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IAEA board draws line under previous Syrian nuclear activities
Board of Governors of the U.N. Nuclear Watchdog, a 35-nation group of nations, passed a resolution Wednesday that drew a line under 'Syria’s secret nuclear activities' during the Assad regime. The International Atomic Energy Agency (IAEA) demanded that Syria disclose its nuclear activities after?Israel bombed the site in eastern Deir al-Zor province in 2007. In 2011, the IAEA board reported that Syria had violated its obligations to prevent proliferation of nuclear weapons. This was then forwarded to the U.N. Security Council. The IAEA and Syria have pledged to cooperate after the 2024?overthrow Bashar al Assad. In a confidential report sent to member states last week, which was seen by, the IAEA stated that it had answered all of its questions regarding the issues initially reported to the board. The resolution passed on Tuesday said Syria no longer did not comply with its obligations. The resolution text submitted by Egypt, Jordan Morocco and Saudi Arabia stated that "(the board) welcomes transparency?and cooperation from the Syrian Arab Republic. It commends its actions taken to resolve its non-compliance." Diplomats said that the resolution was passed by consensus, which means no one objected. IAEA's report confirms that it is "very likely" that the bombed site contained a nuclear reactor and said the fuel was manufactured in Syria. IAEA discovered around 73 metric tons of natural uranium in Syria, mostly in the form of fuel rods. The IAEA is overseeing the material, and Syria says it will remain in Syria.
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Bloomberg News reports that Dow is considering exiting its $20 billion partnership agreement with Aramco.
Bloomberg News reported that Dow was considering a reshuffle of its portfolio as it reshuffled its business in the face of a prolonged industry downturn. Dow shares were up almost 3% on premarket trading following a report that said Saudi Aramco may use this opportunity to purchase Dow's share and increase their ownership in Sadara Chemical Co. The report stated that other strategic or financial investors may also bid on Dow's shares. However, no final decisions had been made. Dow and Aramco didn't immediately respond to requests for comment. The chemicals industry has been impacted by a number of factors, including stagnant demand in Europe, increasing production costs, changing regulatory requirements, and persistent global oversupply. The U.S. and Israeli war against Iran has put further pressure on chemical makers, as it has disrupted oil flows and petrochemicals. Sadara Chemical temporarily halted production earlier this year citing disruptions in the supply chain due to war. In April, Dow said that it would stop recognizing losses for the Saudi joint-venture once liabilities had reached obligations as per accounting rules. The U.S. chemical giant's exit of Sadara could be a significant?shift? in the firm's priorities for its region. Sadara has a complex located in Jubail, Saudi Arabia. Its annual production capacity is more than 3,000,000 metric tons of chemicals and plastics. Dow has also been reevaluating its ownership of non-core assets throughout its global portfolio. Dow began a strategic review in 2024 of certain European assets. In January, it had reduced its workforce by 13% as part of a major restructuring that aimed to boost profitability.
