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Petrobras refuses to accept additional diesel orders because Brazilian prices are below global market
Four sources with knowledge of the situation have confirmed that Brazilian state-run Petrobras has refused to?accept requests from fuel distributors requesting additional diesel volumes, as domestic prices are falling?to record discounts compared to global levels. Petrobras is the largest supplier of fuel in Brazil and the data indicates that the diesel sold by the company is currently 85% less expensive than imported fuels. This is due to global prices rising because of the U.S. Iran conflict. Sources claim that the disparity between the two diesel prices has a negative impact on the booming agricultural sector of the country during the harvest season. Petrobras sells only the diesel that is contractually required to its distributors. A?company source said the firm will not sell more so distributors can stock it up and make money when the state-run oil company raises the price. Source: "We can't give out more diesel to distributors so they can buy cheaply now and profit later," said the source. Magda Chambriard, CEO of Petrobras, said that the company doesn't pass on short-term volatility to the consumers. She also stated last week that the company is still evaluating the new oil prices before making any adjustments. The Middle East conflict's first and most immediate impact on Brazil's agricultural sector would be a spike in diesel prices. This would increase costs for farmers harvesting record soybean crops and planting corn. Sergio Araujo is the head of Brazilian fuel importers' association Abicom. He said that Petrobras, which produces around 55% diesel in Brazil, has a huge influence on fuel prices. Araujo stated that the steep discount is causing buyers to turn away from private refiners and imported cargos. This has reshaped fuel flows, and created logistical strains which are leading supply imbalances. SOUTHERN BRITAIN EMERGES WITH SUPPLY TENSIONS Farmers in Rio Grande do Sul have reported difficulty in obtaining fuel. The state has two refineries, and diesel is normally plentiful. ANP, the oil regulator, said that it will investigate the complaints of rural producers regarding supply shortages during peak harvest. ANP reported that it contacted major suppliers on the weekend, and found that Rio Grande do Sul "has enough stocks to ensure regular supply of diesel." Araujo explained that the problem is not a lack of diesel, but rather buyers who want to buy at the current Petrobras price, while sellers ask for higher prices in order to protect themselves against potential costs in the event the state-owned firm changes its prices in the next few weeks. Araujo said that sellers believe they will have to pay more for restocking. Petrobras didn't immediately respond to a comment request. (Reporting by Marta Nogueira and Rodrigo Viga Gaier in Rio de Janeiro, writing by Fabio Teixeira)
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Venezuelan acting government sends mining bill to legislative
Venezuela's acting government sent Monday a mining regulations?proposal?to the country's ruling party controlled national assembly. This is the 'latest salvo' in a package of 'U.S.-backed' changes that are'meant to open up the economy for foreign investment in minerals and oil'. Since a January U.S. raid which captured President Nicolas Maduro in Venezuela, the administration of U.S. president Donald Trump has backed a series moves by acting president Delcy Rodriguez aimed at attracting investors and stabilizing the country. Trump has repeatedly praised Rodriguez for "cooperating" with the U.S. The draft law that has been seen but not yet made public, repeals the 1999 Mining Regulation Law, allows both foreign and domestic companies, to exploit gold, diamonds, and rare earths, and increases concessions by 20 years?to 30 years. According to the draft which creates a new tax calculation for mining projects, mineral?deposits will remain the property and ownership of the state. Due to the socialist party's majority in the legislature, the law is likely to be approved. U.S. Interior Secretary Doug Burgum, during his visit to Venezuela the previous week, struck an optimistic tone about 'the law.' He said that it would?create opportunities and that Rodriguez had promised to ensure their safety. The U.S. issued an authorization the day after Burgum concluded his visit to Venezuela, authorizing certain transactions involving Venezuelan gold. This license allowed transactions with state-owned Minerven and their subsidiaries as long as contracts were governed by U.S. law. Rodriguez has praised a recent oil reform that lowered taxes, increased the decision-making power of the oil ministry, and granted autonomy to private producers among other measures as a template for mining changes. Reporting by
