The U.S. Navy destroyed three boats carrying Houthi rebels in the Red Sea on Sunday after fighters attempted to board a container ship in the second attack against the vessel this weekend.
Helicopters from two destroyers, the USS Eisenhower and USS Gravely, were dispatched after the Maersk Hangzhou issued a distress call at 6:30 a.m. Sunday morning, U.S. Central Command (CENTCOM) said on X, the ship’s second request for help in 24 hours.
Four small boats arriving from Yemen had got to within 20 meters of the Danish-owned vessel and attempted to board it, according to CENTCOM, and fired on U.S. helicopters as they approached. “The U.S. Navy helicopters returned fire in self-defense, sinking three of the four small boats, and killing the crews,” it said, adding that there was “no damage to U.S. personnel or equipment.”
On Saturday, Washington said it had shot down two anti-ship ballistic missiles after the Maersk Hangzhou issued its first distress call and reported being struck by a Houthi missile.
The United Kingdom Maritime Trade Operations organization said there were no casualties in the shipping vessel’s crew.
Maersk said on Sunday that it has paused all sailing through the Red Sea for 48 hours.
Since November, Iranian-backed Houthi rebels have launched over 20 attacks against ships in the Red Sea and the Bab el-Mandeb Strait, a crucial shipping lane between Europe and Asia where an estimated 15 percent of global trade passes. Several shipping lines and oil major BP have suspended operations in the area as a result.
U.K. Foreign Secretary David Cameron said he spoke with his Iranian counterpart, Hossein Amir-Abdollahian, on Sunday and stressed Tehran’s responsibility regarding the Houthi rebels.
“I made clear that Iran shares responsibility for preventing these attacks given their long-standing support to the Houthis,” Cameron said in a statement. The Houthi attacks in the Red Sea “threaten innocent lives and the global economy,” he added.
The Houthis have said the strikes are in support of Palestinians in Gaza, where Israel is carrying out large-scale bombardments with U.S. backing in response to Hamas militants’ deadly attack against civilians in early October. In response, the U.S. set up a multinational naval taskforce to protect the route, which has been joined by countries including Denmark, Greece, the Netherlands and the U.K.
An American destroyer intercepted four drones fired by Houthi militants into the busy shipping lanes of the Red Sea, as the escalating crisis saw two commercial tankers hit in one chaotic day.
In a statement issued Sunday, U.S. Central Command said its navy had “shot down four unmanned aerial drones originating from Houthi-controlled areas in Yemen that were inbound to the USS Laboon” the day before. The American destroyer had been patrolling the area as part of Operation Prosperity Guardian, the Washington-led mission to prevent violence spilling over into the strategic waterway.
On Saturday, the Pentagon announced that a Japanese-owned, Liberian-flagged chemical tanker, the Chem Pluto, had been struck by a drone in the Indian Ocean, stating that the attack was launched from Iran.
According to data from analytics platform Kpler, seen by POLITICO, the Chem Pluto had been carrying almost 43,000 barrels of highly-flammable benzene en route to the port of Mangaluru at the time, but no casualties have been reported. The attack was well outside the usual area of operation for Houthi drones, around 300 nautical miles from the coast of India and it is believed to be the first time the U.S. has accused Iran directly of targeting commercial shipping since the crisis began.
Washington has previously said intelligence revealed Iran was “deeply involved” in planning attacks on vessels, working closely with Yemen’s Houthi rebels to cause a crisis that experts fear is already threatening the world economy. Houthi forces say they are targeting vessels with links to Israel in retaliation for its war in Gaza.
On Saturday evening, two civilian ships in the Red Sea area sounded the alarm that they were under attack. The Blaamanen, a Norwegian-flagged vessel carrying a quarter of a million tons of sunflower oil, reported it had narrowly avoided an attack drone, while Indian-flagged crude oil tanker Saibaba confirmed it had taken a direct hit.
Close to the Suez Canal which links Europe to Asia, more than 10 percent of global trade passes through the Red Sea, with around 17,000 ships a year crossing between the Mediterranean and the Arabian Sea.
