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Oil prices rise as tensions between the US and Iran flare up again, while stocks are tightened
After?the U.S. The military launched new attacks against Iran, and market data revealed another large drawdown in U.S. oil stocks. Brent futures climbed 66 cents or 0.7% to $92.11 a bar at 0406 GMT. U.S. West Texas intermediate crude crude crude climbed by 60 cents or 0.7% to $88.80. After President Donald Trump promised to act on the downing of an Apache attack helicopter by the U.S., this was a new escalation which threatened to unravel a fragile truce between Washington and Tehran. Priyanka?Nova, a senior analyst at Phillip 'Nova, stated that the latest attacks have shifted traders’ focus to war risks and possible supply disruptions. Sachdeva stated that "while diplomatic efforts are still ongoing, recent military exchanges have brought back a geopolitical premium to oil markets." Tehran has said that it will resume hostilities?if Israel continues to attack Hezbollah in Lebanon. Israel's refusal of ending its campaign against 'Iran-backed Hezbollah' has hindered Trumps attempts to 'extend a fragile ceasefire' in the larger U.S.-Israeli conflict with Iran to a durable resolution. The ING commodity analysts said that if the disruptions continue into the third quarter - a time of higher oil demand - prices could rise. Tehran continues to 'block most shipping through Strait of Hormuz. This normally transports a fifth of crude oil and natural gas around the world. Washington has imposed a blockade on?Iranian port. U.S. Energy Sec. Chris Wright stated on Tuesday that the?oil-exports through 'the Strait of Hormuz? are increasing even though Washington and Tehran struggled to reach an agreement on ending their three-month war. According to data released by the American Petroleum Institute on Tuesday, U.S. crude oil inventories dropped for an eighth straight week. Gasoline stocks also fell. Sources, who spoke on condition of anonymity, said that crude stocks dropped by 9.12 million barrels during the week ending June?5. Gasoline inventories also fell by a total of 1.19 million barrels. During the war, the United States was a marginal crude and product supplier and increased exports to Asia. A drop in U.S. stocks could harm exports and increase prices. Reporting by Arathy S. Somasekhar, Jeslyn Lerh and Shri Navaratnam; Editing by Sonali Paul and Shri Navaratnam
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Officials alter train schedule after drones strike historic museum in Russia annexed Crimea
Local authorities said on Wednesday that Ukrainian drones had hit a historical museum in Sevastopol, in Russia-annexed Crimea. They also reduced the number?nighttime train services in response to intensifying air strikes. The museum is dedicated to the 1853-1856 Crimea War, which was fought between the Russian Empire and a coalition including the Ottoman Empire. In that war, Russia lost. Mikhail Razvozhayev said that the roof of the museum was damaged on Telegram. He didn't provide any details on the damage, or if there were casualties. "The enemy will be held accountable for this sacrilege!" Razvozhayev wrote in his early Wednesday morning post. Sergei Aksyonov, the Crimea's Russian-installed Governor, said on Telegram that authorities had cut night train schedules after a drone strike this week killed a train assistant and injured a driver. Fuel shortages are affecting the Black 'Sea Peninsula of Crimea after recent Ukraine drone strikes, just as the holiday season is about to begin. Last week, Ukrainian President Volodymyr?Zelenskiy proposed face-to?face?talks? with Russian President Vladimir?Putin. He rejected the proposal. The Kremlin claimed that Ukraine undermined efforts to reach a peaceful solution to the conflict after the train accident. A regional governor reported that the city of Novokuibyshevsk, in Russia's Samara Region, which is a major oil hub along the Volga River and hosts several refineries run by state-controlled Rosneft, had successfully repelled drone attacks. Local media reported that authorities urged residents to take shelter in the city's one million inhabitants as public transport was suspended due to air raid alerts. The Ukraine's continued attacks on the Russian energy infrastructure have forced Moscow to?cut its?oil production, which is third largest in the world. The regional governor wrote on Telegram that falling debris from a UAV triggered a fire in a fuel tank located at a site for civilians. On Telegram, the Mayor of Moscow also said that the city is repelling drone attacks. According to local authorities, in a rare move, the remote oil-producing regions of Khanty-Mansiysk and Perm, as well as the industrial regions Chelyabinsk?and Sverdlovsk?in Ural Mountains thousands of kilometers (miles?) from Ukraine issued air raid warnings. Could not independently verify reports. Reporting by Jekaterina Glubkova, Tokyo; editing by Neil Fullick
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Taliban: Pakistani airstrikes in Afghanistan kill at least 13, Taliban claims
Zabihullah Mojahid, the Afghan Taliban's spokesperson, said that at least 13 people, including 11 children, were killed after Pakistani military launched air strikes in three provinces of Afghanistan. This is a resurgence of a conflict which has claimed hundreds of lives this year. Mujahid said that at least '14 other people, all women and children, were injured in the strikes by Islamabad, which violated Afghanistan airspace and targeted civilian homes, in the provinces Kunar, Khost, and Paktika. Security officials told us that Islamabad had carried out airstrikes on what they called the "hideouts of Pakistani militants who were using them against Pakistan." Islamabad accuses Kabul of harbouring militants who, it claims, plot attacks against Pakistan. The Taliban denied the accusations and said that militancy in Pakistan was an internal issue. The renewed violence threatens to 'disturb' a long period of peace between Pakistan and Afghanistan. Former allies, they fought the?worst war in years back in February. In March, the two countries reached a fragile truce. China was tasked with mediating a settlement to the conflict. Reporting?by Mohammad Yunus Yawar and Mushtaq Al in Peshawar; writing by Hritam Mukherjee, editing by Himani Sarkar & Lincoln Feast
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In May, higher gasoline prices are likely to have pushed the US consumer price index up again.
