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British Airways' owner IAG warns about lower profits due to rising fuel prices
IAG, the British Airways owner, forecasted a lower annual profit than originally expected on Friday. The company said that rising jet fuel prices and disruptions in supply caused by the Iran War would weigh more heavily on earnings. The company that owns Iberia, Aer Lingus and other airlines, expects jet fuel to cost 'about 9 billion euro ($10.56 billion), this year. 70% of the fuel it anticipates using in 2026 is already covered. The company didn't give any specific projections for the annual profit forecast Friday. When IAG?didn't provide a 2026 forecast in?February?, the shares?dropped. Analysts warned that the aviation industry faces one of its most challenging environments in recent years, as the Iran War?upends travel and fuel supplies while reducing sentiment.
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Maguire: Seven markets to watch if the Middle East is at peace.
If a durable peace is achieved in the Middle East, it would have a ripple effect on markets that went far beyond crude oil. Risk premias were quickly removed from everything from freight rates and fertilizer prices. Investors and traders should not only focus on whether the prices of energy are falling, but also how different parts of the complex move in relation to each other. Here are some key charts, including crude, products and shipping, as well as industrial commodities, to help you gauge whether the markets are pricing in a temporary ease of tensions, or a structural change in global demand and supply if a deal is reached. PHYSICAL VS. FUTURES Since the U.S. & Israel attacked Iran in late February, there has been a dislocation between physical and paper crude markets. Brent crude, the global benchmark for oil, has seen its physical market tighten dramatically due to the reduction in global oil supply and the increase in shipping and insurance costs. Brent Spot Prices In April, oil prices surged over $140 per barrel - near their all-time highest levels - as traders tried to accurately price the impact of conflict in the Middle East that had brought shipping to a standstill. Brent crude oil futures have also surged since the end of February. However, they topped out at less than $120 per barrel because paper traders ignored the headlines that were threatening and assumed the parties would resolve their differences soon. If refiners, traders and oil companies?believe that a lasting peace agreement has been reached, then physical oil prices will fall from their current levels. This would indicate a sustainable recovery of oil supplies. REFINING MARGINS Since the beginning of the war, oil refiners have made a lot of money thanks to the rise in fuel prices that has been driven by consumers' concerns over possible shortages. The crack spread is the difference between the price of gas oil, diesel or Brent crude futures. Due to the conflict, this widely-tracked indicator of refiner profits has increased by more than twofold since February and is now around $45 per barrel. This margin should be compressed if oil supplies are to recover. It is a good indicator of whether or not oil market participants believe that global oil flows can return to their previous levels. U.S. GASOLINE The sharp rise in gasoline prices this month to multi-year-highs has reminded U.S. legislators that the Iran war's impact extends to other major oil exporting regions. A genuine peace agreement should translate quickly into a drop in fuel prices for the United States, given its crude oil production. The?forward curve for the U.S. gas market will provide a good indicator of future fuel prices. If there is a widely-believed breakthrough with Iran, forward prices should drift back to pre-war levels. However, any skepticism regarding the peace deal will likely keep forward prices high for the foreseeable. FREIGHT FIX Chartering oil tankers out of the Middle East is one of the most noticeable effects of the Iran War. Daily rates for a VLCC from the Middle East into China have risen from less than $150,000 to over $450,000. The sudden emergence of peace in the Middle East and the resumption tanker traffic from that region should help to lower transit costs. However, a full restoration of insurance market would be required for rates to return at their former levels. BEYOND OIL The conflict in Iran has affected many markets, not just fuels and crude oil. Middle East is also a major supplier of other commodities such as fertilizers and industrial acid. Prices of jet fuels, urea, and sulphuric acids on the international market should continue to fall if a peace agreement is reached which restores the traffic in this region quickly. GAS & LNG The Middle East conflict has also impacted the global natural gas market. If a lasting peace agreement is reached, the markets will be corrected. Since the start of the war, prices for LNG (liquefied gas) and natural gas have risen in Asia and Europe. These are the markets that will see the largest potential declines once the conflict is officially over. It is true that restocking depleted gas stocks and higher gas consumption for electricity generation during summer may limit price drops in some areas, particularly during hot spells when air conditioners are used to their fullest. Stock Picking Investors who want to know how conflict resolution will affect companies, rather than the markets, may be interested in the share prices of energy producers that produce a lot of oil. After the Middle East conflict, shares of Canadian oil sands producers and U.S. shale extractors reached multi-year highs or records. Any end to hostilities, and any recovery in Middle Eastern oil production and exports, should cause a selloff of these stocks. This could lead to a wider pullback in the international oil and gas market. A genuine peace dividend will not only push oil prices lower but also reshape the spreads, flows, and relative pricing of all energy products. Investors who pay attention to these relationships rather than a single price will be in the best position to determine whether the calm in the Middle East signals the beginning of a more affordable and stable energy future. These are the opinions of the columnist, an author for. You like this column? Check out Open Interest, your new essential source for global financial commentary. Follow ROI on LinkedIn, X 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 7 days a weeks.