In his first interview since being appointed as U.K. foreign secretary, former British prime minister David Cameron, told The Telegraph on Friday that the West must send “an incredibly clear message that this escalation will not be tolerated” to Tehran. Along with France, Italy and Spain, the U.K. is one of a handful of countries joining forces with the U.S. as part of Operation Prosperity Guardian.
KYIV — Ukraine’s spies aim to intensify intelligence operations and conduct sabotage strikes deep in Russian-controlled territory next year to bring the war as close to the Kremlin as possible, the head of Ukraine’s SBU security service told POLITICO.
“We cannot disclose our plans. They should remain a shocker for the enemy. We prepare surprises,” Major General Vasyl Malyuk said in written responses to questions. “The occupiers must understand that it will not be possible to hide. We will find the enemy everywhere.”
While he dodged specifics, Malyuk did give some hints. Logistics targets and military assets in occupied Ukrainian territory are likely to continue to be a focus. And then there are strikes that hit the enemy across the border.
“We are always looking for new solutions. So, cotton will continue to burn,” Malyuk joked.
Ukrainians use the word “cotton” to describe explosions in Russia and the occupied territories of Ukraine organized by Ukrainian special services. It came from Russian media and officials describing the growing number of such incidents with the word khlopok, which means both “blast” and “cotton” in Russian.
With combat along hundreds of kilometers of front lines essentially stalled for much of this year, the exploits of the SBU both boost Ukrainian morale and also hurt Russia’s war fighting abilities.
“The SBU carries out targeted point strikes. We stab the enemy with a needle right in the heart. Each of our special operations pursues a specific goal and gives its result. All this in a complex complicates the capabilities of the Russian Federation for waging war and brings our victory closer,” Malyuk said.
One area of focus will be Crimea and the Black Sea, building on this year’s operations.
Malyuk’s pet project is the Sea Baby drone, called malyuk in Ukrainian, which means “little guy.” The drone carries about 850 kilograms of explosives and is able to operate in stormy conditions, making it difficult to detect.
“With the help of those little guys we are gradually pushing the Black Sea Fleet of the Russian Federation out of Crimea,” Malyuk said.
It’s been used to attack the Kerch Bridge that links occupied Crimea to mainland Russia in July as well as to hammer Russian ships.
In October 2022 the SBU’s marine drones attacked Sevastopol Bay damaging four Russian warships. This year, the drones hit two missile carriers, a tanker, an amphibious assault ship and also damaged a large military tugboat and Russia’s newest reconnaissance and hydrographic ship.
Malyuk’s pet project is the Sea Baby drone, called malyuk in Ukrainian, which means “little guy.” The drone carries about 850 kilograms of explosives and is able to operate in stormy conditions, making it difficult to detect | Courtesy of the Security Service of Ukraine
That forced Moscow to shift much of the fleet away from its base in occupied Sevastopol in Crimea, leaving the west of the sea free of Russian vessels and allowing Ukraine to resume use of its ports for shipping.
The Kerch Bridge is still standing after a 2022 truck bomb attack and this year’s strike, but is only partially open, Malyuk said.
“It is a legitimate target for us, according to international law and the rules of war. Ukrainian law also allows us to attack this object. And we have to destroy the logistics of our enemy,” Malyuk added.
Malyuk said that Kyiv carefully considers its targets before striking — an effort to stay within the rules of war in contrast with Russia, which has fired missiles, artillery and drones at both military and civilian targets.
“When planning and preparing its special operations, the SBU carefully selects its targets. We work on military facilities or on those that the enemy uses to carry out their military tasks. We act fully by the norms of international law,” Malyuk said.
The SBU conducts most of its operations on Ukraine’s territory — in Donbas, Crimea and the Black Sea.
“This is our land and we will use all possible methods to free it from the occupiers,” Malyuk said.
When it comes to planning something in Russia, SBU says it focuses only on targets used for military purposes like logistical corridors for supplying weapons — like the rail tunnel in Siberia hit with two explosions (the SBU hasn’t claimed responsibility) as well as warships, military bases and similar targets.
