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Urals diffs are softer on the rising freight costs to Asia
According to calculations made by? Calculations on Tuesday. The cost of shipping vessels from Russia's Baltic Sea port to India has risen sharply, according to traders. Robert Fico, the Slovakian Prime Minister, said that after meeting with EU chief Ursula von der Leyen on Tuesday they agreed to resume oil transit through the Druzhba pipe via Ukraine and appreciated EU's readiness for financial and technical assistance for repairs. PLATTS WINDOW * There were no?bids on Tuesday for Urals or?Azeri BTC, and CPC blend, traders said. Donald Trump, the U.S. president and Vladimir Putin, his Russian counterpart discussed the war in Iran on Monday. This was just hours after the Kremlin's chief warned that a global energy shortage threatened the world economy. Reporting by Alan Barona; Editing Alan Barona
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US Energy secretary deletes post on Navy escorting vessel in Strait of Hormuz
U.S. Secretary of Energy Chris Wright deleted on 'Tuesday' a post in X that said the U.S. Navy had successfully escorted a tanker through the Strait of Hormuz to "ensure oil continues to flow into global markets." Wright's post was deleted without explanation. A spokesperson for Iran's Revolutionary Guards, commenting on 'Wright's remarks', denied that an 'oil ship' had been 'escorted' by the U.S. Army through the Strait of Hormuz. Alimohammad Naini, quoted by Iranian state-run media, said: "Our missiles and drones will stop any movement of the US Fleet and its Allies." Naini told state media that the 'claim' that an oil tanker was escorted by the US terrorist army through the Strait of Hormuz was a complete lie. Reporting by Jasper Ward, Idrees Ali and Phil Stewart in Washington; Elwely Elwelly and Chris Reese in Dubai.
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Boeing warns that wiring problems could cause a delay in the first quarter of 737 MAX deliveries
Boeing said Tuesday that the first-quarter delivery of its narrow-body, 737 'MAX jets may be delayed due to wiring problems. This is the latest setback for the troubled aircraft manufacturer as CEO Kelly Ortberg tries to improve the production quality and company reputation. Boeing stated that the 737 program was reworking a group to fix wires with small scratches due to a machining mistake. The production rate for its new MAX jets is still 42 per month. Boeing shares were down nearly 1% during Tuesday's afternoon trading. The company plans to increase the 'rate to 47 jets per month in later this year. It will also open a fourth 737 assembly line this summer at its Everett Washington plant. The company plans to increase production to 63 737s per month within the next few decades. Boeing didn't specify whether the wire scratches were caused by the company or a supplier. The company has informed both the Federal Aviation Administration (FAA) and its customers. The FAA was unable to comment immediately. The company said that all 737 MAX aircraft in service 'can continue to 'operate safely, and it does not expect this issue to impact the company’s goal of delivering about 500 737 jets to customers by the end of the year. The company announced on Tuesday that it delivered 51 jets during February, the highest total for a month since 2018. This is an increase of 46 jets from January. In February, 43 737 MAX aircraft were delivered. Reporting by Nathan Gomes from Bengaluru, and Dan Catchpole from Seattle; Editing and Bill Berkrot, Jonathan Ananda and Maju Samuel)
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Lufthansa Pilots Strike but Middle East Flights Exempt
The pilots union VC announced that Lufthansa will hold a two-day'strike' on Thursday over a disputed pension issue. However, flights to certain Middle Orient countries will be exempted "in view of the current situation". The main airline of Lufthansa and its cargo division are at odds over pensions. After a vote last year, the union announced its readiness to strike in order to press the company into providing more generous retirement benefits. Since then, intermittent talks have been held without success. Andreas Pinheiro, VC president, said in a statement dated Tuesday that he would have liked to 'avoid a further escalation. "But no offer is on the table." If the other party only indicates a willingness for dialogue but refuses substantive improvements to the company pension plan, it's not worth the effort. Between 00:01 and 23:59, March 12, the strike will affect Lufthansa Cargo AG flights?and Lufthansa passengers flights departing German airports? In a statement, it was stated that the strike did not affect flights to Egypt, Azerbaijan and Bahrain, Iraq, Israel. Lufthansa claimed that its previous strike last month had "extremely adversely" and "disproportionately" affected passengers.
