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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.
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Iran and US attack tankers in largest wave of attacks since the war began
Iran announced on Wednesday that it had attacked ten?ships in the Strait of Hormuz, after the U.S. had sunk five Iranian oil tanks. This was the largest declared wave of tit for tat attacks by both sides on shipping since the start of the six month-old conflict. As a result of the attacks on and around the important waterway, the price of crude oil soared. The Brent crude international benchmark broke $100 per barrel for the very first time since last July. The average retail price for diesel fuel in the United States has reached a new all-time high of $5.94 per gallon. Iran said that it also fired ballistic missiles on a base in Jordan used by U.S. troops. Both sides have launched attacks since the end August, shattering a relative calm that lasted for a month. The U.S. has also targeted Iranian military, shipping, and energy assets. In recent days, fighting has escalated between Saudi Arabia and Houthis in Yemen. This is a second theater of war which threatens the Middle East's energy supply to the world. VIDEO SHOWS IRANIAN TANKERS BEING ABLAZE The Americans claimed to have destroyed?five Iranian tankers over night, and released video showing the ships on fire before they sank. Central Command of the U.S. Military said that its attacks were a reaction to Iran's Islamic Revolutionary Guard Corps attacking a U.S. Navy Warship twice with missiles in the previous two days. The U.S. claimed that no Americans were injured. Washington announced that it would attack Iranian oil tankers as a retaliation to fires that threatened its warships. Iran claims it will impose a larger off-limits area around the strait, and use new missiles that are more powerful to attack U.S. warships. "Iran is continuing to attack U.S. navy ships and every time they try or do this, they will lose tankers," U.S. secretary of state Marco Rubio said to reporters during a trip to Colombia. The IRGC announced on Wednesday that they had launched a ballistic-missile attack on a U.S. base near Al Azraq, in eastern Jordan. They also fired on eight oil tankers and two U.S. vessels attempting to pass through an area of the 'Strait of Hormuz' which it has declared off-limits. UKMTO, the British maritime security agency, said that it received reports of merchant ships being disabled by fires in the northern Gulf of Oman and Gulf of Oman on either side of strait. The agency was unable to confirm immediately whether there were any casualties or damage to the environment. The agency said that a vessel had been reported to be listing. This could indicate it was taking on water after a projectile struck the vessel off Port Rashid in the United Arab Emirates. According to a press release carried by the state media, Iran also threatened oil tanks in Kuwaiti and Bahraini port. According to a maritime security source, a tanker of liquefied gas was damaged at the Emirati Port of Khor Fakkan. Iran has effectively choked off the transit through the Strait?that carried about a fifth global oil before war. Washington responded by blocking Iranian ports. It claims to have been able guide many tankers across the Strait. However, independent monitors report that it is becoming increasingly difficult to determine the extent of oil escaping. Data preliminary showed that only six ships crossed the strait with their transponders on in the past 24 hours. Iran claimed that the missiles it fired at Jordan caused heavy damage. Jordan claimed that its air defences intercepted 18 out of 20 Iranian missiles. Two fell in unpopulated areas, and there were no casualties. U.S. officials said that Iran's attacks in Jordan were ineffective, and that all American troops are present. A video filmed and confirmed by in Ash-Shajarah in northern Jordan showed flashes illuminating the night sky. Iran has been targeting U.S. bases throughout the war and at least two U.S. soldiers were killed in a July strike on Jordan. HOUTHI ATTACKS SAUDI ARABIA The escalating conflict between Saudi Arabia, and the Iran-aligned Houthis?that control the majority of populated areas in Yemen have created further uncertainty on energy markets. The Houthis attacked four Saudi Arabian cities on Tuesday. They caused massive fires in oil installations visible from space. Saudi authorities reported that 73 people had been injured. Saudi Arabia issued an alert on Wednesday warning of a possible threat to Khamis Mushait, one the cities that were struck the day before, but lifted the alert later without providing any details. In recent days, the fighting in Yemen has intensified. A Saudi-backed government in the south launched a multifaceted assault on Houthi controlled areas. According to the Houthis, Saudi airstrikes have killed a large number of people. The group has now extended its disruption of shipping to the Arabian Peninsula on the other side, at the entry to the Red Sea.