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Mitsui O.S.K. Mitsui O.S.K.
Japan's Mitsui O.S.K. Lines (MOL), said that on Friday, 'three of their vessels which transited a Strait of Hormuz in April and exited Gulf did not pay transit fees. They adhered to an international law principle. In its proposal to end the conflict with Israel and America, Tehran proposed to charge fees or tolls for vessels that pass through the Strait. The Strait is a vital sea route, and about a fifth (or more) of all global?crude-oil and LNG flows pass through it during normal times. A spokesperson for the company said that it does not intend to pay these fees in the future. In an interview with MOL President Jotaro Tamura in April, the president said, "This is a?of navigation that is based on international laws, and we abide by it." MOL, who still has several ships in the Gulf, was asked how they were able pass through the Strait. They credited the efforts of the relevant countries and stakeholders. The spokesperson said on Friday that "we will continue to put the safety of crews, vessels and cargo above all else." A liquefied gas carrier (LNG) with a Panama flag, owned jointly by an Omani company, and a MOL-linked tanker, traversed the Strait of Hormuz in April. This was the first time since the Iran crisis escalated. Since then, two Indian-flagged liquefied Petroleum Gas (LPG), owned by an affiliate company, have also crossed. The U.S. Treasury warned that any shipper who pays?tolls? to Iran for passage through the Strait of Hormuz could face punitive sanctions. (Reporting and writing by Kentaro Obayashi, Editing by Clarence Fernandez).
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Former China Eastern Airlines Chairman indicted for bribery
China's top prosecutor announced on Friday that a former chairman of China Eastern Airlines Group had been?indicted for bribery. This is the latest high-profile action against corruption as Beijing intensifies its campaign to combat?corruption. The news comes a day after Xinhua, the official news agency, highlighted the magnitude of the effort. Former defence ministers Wei Fenghe, and Li Shangfu were sentenced to death for graft, but with a 2-year reprieve. Xinhua reported that Liu Shaoyong was accused of "abusing a number of official positions... in order to obtain?benefits and accept bribes involving cash and valuables". It added that the charges include Liu's time as airline chairman. Liu was kicked out of the Chinese Communist Party in January. Liu could not be reached for comment. Since President Xi Jinping became China's leader, in?2012 the anti-graft campaigns has targeted both "tigers" and "flies", or high-ranking officials and lower-level officers. The focus has been?increasingly on the misuse?of public money, bank credit and assets of state-owned enterprises, local government resources, infrastructure spending. China's top anti-corruption watchdog announced on Thursday that Hou Weidong had been expelled by the ruling party due to "serious breaches of discipline and laws". Hou accepted illegally?gifts and money, borrowed large amounts from management and service providers, and had other pay his expenses, according to the report. The case is currently being reviewed by the public prosecutor. This week, the crackdown was also directed at two local officials. Xinhua reported that Jin?Zhizhen was 'expelled' from the Party for "serious violations of law and discipline". Zhou Xi'an was a former vice-chairman of the Anhui Provincial Committee of the same 'Conference'. He received a suspended 'death sentence' with a 2-year reprieve. This is one of China's most severe graft punishments. The state broadcaster CCTV reported on Thursday that he illegally accepted money, valuables and other items worth more than 20 million dollars. $1 = 6.8043 Chinese Yuan Renminbi (Reporting and editing by Farah master and the Beijing Newsroom)
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Sources say Trump will bring a smaller CEO delegation to the Beijing summit.