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EIA: Brent will trade above $95 in the next two months due to Iran war
The Energy Information Administration said in its'monthly report' on Tuesday that Brent oil prices will 'trade above $95 per barrel for the next two-months, before dropping to $70 at the end of the year. The EIA's Short-Term Energy Forecast said that oil shipments are largely prevented from using the Strait of Hormuz. This is a crucial chokepoint where a fifth of the world's oil passes through every day. Saudi Arabia has begun reducing its oil production, according to sources. They also said that Iraq and Kuwait have reduced their output due to the restrictions. The EIA stated that the production shutdowns would gradually be eased as the transit resumed. Brent crude futures are up around 21% this month according to LSEG data. They were last trading at $88, at 12:35 p.m. EST. The EIA increased?its Brent price forecast?by 37% over the previous month, to $79 per barrel in 2026. Brent is expected to fall below $80 per barrel by the third quarter this year. The company also predicted that U.S. gasoline retail prices would be $3.34 per gallon in the third quarter of this year, which is 14.7% more than its previous forecast. Diesel prices were forecast to rise to $4.12 per gallon - a 20.1% increase over its previous forecast. We expect that, although we anticipate the majority of the gasoline increase will be passed on to retail prices in the next few weeks, the normalization of refinery and retail margins is likely to occur at a slower pace. The EIA reported that the 'net effect' will be a continued upward pressure during the second quarter, which will lag behind the initial rise. The EIA stated that higher oil prices will encourage the U.S. to increase its crude production. Production is expected to average 13.61 million barrels a day in 2018, and to rise to 13.83 millions bpd by 2027. This compares to the EIA’s previous forecasts for 13.6 million bpd in?2026 and 13.32 for 2027. U.S. Crude Futures have risen around 25% this month. Last trading at $83.60 per barrel, 12:25 pm EST.
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Shipping data shows that Saudi Red Sea oil exports will reach a record high in March.
Shipping data revealed on Tuesday that Saudi Arabia's oil exports via the Red Sea are on track to reach record highs in March, despite the fact they remain far below levels required to compensate for the decline in the Strait of Hormuz. The Kingdom relies on Yanbu, a port located at the Red Sea to boost its exports and avoid steep production cuts. This is because?its neighbours Iraq Kuwait and United Arab Emirates already have reduced their output due to the U.S./Israeli war against?Iran. LSEG data shows that Yanbu loadings in the first nine of March averaged 2.2 millions bpd, up from 1.2 million bpd and nearly 2?million bpd during last week. Saudi Arabia exported approximately 6 million bpd via the Strait of Hormuz, before the war closed the narrow passageway in late February. Aramco announced on Tuesday, during its results call, that it can transport up to 7,000,000 bpd into the Red Sea. Of this amount, 5,000,000 bpd is available for exports while the remaining feeds domestic refineries along the western coast. Energy Aspects estimates that the kingdom has reduced production to 9.8 million bpd from 10.9 millions bpd, in February when it boosted exports over its OPEC quota to prepare for possible supply interruptions. LSEG data shows that a total of 37 tankers will be expected to load at Yanbu during March, 11 of which have already left. According to the 'Kpler shipping data', at least 40 tankers could load in March and push exports over 4 million bpd. Traders said the port can handle?more 4.5 million bpd. However, it has never?loaded more that 2.5 million bpd. Security risks also exist along the Red Sea route, including from Yemeni Houthi forces. Their attacks disrupted shipping during Israel-Gaza's conflict. The West's Navy Information Center JMIC stated on Sunday that no attacks have been reported in the Red Sea since the Iran War began. However, threats remain.
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What are the challenges of securing shipping in the Strait of Hormuz?
Dan Caine, Chairman of the Joint Chiefs of Staff of the United States, said that the Pentagon was looking into ways to safely escort vessels through the Strait of Hormuz. Iran, located on the northern coast of the country, has effectively closed this strait. According to United Nations data, traffic through the strait is down 97% since February 28 when the U.S. and Israel war against Iran started. The U.S. aims to calm the oil markets, as they are concerned that a prolonged war could cause a global crisis of energy. What is at stake? The Strait of Hormuz is a "narrow" passage of water that connects the Gulf of Oman with Iran. It's the only sea route for countries like Kuwait, Iran, Iraq and Qatar, which produce oil and gas. On Monday, oil prices briefly rose to their highest levels since 2022. According to the United Nations, high oil prices may trigger a new cost of living crisis similar to what happened in 2022 after Russia invaded Ukraine. A prolonged conflict may also lead to a fertilizer shortage, putting the global food supply at risk. According to Kpler, about 33% of all fertilisers in the world, including ammonia and sulphur, travel through the Strait. A prolonged war could cause fears of an economic crisis in the world similar to the ones that followed the Middle East oil shocks in the 1970s. What has Iran threatened? The Iranian Revolutionary Guards warned that ships passing through the Strait would be shot at. Since the conflict began, at least 11 ships were attacked. Most