2024-10-03 12:28

LONDON, Oct 3 (Reuters) - Airlines are largely avoiding Iranian airspace in their flights over the Middle East, according to flight tracker FlightRadar24, lengthening flight times and hiking up fuel costs as worries over a retaliatory attack from Israel targeting Iran grow. Turmoil in the Middle East in the last year has led to confusion and upheaval for aviation, prompting airlines to frequently change routes as they reassess the safety of the airspace in the region. "Most airlines have rerouted flights away from Iran, with the northern route taking flights through Azerbaijan, Turkmenistan, Afghanistan, Pakistan and India on their way to Asia, and the southern route flying over Egypt and Saudi Arabia," said FlightRadar24 spokesperson Ian Petchenik. Some airlines have said they have resumed most of their operations across the Middle East since Iran hit Israel with a ballistic missile attack on Tuesday, leading to flight cancellations and delays. Petchenik said most strategic changes to flights to avoid parts of the Middle East have been lifted in direct connection with the Tuesday attack. Late on Wednesday, German group Lufthansa (LHAG.DE) , opens new tab said it would resume flights to Erbil in Iraqi Kurdistan using a limited amount of Iraqi airspace, and will resume using Jordanian airspace on Thursday. It added that flights to Tel Aviv, Beirut and Tehran will remain suspended for the time being. Sign up here. https://www.reuters.com/business/aerospace-defense/airlines-avoid-iranian-airspace-hiking-up-flight-times-fuel-costs-2024-10-03/

2024-10-03 12:21

LONDON, Oct 3 (Reuters) - A Belgian law restricting exports of low-quality fuels and financial constraints among Nigeria's importers are squeezing sales of gasoline from Northwest Europe to West Africa, leaving buyers to explore other options until Nigeria's Dangote refinery is able to meet demand. The Belgian legislation, which came into effect on Sept. 14, tightens the permitted sulphur content of road fuel exports to 50 parts per million, three times stricter than the current Nigerian limit. It brings Belgium into line with the Netherlands, which introduced a similar law last year. Gasoline exports from the Amsterdam-Rotterdam-Antwerp (ARA) hub region to West Africa fell to about 150,000 barrels per day (bpd) in September, Kpler data shows, the lowest since May 2020 in the early days of the Covid pandemic. Exports from Belgium to West Africa were at their lowest since December 2020 at about 90,000 bpd, while exports from the wider EU and UK region touched a one-year low of 250,000 bpd in September, the data shows. Any shortfall from the loss of ARA blending in Nigeria is likely to be temporary, as production from the country's 650,000 bpd Dangote refinery ramps up. However, it is still unclear when the plant will be able to fully meet domestic demand. "It could be several months away until gasoline production reaches a meaningful level to meet Nigerian domestic demand, therefore in the interim, I can see a case for Europe to supply gasoline," said Pamela Munger, lead market analyst at Vortexa. However, analyst Winston Swomley said West African buyers were not expected to pay more for higher-quality gasoline, with the credit lines necessary to enable foreign currency payments difficult to secure. "As such, West Africa-grade blending is likely to shift from ARA to other locales." Financial constraints also hindered any last-minute rush of higher-sulphur grade purchases from Belgium before the legislation was implemented, Ronan Hodgson of energy consultancy FGE said. Malta - which has no oil refineries - loaded around 20,000 bpd of gasoline for West Africa in July and August, compared with around 4,000 bpd during the first half of the year, according to Kpler. Exports from Spain to West Africa averaged around 35,000 bpd this year, nearly four times higher than last year's levels, Kpler data shows. Sign up here. https://www.reuters.com/business/energy/ara-gasoline-exports-west-africa-hit-multi-year-lows-september-2024-10-03/