Five sources familiar with the preparations revealed that the White House had invited a "scaled-down CEO delegation" to accompany President Donald Trump next week to Beijing. This was due to 'divisions within the administration regarding economic policy towards China and the limited expectations for this summit. Three of the five sources said that, unlike Trump's 2017 visit to?China?, when he was accompanied with 29 high-profile executives from the United States, the White House considered inviting representatives from around a dozen U.S. firms. The full list of invited companies was not confirmed. Semafor reports that CEOs of Nvidia, Apple, Qualcomm, Citigroup, and Boeing are on the list of executives invited for the trip to be held May 14-15. Two sources claimed that the CEOs would attend a state dinner hosted by Chinese president Xi Jinping. They said that the offers were made at a very late date, in part due to disagreements within the administration about the size of CEO delegations and who should be invited. The delegation is also smaller than those that other Western leaders brought to Beijing in recent years. British Prime Minister Keir starmer led a delegation of 60 cultural and business executives to China for his visit in January, while German Chancellor Friedrich Merz sent 29 industry titans a month later. U.S. trade representative Jamieson Greer was reluctant to send a delegation of high-powered CEOs to Beijing, when the summit had not yet been scheduled for March. She wanted to focus on "managed" trade. Reva Goujon is a geopolitical analyst at Rhodium Group. She said that a small CEO delegation would make sense. LIMITED EXPECTATIONS Jensen Huang's CEO, Nvidia, who has been unsuccessful in selling AI chips to China, said on CNBC Tuesday that he would attend Trump's China trip "if invited." Three sources confirmed that major U.S. producers of beef and soybeans were also being considered. The people who spoke asked to remain anonymous because the planning for the visit is still ongoing. Trump's 2017 visit to Beijing was awash with pomp and deals. Xi gave him a rare tour of the Forbidden city and touted business deals totaling more than $250 billion. This included a $37-billion sale of 300 Boeing planes and $69-billion worth of?energy projects. These deals are often non-binding agreements or frameworks for multi-year purchases, rather than contracts. Ten companies from the United States were included in the delegation. Qualcomm, a chip supplier with China as its biggest market, was one of the few companies that joined. The summit this year is crucial to unlocking China’s first major Boeing order since 2017, said CEO Kelly Ortberg last month. Boeing and China are in long-term talks about a deal, which industry sources claim could include 500 737 MAX aircraft plus dozens widebody jets. The summit will also focus on the possibility of extending the October trade truce where both sides halted retaliatory import controls. Two sources claim that Beijing wants a?at least one-year extension, while Washington asks for a six-month extension. People briefed about preparations for the discussions said that China wants the Trump administration's commitment to refrain from retaliatory actions in the future, such as technology export restrictions and to remove existing controls on advanced memory chips and chipmaking equipment. Reporting by Laurie Chen and Michael Martina, both in Beijing; editing by Kevin Krolicki and Miyoung Kim.
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Sumitomo Mitsui Trust Bank to target $500 million for new aircraft leasing fund
A Japanese executive revealed that the Sumitomo 'Mitsui Trust Group is planning to 'launch a new aircraft leasing fund. The aim is to raise $500 million from investors in Japan, Asia, and the Middle East. This is the latest effort to increase aircraft leasing investments by a Japanese financial institution hoping to tap into an expanding market due to shortages of aircraft at airlines and supply constraints at Boeing and Airbus. The fund will lease Boeing & Airbus aircraft to airlines worldwide. It is the third fund launched by SMTG and Novus Aviation Capital. Takeru Mifune, head of Sumitomo Mitsui Trust Bank’s asset finance group, said that while the previous two funds focused on domestic institutional investors SMTG plans to use the new fund as a launching pad to increase?sales to overseas investors. Mercuria Holdings, Daiwa Securities, and Sumitomo Mitsui Financial Group have all recently announced the creation of a new 'aircraft lease fund. Orix and Sumitomo Mitsui Financial Group are also strengthening their airline leasing businesses.
