Here are the latest global economic developments on Tuesday around 03:30 GMT, as the Middle East war enters its 25th day.
Oil prices fall on Trump’s statements Oil prices plunged on Monday following Donald Trump’s announcement of a delay in strikes against Iranian power plants and his mention of “very good” discussions with Iran for a “total cessation” of hostilities, despite a denial from the Iranian Mehr agency.
The Brent crude from the North Sea, the global benchmark which was hovering around $114, briefly dropped below $100 per barrel before recovering to around $103.77 (+3.83%) around 03:40 GMT on Tuesday, compared to approximately $70 before the war began.
The US equivalent WTI also followed a similar trend, dropping from $98 to less than $90, before rising by 3.8% to $91.48 on Tuesday.
Markets cautious following Trump’s reversal Despite Tehran’s denial failing to reverse the trend, markets showed some improvement on Monday after Donald Trump’s remarks, although without much enthusiasm.
On Tuesday, Asian markets opened with a sharp increase before quickly tempering their enthusiasm: Tokyo gained 0.8% and Taipei 0.1% around 03:40 GMT, while Seoul rose by 2.3% and Hong Kong by 1.7%.
Caution is advised, as Michael Wan from MUFG commented that “the extent of economic disruptions and the risk of energy shortages resulting from the closure of the Strait of Hormuz loom over the region.”
Moreover, he added that “upcoming discussions are expected to be tough, even though the extreme risk of a destructive scenario seems to have been ruled out for now.”
Japan taps into its oil reserves again Starting Thursday, Tokyo will release a portion of its strategic oil reserves to “ensure +the necessary quantity for the whole of Japan+ of oil products,” said Prime Minister Sanae Takaichi on Tuesday.
Last week, Tokyo already used the equivalent of 15 days of privately-held oil reserves. Ms. Takaichi had previously announced that one month of government reserves would also be put on the market.
Japan relies on the Middle East for 95% of its oil imports.
Sharp concerns from oil industry leaders at their annual meeting Oil prices have not fully accounted for the effects of the closure of the Strait of Hormuz yet, according to Chevron CEO Mike Wirth on Monday at the CERAWeek conference in Houston, Texas.
He emphasized that “Asia, in particular, faces real concerns about the supply of oil and derivative products,” and even after the conflict ends, “it will take time to restock reserves.”
TotalEnergies CEO Patrick Pouyanné said that if the Strait of Hormuz remained closed, he expected “a very high price for liquefied natural gas (LNG), “from August to September, when we refill gas storages in Europe.”
Adnoc’s CEO, Sultan Al Jaber, described the de facto closure of the strait as “economic terrorism against all countries.”
He stated, “No country should allow Ormuz to be taken hostage, neither now nor in the future.”
Washington sees oil market disruptions as “temporary” Facing a very unpopular rise in fuel prices close to the midterm elections, US Energy Secretary Chris Wright assured that disruptions were “temporary” at the start of CERAWeek.
“We are currently going through short-term turbulence, but the long-term benefits will be enormous,” he later affirmed in an interview with CNBC, addressing the “American people.”
Historic fuel price increase in Chile The Chilean government announced a historic increase in fuel prices on Monday, which are regulated in this Latin American country, to cope with the soaring oil prices due to the Middle East war.
Starting Thursday, the price of gasoline will increase from 1.3 to 1.7 dollars per liter, and diesel from 0.7 to 1.7 dollars per liter, as stated by the Chilean Ministry of Finance in a press release.
Coal power plants activated in the Philippines The Philippines Energy Minister plans to increase coal power production, a highly polluting fossil fuel that accounts for 60% of the archipelago’s electricity, to lower electricity prices amidst disruptions in oil deliveries and gas prices.
Concern over diesel supply in Ukraine in April Experts are worried about a diesel shortage in Ukraine starting in April, where prices have jumped by 25%.
The situation prompted Ukrainian President Volodymyr Zelensky to instruct his government on Monday to ensure a stable supply of diesel for the country, as the refineries have been targeted since the Russian invasion, making Kiev heavily reliant on imports.
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