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Traders say that China's teapots are driving Russian ESPO purchases amid record discounts.
Three traders reported a record discount of $7 to $8 per barrel for Russian ESPO blend crude delivered in Chinese ports in January compared to?ICE Brent, due to the pressure from Western sanctions on this?grade. The deeper discounts have revived interest in buying, especially among China's independent private refiners known as "teapots". Earlier in December, ESPO discount prices at Chinese ports ranged from $5 to $6 per barrel as refiners stayed out of the market following harsh Western sanctions against Russian oil majors Rosneft, and Lukoil. Beijing has issued new import quotas and cheaper barrels to lure private refiners back to the market. China's state-owned refineries, however, continue to avoid buying Russian crude at the spot market. This puts pressure on ESPO blend oil prices. ?And abundant supplies of Iranian crude sold at greater discounts have also increased competition with ESPO. ESPO Blend is a light sweet oil exported through Russian Far East ports. Its short shipping distance, combined with its high quality, makes it a vital feedstock for Chinese refiners. Discounts are now higher than they were earlier in the year. This is due to a combination of softer demand, sanctions and restrictions on Russian oil flow. Western sanctions also weigh on the value of Urals, Russia's flagship oil. Due to the weaker Indian demand, traders said that a number of Urals cargoes loaded from?Russian port this month were diverted to China. Chinese port discounts for Urals crude cargoes have been over $10 per barrel compared to ICE Brent - this is for December loadings of Russian ports. The traders stated that although Western sanctions may have made it difficult for some buyers to pay and ship, ESPO and Urals are still attractive to smaller refiners who need quick shipments. China is Russia's biggest oil customer. Wider discounts could support Russian oil exports until early 2026, even though sanctions restrict Moscow's ability sell oil. Reporting by Siyi Liu and reporters in Moscow, with editing by Joe Bavier.
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Oil prices steady as the market balances geopolitical risk against fundamentals that are bearish
The oil prices were relatively unchanged on Tuesday, as the United States' fears of a supply disruption following Ukrainian attacks on Russian vessels were offset by potential sales?of?Venezuelan?crude. Brent crude futures were up 7 cents at $62.14 per barrel as of 0959 GMT. U.S. West Texas Intermediate crude (WTI), up 4 cents, was at $58.05. Brent prices rose by more than 2% Monday. WTI prices climbed the most since November 14, while Brent's daily gains were their highest in two months. After Monday's sharp increase in oil price, heavy oversupply has stifled any further rise. The upside is?limited', according to IG analyst Axel Rudolph, with floating storage at its most recent high since 2020. U.S. president?Donald Trump stated on Monday that the U.S. may keep or sell oil it has seized in recent weeks off the coasts of Venezuela as part of U.S. sanctions, which include a 'blockade' of oil tankers entering and exiting the South American nation. Barclays stated in a Monday note that oil markets will remain well-supplied during the first half 2026. However, the bank also noted that the surplus of oil would 'diminishe to 700,000 barrels a day by the fourth quarter 2026. A prolonged disruption of the market could further tighten it. Russian forces attacked Ukraine's Black Sea Port of Odesa on Monday night - damaging port facilities and a vessel. This was the second attack in less than 24 hour. Ukrainian drones also damaged two vessels, a pier, and started a fire. Ukraine has also targeted Russia’s maritime logistics by focusing on the shadow fleet oil tankers which attempt to bypass sanctions against Russia. Reporting by Seher D. Dareen, Anjana Anil and Emily Chow from Singapore. Editing by David Goodman.
