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Bousso: The quest of ROI-Gulf Exporters to bypass Hormuz is reshaping the region.
Middle East oil producers will have to face the consequences. The Iran War exposed the dangers of relying solely on one chokepoint to export vital oil and natural gas. Gulf governments were left with a clear strategy imperative: diversify at all costs. A blockade of Strait of Hormuz by Iran was long viewed as an "event of doomsday". It would never occur. Experts believed it would take a massive military effort, and Tehran would not be willing to choke off its own exports. These assumptions proved to be wildly wrong. Iran used cheap drones, small vessels, and mines to impose a nearly airtight blockade, but continued to export its oil. The result was a global energy crisis that affected the entire region. The countries lost export revenue and had to close down 11 million barrels of oil per day (bpd), along with refineries and LNG installations. Washington and Tehran agreed to negotiate an agreement for a permanent ceasefire, but the "Hormuz Genie" can't be put back in the bottle. Future closures now pose a persistent and real risk to the region's economy and its people. The Gulf countries have become economically dependent on developing alternative routes to export energy, chemicals, and fertilisers. Pipeline Dreams Saudi Arabia is the best example of how building pipelines to circumvent Hormuz can be beneficial. The world's largest oil exporter diverted 60% of its shipments before the war to the Red Sea Port of Yanbu using a pipeline that crossed the country from the Gulf Coast. In the 1980s, Saudi Aramco, the state-owned oil company, built the 1,200 kilometre (745 mile) route to protect against such a scenario. The strategic foresight was rewarded. In April, the International Monetary Fund stated that it expected Saudi Arabia's economic growth to be 3.1% by 2026. This is just 1.4 percentage point less than its pre-war prediction. According to the IMF, Qatar's economy, which has no other routes for its oil exports and LNG, could contract by 8.6% in this year after growing by 2.8% by 2025. Other regional players are taking note. United Arab Emirates were able to bypass Hormuz in part by using their pipeline?to the Fujairah terminal located outside the Strait. Fujairah was damaged by Iranian fire but the UAE still managed to export 1.8 million barrels per day, or roughly half its pre-war production. Abu Dhabi, who left OPEC last May to pursue a growth strategy that is ambitious, has now accelerated construction of a new pipeline, doubling export capacity through Fujairah to 2027. Iraq is still in a very unenviable situation. The majority of the country's production is based in the south, so it is heavily dependent on Hormuz. Companies and authorities in Iraq are therefore looking at ways to improve and expand the northern export routes via Turkey and Syria. Security and political concerns are still major obstacles. THE QATARI CONUNDRUM Qatar and Kuwait are faced with a much more complex problem. Both countries, lacking alternative export routes on their own territory, will be forced to rely on neighbours in order to circumvent Hormuz. Qatar is the world's largest LNG exporter. For Qatar to gain access to beyond the Strait of Gibraltar, it would have to build a pipeline across the Red Sea or through Saudi Arabia, either via Fujairah, Oman or the UAE. Each option has its own geopolitical and economic complications. Costs would be astronomically higher if such projects required constructing new liquefaction capacities outside of the Gulf. This would also make Qatar highly dependent on Saudi Arabia and the UAE, countries whose relationship with Doha has?been strained over recent years. This creates the political and strategic risk that Qatar has sought to avoid for years. Kuwait faces a similar dilemma. To develop alternative export routes, it would be necessary to deepen energy integration with Saudi Arabia. This highlights how geography could reshape future regional alliances. DIVERSIFICATION OVERSEAS Diversification of geographic focus beyond the Middle East is another response that has gained traction. Gulf national oil companies have been expanding overseas operations to create a hedge for future disruptions in the region. QatarEnergy (QE) and Abu Dhabi National Oil Company(ADNOC), which have built international portfolios that include oil, gas, and renewables, are leading the way. This trend will likely accelerate. Acquiring stakes overseas in upstream assets such as refineries, LNG installations and storage terminals would generate valuable income streams, which are not exposed to Gulf risks. Such investments are a good way to ensure that you can still grow in a world without the certainty of Hormuz. The race to diversify will shake up government strategies, reshuffle alliances and redirect investments as Middle East producers start the recovery process. It could, in other words reshape this region for many decades. You like this column? Open Interest (ROI) is your new essential source of global financial commentary. Follow ROI on LinkedIn and X. Listen to the Morning Bid podcast daily on Apple, Spotify or the app. Subscribe to the Morning Bid podcast and hear journalists discussing the latest news in finance and markets seven days a weeks.