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Trump considers other measures to cool down oil prices, including easing Russia sanctions
Multiple sources claim that Donald Trump may announce an announcement as early as Monday evening to curb the soaring global oil prices in light of the conflict with Iran. According to multiple sources, the White House is concerned that the spike in oil prices after more than a week of U.S.-Israeli strikes on Iran could hurt U.S. consumers and businesses ahead of November's midterm elections when Trump and his fellow Republicans hope they can retain control of Congress. Two sources familiar with the situation said that Trump was in Florida to address congressional Republicans who were gathered at an annual retreat. He would be expected to consider his options by Monday. The White House has added a press event to Trump's Monday schedule at 5:30 pm, but did not provide any details as to whether or not he would make an announcement. Analysts and officials in the oil industry have stated that the White House does not have many tools to curb the rising price of oil unless it can restore the flow of tanks through the Strait of Hormuz. This narrow waterway connects Iran with Oman and carries a fifth of world's supply of crude. One of the sources who has been working with the White House to implement the initiative said, "the problem is that options?range from being marginal or symbolic up to being deeply unwise." Trump is sensitive to the turmoil on energy markets, as it comes at a time when he has been trying to?keep fuel prices low' in order to send a strong economic message. The rise in fuel and oil prices could have a ripple effect on the economy and increase consumer and transportation costs. RUSSIAN SANCTIONS According to sources, reducing sanctions against Russia was one of the policy options. This could boost oil supplies in the world at a moment when Middle East shipments are being disrupted by the growing conflict with Iran. This could complicate U.S. attempts to deny Russia revenue from its war in Ukraine. Three anonymous sources said that such a move would include a broad relief of sanctions as well as targeted options which would allow countries like India to purchase Russian oil without worrying about U.S. penalties. Kirill Dmitriev, the special presidential envoy for investment in Russia, wrote on X that he and the U.S. were discussing lifting U.S. oil sanctions. He added that "Western sanctions are detrimental to the global economy." The White House stated that any announcements on Russia policy would be made directly by Trump or members of his team. U.S. officials have been in separate discussions with counterparts of the Group of Seven countries about a potential joint release of crude from strategic reserves. Energy Secretary Chris Wright confirmed Monday that the U.S. was considering coordinating the sales of oil from its Strategic Petroleum Reserve. However, no decision has been made. The U.S. is not considering "imposing restrictions on the exports of U.S. Energy as a means to control prices," he added. Trump has other policy options, including intervening in the oil futures market, waiving some federal taxes, and lifting restrictions under 'the Jones Act', which mandates that domestic fuel only be transported on ships flying the U.S. flag, according to sources who spoke on condition of anonymity. Trump says 'a very small price' to pay. In a Sunday post on the social media platform Truth Social, Trump downplayed a price spike, saying it will only be temporary. He said that only "fools" could see it differently. The White House stated that Trump has a solid game plan to keep energy markets stable, and is reviewing credible options. Since the U.S.-Israeli strikes began on February 28, global crude oil prices are at levels they have not been seen since mid-2022. Gasoline and other fuels costs have also risen. Last week, the White House asked federal agencies for proposals to help ease pressure on gasoline and crude oil prices. Sources said that top White House officials are involved in the discussions, including White House Chief Staff Susie Wiles, and Stephen Miller as top advisor. The White House's plan to provide backstop insurance and naval escorts for tankers travelling the Strait of Hormuz has so far failed to increase shipping through this vital waterway. (Reporting and editing by Will Dunham; Additional reporting by Nandita BOSE in Miami; Will Dunham, Nick Zieminski, David Gregorio).
