Oil Extends Rally on Russia Embargo Talk, Stocks Rise

(AP)
(AP)
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Oil Extends Rally on Russia Embargo Talk, Stocks Rise

(AP)
(AP)

Oil prices extended their rally Tuesday on supply worries as European leaders debated banning imports from Russia, though equities stood their ground despite a tepid Wall Street lead and the prospect of a sharper hike in US interest rates.

Both main crude contracts started the week by soaring more than seven percent Monday as EU nations discussed following Washington and putting an embargo on Russian energy imports for its war in Ukraine, AFP reported.

Some members are pushing to ramp up pressure on Vladimir Putin with more sanctions over his invasion, though others including Germany -- which still relies on Moscow's fuel -- have been reluctant to target the key sectors.

Adding to upward pressure on oil was a warning from Saudi Arabia that Yemeni rebel attacks on its oil facilities pose a "direct threat" to global supplies, after Red Sea facilities belonging to oil giant Saudi Aramco were targeted.

The surge in oil prices has been a key driver of turmoil on world markets in recent weeks as demand surges owing to economic reopenings just as supplies are strained.

That, along with a spike in the cost of other key commodities such as metals and wheat caused by the war, has sent inflation rocketing and caused a headache for central banks already trying to wind down pandemic-era monetary policy.

"It seems energy traders are growing more confident that supply shortages are just around the corner," warned OANDA's Edward Moya.

"China's decision to avoid broad lockdowns is also helping oil prices as the short-term crude demand hit should be temporary. The oil rollercoaster ride remains a geopolitical trade and right now it seems the risks are growing and that could push crude prices higher."

There is a growing fear that the global economy could endure a period of stagflation in which prices soar by growth stalls.

And the Fed chair Jerome Powell on Monday indicated the bank could hike rates at a faster rate to keep a leash on inflation, less than a week after it announced what is expected to be a number of increases this year.

"I sense that the Fed might well deliver 50 basis point hikes in both May and June as policymakers recognize it will be tough to get inflation down without higher unemployment," said SPI Asset Management's Stephen Innes.

"So as long as multiple 50 point hikes remain on the... agenda, stock markets could remain nervous."

And Moya added that traders were recognizing that rates were likely to shoot up quicker than they had expected, which "could eventually lead to a taper tantrum which might happen alongside stagflation".

"Monetary policy is still accommodative for now, but that could quickly change if the Fed delivers a couple supersized rate hikes by the summer."

Still, while Wall Street ended on a negative, equities remained resilient in Asia.

Hong Kong was back on the rise after last week's blockbuster surge as Chinese authorities reiterated a pledge to support markets and the stuttering economy.

Tokyo returned from a long weekend to pile on more than one percent, helped by a drop in the yen to a new six-year low against the dollar, which helps exporters.

Shanghai, Sydney, Seoul, Manila, Jakarta and Wellington also rose, though Singapore and Taipei struggled.

China Eastern Airlines sank six percent in Shanghai and four percent in Hong Kong after one of its jets crashed in China carrying 132 people, having dropped more than 20,000 feet in just over a minute.

- Key figures around 0230 GMT -
Brent North Sea crude: UP 2.8 percent at $118.84 per barrel

West Texas Intermediate: UP 2.4 percent at $114.81 per barrel

Tokyo - Nikkei 225: UP 1.6 percent at 27,242.88 (break)

Hong Kong - Hang Seng Index: UP 0.8 percent at 21,390.52

Shanghai - Composite: UP 0.1 percent at 3,256.03

Euro/dollar: DOWN at $1.0994 from $1.1013 Monday

Pound/dollar: DOWN at $1.3144 from $1.3156

Euro/pound: DOWN at 83.65 pence from 83.67 pence

Dollar/yen: UP at 119.88 yen from 119.47 yen

New York - DOW: DOWN 0.6 percent at 34,552.99 (close)

London - FTSE 100: UP 0.5 percent at 7,442.39 (close)



Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)
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Iraq Oil Output Exceeds 5 million bpd

Majnoon oil field near the Iraqi city of Basra (Reuters)
Majnoon oil field near the Iraqi city of Basra (Reuters)

Iraq produces more than 5 million barrels of oil per day (bpd), Oil Minister Basim Mohammed told state news agency INA on Saturday.

