the market within 15 days. This included 2 million bpd of emergency stock releases, 400,000 bpd of demand restraints, and 100,000 bpd resulting from fuel switching or spare production capacity.
Hurricane Katrina slammed the U.S. Gulf Coast on August 5, 2005, halting large amounts of offshore production. According to U.S. Government data, at the height of the disruption, on August 29, 2005 about 1.38'million barrels of oil production per day was shut in. The production losses decreased gradually but remained at 840,000 bpd on September 16, 2005.
Hurricane Rita was the next storm to hit in September 2005, and combined storm disruptions shut down up to 1.53 million bpd on September 26th.
The Department of Energy in the United States has loaned 9.1 million barrels of crude oil from its Strategic Petroleum Reserve to refineries. The Department of Energy lent refineries 9.1 million barrels of oil from the Strategic Petroleum Reserve. The U.S. participated in a coordinated 30 million barrel stock release with the International Energy Agency.
The regulators issued emergency waivers to allow the use of winter blend gasoline and higher sulfur diesel fuel. They also temporarily waived the Jones Act, allowing foreign vessels to transport oil between U.S. port to alleviate supply bottlenecks.
2022 RUSSIAN INVASION?OF UKRAINE Russia’s full-scale attack on Ukraine in 2022 triggered a?energy crises as European countries scrambled?to reduce their dependency on Russian oil and _gas.
The search for alternatives to oil led to a spike in prices of over 50% in just a few short weeks. Crude reached some of its highest levels since 2008.
Joe Biden, the then-president of the United States, ordered 180 million barrels to be released over a six-month period in March 2022 to combat the surge.
The U.S., along with other Western nations, also placed price caps on Russian crude oil exports in an effort to reduce Russian funding of the war without taking the oil off the market. (Reporting from Anushree mukherjee in Bengaluru and Anmol choubey; Editing by Sharon Singleton).
(source: Reuters)