The Middle East conflict has increased the prices of energy products in the United States, and this will give the Federal Reserve more ammunition to maintain interest rates at the same level for the rest of the year. Wednesday's Consumer Price Index readings, which are expected to be the third consecutive month of high year-over-year comparisons, will likely highlight increasing pressure on households as more consumers use their savings to fund their purchases. The inflation rate is expected to exceed wage growth for the second consecutive month in May, which could have a negative impact on economic growth. The rising cost of living poses a serious political problem for Donald Trump and the Republican Party as they seek to maintain control of Congress during the November midterm elections. Trump's promise to reduce inflation was a major reason he won the presidential election of 2024. However, his approval ratings have fallen as frustration grows over his economic management. Joseph?Brusuelas is chief economist at RSM. He said that the top-line inflation increase will surpass wage growth for a second consecutive month. This means that Americans' paychecks are declining in real terms. If this trend continues, it could pose a problem for household consumption in second half of the year. A survey of economists has predicted that the Consumer Price Index will likely increase by 4.2% over the past 12 months, ending in May. This would be the biggest annual increase in the CPI in over a decade, and follow a 3.8% advance in April. In March, the CPI rose 3.3% on an annual basis. The CPI is expected to increase 0.5% monthly in May, after increasing 0.6% in April. In order to achieve its 2% target, the U.S. Central bank monitors the Personal Consumption Spending Price Indexes. All inflation measures are well above the Fed target. According to data from the U.S. Energy Information Administration, the national average gasoline cost increased by 8.8% in may to $4.60 per gallon. Gasoline prices had increased by over 50% at one point since the U.S. and Israel attacked Iran in February. In recent weeks, prices have fallen amid a ceasefire. This has led some economists to be cautiously optimistic that the CPI could peak in May. Although the Strait of Hormuz shipping restrictions have increased fertilizer prices, this hasn't yet led to a significant increase in food prices. Stephen Stanley, Santander U.S. Capital Markets' chief U.S. economics, said that there is a high probability that the headline inflation rate will peak in May. However, the oil price could rise again, depending on what happens in the Middle East. The labor market is resilient. This report follows the news that was released last week, stating the economy had posted a third consecutive month of job growth above expectations in May. The unemployment rate has remained at 4,3% for the third consecutive month. Although financial markets are pricing in an increase, economists continue to believe the central bank has a high bar to raise interest rates. Others argued that, aside from high airfares and other signs of oil price shock affecting the services sector, there was no evidence to support this. Core CPI, excluding volatile components such as food and energy, was projected to have increased by 2.9% in May after increasing by 2.8% in April. Core CPI was forecast to have increased 0.3% on a monthly basis, after increasing 0.4%. James Knightley is the chief international economist at ING. "We are in a situation where the central bank still views monetary policy as restrictive." The monthly CPI is expected to moderate in part due to the diminishing boost that was given by a one-time adjustment of rent measures, after the shutdown of government last year prevented data collection. The artificial intelligence boom has driven up the prices of software and computers, but they have a lower weighting in the core CPI basket. In the core inflation basket, there is a greater weighting. Unexpectedly, a deflation of used cars and trucks has also helped curb the?inflation of goods. Import tariffs divided economists. Some saw the price increase as being largely over, while others believed that the duty was still increasing prices. Diego Anzoategui is an economist with Morgan Stanley. He said that the economy was nearing the end phase of tariff pass-through. Our estimates show that tariffs have raised prices by 63 basis point so far. The total pass-through is closer to 70 basis point. We began to see a slowdown in March, and we expect this trend to continue. Reporting by Lucia Muttikani, Editing by Andrea Ricci
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Copper prices fall as macro-concerns weigh on tariff support