According to Reuters, Iraq is pushing for a higher OPEC production quota as the economic fallout from the Iran war and new investment by oil majors increase pressure on Baghdad to boost output, potentially putting it at odds with the producer group.

The conflict has hit Iraq particularly hard, forcing major export cuts and depriving the state of oil revenue, which accounted for 88% of government income last year.


IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
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IMF: Any Slowdown in AI-driven Growth Would be Factor for Central Banks

IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)
IMF Managing Director Kristalina Georgieva speaks during the Annual Meetings Plenary at the Annual Meetings of the International Monetary Fund (IMF) and the World Bank Group (WBG) at the Queen Sirikit National Convention Center (QSNCC) in Bangkok on October 16, 2026. (Photo by Lillian SUWANRUMPHA / AFP)

Central bankers around the world would need to consider any slowdown in AI-driven growth as they assess steps in their fight against inflation, International Monetary Fund Managing Director Kristalina Georgieva said on Friday.

Georgieva said concerns about dependence on the AI investment boom and high valuations were impacting markets around the world.

"Things are going up and down, and this is likely to continue," she told an audience at IMF headquarters in Washington, adding that the volatility would complicate the job of central banks at a time when risks to price stability had been growing.

A steep rout in technology stocks on Thursday rippled through markets on fears that ⁠the Democrats' victory ⁠in the US midterm elections would increase regulatory scrutiny of AI and slow the data center build-out, sending investors to the safety of bonds.

The political jitters are hitting an AI trade already on shaky footing due to worry about return on massive spending on AI-related infrastructure, with the meltdown spurring margin calls and spooking retail investors and hedge ⁠funds alike.

Georgieva said the AI investment boom was lifting growth in some countries, helping to offset a negative oil-supply shock triggered by the war in the Middle East, but it was also adding to inflationary pressures and financial stability concerns.

The IMF last month flagged significant growth and financial stability risks from a potential ending of the AI investment boom, among other factors, including a prolonged Middle East war. At the time, it warned that a steep drop in AI investment could lead to a sharp fall in asset prices, ultimately cutting global GDP ⁠by 1.1% ⁠by 2028, including a 1.8% drop in US output.

Georgieva did not repeat the downside forecast on Friday, but acknowledged the recent market volatility.

"Should there be a slowdown in the AI-driven growth impulse, it would need to be factored in as central banks assess the necessary steps in the fight against stubborn inflation," she said.

Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, Reuters reported on Friday, citing congressional aides and advocates.

That would mark a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development and declined to pass legislation restricting the technology.


World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
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World Food Prices Dip in October, but Remain Higher Than a Year Ago

A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)
A worker carries loaves of bread for sale at a bakery in the capital city of Cairo, Egypt November 4, 2026. (Reuters)

World food prices edged lower in October as weaker import demand contributed to monthly declines in cereal, dairy and meat prices, but were still nearly 6% higher than a year earlier, the United Nations' Food and Agriculture Organization said on Friday.

The FAO Food Price Index, which tracks monthly changes in international prices for a basket of food commodities, ‌averaged 133.9 points ‌in October, down from a revised ‌135.6 ⁠in September.

The index ⁠was 5.9% higher than a year earlier, but remained 16.4% below its March 2022 peak.

FAO's cereal price index fell 4.5% from September and was 12.6% lower than a year ago, as wheat and maize quotations declined. Wheat prices eased on weak import demand ⁠and improved production prospects, especially in Argentina.

"Expectations of ‌easing constraints on Black ‌Sea export flows added to the downward pressure on prices, ‌although continued disruptions to Black Sea logistics limited the decline," ‌FAO said in a statement.

Maize prices also eased after reaching a three-year high in September, pressured by the US harvest, expectations of ample supplies in South America and renewed ‌prospects of easing tensions in the Black Sea region.

Vegetable oil prices edged up 0.3%, ⁠as ⁠higher soybean and sunflower oil prices more than offset a fall in rapeseed oil prices.

Sugar prices rose 6.6%, their fourth straight monthly increase, to the highest level since December 2024, after rainfall disrupted harvesting in Brazil. They were now 28.8% above a year ago.

The dairy index fell 1.1%, as lower butter and cheese prices linked to ample supplies and subdued demand outweighed gains in milk powder.

The meat index declined 1.2%, while still slightly above its year-earlier level, as ovine and bovine meat prices fell.