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The US stock market is worried about the rising oil prices
U.S. investors are apprehensive about the sudden rise in oil prices, which could cause an economic shock and further damage to equities. Investors continue to gauge the economic and market impact of the U.S. - Israeli war on Iran. Michael Reynolds, Glenmede's vice-president for investment strategy, said that the news was a "shock". It's a surprise, and both investors and the public are trying to understand what this means as it unfolds. The Federal Reserve may be hesitant to lower interest rates if the Federal Reserve is concerned about rising inflation. Higher gas and oil prices will increase costs for energy-intensive businesses, reduce discretionary budgets and erode consumer discretionary spending. Oil and stock prices dropped sharply on Monday after President Donald Trump told CBS News that his war against Iran was "very completed." Investors said that as they assessed the possible end of the conflict, they would be watching to see what Iran and Israel will do and how much energy will flow through the Strait of Hormuz. This is a crucial chokepoint. MARKET CORRECTION ?OR WORSE? Reynolds and other investors are scrambling for scenarios in the event that oil reaches heights not expected just days ago. Investors have pointed out that U.S. crude and Brent crude both broke over $100 a barrel on Monday, a level which could cause more stock turbulence. The commodities reached a high of $120 at one time on Monday, but ended lower than $100. U.S. oil was trading at $83 per barrel after Trump's remarks. U.S. crude was settled at $67.02 on February 27, which was the last session prior to the U.S. and Israeli strikes. Stock?volatility is on the rise. On Monday, the Cboe Volatility Index topped 30 for nearly a full year. It was below 20 at the end of February. The declines in U.S. stock prices have been modest compared to those of other regions. However, the S&P 500 benchmark was down 2.6% since its all-time high late January. Major equity indices finished higher on Monday, after falling steeply earlier in session. Yardeni Research strategists said on Tuesday that they were expecting a 10% correction in the stock market. In a note published on Sunday, the firm stated that "we can't exclude a bear market and even a possible recession." OIL AND STOCKS - A Tighter Link Oil prices are on the rise, and the movements have become more closely linked to the stock exchange. According to LSEG, the 20-day correlation of S&P 500 with U.S. Crude stood at -0.813 on Monday morning. This is a strong inverse relation that indicates they tend to move in opposite direction. In a Monday note, Deutsche Bank strategists were assessing whether the Iran situation would prompt a greater risk-off movement. They said that the oil shock was "among the most serious in history," and that investors have priced in "a shorter rather than a protracted conflict." Stock investors, who typically think of oil and stocks as two separate markets, have historically followed oil's price trajectory closely, particularly after extreme price movements. A jump in oil prices over $120 per barrel in early 2022 coincided with a decline in stock values. Stock investors were concerned in 2015-2016 that the low price of U.S. Crude Oil, which dropped below $30 per barrel, was a sign for a general economic slowdown. Pain at the Pump for Consumers The focus is once again on the economic implications of rising oil costs. According to JPMorgan's economists, each 10% increase in oil prices will translate into a drag of 15 to 20 basis points on the GDP growth. The JPMorgan economists stated in a recent note that the effects could also be non-linear. Higher oil prices spikes would result in an even greater hit to the growth. JPMorgan economists, along with other analysts, warned that the economic impact would depend on how high crude prices remain. The price of gasoline is currently rising due to the increase in crude oil. According to AAA, the national average price of gasoline increased to $3.48 a gallon Monday from $2.902 one month earlier. The?group reported that this is the highest price since summer 2024. Kevin Gordon, Charles Schwab's head of macro-research and strategy, said that oil prices were "as visceral" as filling your gas tank. In fact, the shares of companies that are most dependent on discretionary expenditures could be among those most susceptible to rising oil prices. Morningstar says that fuel costs account for 20 to 25 percent of airline unit costs. The S&P 1500 index for passenger airlines is down by about 11% since the war began. One HEADLINE away from a Reversal? Investors are cautious about the future, as Monday's events?underlined. Larry Adam, Chief Investment Officer at Raymond James Wealth Management, said in a Monday note that the firm anticipates the conflict will be "relatively brief." The firm kept its price forecast for U.S. Crude at $55 to $60 per barrel by the end of the year. Investors also keep in mind how Trump changed his stance on policies that are market-sensitive during his tenure. It was the softening of Trump's blanket "Liberation Day", tariff policies in April last year that led to a sharp rise in asset prices. Gordon stated that "we're just one headline away from this all reversing aggressively in a very aggressive manner." (Reporting and editing by Colin Barr; Additional reporting by Chuck Mikolajczak, Siddharth Cavale, and Lewis Krauskopf)
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Livestock-CME cattle prices fall amid inflation fears and crude oil surge