Copper prices fell on Wednesday morning as macroeconomic concerns and volatility related to the Middle East conflict offset the price support provided by U.S. tariffs. As of 0300 GMT, the benchmark three-month copper price?on London Metal Exchange?declined by 0.36% to a metric ton at $13,566.5. The Shanghai Futures Exchange's most traded copper contract fell 0.38%, to 104.010 yuan (15,354.52) per ton. The price of oil rose Wednesday as the U.S. launched a new strike against Iran. The Middle East war has increased energy prices and put pressure on manufacturing, which is a major sector for copper demand. Data released by the Chinese government on Wednesday shows that China's producer price rose for a third consecutive month in May. This is at its highest level since 2022. The rise in commodity prices and improved demand in some industries are to blame. Markets are also watching for the U.S. data on inflation that will be released later today. The dollar rose after better-than-expected U.S. job data last Friday, and the Fed's rate hike is more likely this year. This roiled the copper market. Interest rates that are higher generally reduce the prospects for industrial metals, which depend on growth. The expectation of a U.S. decision on copper tariffs in the second half of this year continued to support prices. The U.S. floated the possibility of a?15% tariff on copper imports starting in 2027. This would be followed by a 30% tariff from 2028. Stocks of copper in LME registered warehouses According to LME data, the number of people using LME has declined every day since May 28. Aluminium fell 1.54% among other LME metals. Zinc lost 0.58%. Lead lost 0.55%. Nickel lost 0.77%. Tin dropped 1.86%. On SHFE, aluminium fell by 0.89%; zinc, by 0.2%; lead, by 0.59%; nickel, 2.19%. Tin, 2.16%.
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Meta partners with Ambani’s Reliance to build AI data centers in India
Facebook parent?Meta announced on Wednesday it had partnered with Mukesh Ambani, a billionaire from India. The two companies will build the first AI-enabled India data center. Reliance is building a datacenter with a 168 MW power capacity in Jamnagar, a city located in the western Indian state Gujarat. According to a statement, Meta will lease this facility with options for expansion. Meta said India’s large user base and rapidly growing digital economy make it a great place to invest. According to IMARC Group, India's data center market will nearly double by 2034 to $13.11 Billion, driven by digital transformation, cloud adoption, and increasing AI workloads. Meta and Reliance created a joint venture in August of last year to build AI platforms and tools?for?enterprises?in India?using Meta's Llama?models. Reliance had committed a joint?initial?investment of 8.55 billion rupees (89.67 millions dollars), which was split 70/30. Meta invested $5.7 billion into Jio Platforms in 2020. This is a Reliance company. ($1 = 95,3500 Indian Rupees) (Reporting and editing by Sherry Phillips and Mrigank Dahniwala in Bengaluru)
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Gold falls as oil and the dollar rise due to renewed US-Iran hostilities
Gold dropped?more? than 1% to a 11-week low on Wednesday, as the dollar and oil prices rose due to renewed hostilities by the United States with Iran. This fueled concerns over inflation and interest rates. Spot gold fell 1.8%, to $4,187.59 an ounce, by 0230 GMT. This is its lowest level since 23 March. U.S. Gold Futures for August delivery were down 1.7% to $4,213.40. Dollars rose, making bullion priced in greenbacks more expensive for holders?of other currencies. Oil prices increased by 1%, fueling inflation fears and cementing expectations that interest rates will?stay high for longer. The Federal Reserve's policy shift, the increase in yields and the dollar's rise are the main drivers. Ilya Spivak is the head of global macro for Tastylive. After President Donald Trump claimed that Iran had shot down a U.S. Apache in the Strait of Hormuz - further threatening a fragile ceasefire - the United States launched strikes on Iran. According to CME FedWatch, traders are now pricing in a greater than 70% chance that the Federal Reserve will raise interest rates by December. Gold is often seen as a hedge to inflation. However, rising interest rates can weigh on the non-yielding gold. The markets are waiting for key U.S. reports on inflation this week. These include the Consumer Price Index (CPI) data from May, which will be released later in the day, and the Producer Price Index (PPI) reading, due out on Thursday, to determine the Fed's policy. Spivak stated that if we could break the $4.100 level the resistance path for gold would fundamentally change. We might then start to consider $3.500 as the next level by the end of this year. Silver spot fell by 1.5%, to $64.43 an ounce. Platinum fell 2.8%, to $1678.10 and palladium dropped 0.8%, to $1212.31. (Reporting by Pablo Sinha in Bengaluru; Editing by Subhranshu Sahu)
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China's factory-gate prices in May rose to their highest level in almost 4 years