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Data shows that three supertankers with Saudi flags sail through Hormuz following the signing of Iran deal
Data from a ship tracking system showed that three supertankers flying the Saudi flag with?six millions barrels of crude aboard sailed through 'Strait of Hormuz' hours after U.S. president Donald Trump had signed a deal with Iran to end their war. On Thursday, other tankers revealed their positions as they sailed through the Strait via public ship tracking after weeks when ships had concealed their voyages while crossing the waterway. According to an analysis of shipping movements, the departures from Saudi ports represented the largest departures through the Strait in recent weeks. Analysis of shipping movements. Saudi Arabia has used its Red Sea Port Terminal of Yanbu to ship oil out due to the conflict that started on February 28, which has prevented hundreds of millions of barrels of crude oil from leaving Gulf producer ports via the Strait of Hormuz. Saudi Arabian shipping group Bahri which manages three tankers could not be reached for comment. On Wednesday, the U.S. released the text of a interim agreement that their presidents had signed to end their conflict. Trump has threatened to re-attack and kill Iranian officials should they fail to honor their commitments. LSEG data shows that the Hong Kong flagged Aframax tanker Tong Lin Wan passed through the strait Thursday. The tanker had loaded naphtha at Abu Dhabi's Ruwais Refinery early in March, and remained within the Gulf ever since. The QatarEnergy-controlled liquefied natural gas tanker Mraikh ?also crossed the strait on Thursday, LSEG and Kpler data showed. It 'loaded its cargo' at Ras Laffan between June 12-13 and will deliver it to Port Qasim in Pakistan on June 18 QatarEnergy did not respond immediately to a comment request. According to LSEG, another medium-range tanker Ye Chi, flying the Hong Kong flag, passed Iran's Larak Island, but has since stopped in the Strait of Hormuz. LSEG data revealed that COSCO Shipping Energy Transportation is the manager of both Tong?Lin Wan?and Ye Chi. COSCO Shipping has not responded to an immediate request for comment. (Reporting and editing by Jonathan Saul and Siyi Liu; reporting by Florence Tan, Emily Chow, and Florence Tan.
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Hegseth announces a review of US forces in Europe and scorns certain allies
U.S. Secretary of Defense Pete Hegseth announced on Thursday a review of America's troops in Europe and threatened withholding some U.S. NATO dues if "free-riding" allies failed to meet their commitments. Hegseth said, in a speech to NATO defense ministers in Brussels, that the U.S. Review would last up to six month and include consultations between the U.S. Congress, which has "legislated" a minimum number U.S. Forces in Europe. He did not say explicitly that the review would result in a reduction in U.S. forces in Europe. However, he said the goal was to encourage the continent to do even more while making sure the U.S. Military could meet its global obligations. "Make no mistake, this is a real evaluation. Hegseth stated that the review will ensure NATO moves quickly and irreversibly towards Europe leading. Hegseth slammed allied nations who failed to support the United States in its war against Iran. Some denied U.S. rights of overflight and basing for war-related activities. He said that the U.S. review will ensure U.S. overflight and basing rights are assured. His comments came at a time when countries in the alliance scrambled for ways to fill the gaps in their crisis force -- the national capabilities that are committed to the transatlantic coalition in an emergency situation -- after Washington reduced some contributions immediately. Last month, the U.S. informed its allies that it was reducing?the pool U.S. of military capabilities available to an alliance in a time of crisis. This raises urgent questions at a time when leaders are preparing for a NATO Summit in Ankara from July 8 to 9. According to NATO's top command, U.S. Air Force general Alexus Grynkewich, the move is intended to gradually end a "unhealthy dependence" on U.S. Forces as Washington faces a?potential of simultaneous conflicts across multiple theaters. Hegseth, who was in Brussels for a NATO meeting with his counterparts, said that the United States would be honest both publicly and privately about countries which need to do more. We will be honest about it, in both public and private. Hegseth added, "I think it's important that friends are honest with each other." "NATO 3.0 represents a post-Cold War acknowledgement that it must return to a hardline military alliance with real military capability capable of deterring attacks right here on the continental and taking the lead in conventional defense for Europe." "IT IS IMMEDIATE" Mark Rutte, NATO chief, acknowledged that the reduction in U.S. contributions to NATO crisis forces had already taken place. The question was raised yesterday: Is it immediate? He told reporters that it was immediate. "However I am hesitant to say that because it's a planning tool. What would actually happen? "If war breaks out, all allies including the U.S. will do everything they can to ensure we can fight the battle." As they arrived at the Brussels meeting, some ministers wrote out their offers to increase their contributions to NATO’s crisis pool. Theo Francken, Belgian Minister of Defence, said that his country will contribute more to NATO crisis