“All SBU operations you hear about are exclusively our work and our unique technical development,” Malyuk said. “These operations became possible, in particular, because we develop and implement our technical solutions.”
U.S. ports are receiving multimillion dollar grants to upgrade cargo handling infrastructure.
The grants are part of the Biden administration’s $21 billion commitment to modernize port infrastructure in the U.S.
Midsize port cities such as Baltimore are among the 2023 grant recipients. In November, the Port of Baltimore received a $47 million grant to kick-start an offshore wind manufacturing hub, among other improvements. For example, the funds will pay for a new berth, or dock, for rolling cargo. Baltimore is the top U.S. destination for rolling cargo imports, a category including farm machinery from John Deere and light-duty vehicles from BMW, according to the Maryland Port Administration.
More than $653 million in Port Infrastructure Development Program grants were awarded to U.S. ports in 2023 by the U.S. Department of Transportation, Maritime Administration. Other projects receiving federal funds include the Port of Tacoma Husky Terminal Expansion in Washington state ($54.2 million), and the North Harbor Transportation System Improvement Project in Long Beach, California ($52.6 million).
Baltimore isn’t the only city with a growing port according to maritime economists. Experts say gateways along the U.S. southeast coast are moving more cargo as major points of entry clog up with truck traffic.
“All of the ports on the East Coast are upgrading their infrastructure and capacity,” said Walter Kemmsies, managing partner at the Kemmsies Group, a maritime economics consulting firm currently working with the Port Authority of Georgia in Savannah. “What that does is it makes it more attractive to the ocean carriers. They like to be able to go in and out of a port very quickly, and they like to go to several ports.”
Ports America formed a public-private partnership with the state of Maryland to manage equipment and operations in sections of the Port of Baltimore. The group told CNBC that $550 million in upgrades have gone into Seagirt Marine Terminal alone for densification of the container yard since the partnership began in 2010.
These upgrades build on past plans to revive America’s declining industrial cities. In Baltimore, public officials are addressing bottlenecks along the supply chain beyond the Port. They believe that the Howard Street Tunnel expansion project will increase double-stack rail capacity out of Baltimore, which could help the companies working at the port move goods to and from points in the Midwest.
Watch the video above to see more of the upgrades coming to the Port of Baltimore.
The US military said it shot down 14 drones in the Red Sea launched from Houthi-controlled areas of Yemen as attacks on commercial carriers continue from the Iranian-backed group, threatening havoc for world trade.
Major shippers MSC Mediterranean Shipping Co. SA and CMA CGM were the latest to announce on Saturday that they won’t send their vessels through the Red Sea for now in the face of rising threats.
The unmanned aerial systems “were assessed to be one-way attack drones and were shot down with no damage to ships in the area or reported injuries,” US Central Command said in a post on X, formerly Twitter. “Regional Red Sea partners were alerted to the threat.”
The drones were struck down by the USS Carney guided missile destroyer early on Saturday. The UK navy also repelled a suspected drone attack.
The MSC Palatium III was attacked on Friday in the Red Sea, the company said in a statement on its website, confirming earlier reports. There were no injuries among the crew of the container ship, though there was “limited fire damage” and the vessel has been taken out of service.
“Due to this incident and to protect the lives and safety of our seafarers, until the Red Sea passage is safe, MSC ships will not transit the Suez Canal eastbound and westbound,” the company said in its statement.
“Some services will be rerouted to go via the Cape of Good Hope instead,” it said, referring to the southern tip of Africa.
Separately, the French group CMA CGM instructed its container ships scheduled to pass through the Red Sea to pause their journey in safe waters until further notice.
UK naval forces shot down a suspected attack drone that was targeting merchant ships in the Red Sea, Defense Secretary Grant Shapps said in a post on X on Saturday. The HMS Diamond used a Sea Viper missile to down the target, he said, without giving more details.
Flexport Inc., a freight forwarding platform based in San Francisco, said in a blog post that taking the route around Africa prolongs the journey by seven to 10 days compared with using the Suez Canal.
Rebels in Yemen escalated a threat against ships with ties to Israel in November, calling them “legitimate targets,” and appear to be targeting vessels in the vicinity more generally.
