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Russia to ban partial diesel exports until the end of the year, but traders claim that there will be little impact.
The Russian government is planning to implement a partial export ban of diesel until the end the year in order to combat shortages after a series of drone attacks by the Ukrainians on Russian refineries. However, traders expect the measure to not have a significant impact on fuel flow. The Russian restrictions will only apply to exporters that do not produce fuel or whose export share is low. Around three quarters of diesel exported by producers are sent via North and South Pipelines, which respectively lead to Baltic and Black Sea Ports. These volumes are not limited. The new restrictions do not apply to the exports of non-producing diesel by Central Asian countries that have also signed intergovernmental agreements on fuel shipment with Russia. Russia plans to restrict the export of oil and petroleum products to reduce fuel shortages across the country. Industry sources claim that Russia will produce almost 86 millions metric tons (about 31 million tons) of diesel by 2024. The Russian government has already introduced an export tariff of 50,000 rubles ($598) for non-producers, which has led to a decline in fuel supplies and a worsening of margins for traders. On the St Petersburg Exchange, diesel wholesale prices are around 70,000 roubles a ton. According to analysts' estimations, the decline in Russia’s diesel exports could reach 0-2% and will be closer towards zero, said a trader, who declined to name himself due to the sensitive nature of the issue. Another trading source stated that "the ban will not lead to any influx of Diesel Fuel into the domestic market."
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Asian spot LNG prices decline on tepid demand, ample inventories
The price of Asian spot liquefied gas fell this week due to a lacklustre market. Prices are expected remain low as Chinese gas production and ample stocks limit the interest in spot purchases. Average LNG price for delivery to North-east Asia in November Industry sources estimate that the price per million British Thermal Units (mmBtu) was $11.20, down from $11.50/mmBtu in the previous week. Go Katayama is an LNG and gas analyst with data analytics firm Kpler. He said that Asian LNG prices will remain somewhat bearish through next week due to increased domestic gas production, higher underground storage withdrawals in China, and abundant regional LNG inventories. Katayama said that the upward revisions of China's domestic gas production estimates for September to December 2025 combined with the higher forecasted underground storage withdrawals from November are likely to replace additional spot LNG demand, and put downward pressure on Asian prices. EUROPEAN Prices Keep to Tight Range Prices in Europe were slightly higher on Friday morning, but still within the recent tight range. The gradual end of maintenance season in Norway has increased supply, while strikes in France have reduced LNG deliveries. The disruption caused by the strikes at French LNG Terminals will likely last until the end of September. The strike has led to a rise in the price of gas in France, and sellers have been forced to move cargoes to LNG terminals around northwest Europe. Katayama stated that Kpler has a stable outlook on the TTF front month contract for the coming week. This is because ample LNG and pipeline supply will help balance the gradual decline in renewable generation, and the lower Algerian piped flow to the EU. Lack of competition in Asia has reduced the urgency for European market players to purchase winter goods. Orbify, a data intelligence company, reports that 32 vessels will be heading to Europe in the next 14-days with 1,30 million cubic meters LNG. S&P Global Commodity Insights estimated its daily North West Europe LNG Marker price benchmark (NWM) for cargoes to be delivered in November ex-ship on September 25 at $10.954/mmBtu, a $0.65/mmBtu reduction from the November futures prices at the TTF Hub. Spark Commodities rated the October price as $10.517/mmBtu. Argus rated the price at $10.681/mmBtu. Xiaoyi Deng of Argus reported that in Egypt, LNG-laden vessels formed queues this week outside floating storage units due to scheduling problems at the terminals. Spark Commodities analyst Edward Armitage said that the U.S. front month arbitrage to North-East Asia via Cape of Good Hope still encourages U.S. cargoes for delivery to Europe. The global LNG freight rate for the Atlantic fell to its lowest level in five months, $21,500/day. Pacific rates have also weakened for the fifth consecutive week to $25,250/day. Marwa Rashad reported. Mark Potter (Editing)
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Lufthansa will cut thousands of jobs to improve efficiency