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Oil tops $100 and stocks fall as Middle East tensions increase
Brent crude prices soared above $100 per barrel on Wednesday as the escalating conflict engulfing the Middle East fueled fears of energy-driven inflation and sent global stock markets tumbling in advance of a number major central bank decisions. Brent crude futures rose by as much as 3%, reaching a session-high of $100.95. This was the first time the price has surpassed the symbolic level since July 24. After Iran claimed it had fired ballistic missiles on a U.S. military base in Jordan, and both sides claimed they had attacked vessels, oil supply concerns from the region were raised. The latest rise in energy prices has caused concern that higher inflation may prompt central banks around the world to tighten monetary policy for longer. U.S. Stock Index Futures dropped about half a percentage,?setting Wall Street Indices up for a 3rd consecutive day of losses. The pan-European STOXX 600 Index dropped 1.5% at 1123 GMT. It is on track to experience its largest percentage drop in two months. Manish Kabra, Societe Generale's multi-asset strategist, said that $100 is a round figure, a psychological one, but for developed markets, the break-even price of oil is higher. "We believe crude oil needs to reach $150 in order to cause a significant drop in demand." Kabra warned that if the price margins of refined products do not decrease, "then?diesel costs go up with a tendency to have a trickle down impact on inflation and service." U.S. Diesel prices reached a record-high last week, as global supply constraints intensified following the?wars? in Ukraine and Iran that affected refineries in Russia & Middle East. Diesel is used widely in trucking, farming and industrial activity. Higher prices could impact the economy. The euro rose ahead of Thursday's ECB policy announcement, as markets were expecting an increase amid inflationary pressures caused by the Iran War. The currency reached a high of $1.16493, which is higher than the previous week's. As traders exited their short positions, the yen rose to a near seven-month high against the dollar. The expectations are building for a faster Bank of Japan rate increase and a possible rush of Japanese capital repatriation. Japan and the Eurozone are both energy importers. U.S. INFLATION TESTS The benchmark yield for global borrowing costs is the 10-year U.S. Treasury. It traded at 4,808%. It reached a three-year high last week of 4.818% as traders increased expectations of tighter monetary policies. The U.S. consumer and producer price reports that are due to be released this week are expected to be a true test of these bets. Policymakers are looking for more evidence that inflation is continuing its downward trend. The odds of a U.S. Federal Reserve?quarter point hike or a holding on Wednesday next week are close to 60%, but the BOJ is almost certain?to increase by a quarter point two days later. The yen gained around 0.4%, reaching 153.350 to the dollar. It is now moving back toward its previous session high of 152.89. Market players reported that it had risen by around 4% in the last five sessions. Hawkish comments made by?BOJ officials were ostensibly responsible for this move, which then snowballed when breaks of 'key levels' triggered more buying. The pound rose 0.1% to $1.3558. The Bank of England will announce its latest decision on Thursday of the following week. Economists predict that the key rate for the rest of the year will remain unchanged. Gold rose 1.1% to $4,403 per ounce.
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LME launches steel contract using Shanghai Prices on October 27
The London Metal Exchange will launch a contract for steel on October 27 using prices from its Shanghai counterpart, the 'LME' announced -on Wednesday. This is part of China’s efforts to increase its influence on global commodity pricing. In June, the LME announced an agreement with the Shanghai Futures Exchange for the new contract. At the time, the LME stated that trading would start in October. However, it did not specify a date. The SHFE, one of the most liquid steel contracts in the world, will be mirrored on the LME to increase trading volume and attract new customers. The new contract is based on Shanghai Hot-Rolled Coil Steel Futures. MiRan Park is the chief business officer of the LME. She said: "From next week, the LME provides the market with an easy way to access?what's widely regarded as a global benchmark for the sector flat steel. The exchange also outlined an incentive program for market participants who provide quotes for the new contract on its electronic trading platform. China is urging its futures markets to expand internationally and innovate as Beijing seeks to exert greater influence over global commodity prices. Hong Kong Exchanges and Clearing Ltd. owns the?LME.
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Brent oil surpasses $100 due to Middle East conflict, which is causing supply concerns