forces in order to replace some U.S. capabilities. This includes F-16 fighter jets as well as MQ-9B SkyGuardian drons. The minister stated that "there will be heavy discussion on who is doing and what," but that Belgium was contributing. The Europeans are lacking weapons like deep-strike missiles. This has led German Defence Minister Boris Pistorius, to call for an synchronized approach to prevent "dangerous capabilities gaps in Europe". He warned that it was dangerous and difficult for NATO to maintain its security in Europe if the capability of deep strike were removed without a clear understanding of when compensation could be made. There, we'll need either temporary solutions or some time to prepare for their withdrawal. Negotiations will be required with our American counterparts. Pistorius stated that "we will be able compensate much, but we'll need some more time." According to a military source, the U.S. does not disclose details about its reductions. However, they include fighter jets, drones, and ships. According to the source, the number of U.S. F-15E and F-15 fighter jets that NATO can use will drop by a third. The number of MQ-4 Reaper drones and MQ-9 Reaper MQ-4 drones will also fall by half. Reporting by Sabine Siebold and Phil Stewart; Editing by Andrew Gray and William Maclean
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India's NSE IPO, which has been delayed for years, brings $2.6 billion to top investors
Investors ranging from Indian state-owned banks?to Singapore’s sovereign wealth fund and Canada’s national pension manager will reap $2.6 billion in windfalls as India’s National Stock Exchange (NSE), moves forward with its long-awaited listing. NSE, the largest bourse in the country and the most active exchange for derivatives in the world, filed draft papers late Wednesday night to launch an initial public offer after years of regulatory delays. The listing will consist of a pure sale, where existing shareholders offer to sell approximately 6% equity in the exchange. No new equity is raised. According to trading platforms, NSE currently has over 200,000 investors, and its shares are valued at around 2,000 rupees (about 21.18 dollars) on the unlisted market. This suggests an estimated valuation of $57 billion. The bourse is now poised to be the fifth most valuable in the world after London Stock Exchange Group. Three sources, including merchant banks, have said that the exchange could offer shares at a discount of 5% to 10% from private market valuations. Three sources, including merchant bankers, said that the valuation being discussed is approximately 1,900 rupees for each share. They declined to be named as they were not authorised to talk to media. One source stated that "at this valuation, NSE will attract new investors without shortchanging current ones." Investor roadshows will help us make a final decision about pricing closer to the listing date. The IPO, at 1,900 rupees a share, would have a value of $3.3 billion. It is one of India's largest public offerings, along with Mukesh Ambani Reliance Jio's IPO, which will likely be worth $4 billion this year. When asked about valuation, NSE stated that it was unable to comment on the valuation beyond stating that it had filed an IPO Prospectus. Winfall Gains Based on the acquisition prices disclosed in a draft prospectus, the?top 10 investors who are offering shares will?receive a windfall of $2.6 billion. State Bank of India will earn about 497.67 millions dollars in profits, while Morgan Stanley's MS Strategic (Mauritius) fund will gain about 29,34 billion rupees. Calculations based on disclosures from prospectuses and valuation estimates were used to make the calculations. Singapore's Temasek will make 20,67 billion rupees through its Aranda Investment division, while Canada Pension Plan Investment Board stands to gain 18,71 billion rupees. State Bank of India (SBI), Morgan Stanley, and Temasek have not responded to requests for comment. CPPIB refused to comment. Anubhav Dayal is the founder of Soach Global Corporation based in Hong Kong. He said that its flagship fund bought NSE first back in early 2016, and now sells 20% of its holdings to provide liquidity for investors. It has been a good investment. Dayal added that NSE is a major investment for the company. "NSE will continue playing an important role in India's economic activity." GROWTH PROSPECTS and REGULATORY RISKS Sources said that the exchange will likely begin roadshows for IPOs in the next two months, and added that both domestic mutual funds as well as global funds have already shown interest. The growth of options trading has driven the exchange's revenue to more than double between April 2019 and 2026, reaching 187 billion rupees. The growth has slowed in the last year due to a series regulatory restrictions on derivatives. In its filing detailing regulatory risks, the exchange said that revenue could be negatively affected by government and regulation measures intended to temper?derivatives activities. In its IPO documents, NSE stated that growth would?depend on the continued expansion of first-time investors and rising trading activity. Innovation in derivatives 'products, as well as a push towards commodities. Former NSE group president Ravi Varanasi now runs a consulting firm that advises Indian exchanges. He said NSE has a near-total hold on the cash markets, which gives it an excellent opportunity for long-term growth. Cash trading volumes will continue to increase as India's capitalisation grows, he said.