Rerouting the world’s container fleet around the conflict zone during Israel’s war against Hamas in Gaza threatens to increase freight rates and cause delays rippling across global supply chains.
About 5% of global trade depends on the Panama Canal and 12% depends on Suez, according to Marco Forgione, director general at the Institute of Export & International Trade.
— With assistance from Valentine Baldassar
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Oil futures fell on Friday, but finished off the session’s lows to eke out a gain for the week — the first for U.S. and global benchmark crude prices in eight weeks.
Attacks on ships traveling through the Red Sea, blamed on Yemen’s Houthi rebels, raised the potential for disruptions to the transport of oil and other goods, providing some support for prices.
Oil saw larger declines early Friday after a Federal Reserve official walked back dovish comments made earlier this week by the Fed Chair Jerome Powell, helping to strengthen the U.S. dollar.
Price action
West Texas Intermediate crude for January CL00, +0.49%
CLF24, +0.49%
declined by 15 cents, or 0.2%, to settle at $71.43 a barrel on the New York Mercantile Exchange, with prices ending 0.3% higher for the week, according to Dow Jones Market Data.
BRNG24, +0.52%,
the global benchmark, fell 6 cents, or nearly 0.1%, to $76.55 a barrel on ICE Futures Europe, settling 0.9% higher for the week.
January gasoline RBF24, -0.16%
added 0.9% to $2.14 a gallon, up almost 4.3% for the week, while January heating oil HOF24, +0.20%
climbed 1.1% to $2.62 a gallon on Nymex, marking a weekly rise of 1.5%.
Natural gas for January delivery NGF24, -0.88%
gained 4.1% to $2.49 per million British thermal units, but still logged a weekly loss of 3.5%.
The Red Sea is “one of the hot pockets of seaborne crude flows,” accounting for approximately 10% of global volume, said Manish Raj, managing director at Velandera Energy Partners. “Although the attackers lack sophistication … shipping crews are even less sophisticated, making them easy targets.”
A potential blockage of the Red Sea route would be “chaotic indeed, but not nearly as detrimental as blockage of [the] Strait of Hormuz near Iran, for which there is no viable alternative,” Raj said.
For now, there is concern over higher insurance costs for these ships, said Phil Flynn, senior market analyst at the Price Futures Group.
“With ships in the Red Sea continuing to be at high risk, ‘it won’t take that much for the market’ to see oil prices spike if an oil tanker should be hit.”
— Phil Flynn, Price Futures Group
Obviously, the risk to oil supply is large, although “so far, most of the attacks have been on cargo ships and not oil-related ships,” Flynn told MarketWatch.
However, as ships in the Red Sea continue to be at high risk, “it won’t take that much for the market” to see oil prices spike if an oil tanker is hit, Flynn said.
For the week, both U.S. and global benchmark crude prices posted gains.
“The combination of lower U.S. inventories, stronger economic data, and improved OPEC compliance [with production cuts] for the month of November were the highlights of the week,” said Peter McNally, global head of sector analysts at Third Bridge.
“However, there are ongoing seasonal challenges that forced OPEC to sustain production cuts through the first quarter of 2024, so it remains to be seen if they have done enough to prevent inventories from continuing their upward trend,” he said.
Oil had been trading lower early Friday after New York Federal Reserve President John Williams told CNBC that it is “premature” to discuss whether it is time to cut interest rates. “We aren’t really talking about cutting interest rates right now,” Williams said.
That ran contrary to Powell’s comments Wednesday that Fed officials were starting to discuss when to cut rates.
After the euphoria in the U.S. stock market over the Powell “pivot party” on Wednesday, we got a “wake-up call” from Williams when he pushed back on market expectations for a March rate cut, Michael Hewson, chief market analyst at CMC Markets UK, said in market commentary.
BRUSSELS — In early August, Bulgarian officials spotted something they weren’t sure was legal.
Barrels of Russian oil were arriving in the country priced above a $60 limit allies had adopted to sap Moscow of critical revenue for its war in Ukraine.