The price of oil topped $100 per barrel for the first time since six weeks on Wednesday as the escalation of fighting between U.S. forces and 'Iranian forces raised concerns about the supply coming from the region. This also raised fears over inflationary pressures, and increased energy costs for businesses and consumers. Brent, the global benchmark for oil, has increased by 25 percent since early last week as hope fades of a permanent solution to the six-month old U.S./Iran conflict. This week, the rally intensified after Iran-backed Houthi attacked Saudi energy installations and set them ablaze. The increased risk of disruptions spreading across the Gulf region was heightened by the attacks. The break of oil above $100 signals that global markets are becoming more vulnerable due to months of supply losses caused by disruptions in oil exports via the Strait Of Hormuz and inventory drawdowns. Oil investors have expressed their opinion about the impact of this latest escalation of violence in the Middle East, said Tamas Varga of oil broker PVM. They are voting with dollars, and this vote strongly indicates unless the Strait of Hormuz is reopened and oil flows again unhindered, supply and demand will not align in the near future. Brent futures are still below the $126 level that was reached earlier in the conflict. However, sustained prices above $100 could have a ripple effect beyond the energy market, increasing transport and manufacturing costs and reigniting inflation concerns. This would also keep interest rates high for longer. OIL STOCKS are low Some key oil consumers have seen their oil stock dwindle after six months of lower oil exports due to the war with Iran. The United States also drained heavily on its Strategic Petroleum Reserve. It is now at its lowest level in 1982. After years of releases from former President Joe Biden, and President Donald Trump to cushion consumers against high fuel prices, the reserve now contains 289.7 millions barrels. Trump's Republican Party faces a threat from persistently high gas prices over $4.00 per gallon. The party will be fighting to maintain a narrow majority in both chambers of Congress at the November midterm elections. International Energy Agency (IEA), the West's energy watchdog announced in March that 400 million barrels of emergency oil reserves had been released. The agency also stated that the global economy has significant stocks. Around three-quarters of the oil reserves have been released. According to the IEA, total global oil reserves, including all types, such as commercial stock, U.S. stocks and SPR, Chinese oils, and stocks on the water, appear fairly secure. Still, there are a large number of reserves either in transit or committed to buyers, or in countries like China that don't provide much information on their available reserves. OIL FLOWS OUT OF THE MIDDLE ESTATE ARE STILL DISRUPTED Prices are still below the April peak, when Brent surged to $126 per barrel. The return of oil prices above triple-digit levels poses a threat to a market that has little margin for error. Reduced inventories and limited spare capacities leave the supply vulnerable to further disruptions. According to estimates by?Vortexa which tracks oil shipments, the Iran War has resulted in oil exports being missing of 10 million bpd or about 10% of global oil demand. The IEA predicted that global oil production would drop by 4.3m bpd or 4% this year, despite some producers, such as the United States and Canada, increasing their output. Analysts say that with emergency stocks depleted, and millions of barrels?a day?already offline, the market is less able to absorb new disruptions than at the beginning of the war. "I believe the market is trying treat this increase in energy prices like a one-off. It's not. This is structural. It is not going to disappear, and I would say that it is part of what I call a security premium. It's only going grow bigger", said Jeffrey Currie.
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Gold gains on weaker dollar; US inflation data is in focus
Gold rose on Wednesday, supported?by a softer U.S. Dollar, as?investors? weighed inflationary forces from renewed attacks in Middle East, and awaited price data to get clues about the Federal Reserve policy outlook. Spot gold increased 1.1% per ounce to $4401.60 by 1116 GMT. U.S. Gold Futures for December Delivery gained 0.1% at $4445.30. As the U.S. Dollar weakened, greenback bullion became more affordable to buyers overseas. Lukman Otunuga is a senior research analyst with FXTM. He said that the weaker dollar, as well as technical buying have helped gold bounce from its 100-day moving mean. Gold and oil do not always move in tandem, even though Brent broke above $100. This week's price action shows why. The dollar is softening, and this has outweighed the pressure on gold today. Gold's direction in the near term will be determined by inflation data released this week. Investors are preparing for the release of producer price index (PPI), due Thursday, and consumer price index, due Friday. According to CME FedWatch Tool, traders are pricing in a 60% probability of an interest rate increase at the central banks policy meeting next Monday. Iran's Revolutionary Guard claimed that it had fired ballistic missiles on a base used by the U.S. military in Jordan and attacked 10 vessels on Wednesday after Washington announced it had destroyed five Iranian tankers. Brent crude prices surpassed $100 per barrel on Wednesday for the first since July 24. Gold is often viewed as an inflation hedge. However, rising rates are likely to reduce the appeal of non-yielding gold. In a note, Ole Hansen said that bears could be focusing on an emerging head and shoulders formation. A break below $4,300 may signal a deeper corrective move towards the established support zone around $4,000, he added. Silver spot gained 1% to $66.30 an ounce. Platinum rose 2.2% to 1,852.69 and palladium rose by 0.2% to 1351.37. World Platinum Investment Council stated that the global platinum market will be in surplus this year for the first since 2022 due to the weaker demand from investment and jewelry.