of the traffic is halted. This is partly due to caution, but also because insurance premiums have been raised by up to 300%. What have the US and other countries promised? On March 3, President Donald Trump announced that the U.S. will provide protection for oil tankers through the Strait of Hormuz. He said that he also ordered the United States Development Finance Corporation (USDFC) to provide insurance and guarantee for shipping companies. Emmanuel Macron, the French president, said that several European countries as well as India and other Asian nations were planning a mission to provide security. He said that such a mission could only be carried out once the conflict is over. France has deployed about a dozen navy vessels, including an aircraft carrier strike group to the Red Sea, the Eastern Mediterranean and possibly the Strait of Hormuz. A spokesperson for the British Prime Minister Keir starmer said that he had spoken to the German and Italian leaders on options of providing support?for commercial shipping within the Strait. General Caine, speaking to reporters at the Pentagon Tuesday without giving any details, said: "We are looking at various options." Why is it so difficult to secure the HORMUZ? It is difficult to defend the Strait of Hormuz. According to shipping broker SSY Global, the shipping lanes are only two nautical miles wide. Ships must turn around and face Iranian islands as well as a mountainous coastline that offers cover for Iranian forces. IS IT POSSIBLE TO PROTECT SHIPS TRAVELING THROUGH HORMUD? Tom Sharpe (a retired Royal Navy Commander) said that although Iran's conventional naval force has been largely destroyed, the Islamic Revolutionary Guard Corps has plenty of weapons to do damage. These include fast attack craft, uncrewed surfaces vessels, speedboats mini submarines mines and even explosive-packed jet skis. According to the Centre for Information Resilience (a non-profit group of researchers), Tehran is able to produce 10,000 drones per month. Sharpe stated that it would be possible to air-cover three or four vessels a day in the short term using seven or eight destroyers. However, doing this for several months would require additional resources. Adel?Bakawan is the Director of the European Institute for Middle East & North African Studies. Kevin Rowlands is the Editor of RUSI's Journal, at the Royal United Services Institute. He said that "the world needs oil flowing through the Gulf and so there are plans in place to put protective measures in place." What happened in other shipping chokepoints in the region? Yemen's Houthis - a group allied to Tehran - but with a much smaller arsenal than Iran - managed to close down the majority of traffic through the Red Sea, Bab al-Mandab Strait, and on the way to the Suez Canal, for over two years despite the protection provided by U.S.-led forces and European Union-led troops. The majority of?shipping firms still use a much longer route via southern Africa. Danish shipping company Maersk announced that it would return to the Suez route in phases starting January. The EU-led force that countered piracy off the coast of Somalia has had more success than Iran's Revolutionary Guards, despite being a far inferior force. AREN'T THERE OTHER WAYS TO USE THE STRAIT? The UAE and Saudi Arabia are looking for ways to bypass this strait. They have built more oil pipelines. These alternatives are also not operational at the moment. An attack by Houthi militants on a Saudi east-west pipeline in 2019 proved that they were vulnerable. (Additional reporting from Renee Maltezou, Kate Holton and Charlie Devereux. Editing by Timothy Heritage.)
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IndiGo CEO Elbers exit brings India's airline industry into focus
IndiGo, an Indian budget airline, announced on Tuesday that Pieter Elbers would step down from his position as CEO. This comes months after regulatory scrutiny was raised over a series of'mass cancellations' which left tens and thousands stranded. Here's an overview of India's airlines as Elbers' tenure at IndiGo comes to a close. INDIGO IndiGo, India's largest airline with a 64% market share and a fleet of 440 aircraft as of the end of December, is India's most popular airline. The airline operates over 2,200 flights daily, connecting 95 domestic destinations and more than 40 international ones. IndiGo's international network expanded under Elbers, with the launch of long-haul European flights using aircraft leased from Norway's Norse Atlantic. IndiGo placed its first ever long-haul, wide-body jet order of 500 Airbus A320 aircraft under Elbers. AIR INDIA Air India Group has a combined fleet size of 290 aircraft. This includes 104 aircraft at the 'budget carrier Air India Express. Air India is owned by India's Tata Group, and Singapore Airlines. It operates non-stop flights between 42 international destinations across five continents. AKASA AIR A relatively recent entrant into the?sector Akasa has a market-share of almost 5%. This makes it India's 3rd largest airline. Its fleet consists of 35 aircraft. It also connects Indian cities with?locations throughout the Middle East including Jeddah and Riyadh as well as Doha, Abu Dhabi and Phuket in Thailand. SPICEJET SpiceJet, a budget carrier,?held a?market share of about 4% as of the end of December with a fleet of 33 operational aircraft. The airline mainly operates domestic flights with some international destinations like Dubai and Fujairah. (Reporting by Nandan Mandayam in Bengaluru)
Fuel costs rise as Middle East conflict disrupts flights and increases airline fares
Qantas Airways, Scandinavian SAS, and Air New Zealand all announced price increases on Tuesday. They blamed the Middle East conflict for the sudden spike in fuel prices.