Bulgaria was in an unusual position among its partners. It had been given an exemption to European Union sanctions barring most imports of Russian oil, ostensibly to ensure the country wouldn’t face acute energy shortages even though the EU’s broader policy aimed to crush Russia’s main cash artery following its full-scale assault on Kyiv.
But could Bulgaria still import Russian oil if it was above the price cap? Customs officials in Sofia wanted to know for sure, so they reached out to EU officials asking for “clarification,” according to a private email exchange dated August 4 and seen by POLITICO.
The answer: Let it in.
“Crude oil imported based on these derogations does not need to be at or below $60 per barrel,” came the EU’s reply.
Green light in hand, Bulgaria proceeded to import Russian crude exclusively above the price cap from August until October, according to confidential customs data seen by POLITICO. The shipments were worth an estimated €640 million, according to calculations by the Centre for Research on Energy and Clean Air (CREA) think tank. The cash went to Russian energy firms, which pay the taxes helping fill the Kremlin’s war chest.
The sanctions gap is emblematic of the broader flaws that have corroded the EU’s attempt to stymie the billions Russia earns from energy exports. Roughly a year after adopting the initial penalties, legal loopholes have combined with poor enforcement and a mushrooming parallel trade to keep Moscow’s fossil fuel revenues flowing, and feeding almost half of Vladimir Putin’s war-hungry budget.
Russian oil is likely winding up as fuel in Europe via new routes. Enforcement across the Continent is scattered and reliant on inconsistent data. And a whole new black market has sprung up to insure, ship and hide Russia’s fuel as it travels the world.
The sanctions, in other words, have come up short. Russia’s oil export earnings have dropped just 14 percent since the restrictions were imposed. And in October, Russia’s fossil fuel revenues hit an 18-month high.
It also appears the EU has run out of steam to do much about it. The latest EU sanctions package, set to be finalized at a leaders’ summit this week, is mostly focused on administrative tweaks that experts say will do little to curb widespread evasion. Absent are any efforts to drop the level of the oil price cap further.
“The whole sanction mechanism works only if you keep adopting on a regular basis decisions that close loopholes and impose new sanctions,” Ukrainian Foreign Minister Dmytro Kuleba told POLITICO. “Every actor in the world has the capacity to adapt.”
The Bulgarian oversight
The reason behind Bulgaria’s price cap loophole is arguably a clerical oversight.
When the EU wrote the G7 nations’ price cap into law, officials expressly forbade EU shipping firms and insurance companies from trafficking Russian oil above the $60 threshold to non-EU countries. The aim was to squeeze the Kremlin’s revenues while keeping global oil flows steady.
But officials never thought to impose similar rules on shipments to EU countries, partly because Brussels had banned Russian seaborne crude oil imports that same day.
Except for Bulgaria.
The backdoor has meant millions in extra revenue for Moscow. According to CREA, Russian oil export earnings from Bulgarian sales between August to October — a third of which came from sales above the price cap — raised around €430 million in direct taxes for the Kremlin. All Russian-origin shipments delivered during this time — priced between $69 and $89 per barrel — relied on Western help, including from Greek ship operators and British and Norwegian insurers.
And it was all technically legal.
The situation “reveals that Bulgaria has aided Russia to exploit this glaring loophole to maximize the Kremlin’s budget revenues from these oil sales without any apparent benefits for Bulgarian consumers,” said Martin Vladimirov, a senior analyst at the Sofia-based Center for the Study of Democracy (CSD) think tank, which has studied the issue.
More broadly, Bulgaria’s exemption from the Russian oil ban has been lining the pockets of both Russia’s largest private oil firm, Lukoil, which dominates Bulgaria’s fuel production with its sprawling Black Sea refinery, and the Kremlin itself.
More broadly, Lukoil’s crude oil imports to Bulgaria raked in over €2 billion in export revenues for Russia since the sanctions went into effect in February, according to a new CREA and CSD analysis. And the Kremlin has made €1 billion in direct taxes from the sales, POLITICO revealed last month.
There is now mounting pressure to mend these money-making fissures.
Bulgaria has vowed to cut short its opt-out from the Russian oil ban by six months, provisionally moving the deadline up to March.