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Copper nears record highs in spite of Middle East concerns
Copper prices reached record levels on Wednesday due to a shortage of supplies in the United States. As 'hostilities' in the Middle East flared, concerns were raised about global demand and growth. The price of three-month copper at the London Metal Exchange fell 0.5% by 1045 GMT to $14,641 per metric ton after reaching an all-time record high of $14 779 on Tuesday. After the escalation of attacks by Iran and the U.S., oil prices soared above $100 per barrel. This is a six-week high. Ewa Manthey is a commodities?strategist with ING. She said that copper?is easing off record highs, as investors become more cautious regarding the macro-outlook, especially?with oil at $100 a barrel, raising concerns about inflation and global economic growth. LME copper is up 25% since March's three-month low. This was largely due to a?flow of metal into the U.S., on speculation that tariffs would be imposed there on refined?copper, creating shortages in other countries. Natalie Scott-Gray, an analyst at StoneX, estimated that more than 1.2 millions tons of copper had entered the U.S. after Washington began its Section 232 copper investigation in February last, leaving the available material outside of the country "historically low". COMEX copper dropped 1% to $6.76 per pound. This brings the COMEX premium over LME copper up to $260 per ton. COMEX copper inventories As of Tuesday, the number of short tons (or 723,275 metric tonnes) reached 797,275. The premium of LME Cash Copper over the three-month contract After some influxes into LME storages, the price has fallen to $40 per tonne from over $500 at mid-August. LME Zinc rose by 0.2% to $4.029.50 per ton, after reaching $4.051.50, its highest since April 2022. Manthey stated that "Zinc's move above $4,000 per ton reflects an even tighter market with the ongoing challenges in mine supply continuing to support prices." Nickel eased by 0.1% at $16,845 and tin rose 0.7% to $55,260.
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MORNING BID AMERICA-Tit for tat
Oil prices have risen to $100 per barrel, the highest since July, after a new round of back-and forth in the "Iran War". Meanwhile, the U.S. has banned some Canadian imports, the latest salvo in a spiraling trade dispute. Brent crude prices have risen to three-year-highs and natural gas prices are also up. This is because Iran has attacked U.S. base again on Wednesday, in response to U.S. destructions of some of its oil tanks. Iran-backed Houthis attacked energy facilities and Saudi Arabian cities on Tuesday. The traffic through the Strait of Hormuz is once again at a crawl as winter approaches for major economies. In response to Canada's "dollar for dollar" retaliation against U.S. tariffs, Washington has moved from high tariffs to bans on certain Canadian imports. The bans cover a wide range of Canadian products, including alcoholic beverages and motorcycles. The bans come after Donald Trump announced on Monday that Canadian aircraft manufacturer Bombardier could no longer sell their planes in the U.S. until it began?manufacturing there. It's anyone's guess where this will end, but countries in Europe and Asia are expecting another round of tariffs from the U.S. Tariffs are coming to a wider range of countries. In a week when the European Central Bank will likely raise interest rates again, the geopolitical noise and inflation increase that goes with it have pushed up the long-term borrowing rate once again. Next week, the Bank of Japan and perhaps even the U.S. Federal Reserve may follow. Wall Street ended the day in the red, and now we await the big U.S. Inflation reports for the week on Thursday and Friday. OpenAI's GPT-6 Astra model gave software stocks a new jolt, while chip stocks continued to rally in Asia. Markets are waiting for details of Treasury Secretary Scott Bessent’s first buyback, scheduled for this Thursday. He reportedly said that he was doing it to cool the "fever" in the bond market. Treasury yields are still as high as they were when the announcement was made last month. Japan's yen was at a seven-month high ahead of an expected BOJ rate increase next week. There were also reports that major Japanese investors are shifting investments home to take advantage of higher-yielding bonds. China released its August inflation data on Wednesday. The figures showed that the long-shaded consumer and producer price levels had increased significantly, primarily due to rising energy costs. Chart of the Day The Japanese yen is now up 4% so far this month. On Wednesday, traders were bracing for another BOJ rate hike next week. Even though Treasury Secretary Scott Bessent, on Tuesday, dared traders to bet against yen after the U.S. joined Japan to intervene to support the currency. Speculative short positions are still significant. Oil prices have risen above $100 per barrel, and this has a devastating impact on Japan's import bill. Watch today's events * U.S. 10-year note auction (1 ?p.m. EDT) Check out my latest article on the global economy and how it could affect markets in the future. Listen to the most recent episode of Morning?Bid's daily podcast where we discuss the resurgence of oil and Washington's import restrictions. Subscribe to the Morning?Bid daily podcast and hear our journalists discuss all of the latest news from?markets, finance and politics. Want to receive Morning Bid every morning in your email? Subscribe to the newsletter by clicking here. You can find ROI at the website and follow us on LinkedIn or X. The opinions expressed are solely those of the authors. These opinions do not represent the views of News. News is committed to the Trust Principles and is dedicated to integrity, independence and freedom from bias.
