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March 9th - The de facto closure of the Strait of Hormuz has disrupted shipping, forcing Saudi Arabia to divert its crude oil shipments to the Red Sea. Saudi Aramco recently launched a rare tender to supply approximately 4.6 million barrels of crude oil for immediate delivery, encompassing ultra-light, heavy, and its flagship Arab Light grade. This tender in the spot market reflects the pressure it faces. Because it typically sells only through long-term contracts, Saudi Aramco is unable to sell most of its oil through conventional channels and is instead transporting a record volume of crude to Yanbu port on the Red Sea via pipeline. Bloomberg vessel tracking data shows that its western terminal shipments have surged to approximately 2.3 million barrels per day this month, about 50% higher than any month since the end of 2016. Traders say the prices in these tenders represent a premium over the official selling prices for their respective grades in March. These official prices were set a month ago, well before the current Middle East conflict began.March 9th - According to foreign media reports, Saudi Aramco has provided spot crude oil supplies through a series of rare tenders due to the de facto closure of the Strait of Hormuz forcing cargoes to be diverted via the Red Sea. According to informed traders, the company recently offered approximately 4.6 million barrels of crude oil across three grades – Arab Extra Light, Arab Heavy, and Arab Light.Market news: Saudi Aramco has provided immediate crude oil supplies through a series of rare tenders.March 9th - As the escalating conflict in the Middle East pushes up global oil prices, the South Korean government has taken emergency measures. South Korean President Lee Jae-myung, at an emergency economic meeting on Monday, called for the "swift introduction and bold implementation of a maximum oil price system" to curb excessive price increases. Lee made these remarks as international oil prices approached $120 per barrel, a new high since 2022. Production cuts by Middle Eastern oil-producing countries, the continued blockade of the Strait of Hormuz, and the USs threats to escalate the conflict have put continuous pressure on the energy market. South Korea relies almost entirely on energy imports, with approximately 70% of its oil transported through the Strait of Hormuz. This proposed oil price cap mechanism would be the first time South Korea has used such measures in nearly 30 years, aiming to mitigate the impact of geopolitical instability on its domestic energy supply chain.March 9th - According to the Financial Times, G7 finance ministers will hold an emergency meeting on Monday to discuss the possibility of jointly releasing emergency oil reserves under the coordination of the International Energy Agency (IEA). This meeting aims to address the surge in oil prices following the conflict in the Gulf region. Sources familiar with the matter revealed that the G7 finance ministers and IEA Executive Director Fatih Birol will hold a teleconference at 8:30 AM New York time (8:30 PM Beijing time) to discuss the impact of the war with Iran. Sources also indicated that three G7 countries, including the United States, have so far expressed support for the idea. The 32 member countries of the IEA hold strategic reserves as part of a collective emergency system established to address the oil price crisis. One source stated that some US officials believe a joint release of 300 to 400 million barrels of oil reserves would be appropriate, equivalent to 25% to 30% of the total reserves of 1.2 billion barrels.

The EUR/GBP exchange rate recovers above 0.8000 in advance of Eurozone inflation and UK gross domestic product

Alina Haynes

Mar 30, 2023 16:05

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The EUR/GBP pair extended its recovery above 0.88 during the Asian trading session. Anticipating that the European Central Bank (ECB) will continue to raise interest rates to combat persistent inflation, the cross has depreciated progressively. Friday will see the publication of preliminary Eurozone Harmonized Index of Consumer Prices (HICP) and Gross Domestic Product (GDP) (Q4) figures. Prior to the publication of these figures, it is anticipated that the asset will exhibit explosive activity.

 

It is anticipated that the preliminary Eurozone HICP will decelerate significantly from 8.5% to 7.3%. While it is anticipated that the core HICP will rise to 5.7% from 5.6% in the previous release. Weak energy prices are anticipated to have a significant impact on Eurozone inflation. In light of Christine Lagarde's prediction that inflation will remain elevated for an extended period of time, the European Central Bank (ECB) is expected to continue tightening monetary policy.

 

In the interim, banking tensions are subsiding as the absence of information regarding additional collateral damage has a positive impact on the market. Chief Economist Philip Lane stated on Wednesday that ECB interest rates must rise if banking tension has no or a "relatively limited" impact.

 

Investors avidly anticipate the United Kingdom's Gross Domestic Product (GDP) data. According to the consensus, the United Kingdom's growth in the fourth quarter of CY2022 remained unchanged. It is anticipated that the annual GDP will remain unchanged at 0.4%. It is expected that the British economy will undergo a severe recession as a result of high inflation and sluggish growth.

 

The Bank of England (BoE) policymakers appear confident that inflation will moderate in the near future and that the unexpected rise in February's inflation was a one-time anomaly; however, the absence of evidence raises doubts. If inflation persists, BoE Governor Andrew Bailey stated that additional rate increases would be announced. In contrast, Bank of America (BoA) analysts anticipate that the Bank of England (BoE) will not increase rates and will maintain current levels until 2024.


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