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Oil prices top $100 and European stocks fall on new Gulf attacks
Brent crude prices soared to $100 per barrel on Wednesday as the intensification of the conflict in Middle East fueled fears of 'energy-driven inflation' and sent European stock markets to a one-week-low ahead of major central bank decisions. Brent crude futures increased by as much as 2.3%, reaching a session-high of $100.19. This was the first time that Brent crude futures had breached the symbolic price since July 24th. Iran claimed it fired ballistic rockets at an American base in Jordan. Both sides also claimed to have launched attacks on vessels. The latest rise in oil prices has caused stock markets around the world to be under pressure. Central banks are worried that higher inflation could lead them to tighten monetary policy. The pan-European STOXX 600 Index fell 0.7% at 0901 GMT. Among the biggest decliners were industrial stocks and banks that are sensitive to economic conditions. U.S. Stock Index Futures were mostly flat on Wednesday after the cash index fell 0.6% Tuesday. Manish Kabra, Societe Generale's multi-assets strategist, said that $100 is a "round number" and a "psychological number," but the breakeven point for oil prices on developed markets is higher. "We believe crude oil needs to reach $150 in order to create a major pullback in the demand cycle." Kabra warned that if the price margins of refined products do not decrease, "then diesel costs?go up? and tend to have a?trickle-down effect on inflation and service prices." The euro moved higher in anticipation of the European Central Bank policy announcement on Thursday. Markets were expecting an increase amid inflationary pressures due to the Iran War. The currency reached a high of more than $1.16493 a week ago and was last up by 0.1% to $1.16325. As traders exited their short positions, the yen rose to a near seven-month high against the dollar. The Bank of Japan is expected to increase interest rates faster and there could be a rush of Japanese capital repatriated. U.S. INFLATION TESTS Recent weeks have seen a rise in bond yields due to inflation fears. Traders are pricing higher odds of central bank tightening. The U.S. producer and consumer price reports this week are seen as an important test of those bets. Policymakers are looking for more?evidence? that inflation pressures continue to?cool. The odds of a U.S. Federal Reserve quarter-point rise or hold on Wednesday next week are close to 60%. However, the BOJ quarter-point raise is almost certain two days later. The yen gained 0.2%, reaching 153.675 to the dollar. This is a slight increase from its previous high of 152.89. Market players say that the yen had risen by around 4% in the last five sessions. Hawkish comments made by BOJ officials were ostensibly responsible for 'initiating' a move which then snowballed when breaks of key levels triggered more buying. The sterling was little changed at $1.3543. 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% to $4,401 per ounce.
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UK short-dated bonds yields reach a one-week-high after oil crosses $100 per barrel
The yields on two-year and five year British government bonds rose to a new high of one week after oil prices surpassed $100 per barrel for the first time in six weeks. This sparked fears about inflation, which pushed yields up to their highest levels in decades last weekend. At 0925 GMT the two-year gilt yields - which are sensitive to expectations of interest rates - reached 4,629%, an increase of more than 3 basis point on the day. This is their highest level since September 2, when they reached a five-month high of 4,691%. The five-year yield peaked at 4,727%. This is also up by 3 basis points and their highest level since last week when they reached a three-year peak of 4.785%. Daniela Hathorn is a senior market analyst at Capital.com. She said that "higher crude" has re-invigorated concerns about the energy shock, which could'stall disinflation' and 'force central banks to stay restrictive". The Bank of England is not expected to increase rates next week or any time this year. However, the financial markets have priced in a 70% possibility of an increase by November. Andrew Bailey, the BoE Governor, told a Parliament Committee on Tuesday that "market pricing" reflected the threat of additional energy market pressures on inflation. However the BoE was not trying to signal a rate rise. The country's most expensive borrowing since 1998 was done by Britain on Tuesday. This added pressure to Finance Minister John Healey before his first budget.
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Indonesia's chief regulator claims that the new commodity exchange will help it to be a "price influencer" with its new commodities.
Indonesia aims to influence the price of its top commodities in the early stages of operation at its planned 'new commodity exchange. The newly appointed chief regulator of the country said this on Wednesday. Jakarta is looking to become a global 'price maker. Indonesia's new strategic commodities and minerals exchange, which is part of President Prabowo Subianto's ambition to increase state control over vast natural resources in the country, will launch on January 1, 2020. Prabowo, in a fiery address to the parliament last month said that the resource-rich nation would prefer to keep its commodities rather than sell them at too low a price. Sarjito said the bourse's first goal should be to achieve a smaller target in order to gain more influence on the international stage. He told reporters that he didn't want the exchange to be a price taker at first, but rather a price influencer. Sarjito (who goes by a single name) said, "At the very end, we have to be able and confident enough?to be a price maker." He didn't set a deadline. Indonesia is the largest exporter in the world of palm oil, thermal coal and nickel. It also ranks high on global lists for tin and copper. The palm oil production and export policies of Malaysia are already impacting the benchmark price at the Malaysian derivatives exchange. A surge in nickel production over recent years also has pressured prices in London and Shanghai. Analysts and industry veterans have warned that Indonesia's plan to set prices could backfire by driving away buyers if?trading on the?exchange is made mandatory, or if the price difference with other benchmarks gets too large. Sarjito was nominated by Prabowo to this position and received parliamentary approval last month. He had promised to create a trusting exchange in a "fit?and?proper" test. Sarjito stated that the new bourse will help to tackle tax leakage by addressing such practices as under-invoicing by exporters and transfer pricing. Sarjito stated that his immediate priority was to finish commodity trading regulations before the deadline of September 17. He said that a presidential directive would decide which commodities will be traded at the exchange.
