The Iran war has forced the shutdown of at least 10 million barrels per day of oil from the Middle East due to Iran’s effective closure of the strait

International News via Reuters:

The European and African oil market is showing more signs of tightness with some crude differentials hitting record highs as peak summer demand nears and Asia seeks supplies to fill shortages caused by Iran’s blocking of the Strait of Hormuz, now into its fifth week.

 The Iran war has forced the shutdown of at least 10 million barrels per day of oil from the Middle East due to Iran’s effective closure of the strait, and attacks on Iranian and other Middle East Gulf nations’ energy infrastructure.  That production volume represents at least 10% of daily global oil consumption.

Asia has been most affected by oil and gas disruptions, as it is the world’s largest oil-importing continent and relies on supplies from the Middle East. The Middle East Dubai oil benchmark hit an all-time high of $169.75 on March 23, breaking Brent futures’ previous record of $147.50 set in 2008 to become the most expensive oil benchmark ever. 

In an example of tightening markets, North Sea Forties crude surged to a $7.20 per barrel premium to dated Brent on Friday, the highest on record according to LSEG data. The paper markets surrounding North Sea physical prices also show tightness. The first week of the short-term Brent swaps curve, known as contracts for differences, which indicates the dated Brent value, was trading $12.35 a barrel higher than the contract six weeks ahead on March 27, also a record.

“Globally, there are fewer barrels available, so the people who need them are bidding prices up,” said Neil Atkinson, former head of the oil markets division at the International Energy Agency and a veteran oil analyst.

ASIA BUYING MORE OIL FROM EUROPE, AFRICA

Shortages and stiff competition from Asian buyers looking to secure valuable barrels elsewhere have pushed up prices for European buyers, Morgan Stanley analysts said on Monday.

“The supply being diverted east is coming out of the pool that Europe would otherwise use to balance itself,” the Morgan Stanley analysts said, adding that more oil from West Africa, which can swing between European and Asian buyers, is heading to Asia.

On Monday,  U.S. WTI Midland crude, which helps set the dated Brent benchmark, traded at a record $9.50 per barrel premium to dated Brent for delivery to Europe, almost $8 higher than before the war started.

Crude and products shipments to Asia from Europe, plus key West African producers Angola and Nigeria, are set to rise by about 200,000 bpd in March from February to 3.72 million bpd, according to Kpler.

Some fuel shipments have even rerouted away from Europe towards Asia and Africa, a further sign of tough global competition for short supplies. 

Four tankers carrying 168,000 tons of U.S. diesel and gasoil have diverted away from Europe and towards South Africa in recent weeks, according to consultancy Energy Aspects. That follows at least four other tankers carrying a combined 430,000 tons of Middle Eastern and Indian diesel in late-February to early-March, which began sailing towards Europe and then U-turned towards Southeast Asia, the data showed.  

European gasoline cargoes are also heading to Asia after Asian prices surged on tightening supply, and Asia is also taking more crude cargoes from Europe and West Africa, according to trade sources and shipping data. 

Reporting by Robert Harvey in London, editing by Rod Nickel

The deadlock after four days of talks in Cameroon’s capital Yaounde could give added impetus to groups of countries seeking deals among themselves outside the WTO

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World Trade Organization talks broke up on Monday with no agreement on reform plans or even on extending a moratorium on e-commerce duties, piling more pressure on the body that finds itself increasingly sidelined by economic nationalism.

The deadlock after four days of talks in Cameroon’s capital Yaounde could give added impetus to groups of countries seeking deals among themselves outside the WTO, analysts said, potentially further weakening the global system it underpins.

The meeting ended in the early hours with Brazil blocking a bid by the U.S. and others to prolong a moratorium on duties for electronic transmissions including digital downloads and streaming.

RISK OF A ‘SPAGHETTI BOWL’ OF DEALS

“It marks another crack in the foundations of the WTO system,” Andrew Wilson, Deputy Secretary General of the International Chamber of Commerce, said. He urged delegates to renew the moratorium before states hit digital services with new charges.

Expectations for progress had been low before the talks, but there were hopes the moratorium – which has been regularly renewed since 1998 – would at least be extended.

Trade ministers could not agree to extend it for more than two years, which was not enough for the United States, diplomats said. One said the WTO’s future was being jeopardized.

U.S. officials and business groups voiced frustration, and Britain’s Business and Trade Secretary Peter Kyle said the outcome was a “major setback for global trade”.

The talks tested the WTO’s relevance after a year of huge trade turmoil and more recent disruptions in the Middle East.

Still, a subset of 66 members did agree to sidestep previous ​hurdles to ‌usher in the world’s first baseline deal on digital trade rules among participants.

Svitlana Taran of the European Policy Centre think tank said the talks’ failure would likely boost interest in pursuing accords between limited groups of countries, rather than in trying for global deals.