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Gulf Markets ease up on oil prices
The Gulf's major stock exchanges eased early on Tuesday as lower crude prices and concerns about oversupply and sluggish demand dominated the geopolitical tensions following the U.S. announcement that it would sell Venezuelan oil. Oil prices, a key factor in the Gulf financial markets, fell as traders weighed geopolitical risk against fundamentals that were bearish. Saudi Arabia's benchmark index dipped 0.1%, mainly due to a 0.6% drop in oil giant Saudi Aramco as well as a 0.1% decline in Al Rajhi Bank. Dubai's main stock index fell 0.3%. Toll operator Salik?Co lost 0.6%, and top lender?Emirates NBD saw a 0.5% drop. The Abu Dhabi Index bucked trend and rose 0.2%. Reports indicate that Donald Trump, the U.S. president, may announce his choice for the new Federal Reserve Chair as early as this January. Trump said last week that the Fed chair will be someone who is strongly in favor of "significantly lower interest rate". The markets are pricing in two interest rate cuts for the U.S. in the next year, based on the expectation of a shift to dovish monetary policy. The U.S. monetary policy changes have a major impact on the Gulf markets where the majority of currencies are pegged with the dollar. The Qatari Index fell 0.2% and the Qatar Islamic Bank dropped 0.5%. (Reporting by Ateeq Shariff in Bengaluru; Editing by Harikrishnan Nair)
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NHTSA: Amazon's Zoox recalls 332 US vehicles due to software error
Amazon's self driving unit Zoox has recalled 332 vehicles from the?U.S. The U.S. National Highway Traffic Safety Administration announced on Tuesday that a software error in automated driving systems (ADSs) was the reason for the recall. Zoox has recalled ADS vehicles equipped with software versions that were released prior to December 19, NHTSA said. They added that, at intersections or near them, Zoox vehicles may drive across the yellow line or stop in front of oncoming traffic. This increases the risk of a collision. NHTSA said that the company had updated its ADS software at no cost. In May, it recalled 270 cars. It issued a new software update in May to improve the way its vehicles track pedestrians and prevent movement when they are close. This was in response to a fatal crash that occurred in San Francisco. NHTSA certified Zoox vehicles for demonstration use in August and ended a probe that the U.S. regulator of auto safety began in 2022 to determine if they met federal requirements.
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Italy's antitrust regulator fines Ryanair 300 million dollars over its dealings with travel agents
The Italian competition authority announced on Tuesday that it had fined Europe’s largest budget airline Ryanair $300.19 million ($255.19 mln) for abuse of its dominant position with travel agents. The regulator claimed that the airline had allegedly made it difficult for travel agents to offer Ryanair in combination with other airlines and other services. Ryanair didn't immediately respond to an inquiry for comment. The authority alleged that it was unhappy with the 'airline for introducing facial -recognition procedures initially, blocking payments to online travel agencies, and finally imposing partnership agreements on travel agents limiting their abilities to offer Ryanair as part of travel packages. The?watchdog stated that "Ryanair's dominant position stems from not only its significant market share which continues to grow but also numerous other indicators...(which) contribute (to) giving Ryanair a significant market power as well as the ability to act independent of competitors and consumers." The regulator said that the alleged abuse of dominant position took place between April 2023 and at least April this year. $1 = 0.8495 Euros (Reporting and editing by Alvise Armillini, Giulia Segriti)
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Pakistan receives three bids for the second televised auction of national carrier PIA
On 'Tuesday, the Pakistani government received three bids for its state-owned airline Pakistan International Airlines in a televised bidding process. The auction was held as part of a push to implement a reform that has been long delayed by 'the International Monetary Fund. This is Pakistan's 2nd televised auction to sell the once-storied flag carrier. A botched process last year resulted in only one bid, which was far below the reference price set by the government. The failed attempt ruined Pakistan's 1st major privatisation for nearly 20 years. The representatives of the bid groups entered one-by-one on Tuesday, putting sealed offers in a transparent box during the live broadcast. They briefly stumbled as they pushed envelopes into the slot. The bids for a'majority stake' in PIA will be made in two phases. Officials have announced that a second open-bidding event will be held later in the afternoon. Shehbaz sharif, prime minister of Pakistan, said: "I'm grateful to the Ministers and the head of the Privatisation Commission who have made the process transparent." He invited cabinet members to attend the 2nd ceremony. The?bidders were a consortium led?by Lucky Cement Limited and comprising of power producer Hub Power Holdings Limited?and investment firm Metro Ventures. Arif Habib Corporation Limited led a second consortium, which included the private school network City Schools, fertiliser manufacturer Fatima Fertiliser Company Limited and real estate company Lake City Holdings Limited. Air Blue (Private) Ltd., a private airline, was the third bidder. Local media reported that the government was willing to sell up to 100% of PIA under the current transaction structure. Any stake over 75% would be subject to a premium of 15%. Try again The government had set a price of $305 million as a minimum for a 60% share, but only received a bid from Blue World City. They declined to increase their offer due to concerns about PIA's finances, and cited "significant leakages". Officials from "several prequalified groups" told at the time that they chose not bid because of concerns about policy continuity, unattractive conditions?and doubts regarding the government's capability to honour long-term obligations, especially after Islamabad decided to renegotiate contracts with sovereign guarantees. PIA has seen its prospects improve since then. Islamabad assumed the majority of PIA's legacy debt. The carrier posted its first profit before tax in 20 years. Britain and the European Union lifted a ban on PIA that was five years old. Analysts and government officials said that the reopening could boost?revenues materially and allow for a higher valuation compared to last year's auction. The sale of the airline is part of a larger privatisation drive under Pakistan's IMF bailout. This includes plans to sell stakes in state owned banks, power distribution firms and other loss making enterprises, as the government seeks curb fiscal drain and restore investors' confidence.