2024-10-03 12:16

NOC lifts force majeure at all oilfields and terminals Production resumption could pave way for OPEC member to raise output Technical problems delay full capacity production at Elfeel, engineers say BENGHAZI, Oct 3 (Reuters) - Libya's eastern-based government and Tripoli-based National Oil Corp (NOC) announced on Thursday the reopening of all oilfields and export terminals after a dispute over leadership of the central bank was resolved. This could pave the way for the OPEC producer to raise oil output significantly. NOC said in a statement it had lifted force majeure at all oilfields and terminals as of Oct. 3. "We have recently received a formal security assessment concerning Sharara, El Feel and Essider, which confirms that NOC can resume the Operations and Exporting Operations to its customers," it said in the statement. It added that chief Farhat Bengdara met the new central bank governor, Naji Issa, and they discussed a mechanism for the bank to finance projects to raise production to maintain financial sustainability and "compensate for the deficit in revenues resulting from closures and the decline in oil prices". Libya's oil output has been disrupted repeatedly in the chaotic decade since 2014 when the country divided between two rival authorities in the east and west following the NATO-backed uprising that toppled Muammar Gaddafi in 2011. Libya was producing about 1.2 million barrels of crude per day before output at the Sharara, El Feel and Essider oilfields was halted in late August and early September. It was exporting most of it. In September, exports averaged 460,000 bpd according to oil analytics firm Kpler. TECHNICAL PROBLEMS AT ELFEEL NOC declared force majeure on Aug. 7 at Sharara oilfield - one of Libya's largest production areas with a capacity of about 300,000 barrels per day - and on Elfeel oilfield on Sept.2. Sharara is located in southwestern Libya and operated by a joint venture of NOC with Spain's Repsol (REP.MC) , opens new tab, France's TotalEnergies (TTEF.PA) , opens new tab, Austria's OMV (OMVV.VI) , opens new tab, and Norway's Equinor (EQNR.OL) , opens new tab. Elfeel has a capacity of 70,000 barrels per day and is operated by Mellitah Oil and Gas, a joint venture between NOC and Italy's Eni (ENI.MI) , opens new tab. Two engineers at the field told Reuters the oilfield resumed production but not with full capacity due to maintenance work. Earlier, three engineers said there were some "technical problems" at Elfeel. The government in Benghazi in the east said oil production and exports would resume normal operations, after the rival authorities agreed last month to appoint Issa as new central bank governor. Authorities in the second-largest city had closed oilfields and halted most of crude exports on Aug. 26 in protest against a move by the Presidential Council, which sits in Tripoli in the west, to replace veteran central bank chief Sadiq al-Kabir. The head of the Presidential Council, Mohamed al-Menfi, met with Issa on Wednesday and stressed "the need for the central bank governor to commit to the technical role of the bank, stay away from politics, and not surpass the legal jurisdictions of the board of directors." The United Nations Support Mission in Libya UNSMIL welcomed in a statement NOC announcing the lifting of force majeure on oil production. The mission emphasized that "it is essential that revenues from this vital resource be channeled through the appropriate institutional framework, and ultimately to the Central Bank of Libya." Sign up here. https://www.reuters.com/world/africa/libyas-eastern-based-government-lets-oilfields-reopen-sources-media-say-2024-10-03/

2024-10-03 12:05

Oct 3 (Reuters) - Mstack Chemicals has raised $40 million in a Series A funding round led by Lightspeed Venture Partners and Alpha Wave with additional backing from HSBC Innovation Banking, the chemical sourcing firm said on Thursday. The new round values Mstack between $90 million to $100 million, a person familiar with the matter said, as the company seeks to expand its global operations. WHY IT'S IMPORTANT The global chemical supply chain has been experiencing disruptions since 2020 owing to the COVID-19 pandemic and geopolitical conflicts. Firms like Mstack promise to address these challenges, ensuring a stable supply of essential chemicals for high energy-consuming industries. Mstack plans to use the funds to expand its footprint across the Middle East, Latin America and Asia, while growing its presence in the United States and doubling down on research and development. CONTEXT Mstack offers mid-to-large enterprises a platform for sourcing specialty chemicals through a supply chain that is "secure against geopolitical disruptions", it said. The company offers products in four categories - oil and gas, coatings, water treatment and home and personal care. With this funding, Mstack said it plans to expand into agrochemicals and pharmaceuticals. KEY QUOTES "Our R&D team in India is poised to commercialize multiple chemicals soon. Future plans include establishing advanced labs to drive innovation and IP creation, while offering custom formulations and process innovation through our on-demand platform." said Shreyans Chopra, founder at Mstack. Sign up here. https://www.reuters.com/markets/commodities/mstack-chemicals-raises-funds-around-100-mln-valuation-source-says-2024-10-03/