Chicago Mercantile Exchange feeder cattle and live cattle futures declined?on Monday, as rising gasoline and a'stock market decline' stoked broader concerns and fueled fears about?consumer expenditure on beef. Managed funds exited their long positions for the?second straight day and technical selling has accelerated the decline of the market as actively traded contracts have fallen below recent lows, and broken through key technical chart resistance levels. The feeder cattle market was further impacted by the high feed corn prices. Since the U.S. President Donald Trump, and his allies in Israel, attacked Iran over a week ago, the markets, including commodities, are roiled by hostilities. This has disrupted crude oil production, shipping, and prices across the region, sending them to highs that have not been seen since 2022. Equities markets were near multi-month lows for most of the day. Mike Zuzolo is the president of Global Commodity Analytics. He said, "The cattle have taken a hit because of the corn rally, and Wall Street's weakness. The feeders are the ones who have suffered the most." The late-session drop in crude oil and the stock market's rebound was too late to affect cattle markets. CME April Live Cattle ended at 230.150 Cents per Pound, a 4.425-cent decrease after reaching their lowest level since mid December. April feeders settled at 346.550cents per pound after touching limit-down, a 5.075-cents decline on the day. Beef packers are acquiring cattle for lower prices, but their margins still remain negative. According to the U.S. Department of Agriculture, wholesale beef prices have risen as a result of 'pared-back production. According to HedgersEdge, an advisory service for livestock marketing, the average beef packer's margin was estimated as a negative $117.95 a head on Monday. This compares with losses of $200 per head one week ago. Lean hog futures declined on Monday as spillover pressure due to lower cattle prices outweighed support from strong pork demand. CME April hogs ended 0.800 cents lower at 95.825 cents per kilogram. (Reporting and editing by Shilpi Mahumdar; Reporting by Karl Plume)
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Kremlin: In a telephone call with Trump Putin shares his proposals for ending the Iran War quickly
Yuri Ushakov, a Kremlin adviser on foreign policy, said that Russian 'President Vladimir Putin', during a phone conversation with Donald Trump of the United States, made a number of proposals to a halt the conflict involving Iran. Ushakov told reporters that the two leaders discussed the conflict in Ukraine, and that the Russian gains should prompt Kyiv's negotiating team to work towards a resolution. He called the whole?discussion "very substantial", and added that it "would likely have practical implications for future work between the two countries". Ushakov stated that Putin "expressed a number of thoughts aimed at ending the Iranian conflict quickly, both politically and diplomatically, including contacts with leaders of Gulf States, the President of Iran, and other leaders". He said Trump had "offered his opinion on the developments in U.S. Israeli operations." I can say with certainty that there was a substantial exchange of ideas. Ushakov stated that Trump believes it is in the U.S.'s interest to see "a rapid end to the conflict in Ukraine, with a ceasefire and long-term solution". He said that "Russian troops are advancing very successfully" in Ukraine. As was noted, this 'factor' should encourage the regime in Kyiv - to negotiate a solution - to the conflict. Ushakov said that the two presidents discussed the Venezuelan situation within the context of the global oil markets. (Reporting and writing by Dmitry Antonov, editing by Ron Popeski and Alistair Bell).
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Brazil's farmers are facing a rise in diesel prices as a result of the Middle East conflict.
The first and most immediate impact of the U.S.-Israeli attack on Iran is a spike in diesel prices. This will increase costs for Brazilian farmers harvesting record soybean crops?and planting corn that they can't afford to delay. Brazil imports around 30% of its diesel needs. This leaves farmers vulnerable as fuel prices rise along with global oil costs, said representatives from major agricultural groups. The conflict occurs at a time when the demand for diesel in Brazil is at an all-time high. Farmers are harvesting the remaining fields, hauling soybeans for market and finishing the planting of 'the second corn crop', which is the majority of corn produced in Brazil. Brazil is one of the world's biggest soybean exporters and corn suppliers, so any disruption in farm operations will have a significant impact on global grain markets. Officials from the industry said that these activities, as well as other fieldwork, such applying pesticides and fertilizers, are dependent on diesel. Diesel is currently the most important issue. "We saw oil moving from around $80 per barrel to $100 per barrel range and that has caused alarm among the countryside," Bruno Lucchi said, technical director of farm lobby CNA. On Monday, oil prices rose above $119 per barrel before falling back. Brent crude had risen by more than 7% at 2 pm local time and was trading close to $100 per barrel. Petrobras - which supplies the majority of the market - hasn't yet altered its prices, but you can already feel it. Some suppliers have allegedly restricted sales due to higher oil costs, causing problems for farmers in Rio Grande do Sul. Lucchi said that higher costs - or disruptions in -nitrogen fertilizer imported from Iran due to risks on the Strait of Hormuz - were manageable at this time because farmers already had supplies?for current season, and could delay any new purchases. Diesel is a more immediate problem. Cleiton Gauer, director at Mato Grosso's farm economy institute Imea said that producers needed fuel immediately to keep the fieldwork moving. Diesel and lubricants account for about 5% of farm costs, according to Gauer. Lucchi said he received reports that the price of gasoline had risen by as much as 1.5 reais per liter in some areas, especially those located in Brazil's southern and center-west regions. (Reporting and writing by Roberto Samora, Kylie Madry, Aurora Ellis).