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Grid charges are key to Bangladesh's "merchant" renewable growth
Bangladesh permits business-to-business deals This allows businesses to increase their renewable share The key to the viability of this business is network charges Tahmid Zami Tahmid Zami Last year, Bangladesh allowed private companies to directly sell electricity to large consumers. The electricity from "merchant power plant" was carried over the grid with users paying charges to the grid and distribution companies. India has allowed open-access to power purchases for many years, while Pakistan has been working towards a "competitive" bilateral market but has had disputes over the use-of system charges. The energy regulatory commission of Bangladesh is currently working out the details for its open-access grid, including what charges consumers will have to pay. Energy analysts say that the viability and affordability of open-access deals for power purchases is partly dependent on the grid charges, and any additional surcharges. These will be crucial to the balance of interests between businesses, households, and farmers. After the grid charges are finalised and rules have been set, buyers such as ready-made garment producers with targets for greenhouse gas emissions reduction can purchase renewable electricity directly from remote wind or solar power plants. Mohiuddin Rubel, managing director of Denim Expert Ltd, a garment supplier, says that a mid-sized factory could offset 10% to 15% of its energy demand through rooftop solar. Off-site generation can take this up to 50% or 70%. Companies can buy renewable energy certificates (RECs) from renewable energy producers. Bangladesh has not yet developed a market for RECs with a large enough supply, according to garment suppliers. "Merchant Power Plants will allow us the ability to buy electricity directly and reduce the need to purchase renewable energy certificates on the market," stated Mashook Mujib. Sustainability manager at DBL Group. CHARGES KEY Shafiqul alam, an energy analyst with the Institute for Energy Economics and Financial Analysis (a non-profit based in the United States), said that Bangladesh's annual investment into renewable energy has been less than $250 millions a year. This is far below what is required. He said merchant power generators could be a way to boost renewable investment. Recent news reports suggest that open access charges may be around 2 U.S.cents per kilowatt hour, in addition to renewable tariffs of about 9 U.S.cents per KWH. Alam said that such charges could increase costs for industrial users and industry's response may be lukewarm. Officials from the government said that the charges should be balanced to balance the interests and concerns of all parties. The needs of each party are different: the consumers want affordable and reliable power, the project developers want bankable projects and predictable revenues, and the utilities and grid operators have to maintain and recover the costs of the service. Experts from India and Pakistan, two countries that border Bangladesh, said they had mixed lessons to teach the country. Khalid Waleed is a research fellow with Pakistan's Sustainable Development Policy Institute. He said that the costs for using the transmission network and distribution system are slowing down the industry's transition to renewable energy sources off-site. He said that the experience of Pakistan can be a warning to other countries, such as Bangladesh. Waleed stated that Pakistan is moving towards a flat rate of 12,55 Pakistani Rupees ($0.045). The industry, however, believes it should be closer at 5.85 rupees (0.045) for each kilowatt hour. He said that as Pakistani consumers move from grid power to renewable energy, the government is trying to compensate for the revenue lost by adding the old system costs to the?bills. GROWING DEMAND FOR POWER India has, on the other hand, developed remote power purchasing arrangements using both open-access long-term deals and short-term power trading. Indian businesses that purchase power under open-access agreements are also required to pay a subsidy to many farmers and households. Deepak Krishnan is the deputy director of WRI India's energy programme. He said that if these charges were not recovered from open access consumers who are typically corporate buyers, they would be a heavy burden for poorer consumers. The energy regulator in Bangladesh must balance competing interests, by fixing charges transparently, so that the utility companies don't lose out and the market doesn't get destroyed, said Krishnan. Prabhakar Singh, consultant at Indian consultancy outfit JMK Research said that open-access fees should be consistent over a specified period to allow investors to plan their business models. If the government wants open-access markets for solar and wind for industrial consumers, then there could be waivers to a certain degree," said Sharma. Shafiqul alam, IEEFA, says that open-access power purchases could be used in Bangladesh to meet the increasing?industrial electricity demands. He added that utilities and policymakers should avoid charging a high rate immediately and instead revisit the issue in three years' time to see if they are losing money.
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Iran's state media reports that the US Navy was hit by missiles after an attack on an Iranian oil tanker.
Iranian state media reported on Thursday that U.S. naval units operating in the Strait of Hormuz area were hit by Iranian missiles following an attack on a?oil tanker by the U.S. It added that U.S. naval vessels were "forced to retreat" after being damaged by Iranian missile attacks. The exact date of the incident is not known. Iran's semiofficial news agency Tasnim reports that the Iranian navy attacked three U.S. destroyers in the Strait of Hormuz. The Pentagon did not respond immediately to a comment request. The U.S. Military announced on 'Wednesday that it had disabled an Iranian flagged oil tanker which was trying to sail towards an Iranian port. The U.S. military said that U.S. troops hit the tanker’s rudder with an F-18 fighter jet. Reporting by Parisa Hafezi and Ahmed Tolba; additional reporting by Idrees Al. Editing by Nia William.
Minister: no massive flight cancellations this summer expected in France
French Transport Minister Philippe Tabarot said on Friday that he didn't expect "massive" flight cancellations this summer by airlines due to jet fuel shortages.
He said that most airlines do not want to cancel flights in the summer, when they make their biggest revenues. However, some have reduced their traffic slightly.
Transavia France has cancelled 2% its flights between May and June, according to a spokesperson on Friday.
The French government is working on measures to help airlines, such as deferrals in social security contributions and extended deadlines for tax payments.
After announcing that there would be a shortage of jet fuel within weeks due to the war in Iran, European authorities are now scrambling to find solutions. Europe depends more on imports of jet?fuel, with a?75% share coming from the Middle East, than any other type of transport fuel. (Reporting by Inti Landauro Editing by Alexandra Hudson)
(source: Reuters)