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The PM has announced that the second LNG-ice-class ship of Russia is now ready for service.
The second Russian ice-class LNG carrier, built in-house by the country's Prime Minister Mikhail Mishustin, is now ready to enter service. Its commissioning ceremony will be held on Thursday. Mishustin announced that the ceremony to celebrate the vessel "Konstantin Posiet" will take place in the Zvezda Shipyard?in Russia's Primorsky Region. The ships were?designed so that they could transport LNG from Russia’s Arctic projects to Asian markets and other markets year-round, regardless of the harsh weather conditions. Zvezda is one of Russia's leading shipbuilding companies. They specialize in large Arc7 ice class tankers that can break through ice up to 2 metres thick. The shipyard had been tasked with building?15 tanks for Russia's Arctic LNG-2 project, but sanctions imposed because of the conflict in Ukraine caused delays and difficulties. Sovcomflot, Russia’s largest shipping company, received the "Alexei Kosygin", the?first domestically built ARC 7 ice-class?tanker, in 'December last year. (Reporting and writing by Oksana KOBZEV; Editing by Andrew Osborn).
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Birol, IEA's Birol, says the Strait of Hormuz should be reopened without conditions
Fatih Birol, the head of the International Energy Agency (IEA), welcomed on?Thursday the interim agreement that ended the?Iran War and?called for a reopening without conditions of the?Strait?of Hormuz. Birol said that several countries are reviewing their energy policies, as it is clear that the waterway may be closed again. Iran has already shut down the waterway during the war. Birol, speaking at an Istanbul event, said that the IEA would discuss new strategies with a number of countries, as the energy crisis has redrawn global maps. He added that "trust" was crucial in the global markets for energy, where prices have dropped since the peace pact. In the agreement, Iran will reopen the Strait of Hormuz and the U.S. will lift its naval blockade against Iran. This could end the biggest oil supply disruption ever. Birol added that the strait should be reopened without conditions so all parties can "believe" it is safe. "We'll now see what the details are of the agreement, the negotiation process, and next steps will be", he said. "The vase is cracked," he said. "Now that?all actors are aware that the Strait of Hormuz has been closed before, it can be shut down again." According to the IEA, the Iran war - which began on February 28 with U.S. and Israeli strikes against the country - has blocked more than 14 million barrels of Middle East oil production per day (bpd). Reporting by Ezgi Erkoyun, Ceyda aglayan and Jonathan Spicer. Editing by Alexander Smith.
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Witnesses report sustained gunfire and explosions at the airport in Niger's capital.
Witnesses reported hearing explosions and sustained gunfire early Thursday morning in the capital of Niger, 'Niamey. A security source called it an apparent attack. No immediate claim of blame was made for the attack. The Niger government spokesperson didn't immediately respond to an inquiry for comment. In January, the?Islamic State's affiliate in the area claimed responsibility for a terrorist attack at?the airport. The group claimed that it had attacked the?aircommand headquarters and drones and "delivered an immediate blow" to the Sahel countries'?counterinsurgency efforts. Niger has, along with its Sahel neighbours Mali, Burkina 'Faso and Mali, struggled to contain jihadist attacks linked to al Qaeda or Islamic State, which have caused thousands of deaths and millions of displaced people in all three countries. The witness reported that the first explosions took place at 6 am local time (0500 GMT). Sporadic gunfire could still be heard 'nearly 2 hours later. Witnesses said that security forces had closed off the area. Niger's Defence Ministry stated that militants arrived on motorcycles in the January attack and security forces quickly defeated them. The ministry said that four soldiers had been injured. The ministry reported at the time that several civilian aircraft were damaged in this?attack. Abdourahamane Tiani - the?military leader of Niger - accused the presidents from France, Benin and Ivory Coast, of sponsoring an attack in January, but did not provide any proof. He also promised retaliation. (Reporting and writing by Niger Newsroom; Editing by Philippa Fetcher, William Maclean).