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Gold gains on weaker dollar; US inflation data is in focus
Gold rose on Wednesday, aided by a weaker?U.S. Investors weighed the price pressures of renewed attacks in the Middle East, and awaited important inflation data to get clues about the Federal Reserve policy outlook. Spot gold increased 1.1%, to $4401.09 an ounce, by 8:25 GMT. U.S. gold contracts for December delivery rose 0.1%, to $4445.10. The U.S. Dollar has weakened, making greenback priced bullion more accessible to buyers abroad. Lukman Otunuga is a senior research analyst with FXTM. He said that a weaker US dollar and technical buying are providing ample support for gold. "Normally, an oil-driven inflation fear would have a negative impact on gold and reinforce the argument for higher interest rates. The broader dollar softness today is more important than?that pressure, and its near-term course will be determined by the U.S. Inflation data this week. Investors prepare themselves for Thursday's data of the Producer Price Index (PPI), and Friday's data of the Consumer Price Index. 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 also said that it had fired ballistic missiles at a U.S. military base in Jordan and attacked ten ships on Wednesday after Washington claimed to have destroyed five Iranian oil tankers. Brent crude prices surpassed $100 per barrel for the first time since July 24, Gold is often seen as a hedge against inflation, but higher rates tends to reduce its appeal. In a note, Ole Hansen said that bears may focus on a head-and-shoulders pattern. A break below $4,300 could signal a deeper corrective move towards the established $4,000 support area. "Conversely a sustained break above the '200-day moving averge would improve the technical outlook, and bring $4.770 into focus." Silver spot gained 1.3% per ounce to $66.59, platinum rose 2.2% to 1,852.86, while palladium rose by 0.5% to 1355.6.
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Google invests $15 billion in AI infrastructure, and purchases nuclear power in Finland
Google, a subsidiary of Alphabet, said it would invest at least EUR13 bn ($15.1 bn) in artificial-intelligence infrastructure in Finland over the next two years. It also announced that it had signed its first contract for nuclear power outside the U.S. Fortum, the operator of Finland's nuclear power plants, said that part of the deal is a 22-year agreement to purchase up to 50 percent of energy produced by one of Finland’s two nuclear reactors. Finland is a country that offers a lot of nuclear power as a low-carbon source of energy. Companies like Microsoft, TikTok's owner ByteDance, and Google are looking for sites to build data centres. Ruth Porat, Chief Investment Officer of Google U.S.A., told Helsinki reporters that this was the company's first nuclear deal outside the United States. "We think it's an important cornerstone for everything we do here," she said. The companies have said that Fortum and Google will also look at the development of nuclear and renewable energies in Finland. Fortum's shares rose by 10% at?0825 GMT. This was higher than the 1.4% rise in the Helsinki benchmark index. The biggest deal in Europe so far Alphabet increased its investment in the global market this year to between $195 and $205 billion dollars as it seeks out to capture the growing computing demand. Google says the AI investment in Finland is its largest deal ever in Europe. Google announced that the investments would include data centres, improvements to the electricity grid, and clean energy projects and battery projects, which will drive services like Gemini, Search, Maps, and YouTube. The company stated that "the new digital infrastructure will be building blocks for Finnish digital readiness and innovation as well as AI development" Google stated that the investment will support 7,000 jobs per year once it is operational. It will also contribute $3.6 billion to Finland's Gross Domestic Product during construction. In a statement, Finland's Premier Petteri Orpo stated that Google's decision is "a clear testimony to our strengths". He added that "the value of the data-economy?extends beyond direct investments into spurring research and development, innovation, and creativity." Fortum stated in a statement that the long-term contract provided financial certainty for a lifetime upgrade and extension of 'the Loviisa Power Plant through 2050. The plant is located near Google's Hamina Data Centre. The cold climate of Finland lowers costs, not only because of the abundance of low-emission electricity but also because the energy required to deal with the heat generated by data centres is reduced.