And Kiril Petkov, the former prime minister who leads one of two parties controlling Bulgaria’s current governing coalition, told POLITICO the price cap workaround should “absolutely” be closed too. He vowed to pressure the government and ask the European Commission, the EU’s executive in Brussels, to do so, while insisting that Bulgaria is accelerating its efforts to shake off its Russian energy ties, unlike nearby countries like Slovakia.
Bulgaria proceeded to import Russian crude exclusively above the price cap from August until October, according to confidential customs data seen by POLITICO | Robert Ghement/EPA-EFE
“We do not like the $60 loophole that was created by the EU Commission derogation,” Petkov said. “We don’t want Putin to receive any euro that he doesn’t have to.”
The Bulgarian case “highlights one of the many loopholes that make sanctions less effective at lowering Russian export earnings used to finance the Kremlin’s war chest,” according to Isaac Levi, who leads CREA’s Russia-Europe team.
Bulgaria’s finance ministry and Lukoil didn’t respond to requests for comment.
‘Not all rainbows and unicorns’
A major challenge is poor monitoring and enforcement.
In October, a report commissioned by the European Parliament found EU sanctions enforcement is “scattered” across over 160 local authorities, while capitals have “dissimilar implementation systems” that include “wide discrepancies” in penalties for violations.
That assumes you can find a breach to begin with. Even those involved in shipping oil get only limited access to information on trades, according to Viktor Katona, chief crude analyst at the Kpler market intelligence firm.
Insurers, for example, rely on a single document from firms buying and selling oil cargoes pledging the sale is not above $60 per barrel, which amounts to a “declaration of faith,” he said.
The EU’s upcoming 12th package of sanctions is trying to crack down on this problem with new rules forcing traders to actually itemize specific costs. The goal is to prevent buyers from purchasing Russian oil above the limit and then hiding the extra costs as insurance or transport fees. But few in the industry have high hopes the added paperwork will stop the workaround.
Several EU countries with large shipping industries are also reluctant to tighten the price cap, making things even trickier. During the latest round of sanctions, Cyprus, Malta and Greece once again raised concerns over calls to strengthen the restrictions, according to two EU diplomats, who like others in the story were granted anonymity to speak freely.
A diplomat from a major maritime EU nation said stricter sanctions would only push Russia to use more non-Western operators to ship oil. Instead, the diplomat argued, the focus should be on broadening the countries adhering to the price cap. Currently, the G7, the EU and Australia are on board.
“It would be stupid to push for price caps, and then other shipping registers do not abide by it because they are not EU members,” the diplomat said, adding that “all that will be achieved is the total destruction of the shipping industry.”
Meanwhile, EU countries are still allowing Russian oil cargoes to cross their waters on their way elsewhere.
CREA research on behalf of POLITICO found that 822 ships transporting Moscow’s crude transferred their cargo to another ship in EU territorial waters — the majority in Greek, but also Maltese, Spanish, Romanian and Italian waters — since the oil sanctions kicked off last December. The volumes were equivalent to 400,000 barrels per day.
A Commission spokesperson defended the EU sanctions, noting Russia has been forced to spend “billions of dollars” to adapt to the new reality, including on new tankers, and its oil extraction and export infrastructure as Western demand shriveled.
That has caused “serious and ongoing economic and policy consequences,” the Commission spokesperson said. And CREA did find that the oil price limit has stripped the Kremlin of €34 billion in export revenues, equivalent to roughly two months of earnings this year.
Others point out that teething issues are normal — it’s the first time the EU has deployed sanctions at such a scale.
“Let’s be fair … all of the sanctions measures are unprecedented, so there’s an element of learning by doing it, as well,” said one of the EU diplomats. “We don’t live in a perfect world: it’s not all rainbows and unicorns.”
Deep dark waters
Instead of accepting the tough rules designed to drain its finances, Moscow has sparked a sanctions circumvention arms race, looking for loopholes as part of what one senior Ukrainian official has described as a “cockroach strategy.”