New Zealand's national carrier, Air New Zealand, said that jet fuel prices have risen from $85-$90 per barrel prior to the U.S. and Israeli strikes on?Iran to $150 to $200. It suspended its financial forecast for 2026 because of uncertainty surrounding the conflict.
The 'war' has disrupted an important oil-export route, increasing airline costs and causing fares to rise on certain routes. This is causing concern over a wider impact on global travel.
A spokesperson for SAS said that "increases this large make it necessary to act in order to maintain stability and reliability operations," adding that it had implemented "temporary pricing adjustments."
Last year, the largest Scandinavian airline temporarily changed its fuel hedging strategy due to unpredictability of market conditions. It said it would not hedge fuel consumption for the next 12 months.
Many Asian and European Airlines, such as Lufthansa, and Ryanair have implemented oil hedging, which secures a portion of their fuel supply at fixed prices.
Finnair, who had hedged 80% of their fuel purchases in the first quarter, warned that the fuel supply could even be at risk if the conflict continued.
Finnair's spokesperson stated that a prolonged fuel crisis could impact not only its price but also its availability. This was at least temporary.
Kuwait, one of the largest jet fuel suppliers to Europe's north-west, has had its output cut.
AIRSPACE CHAOS IN THE MIDDLE EAST
Flightradar24 reported on X that planes arriving at Dubai on Tuesday were temporarily placed in a hold pattern due to an alleged missile attack. This highlights the chaos of the Middle East's airspace. The planes eventually?landed.
In response, airlines have already adjusted their networks and prices. Qantas announced it was looking at relocating capacity to Europe, as airlines and customers seek to avoid disruptions in the Middle East. Cathay Pacific also said that it would be adding flights to London and Zurich by March due to airspace closures on Asia-Europe routes and capacity restrictions.
Air New Zealand has increased fares on domestic, short-haul, and long-haul flights, and warned that more price increases or changes to schedules may be forthcoming if jet fuel costs continue to rise. Hong Kong Airlines announced that it will also increase fuel surcharges up to 35.2% beginning Thursday.
Air India announced on Tuesday that it will begin to increase fuel surcharges for its domestic and international flights, citing the rising price of jet-fuel.
Some European carriers stated that they did not see a need to increase prices immediately. IAG, British Airways' owner, stated that it had no immediate plans to raise fares and was well-hedged for the short term. British Airways said, however, that it had brought forward its winter-season flight to Abu Dhabi due to the "continuing uncertainties."
After the sale of Airline shares, shares in the airline have stabilized.
Oil prices dropped to $90 per barrel from $119 per barrel on Monday, after U.S. president Donald Trump announced on Monday that the war might be ending soon.
In Europe, airline stocks were up between 4 and 7 percent. In afternoon trading, shares of Delta Air Lines and United Airlines as well as American Airlines fell between 1%?and 2%.
The majority of major U.S. carriers no longer hedge fuel costs. This is in contrast to European and Asian carriers who continue to actively maintain hedging programs. Fuel is usually their second largest expense, after labor.
Airlines are forced to raise fares in order to cover rising costs without fuel hedges. The latest data from Deutsche Bank shows that U.S. airfares are rising quickly. Both?last minute tickets and advance purchase fares have risen over the last week.
Analysts say that the backdrop should allow the market to absorb higher prices, as passenger traffic continues to exceed the growth of airline seat capacity. Some carriers are forecasting record demand for spring break.
As fuel costs rise, airlines are expected to reduce their growth plans and increase their pricing power. It is still unclear whether or not these measures will be sufficient to protect the profit margins.
Analysts are expecting major U.S. carriers to update their outlooks in advance of an industry event next week. However, some have already reduced their profit and capacity predictions for the current quarter as well as the entire year. Analysts from Melius have, for instance, cut their estimates of net income by 10%.
CONFLICTS SHRINKING AVAILABLE AIRSPACE
The tightening of airspace, in addition to the high cost of fuel, threatens to bring down the travel industry worldwide, as pilots are rerouting to avoid the Middle East conflict, and the capacity on popular routes is filling up.
Cirium reports that Emirates, Qatar Airways, and Etihad account for approximately one-third the passenger traffic between Europe, Asia, and Australia. They also fly more than half of passengers from Europe, to New Zealand, Pacific Islands and Australia.
Many European airlines are already struggling with the lack of airspace created by the conflict in Ukraine. They avoid Russian airspace, and fly longer international routes. With even less airspace available, the airlines say that their business is now even more difficult.
(source: Reuters)