Two sources familiar with the matter say that Lufthansa will announce several thousand layoffs on Monday, at its first capital markets day for the entire company in six years. The airline is looking to reassure investors about its commitment to efficiency. After the announcement of planned cuts, shares in Lufthansa rose by 3.4%, reaching their highest level in over three weeks. Analysts and investors criticised Lufthansa's inability to reduce costs and grow the core business for two years after it delayed its target of an 8% operating margin by 2025. The group issued two profit warnings for 2024, and assured investors that it would implement a turnaround program. The exact number of redundancies is not known Two sources have confirmed that the airline group plans to cut its administrative staff by 20 percent in the next few years. However, the exact number is still being determined. Sources spoke under condition of anonymity due to the sensitive nature of the subject. The company said that its turnaround was progressing. The company is still facing labour issues, and a dispute over pensions will likely overshadow Capital Markets Day on Monday in Munich. A pilot strike is still possible. Lufthansa has declined to comment. A third source familiar with the discussions said that any redundancies would impact the entire group and not just the core carrier. Analysts predicted that the market will continue to pressure Lufthansa, to demonstrate its ability to build a more effective group. Bernstein stated in a note focusing on the airline's Capital Markets Day that despite having fewer aircraft and even less flying, the airline business employed 7% more employees than in 2019. CAN IT LEVERAGE NEW GERMAN OPERATIONS? The airline's ability to leverage Discover and City Airlines, its two new German operations, is key to the remaining hopes of a turnaround. Analysts say that the labour agreements of Lufthansa Classic are outdated, inflexible and expensive. However, the contracts for the employees of the newer subsidiaries can be more easily negotiated, according to an insider. Executives told reporters that increased flexibility would allow the group's resources to be moved from less-profitable subsidiaries to lower-cost options. Analysts said that convincing shareholders and analysts about progress will likely remain a challenge. Ruairi Cullinane is an analyst at RBC. She believes that Lufthansa needs to focus on the immediate and not mid-term goals. He said that analysts may want to know if Lufthansa will be able to meet its 2025 target of a significant rise in adjusted EBIT. (Written by Joanna Plucinska, edited by Barbara Lewis).
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MOL Hungary will resume crude oil exports to Iraqi Kurdistan
The Hungarian refiner MOL group has signed agreements for the resumption of international crude oil exports out of Iraq's Kurdistan Region, it announced on Friday. This is a major step towards restoring operations that have been halted since Spring 2023. These agreements include international exploration and production firms, the Kurdistan Regional Government and the Federal Government of Iraq. MOL anticipates that the crude oil pipeline linking the region with the Turkish port of Ceyhan will reopen within the next few days. MOL's statement said: "We are confident about the reopening and the positive impact that it will have on our operations." The closure of the pipeline earlier this year has disrupted crude oil exports from Kurdistan, affecting revenues for oil companies operating in Kurdistan. MOL owns a 20% stake of the Shaikan Oil Field in Iraqi Kurdistan. Reporting by Anna Wlodarczak Semczuk, Alan Charlish. Mark Potter edited the story.
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Foreign Minister says that Denmark does not intend to invoke NATO Article 4
Denmark does not plan to invoke NATO Article 4 following drone incursions near military and civilian sites which shut down air traffic earlier this week in the Nordic nation, Denmark's Foreign Minister said on Friday. According to Article 4 of NATO's treaty, members will consult each other whenever they believe that the territorial integrity, political independence, or security of one of their members is at risk. Reporters were told that Article 4 had been used nine times during the history of NATO, including twice in recent years in relation to Poland, and Estonia. Therefore, there is no reason for us to use it, said Foreign Minister Lars Lokke Rasmussen. Mette Frederiksen, the Danish Prime Minister, has linked the drone accident that closed Copenhagen Airport late Monday night to suspected Russian drone activity across Europe. However, she did not provide any evidence for this claim, which was strongly denied by Moscow. The Danish foreign minister announced Thursday that Denmark will also donate 2.7 billion Danish crowns (US$422.43million) to Ukraine. A large portion of the donation would go into Ukraine's defense industry. $1 = 6.3916 Danish crowns (Reporting and editing by Terje Solsvik, Louise Breusch Rasmussen)
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Source: FAA will return some 737 MAX and 787 ticketing authorities to Boeing
Sources say that the Federal Aviation Administration is allowing Boeing to issue airworthiness certifications for certain 737 MAX aircraft and 787 planes as of next week, after holding this authority for years. Since years, the FAA continues to inspect every 737 MAX or 787 aircraft prior to issuing an airworthiness certification and clearing for delivery. The FAA typically delegated the authority for issuing airline tickets to the manufacturer. Source: Under the new program, which will be announced on Friday, Boeing, FAA and other agencies will issue airworthiness certifications alternately every week. Boeing and the FAA did not immediately respond to our request for comment. After a mid-air blowout incident in which a new Alaska Airlines MAX aircraft was missing four bolts, the FAA did not lift its production cap for 38 737 MAXs per month. Reporting by Shivansh Tiwary, Bengaluru. Editing by Anil d'Silva and Tasim Zahid.