Oil prices rise to $100 due to conflict fears Why isn't the price higher?
Brent crude, the global benchmark for oil prices, hit $100 per barrel Wednesday. This was the first time this has happened since late July. However the price increase is relatively slow despite the escalating conflict in the Middle East that fuels fears of more disruptions to oil shipments.
Russell Hardy, CEO Vitol - the world's largest independent oil trader - told the APPEC Conference in Singapore on Tuesday that the Middle East has exported approximately 9 million barrels of crude per day and another 1 million bpd in refined products in recent days.
This compares to roughly 20,000,000 barrels of crude oil and other products just before the 'Iran War' began on February 28.
What factors drive oil prices?
SIGNIFICANT VOLUMES CAN FLOW THROUGH THE HORMUZ
Claudio Galimberti is Rystad Energy Chief Economist and he says that in the week prior to the fighting breaking out again on August 30 there were 8-9 million bpd flowing through Hormuz. This was double the volume of the previous week.
During the interim U.S. - Iran peace deal, in July, Hormuz oil exports reached pre-war levels at 16 million bpd.
GULF EXPORTERS USING ALTERNATIVE ROUTE
Gulf producers have found alternate routes and will continue to send cargoes outside of Hormuz for ship-to -ship transfers, mitigating a part of the initial shortfall.
Saudi Aramco resumed its loadings at its Ras Tanura Port in the Gulf of Aden in August. However, its exports to the Red Sea from Yanbu remain under pressure due to a naval blocade by Iran-aligned?Yemeni Houthis.
Provisional Kpler data shows that Yanbu exports fell to 1.429m bpd, a six-month low, in August. This is down from an average of 3.93m bpd over the previous three month period. Houthi attacks on Saudi energy infrastructure this week could threaten Red Sea shipments.
Exports of Sidi Kerir, Egypt's alternative port, reached 2.139 million bpd during August. This is more than double the volume in June.
Iraq, the No.2 OPEC producer, saw its exports rebound in August to around 2.34 million bpd. Exports from No.
Kpler data revealed that shipments from the United Arab Emirates (UAE) hovered at around 2.9 millions bpd between August and July, after reaching a record high in June.
Kuwaiti crude oil exports increased to around 1 million barrels per day in July and August.
The U.S. Blockade has led to a sharp decline in Iran's oil production.
Other producers are stepping up
According to Jarand Rystad of Rystad energy, non-OPEC producers such as the United States and Canada will increase their output this year by a total of 1.4 million bpd. This will help to fill the gap.
Kpler data revealed that Russian refineries have been unable to process crude oil due to the damage caused by Ukrainian attacks on their plants.
The Russian government has reduced its oil production forecast for 2026 to the lowest level in 17 years, which could reduce exports.
The importance of demand destruction is significant
Rystad reported that the demand destruction of petrochemicals, transportation fuels, and other chemicals is still significant at 3.5 millions bpd compared to 4.5 million in the second quarter. China accounts for more than half, due to the increase in transport electrification, and the use of coal-based chemical products, Rystad stated.
China, the top importer, dubbed "the new demand OPEC" because of its influence on the market, slashed its seaborne crude shipments from 11 million bpd to 7 million bpd between July and August, down from over 11 millions bpd back in February.
The research arm of Sinopec said that China's oil consumption is forecast to decline by 600,000 barrels per day (bpd) in 2026. This would be a third consecutive annual decline.
The markets have also been comforted by the vast reserves of China, which Kpler estimates at 1,17 billion barrels.
The PHYSICAL MARKET AND PRODUCT MARKERS TELL DIFFERENT STORIE
Data showed that spot premiums had rebounded from April levels, with Dubai and Oman more than $20 per barrel higher than Dubai's quotes for November cargoes. Oman futures reached $121.68 on Tuesday.
David Fyfe is the chief economist of Argus.
"We have?already gotten prices that are substantially higher than $100 per barrel, and more importantly, the diesel market is in a state of screamin' shortage."
As refiners increase production of diesel in the U.S., demand is expected to rise.
ANALYSTS CHANGE FORECASTS
Several banks raised their Brent forecasts. Morgan Stanley expects prices to average $100 a barrel in the fourth quarter. HSBC raised its forecasts for 2026 and 2027 Brent prices from $90 to $85 a barrel.
Goldman Sachs has raised its Brent and West Texas Intermediate price forecasts for December 2026 by $5 per barrel, citing the expectation that Middle East ship disruptions will continue into next year. Goldman Sachs now expects Brent to be $85 per barrel and WTI to be $80 in December 2026. Prices for 2027 will then remain at $80 and $75.
(source: Reuters)