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On July 8th, according to a statement released by the U.S. Treasury Departments Office of Foreign Assets Control on July 7th, the U.S. revoked a general license authorizing the sale of Iranian oil, allowing related final transactions to continue until midnight Eastern Time on July 17th. International oil prices rose in response. Iran has not yet responded. According to an anonymous U.S. official, initial indications suggest that "Iran recently fired on three merchant ships in the Strait of Hormuz," an action that is "completely unacceptable" and will have consequences. The U.S. official also stated that despite the escalating situation, U.S. negotiators are "still sincerely working towards a final agreement with Iran." U.S. Treasury Secretary Bessenter announced on June 22nd that, as part of the framework for U.S.-Iran negotiations, the U.S. Treasury Department issued a 60-day general license authorizing the production, delivery, and sale of Iranian oil. According to the announcement released that day by the U.S. Treasury Departments Office of Foreign Assets Control, transactions involving the production, delivery, and sale of Iranian crude oil, petrochemicals, and petroleum products, previously prohibited by multiple U.S. executive orders and regulations, have been exempted, with the exemption period ending on August 21, 2026.Iranian Foreign Ministry Spokesperson: Iran urges regional countries, including Qatar, and shipping companies to refrain from any actions that violate the memorandum.Pakistan Airports Authority: A K2 Airlines Boeing 737 cargo flight from Sharjah to Karachi reported a navigation system malfunction at 21:18 local time. There were five crew members on board the K2 Airlines Boeing 737.Research by semiconductor industry organizations, McKinsey, and the National Science Foundation indicates that the chip industry may face a shortage of up to 157,000 jobs by 2030.Hang Seng Index futures closed up 0.11% at 23,499 points in overnight trading, a premium of 2 points.

In a risk-on environment with a weaker US dollar, WTI consolidates weekly losses above $83,000

Alina Haynes

Sep 09, 2022 17:17

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The price of WTI crude oil is higher for the second day in a row while paring the weekly losses at the eight-month low on Friday during the Asian session. However, by the time of publication, the black gold has reached a new intraday high of around $83.50.

 

Recent news reports from the US Treasury Department regarding the oil price cap appear to have helped drive up energy prices together with stronger sentiment and a weaker US dollar. According to the US Treasury source, "the oil price cap should be set above the marginal production cost, taking into account past Russian oil prices."

 

In other news, stronger sentiment and slow US Treasury yields cause the US Dollar Index (DXY) to fall intraday by 0.55%, to 109.05 at the latest. It's interesting to see that after a solid day, the US 10-year Treasury yields are still stuck around 3.32%, while the S&P 500 Futures tracks Wall Street's gains at approximately 4,020.

 

Recent market sentiment appeared to be aided by remarks made by US Treasury Secretary Janet Yellen, which suggested that trade relations between the US and China were set to improve. The market's attitude also appeared to have been aided by recently stronger US statistics and expectations that global central bankers will be able to offset the shock caused by inflation with a comprehensive strategy and higher rates. The Wall Street Journal (WSJ) article, on the other hand, raises some concerns about the future of China's technological enterprises and casts some doubt on the optimism.

 

A price document examined by Reuters on Friday revealed that Kuwait has decreased the official selling prices for its oil grades for the month of October from the previous month. Before the present program ends in October, US Energy Secretary Jennifer Granholm said the administration of US President Joe Biden is considering whether additional releases of crude oil from the country's emergency stockpiles are necessary. Prior to that, a Department of Energy official reportedly told Reuters that the White House was only considering releasing the 180 million barrels from the US Strategic Petroleum Reserve (SPR) that the president had already stated.

 

It should be highlighted that the recent decline in China's inflation data, coupled with the hawkish central bank activities, presents a challenge to oil purchasers. Both China's Producer Price Index (PPI) and Consumer Price Index (CPI) show unfavorable results for August. However, compared to 2.8% market expectations and 2.7% in the prior year, the headline CPI declined to 2.5% YoY, and the PPI fell to 2.3% from 3.1% projected and 4.2% in the preceding year.


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