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US considers easing Russian oil sanction to cool global prices surge, sources claim
According to sources familiar with Trump's plans, the administration may reduce oil sanctions on Russia in order to cool the surge in global energy prices caused by the U.S. and Israeli war against Iran. An announcement could be made as early as Monday. The U.S. would like to increase world oil supplies amid the'massive disruptions in Middle East shipments due to the expanding conflict. But this could also complicate its efforts to deny Russia revenue from its war in Ukraine. Sources who spoke on condition of anonymity said that the discussions could include a broad relief of sanctions as well as more 'targeted' options which would allow certain countries such as India to purchase 'Russian oil' without fear of U.S. tariffs or penalties. Last week, the United States allowed India to temporarily buy Russian crude oil that was already on tankers in the sea to help it cope with Middle East supply cuts. Sources said that the new measures could be announced as early as Monday. Taylor Rogers, White House spokesperson and a spokesperson for the 'administration,' called the war Operation Epic Fury. Rogers stated that "any policy announcements will be made directly by the President or his staff."
After Trump's hint at ending the Iran war, shares rise and oil prices fall
Wall Street stocks rose, oil prices remained steady and U.S. Treasury Yields fell on Monday. President Donald Trump reportedly stated that he believes the war against Iran is "very complete" and the 'U.S. It is "very much ahead" of the initial estimate of four to five weeks. The initial fall in stock and bond prices was due to the surging oil price, which seemed to be a sign that inflation would spread around the world. This led central banks to increase interest rates.
Saudi Arabia, along with other OPEC countries, cut oil supplies to counter the U.S. - Israel war against Iran. Oil prices soared as high as 29% in the session. Prices fell from their session highs after the U.S., and other Group of Seven countries (G7) considered tapping into strategic petroleum reserves in order to reduce inflation pressures caused by energy price increases.
After settlement, U.S. Crude fell 5.32%, to around $86 per barrel. Brent dropped to $90, a drop of 2.65%. Wall Street stocks recovered from initial losses to end higher. The Dow Jones Industrial Average rose 0.6%, S&P 500 climbed 0.8% and Nasdaq Composite soared 1.3%. The gains came despite Iran’s hardliners staging a show on Monday to declare their loyalty to the new Supreme Leader Mojtaba Khmenei. His rise seemed to have dashed hopes of a quick end to the war in the Middle East, which was causing havoc to global markets.
EUROPEAN AND ASIAN SHARE PRICES DROP European shares have fallen to their lowest level in over two months. The pan-European Stoxx 600 has lost 0.6% for the third consecutive session. The benchmark index lost 5.5% in the past week, which was its worst performance since nearly a full year.
Oil price spikes were a sobering experience for Asian oil importers. Japan's Nikkei closed down 5.2%, after a drop of 5.5%.
China, a major oil importer with a large stockpile, saw its blue chip index drop by about 1%. China said on Monday that inflation was already up in February, before the current oil boom, and consumer prices rose 1.3% year-on-year. This is not necessarily a bad development, as the country has struggled for years with deflation.
Lisa Shalett is the chief investment officer of Morgan Stanley Wealth Management. She wrote earlier in the day that, although the U.S. stock market may appear calm, there are still "extreme" rotations taking place and dispersions of stocks below the surface.
Shalett wrote that "war-induced oil scares" have not been kind to the stock market in 80 years. Nearly every episode has triggered a recession or a selloff of the markets.
Central Banks Face Inflation Conundrum U.S. Treasury Yields have pulled back after Monday's initial rise, as oil prices have slowed. The yield for the two-year bond was down by 0.4 basis points to 3.552%. It had earlier reached 3.635%, its highest level since November 20. The benchmark U.S. 10 year note yield dropped 3 basis points to 4,102%, after trading earlier at 4.216%.
Fed funds futures now price in 77% of the odds that rates will be cut in July. This is up from 67% on Monday. They also fully price in a rate reduction in September. The U.S. Dollar was barely changed against the yen and euro after both gained earlier on Monday as a flight to security.
Spot gold dropped 0.53%, to $5,142.37 per ounce. Bitcoin gained almost 3%, to $69154. (Reporting and editing by Thomas Derpinghaus; Bernadette Baum and Susan Fenton; Will Dunham, David Gregorio and Will Dunham)
(source: Reuters)