To ensure it can sell its fossil fuels at whatever price it can get, in violation of the oil price cap and other restrictions, Russia has presided over the creation of a parallel shipping market that, through a mixture of law-breaking and law-bending, is lining the pockets of its state energy firms and oligarchs.
A “shadow fleet” of aging tankers has emerged, mysteriously managed through a network of companies that obscure their ownership, frequently trading their cargo of fuel with other ships at sea. To help them escape the jurisdiction of Western sanctions while meeting basic maritime requirements, a cottage industry of murky insurance firms has sprung up in countries like India.
“When they were introduced, the sanctions seemed to be having an effect for a very short time. But now the state of play is most of the sanctions that have beeninplace have not really worked — or they’ve been very limited in terms of what they’ve been able to do,” said Byron McKinney, a director at trade and commodity firm S&P.
As Russian trades move increasingly away from Western operators and traders, that makes tracking them even more difficult, said Katona, the Kpler oil analyst.
“Every single” Russian type of oil now trades above the price cap, he said, while CREA estimates only 48 percent of Russian oil cargoes were carried on tankers owned or insured in G7 and EU countries in October.
“It’s like coming to a party and telling everyone not to drink alcohol, but not coming to the party yourself,” Katona said. “How do you make sure that no one’s drinking?”
At the same time, countries like India have increased their imports of cheap Russian crude by 134 percent, CREA found, processing it and then selling it everywhere. That means European consumers could unknowingly be filling up their cars with fuel produced from Russian crude, bankrolling Moscow’s armed forces at the same time.
The waning West?
The EU is well aware of the problem.
“Unless you have big players like India and China as part of it, effectiveness sooner or later fades away,” conceded one senior Commission official.
“It shows us the limits of what the tools of Western players can achieve at a global level,” the official added, noting it’s “a lesson in how much the [global] power balance has changed compared to 10 or 20 years ago.”
Expectations are low, however, that India or China — or Turkey, another critical shipping country — will come around to the price cap any time soon.
And back in Brussels, political leaders seem to be throwing up their hands. When EU leaders gather for their summit on Thursday, the sanctions package they’re expected to endorse will do little to stanch the flow of Russia’s energy cash, omitting any measures targeting Russian oil or lowering the price cap.
Until such steps are taken, Russia’s finances won’t truly wither, said Alexandra Prokopenko, an economist and nonresident scholar at the Carnegie Russia Eurasia Center.
“The oil price is now the only real channel of transmission for external risk,” she said. “Russia will feel extremely bad if the average price on its oil is $40 or $50 per barrel — that would be painful for its budget and for Putin’s ability to finance expenditures.”
Getting to that point, however, was never going to be easy.
“The Russian economy was quite a big animal,” Prokopenko said, “that makes it hard to shoot it with a single shot.”
Victor Jack and Giovanna Coi reported from Brussels. Gabriel Gavin reported from Yerevan.
Claudia Chiappa contributed reporting from Brussels.
Shares of UiPath Inc. soared late Thursday after the automation-software company reported fiscal-third-quarter earnings and revenue that rose above expectations, amid strength in the licenses and subscription-services businesses.
The stock PATH, -0.55%
shot up 11% in after-hours trading, putting it on a path to trade at the highest closing levels seen since April 2022.
Net losses for the quarter to Oct. 31 narrowed to $31.5 million, or 6 cents a share, from $57.7 million, or 10 cents a share, in the same period a year ago. Excluding nonrecurring items, such as stock-based compensation expenses, adjusted earnings per share rose to 12 cents from 5 cents to beat the FactSet consensus of 7 cents.
Total revenue grew 24% to $325.9 million, above the FactSet consensus of $315.6 million.
Licenses revenue jumped 25.3% to $148.1 million, well above the FactSet consensus of $137.5 million, and subscription-services revenue climbed 28.7% to $167.5 million to top expectations of $166.9 million. Meanwhile, professional services and other revenue dropped 28.4% to $10.3 million, to miss forecasts of $11.2 million.
Annual recurring revenue increased 24% to $1.38 billion, above the FactSet consensus of $1.36 billion.
For the fourth quarter, the company expects revenue of $381 million to $386 million, which surrounds the FactSet consensus of $383 million.