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Lufthansa will announce thousands of job reductions on Monday
According to sources familiar with the matter, Lufthansa will announce several thousand cuts in its first capital markets day for the company since six years on Monday, to demonstrate its commitment to efficiency. In 2024, the group issued two profit warnings as it battled rising costs and labour challenges. Investors were promised that an ambitious turnaround program would be implemented in the next few years. Two sources have confirmed that the airline group plans to cut its administrative staff by 20 percent in the next few years. However, the exact number is still being determined. Sources spoke under condition of anonymity due to the sensitive nature of the subject. Lufthansa has declined to comment. A third source familiar with the discussions said that any redundancies would affect the entire group and not just the core carrier. (Writing and editing by Barbara Lewis; Joanna Plucinska)
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Abra ends talks with Gol-Azul, ending the major Brazilian airline merger
A filing late Thursday showed that the airline group Abra had decided to end talks about a possible merger between Brazilian carrier Gol and Azul. This move puts an end to the possibility of creating a dominant airline for Latin America's biggest economy. The new carrier would have had roughly 60% of the domestic markets, surpassing LATAM Airlines, based in Chile. Abra Group, the majority shareholder in Gol and Colombia’s Avianca, and Azul signed the first memorandum in January to combine the two airlines. This followed months of discussions and speculation in the market. Azul filed for Chapter 11 protection in May. Analysts warned that this move would likely stop the merger between Gol and Azul, who emerged from their own bankruptcy proceedings in June. STRIKES IN THE INDUSTRY According to Gol, Abra informed Azul that "the parties have not meaningfully talked or progressed on a possible transaction since several months due to Azul's attention towards its Chapter 11 proceeding." Both companies filed for bankruptcy as the airline industry struggled to deal with debt, a sharp decline in traffic due to the COVID-19 epidemic, and delays in aircraft deliveries. Abra pointed out that the memorandum from January came "in a different scenario and at a different moment for the companies." Gol and Azul terminated also their codeshare agreement for 2024, which was being closely scrutinized by antitrust watchdog CADE. Concerns about competition Abra left the door wide open for future discussions. Abra said, "We still believe in the merits a business merger between Azul and Gol, and as such, Abra stands ready, willing, and available to engage the relevant stakeholders." Azul confirmed in a separate filing that the talks were over and reiterated its "commitment" to strengthening its capital. Azul anticipates that it will emerge from bankruptcy by the beginning of 2026. LATAM criticised the potential merger, but some experts called it "necessary" to maintain a financially sound sector in Brazil where air travel is restricted and costs are high. Brazil's government welcomed the end to the negotiations. Initially, it supported the merger in order to avoid either company failing, but then changed its mind due concerns about competition. The Minister of Ports and Airports, Silvio Costa Filho, wrote in X that "the outcome is a result of the strengthening and growth of Brazilian aviation." Reporting by Gabriel Araujo, Luciana Magnhaes and Kirsten Donovan; editing Jacqueline Wong.
Russian oil exports to Turkey drop as Trump seeks a cut in Moscow's earnings
The decline in imports of Russian fuel to Turkey has been due to sanctions and competition from other grades of oil, as well as the fact that President Donald Trump is urging allies not to buy Russian oil, to hinder its war effort.
Trump, frustrated by Russia's refusal of to stop fighting in Ukraine and a major source of revenue for Moscow, has asked Europe to cease Russian oil and gas sales.
After two hours of discussions with Turkish President Tayyip Erdoan, Trump stated that he thought Ankara might agree to his demand to stop purchasing Russian oil, and he could lift U.S. Sanctions against Turkey.
TURKEY & RUSSIA FORMED CLOSE RELATIONSHIPS
Erdogan and Russian President Vladimir Putin, who have developed close relations over the past few years, may not guarantee a change in Turkey's position.
Dmitry Peskov, the Kremlin's spokesperson, said that on Friday, it was up Turkey to decide with whom it does business.
"It's a sovereign country that decides on its own in which fields to cooperate with us. "If certain goods and certain trade types are seen as beneficial to the Turkish side then they will continue doing so," he added.
Two traders and LSEG data show that imports of Russian crude oil into Turkey fell in September to their lowest level since April.
According to LSEG, Turkey is the second largest importer of Russian Urals crude oil by sea after India. It has not imposed sanctions on Russia, but it complies with all international laws and regulations.
LSEG data shows that Turkey purchased 1.6 million tonnes of Urals during June, the highest since May 2024.
According to LSEG's data, imports will fall by around 1.2 millions tons this month.
The energy ministers of Turkey and Russia did not immediately respond to comments.
Turkey reduced Russian oil imports in the beginning of the year after refiner Tupras stopped purchases when the price of Urals surpassed the Western-imposed $60 per barrel price cap.
Tupras began buying Urals again in April after it dropped below the price cap.
The European Union and UK reduced the price of Urals in July to around $47.60 a barrel, complicating purchases. (Reporting from in MOSCOW. Can Sezer contributed additional reporting from ISTANBUL. Mark Potter (editing)
(source: Reuters)