2024-10-03 11:54

Brent jumped 5% on Tuesday after Iran attacked Israel US output to hit record 13.49 million bpd by year's end Global crude supplies not yet disrupted by Middle East war OPEC is set to start raising output later this year HOUSTON/DENVER, Oct 2 (Reuters) - The oil industry and markets have had a muted reaction to growing conflict in the Middle East, a sign of just how well stocked oil supplies are as U.S. output grows and OPEC+ prepares to lift production. The global oil benchmark Brent jumped 5% on Tuesday after Iran, a key producer and member of the Organization of the Petroleum Exporting Countries, attacked Israel in retaliation for its campaign against Hezbollah in Lebanon. The price of Brent settled on Tuesday only 2.6% higher at $73.56, however, broadly in line with last week's levels. Oil futures settled up just 34 cents on Wednesday after the U.S. reported a large build in oil stocks. The U.S. is pumping some 13.4 million barrels per day of oil and its output is anticipated to climb to a record 13.49 million bpd by the end of the year, according to U.S. government data. Meanwhile, OPEC and its allies, a group known as OPEC+, which has been focused on cutting production since 2022, is set to start raising output later this year. In the past, such escalating conflict in oil-producing regions of the world would have been expected to have a bigger and lasting impact on prices. But there is enough supply and concerns about soft demand to buffer the market from those events. "In this new world of U.S. shale being the dominant global oil producer, it seems that the 'fear premium' no longer exists to the same extent," said Rhett Bennett, the CEO at Black Mountain Energy, which has operations in the Permian basin and Western Australia. "This diversity of supply from domestic sources, combined with healthy spare capacity within OPEC, is translating into the market feeling insulated from a dramatic supply shock – regardless of perpetual Middle East flare-ups," Bennett added. Global crude supplies have yet to be disrupted by the war in the Middle East and Iran-aligned Houthi rebel attacks on vessels in the Red Sea. As a result of its years of production cuts, OPEC+ has a sizeable spare capacity and this has limited the upside for prices from escalating conflict in the Middle East, analysts have said, as other producers could in theory compensate for supply disruptions. The International Energy Agency estimates OPEC+ spare production capacity at 5.7 million bpd, nearly 6% of oil consumption, with Saudi Arabia accounting for 54% of the buffer. This is more than Iran's production of 3.4 million bpd. US PRODUCERS HOLD STEADY The price of Brent fell 17% in the third quarter and 9% in September, its largest monthly decline since November 2022, in part due to downward revisions to OPEC's global demand growth outlook. West Texas Intermediate was down 16% for the quarter and 7% for the month to $68.17 a barrel. "The U.S. has so much production, it is a strategic cushion," said Dan Pickering, chief investment officer at Pickering Energy Partners. "I think the supply and demand equation is unchanged, even though the risks of the supply and demand equation are changing." While oil may draw some immediate support from the developing conflict in the Middle East, it is unlikely to spur U.S. operators to quickly ramp up production, said Pickering and other shale oil executives. Many are exercising caution as OPEC+ plans to add an additional 180,000 bpd to the global market in December, and some analysts have said a lack of compliance by members that are over-producing could prompt Saudi Arabia and others to raise output even faster from December. "It's too soon to weigh these events against actions OPEC may or may not take to affect supply," said Michael Oestmann, the CEO of Tall City Exploration, a producer in Midland, Texas. "It is unlikely that this will incentivize drilling or cause any change in business plans," he added. OPEC+ is currently cutting output by a total of 5.86 million bpd, or about 5.7% of global demand. Analysts at consultancy Wood Mackenzie are forecasting higher Brent prices for October at $81 per barrel. They noted that this could be revised up or down depending on whether escalation in the Middle East is avoided. Brent futures rose 34 cents, or 0.46%, to settle at $73.90 per barrel on Wednesday, while U.S. West Texas Intermediate crude settled up 27 cents, or 0.39%, to $70.10 per barrel. "We see it as a temporary uptick, but if the war goes longer and more countries are involved, then prices could stay elevated," said Mark Marmo, the CEO of Deep Well Services, Zelienople, Pennsylvania-based oilfield firm. Sign up here. https://www.reuters.com/markets/commodities/plentiful-oil-supply-dampens-industry-reaction-rising-geopolitical-tensions-2024-10-02/