China's producer price rose for the third consecutive month in May, to its highest level?since July 20,22. Consumer prices remained?elevated due to global energy prices that put cost pressure on manufacturers and increase costs for households. The Middle East conflict may increase costs, which could further reduce domestic demand and stifle corporate profits. This will make it difficult for policymakers to promote household consumption. National Bureau of Statistics data revealed that the producer price index (PPI), a measure of the cost of goods produced, rose by 3.9% compared to the previous year. This was higher than the 3.8% predicted in a poll. The rise was greater than the 2.8% in April. PPI rose 0.5% compared to the previous month. This is less than the 1.7% increase in April. In a statement, the NBS stated that rising commodity prices were driving up factory-gate inflation and an improved demand for certain products in certain industries. Since the United States and Israel attacked Iran in late-February, energy prices have skyrocketed. Cost pressures will likely persist as the Strait of Hormuz remains effectively closed and continues to disrupt the flow of oil and gas from the Gulf. Even after the waterway is reopened, it will take time for the oil and gas flows to resume. In March, the PPI's year-on-year reading was positive for the first since September 2022. This is due to the?energy-induced shock in prices. The government's campaign to stop corporate price cuts and other policy efforts to increase prices had only helped to ease deflation. The mismatch between demand and supply in China may worsen, as rising living costs dampen the already lukewarm appetite of households for discretionary expenditure. According to the statistics bureau, consumer prices rose by 1.2% in May compared to a year ago, primarily due to higher gasoline, gold jewelry and service prices. The index rose by 1.2% in April, and economists expected a rise of 1.3% for May. Pork prices dropped 16.1%, a 1.7% drop on the year. After factoring in last week's price reductions, Beijing has increased?diesel prices by 1,530 yuan ($225.89), and gasoline by 1,590. China's gasoline and diesel consumption fell 13% on an annual basis in May, after having fallen by 16% the month before. This is according to OilChem data. China Passenger Car Association statistics show that domestic car sales have fallen. The number of cars sold has dropped by 22,3% in May, and by 19,7% in the five months prior to this month. Cui Dongshu is the secretary-general of the association. She said that the decline was primarily due to an increase in gasoline car sales as a result of oil prices rising because of 'the Middle East Crisis. The Core CPI (which excludes volatile fuel and food prices) rose by 1.1% compared to a year ago. CPI fell 0.1% on a monthly basis. This was in line with expectations, and compares to a 0.3% increase in April.
As US launches new attacks against Iran and supply tightens, oil prices rise by almost 1%
The oil prices rose about 1% Wednesday after the U.S. military launched a new strike against Iran, and market data revealed another large drawdown in U.S. crude stock.
After President Donald Trump promised on Tuesday that he would respond to the downing overnight of a U.S. Apache helicopter, there was a new escalation which threatens to unravel a fragile truce between Washington and Tehran.
Brent futures rose 83c, or 0.9%, to $92.29 a barrel, while U.S. West Texas Intermediate crude (WTI), climbed 68c, or 0.8% to $88.97.
Brent closed at its lowest level on Tuesday since April 17 while WTI was at its weakest level since May 29, after Trump's call for Israel and Iran to cease direct attacks against each other.
Tehran has said that it will resume hostilities in the event that?Israel continues to attack Hezbollah's?militia?in Lebanon. Israel's refusal of ending its campaign against Iran's Hezbollah hampered Trump's attempts to turn a fragile ceasefire in the U.S.-Israeli War with Iran into a lasting settlement.
Tehran continues to block the Strait of Hormuz which carries about a fifth of all crude oil and natural gas in the world. Washington has also imposed a blockade on Iranian ports.
U.S. Energy Sec. Chris Wright stated on Tuesday that the?oil and ship traffic through the Strait of Hormuz is increasing, even though Washington and 'Tehran are struggling to reach a deal regarding the end of their three-month war.
According to sources, the American Petroleum Institute released data on Tuesday that showed that U.S. crude inventories had fallen for the eighth consecutive week. Gasoline stocks were also down.
The sources, who spoke on condition of anonymity, said that crude stocks dropped by 9.12 million barrels during the week ending June 5. Gasoline inventories also fell by 1.19 million barrels.
The United States was a marginal crude and product supplier during the war, and increased exports to Asia. A drop in U.S. stocks could harm exports and increase prices. (Reporting and editing by Shri Navaratnam.)
(source: Reuters)