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Pakistan will receive bids in a televised auction for the privatisation of PIA
The auction was held on a televised basis in Pakistan as the government tries to implement a long-delayed IMF reform. Officials said that the bids for a'majority stake' in PIA will be conducted in two phases. The first phase is a televised auction, and the second one is a public opening ceremony. This is Pakistan's 2nd attempt to sell the once-storied flag carrier. Televised bidding collapsed last year when one bidder offered a price far below that of the government. The result was the failure of what would have been Pakistan's 1st major privatisation for nearly 20 years. In an interview with digital media outlet?Nukta last week, Privatisation Minister Muhammad Ali said that three domestic bidders will be participating in Tuesday's?auction following the withdrawal of the military's Fauji Fertilizer from the process. Local media reported that the government was willing to sell up to 100% stake in PIA. Any stake above 75% would be subject to a premium of 15%. Try again The government set a price minimum of $305m for a 60% stake last year. However, only one bid was received, from Blue World City. They declined to increase their offer due to concerns about PIA's finances, and "significant leakages". At the time, officials from pre-qualified groups said they did not bid because of concerns about policy continuity, unattractive conditions and doubts over the government's capacity to honour long-term agreements, especially after Islamabad decided to renegotiate contracts with sovereign guarantees. PIA has seen its prospects?improved since then. Islamabad assumed the majority of the airline's debt. The carrier posted its first?pre tax profit in 20 years. Britain and the European Union lifted a ban on PIA that was in place for five years. Analysts and government officials said that the reopening could "substantially" increase revenues and allow for a higher value than last year's auction. The sale of the?airline is part of a larger privatisation drive under Pakistan's IMF bailout. This includes plans to sell stakes in state owned banks, power distribution firms and other loss making enterprises, as the government tries to curb fiscal deficit and restore investor trust.
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Azul, a Brazilian company, launches a share offer to raise $1.33 Billion
Brazilian airline Azul launched on Monday a 'primary share offer' to raise around 7.44 billion reais (1.33 billion dollars) to settle financial debts. The filing indicated that Azul is offering 724 billion ordinary shares and 724 billion preferential share. Azul filed for Chapter 11 bankruptcy at New York in May. The company wanted to reduce its debts and increase the resilience of their business to market challenges such as fluctuations in fuel prices and currency rates. A U.S. bankruptcy court judge approved the debt restructuring of the Brazilian airline earlier this month. This allowed the airline to reduce?more than 2 billion dollars in debt, and raise capital via a new equity right offering and an investment from American Airlines. Azul offers preferential shares as allotments of 10,000 at a price of 101.45 reais each, whereas ordinary shares will be sold in groups?of one million shares for a price?of 135.27 reais per group. The bookrunner for the offering is UBS BB, whose final conclusion will be ratified on January 6 by Azul's Board. Azul also offers?subscription bonuss, which can later be converted into shares, for investors who take part in the offering.
Spanish regulator sets return of 6.58% for electricity grids in 2026-2031
The Spanish competition watchdog approved rules that set the financial return on power?grid activity at 6.58% over the next six years. It said it was trying to balance the needs of network?investment with the protection of consumers.
The massive blackout which hit Spain and Portugal in April has reignited the debate on investment and return on investments. Power companies invest in grids for a guaranteed return, and consumers pay this rate via their electricity bills.
The CNMC said in a late-night statement that the financial remuneration 'rate for electricity transmission system operation and distribution 'would increase by 100 % from 5.58% for the previous six year period.
The watchdog has also released guidelines for calculating the remuneration of electricity distribution. This is to improve network quality and efficiency, reduce losses, and provide incentives for electrification.
CNMC stated that the distribution method aligns with government limits on investment by remunerating auditored investments?upto 0.13% gross domestic product.
The?regulator stated that it used a "guarantee based and participatory process" in making its decision. This included seven public consultations and five public hearings. It also sought the opinion of Spain's Energy Ministry on five separate occasions.
In recent years, energy groups like?Iberdrola or Enel have focused more on upgrading and expanding power grids while being selective about renewable energy projects. (Reporting and editing by David Latona)
(source: Reuters)