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The Gulf stock market gains on US-Iran deal
Investor sentiment improved after an interim ceasefire was reached between Iran and the United States. U.S. president?Donald Trump signed a deal with his?Iranian counterpart on Wednesday to end the war. Trump warned that Washington would re-target Iranian officials and resume its attacks if Tehran did not honour its commitments. Dubai's main stock index rose by 0.8%, led primarily by the?real estate and industrial stocks. Emaar Properties, a developer, gained 2% while Emirates NBD Bank added 1.3%. NBD Bank, Dubai’s largest lender, announced that it has completed the acquisition of India's RBL Bank's majority stake through a $2.75 billion primary infusion. Among the other winners,?low cost carrier Air Arabia rose 3.8%. Exchange operator Dubai 'Financial Market' jumped 4%. Abu Dhabi's benchmark stock index grew 0.5%. Alpha Dhabi Holding, a conglomerate, rose 3.3% while Aldar Properties, a real estate developer climbed 2%. Saudi Arabia's benchmark stock index grew by 0.1% thanks to gains in real estate, financial and materials shares. Specialized Medical Company rose 4.6%, while Saudi Energy Company grew 1.7%. This was after Specialized Medical Company won a project worth an estimated 3.8 billion Riyals ($1.01 'billion). Saudi Aramco dropped 0.4% after a report that the oil giant is considering selling its stake in its sulphur division in an 'up to $7 billion deal. Qatar National Bank, the largest lender in the region, fell 0.6%, while Industries Qatar, the?Qatari index, was little changed.
Sources claim that PetroChina and Indian Oil failed to secure tankers for loading Iraqi crude.
PetroChina and Indian Oil Corp have failed to secure very large carriers?to transport Iraqi Basrah oil in late June. Company and shipping sources confirmed this on Thursday. Another Chinese major Sinochem, meanwhile, is 'on the hunt' for a tanker.
The Chinese state-owned energy firms have made inquiries this week following an interim agreement between the United States of America and Iran, which ended their war and opened the Strait of Hormuz – a crucial waterway for Middle East oil supplies.
Two shipping sources confirmed that PetroChina was looking for a VLCC ship to load oil from Iraq's Basrah Oil Terminal between June 25-30. Two shipping sources said that PetroChina had requested a VLCC to load from Iraq's Basrah Oil terminal between June 25 and 30,?
They said that the Chinese major received "at least six" offers with worldscale points between 650 and 750. This was nearly three times the rate charged before Israel and the U.S. launched their war in late Feb. Shipping companies use the worldscale measurement to calculate freight rates.
PetroChina said that there are available tankers, but they're too expensive and there's no guarantee you can leave the strait.
According to one of the sources, securing the Gulf's supplies would remain difficult despite the peace agreement.
The source stated that "it'll still be difficult to fix a ship due to the rate and I assume both parties will need to agree on some special clauses (in the contract for transiting the Strait)."
Shipping sources reported that Sinochem was looking for a VLCC on Thursday to load oil between June 20-30 in the Gulf destined for Asia. The?company's?ability to find a vessel was not immediately known.
PetroChina and Sinochem have not responded to our requests for comment.
IOC did not receive any bids last week for a VLCC that would transport oil from Iraq to Paradip on India's East Coast on June 22-23, according to a source with knowledge of the matter.
The source said that IOC, India’s largest refiner?issued a force majeure order on the cargo.
The IOC did no respond immediately to a comment request. Reporting by Nidhi verma, Siyi liu, Chen Aizhu, and Florence Tan, in New Delhi; Additional reporting by Mohi narayan; Editing, Joe Bavier
(source: Reuters)