The parties of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership – 12 countries including Japan, Britain, Canada, Mexico and Australia, but not the U.S. – met with the EU on the sidelines of the WTO talks.

As diplomats pursue a mix of agreements between two or larger subsets of countries, they risk creating a complex “spaghetti bowl” of agreements, Dmitry Grozoubinski, executive director of the Geneva Trade Platform, said.

E-COMMERCE TEST

Agreeing on an e-commerce moratorium was seen as key to securing U.S. support for the WTO, which under President Donald Trump has retreated from global multilateral bodies.

WTO Director-General Ngozi Okonjo-Iweala said the trade body hoped the moratorium could still be restored and that Brazil and the U.S. were trying to reach agreement on it.

She said progress was made on a reform roadmap, and talks on issues like making subsidy use more transparent and facilitating decision-making are expected to continue in Geneva.

The U.S. and the EU argue that China in particular has taken advantage of current rules to their detriment. China has long dismissed accusations that it flouts trade rules and said it supports the multilateral system, including the WTO.

Diplomats worked through Sunday to close the gap between Brazil’s initial two-year proposal on the moratorium and the U.S., which wanted a permanent extension, by drafting a plan for a four-year extension with a one-year sunset buffer.

Brazil then offered a four-year extension with a mid-term review clause, but it lacked sufficient support.

Developing countries opposing a lengthy extension argue the moratorium denies them potential tax revenue.

A U.S. official said Brazil had opposed a “near-consensus document”. A Brazilian diplomat said “the U.S. wanted the sky,” and that a longer extension was not prudent given rapid developments in digital trade.

Another diplomat said U.S. Trade Representative Jamieson Greer made delegates “uncomfortable” by warning of “natural consequences” if a long-term extension was not agreed.

A U.S. official said Greer explained the WTO would become less relevant without that agreement and that digital trade discussions would take place outside the organisation.

Keith Rockwell, a trade analyst at the Hinrich Foundation and a former WTO director, said Brazil’s efforts to leverage e-commerce for concessions on agriculture failed because the U.S. was no longer so invested in the WTO.

“In the old days because they felt responsibility for the system the Americans would have swallowed hard and taken a hit,” he said. “But now they won’t do that anymore.”

Additional reporting by Emma Farge in Geneva and Lisandra Paraguassu in Brasilia and David Lawder in Washington, D.C.Writing by Dave Graham; Editing by Hugh Lawson and Andrew Heavens

Sheinbaum’s remarks came one day after U.S. president Donald Trump softened his stance on the block of oil shipments to the Communist-run island and as a Russian oil tanker approached Havana

International News via Reuters:

Mexico President Claudia Sheinbaum said on Monday that her country has every right to send fuel to Cuba, whether for humanitarian or commercial reasons. 

Sheinbaum’s remarks came one day after U.S. president Donald Trump softened his stance on the block of oil shipments to the Communist-run island and as a Russian oil tanker approached Havana.

The Mexican government “always seeks (to send) humanitarian aid, and it is in that context that we will make the decision,” Sheinbaum responded at her morning press conference, in response to a question about fuel shipments to Cuba.

She did not specify or give a timeline for when Mexico could decide to send an oil shipment to Cuba.

Sheinbaum also said that private companies in Cuba, such as hotels, have approached the Mexican government to purchase oil from state-owned energy company Pemex.

Reporting by Aida Pelaez-Fernandez and Raul Cortes; Editing by Emily Green

Ahmad Munawir, a conservation official at the ministry, told Reuters a male and a female will be sent to a zoo in Shizuoka

International News via Reuters:

Indonesia will loan two Komodo dragons to Japan’s Shizuoka prefecture, where it is hoped the endangered reptiles will be able to breed, and will receive some red pandas and giraffes in return, an official said on Monday.

The Forestry Ministry said the animal swaps would increase “contributions from both parties toward wildlife protection and conservation, as well as raising public awareness of biodiversity,” adding that the programme was intended to breed the Komodo dragons, which the IUCN Red List classifies as endangered.

Ahmad Munawir, a conservation official at the ministry, told Reuters a male and a female will be sent to a zoo in Shizuoka. In return, the prefecture will send several animals to Indonesia, including red pandas and giraffes, Ahmad said.

The agreement was signed last week, ahead of a visit to Japan by President Prabowo Subianto, who will meet with Japanese Prime Minister Sanae Takaichi later this week.

Indonesia is home to over 3,000 Komodo dragons, according to government data. The reptiles are the largest lizards in the world, growing up to around 3 metres (10 feet) long. They have a yellow forked tongue and a venomous bite.

Japan’s TV Shizuoka has reported the two dragons would arrive as early as June for the breeding programme. Ahmad said the dragons would be sent after a business-to-business agreement was signed by the zoos in Indonesia and Japan.

Reporting by Stanley Widianto; Editing by John Mair