2024-10-03 11:50

U.S. oil production reduces global sensitivity to Middle East disruptions Cooling inflation, cenbank easing support investor sentiment Potential for deeper selloff if geopolitical tensions escalate further LONDON, Oct 3 (Reuters) - Conflict in the Middle East is escalating once more, but the mood music across financial markets remains upbeat for now due to shifts in oil production and as global interest rate cuts eclipse geopolitics. Israel, still battling Hamas in Gaza, bombed Beirut on Thursday as it continued its conflict with Lebanese group Hezbollah days after being attacked by Iran. Yet MSCI's world stock index (.MIWD00000PUS) , opens new tab is just 1% off last week's record highs and oil prices, which rose around 5% in the 24 hours after Iran's missile attack on Israel, have steadied around a far from threatening $75 dollars a barrel . Certainly, a bigger escalation that disrupts supplies of oil from the Middle East and shakes the global economy would invoke a bigger reaction, and the fact that stock markets are near record highs could make them vulnerable to sharp falls. But for now markets are cushioned by the prospect of more monetary easing and by the United States' expanded role in oil production, which has offset the Middle East's dominance. Wall Street's so-called fear gauge, the VIX volatility index (.VIX) , opens new tab, is at a moderate level around 20 - well below a post-pandemic peak above 60 hit during market turmoil in early August linked to an unwind in global carry trades. "When we think about geopolitical risk and its transmission into asset prices, what will obviously have a bigger impact is if we see outcomes that materially impact growth or inflation," said Mark Dowding, BlueBay Asset Management's chief investment officer. "The main concern really has been through a transmission impact on oil prices. But even here, we've been in a situation where, if anything that the oil price had been sliding." The United States becoming a big oil producer - the world's biggest for the past six years - has reduced global sensitivity to Middle East supply disruptions, analysts say. And European energy markets have reorganised themselves since Russia's invasion of Ukraine, which was a dramatic example of how an energy price surge can roil global markets and economies. "The growing importance of the U.S. would suggest that risks to energy supply from rising tensions in the Middle East are somewhat mitigated," said Katharine Neiss, chief European economist at PGIM Fixed Income. DIFFERENT TIMES In 2022, when Russia invaded Ukraine, oil prices surged above $100 and gas prices soared, unleashing a fresh wave of inflation that piled pressure on central banks to hike interest rates, driving bond yields higher, especially in the U.S. and, in turn, boosting the dollar. The situation today is different. Central banks are already in easing mode and hopeful the U.S. will avoid recession. The world economy is not primed for an oil shock, said Trevor Greetham, Royal London Asset Management head of multi asset, because it is at a "softer stage of the cycle." That contrasts with 2022, "when Ukraine happened, you were already in that period where you were just starting to get very high inflation numbers," Greetham said. The current backdrop of easier monetary policy supports investor sentiment, even as tensions in the Middle East rise. Tilmann Kolb, emerging markets strategist at UBS Global Wealth Management, said that while the past two years had seen significant developments in domestic and international politics, for markets, the economic outlook remained key. "Where is inflation going? How is the Fed responding? Is growth holding up?," he said. Meanwhile, investors have jumped on announcements of long-awaited economic stimulus measures from China that have sent Chinese shares surging, and boosted global assets from luxury stocks to industrial metals and miners. "The impact of China delivering a big policy stimulus last week was almost a more significant factor in terms of what it means for global demand and growth," said BlueBay's Dowding. RISK ON TO RISK OFF Of course, the dial could swing very quickly and oil itself remains the transmission mechanism if geopolitics flare further. Tina Fordham, founder and geopolitical strategist at Fordham Global Foresight, said she was watching to see if Israel would target either Iran's energy infrastructure or nuclear facility. "Either of those targets would result in a market impact," she said. "Where this could get more problematic is, for example, if Ukraine targets Russian energy infrastructure at the same time." And with stock markets near record highs, there is scope for dramatic tumbles, policymakers warn. The Bank of England said on Wednesday that global asset prices remain stretched and are vulnerable to a big fall as investors grow more concerned about geopolitical risks. And for Andrew Bresler, CEO at Saxo UK, assets are mispriced given geopolitical risks, adding that volatility indicators such as the VIX should be higher. "It's a little bit alarming to me how desensitised markets are to geopolitical risks," he said. Sign up here. https://www.reuters.com/markets/global-markets-mideast-analysis-pix-2024-10-03/