GRAPHIC-Brent Oil Tops $100 As Middle East Conflict Intensifies, Stoking Supply Fears
The price of oil topped $100 per barrel for the first time in six weeks on Wednesday as an increase in fighting between U.S. forces and Iranian forces heightened concerns about supply coming from 'the -region. This also raised fears over inflationary pressures, and increased energy costs for businesses and consumers.
Brent, the global benchmark for oil, has increased by 25 percent since early last week as hope fades of a permanent solution to the six-month old U.S./Iran conflict.
This week, the rally intensified after Iran-backed Houthi attacked Saudi energy installations and set them ablaze. The increased risk of disruptions spreading across the Gulf region was heightened by the attacks.
The break of oil above $100 indicates that global markets are becoming more vulnerable due to months of supply losses caused by disruptions in oil exports via the Strait of Hormuz, and inventory reductions.
Oil investors have expressed their views about the impact of this latest escalation of violence in the Middle East unambiguously, said Tamas Varga of oil broker PVM. They are voting with their dollars, and this vote strongly suggests that until the Strait of Hormuz is reopened and oil flows again unhindered, supply and demand will not align in the near future.
Brent futures are still far from the $126 level that was reached earlier in the conflict. However, sustained prices above $100 per barrel would have a significant impact on the energy market, increasing transport and manufacturing costs and reigniting inflation concerns.
OIL STOCKS are low
Some key oil consumers have seen their oil stocks depleted after six months of reduced Middle East oil exports due to the conflict in Iran.
The United States also has a?drawn heavily from its Strategic Petroleum Reserve which is now at its lowest level in 1982. After years of releases from former President Joe Biden, and President Donald Trump to cushion consumers from high fuel costs, the reserve now contains 289.7 millions barrels.
Trump's Republican Party faces a threat from persistently high gas prices over $4.00 per gallon. The party will be fighting to maintain a narrow majority in both chambers of Congress at the November midterm elections.
International Energy Agency (IEA), the West's energy watchdog announced in March that 400 million barrels of emergency oil reserves had been released. The agency also stated that the global economy has large stocks. Around three-quarters of this amount has been released.
According to the IEA, total global oil reserves, including all types, such as commercial stock, U.S. stocks, Chinese stocks, and stocks on the water, appear fairly secure.
Yet, many of these are in transit, have been sold to buyers, or are held in countries like China that don't provide much information on their available reserves.
OIL FLOWS FROM THE MIDDLE ESTATE STILL DISRUPTED
Brent prices have remained below their peak of $126 per barrel in April. The return of oil prices above triple-digits poses a threat to a market that has little margin for error. Reduced inventories and limited spare capacities leave the supply vulnerable to further disruptions.
According to Vortexa's estimates, the Iran War has caused oil exports of 10 million bpd - or about 10% of global oil demand - to be lost.
The IEA predicted that global oil production would drop by 4.3m bpd or 4% this year, despite some producers, such as the United States and Canada, increasing their output.
Analysts say that with emergency stocks depleted, and millions of barrels?a day already off the market, the market is less able to absorb?new disruptions?than it was at the beginning of the war.
"I believe the market is attempting to treat this increase in energy prices as an anomaly. It's not. This is structural. It is not going to disappear, and I would say that it is part of a security premium. It's only going grow bigger," said Jeffrey Currie.
(source: Reuters)