The stock, which fell 0.6% during Thursday’s regular session after closing the previous session at a 15-month high, has run up 26.6% over the past three months, while the SPDR S&P Software & Services ETF XSW, -0.60%
has tacked on 1.3% and the S&P 500 SPX, +0.38%
has edged up 1.2%.
DEIR AL-BALAH, Gaza Strip (AP) — Hamas released the first batch of hostages under a ceasefire deal that began Friday, including 13 Israelis who have been held in the Gaza Strip since the militant group staged a raid on Israel nearly seven weeks ago, according to officials and media reports.
Twelve Thai nationals were also released, according to Thai Prime Minister Srettha Thavisin.
Dozens of Palestinian prisoners are expected to be freed by Israel.
The ceasefire between Israel and Hamas began Friday, setting the stage for the exchange and allowing sorely needed aid to start flowing into Gaza.
There were no reports of fighting after the truce began. The deal offered some relief for Gaza’s 2.3 million people, who have endured weeks of Israeli bombardment and dwindling supplies of basic necessities, as well as for families in Israel worried about loved ones taken captive during Hamas’s Oct. 7 attack, which triggered the war.
The truce raised hopes of eventually winding down the conflict, which has flattened vast swaths of Gaza, fueled a surge of violence in the occupied West Bank and stirred fears of a wider conflagration across the Middle East. Israel, however, has said it is determined to resume its massive offensive once the ceasefire ends.
Under the deal, Gaza’s ruling Hamas group pledged to free at least 50 of the about 240 hostages it and other militants took in the Oct. 7 raid. In exchange, Hamas said Israel would free 150 Palestinian prisoners.
It was not expected that captive Americans would be among those released late Friday afternoon, but the Biden White House said in a statement that it continued to work to ensure that U.S. nationals, including an Israeli-American girl who turns 4 on Friday, are among the initial 50.
Both sides agreed to release women and children first, in stages starting Friday, and as planned 13 Israelis were released, according to Israeli media, citing security officials. An Israeli official, meanwhile, confirmed that the Thai captives left Gaza and were en route to a hospital in Israel.
The official spoke on condition of anonymity because she was not authorized to discuss the releases with the media.
Israel said the deal calls for the truce to be extended an extra day for every additional 10 hostages freed.
Early in the day, ambulances were seen arriving at the Hatzerim air base in southern Israel, preparing for the release. Those freed will then be taken to hospitals for assessment and treatment, Israeli officials said.
Among the Israeli citizens freed some have a second nationality, according to a Hamas official who spoke on condition of anonymity because he was not authorized to discuss details with the media.
Israel’s Justice Ministry published a list of 300 Palestinian prisoners eligible for release. Thirty-nine — 24 women, including some convicted of attempted murder for attacks on Israeli forces, and 15 teenagers jailed for offenses like throwing stones — were expected to be freed Friday, Palestinian authorities said.
On Friday, the truce brought quiet after weeks in which Gaza saw heavy bombardment and artillery fire daily as well as street fighting as ground troops advanced through neighborhoods in the north. The last report of air-raid sirens in Israeli towns near the territory came shortly after the truce took effect.
Not long after, four tankers with fuel and four with cooking gas entered the Gaza Strip from Egypt, Israel said.
Israel has agreed to allow the delivery of 130,000 liters, or 34,340 gallons, of fuel per day during the truce — still only a small portion of Gaza’s estimated daily needs of more than 1 million liters.
For most of the past seven weeks of war, Israel had barred the entry of fuel to Gaza, claiming it could be used by Hamas for military purposes — though it has occasionally allowed small amounts in.
U.N. aid agencies pushed back against the claim, saying fuel deliveries were closely supervised and urgently needed to avert a humanitarian catastrophe since fuel is required to run generators that power water-treatment facilities, hospitals and other critical infrastructure.
The Israeli military dropped leaflets over southern Gaza, warning hundreds of thousands of displaced Palestinians who sought refuge there not to return to their homes in the territory’s north, the focus of Israel’s ground offensive.
Even though Israel warned that it would block such attempts, hundreds of Palestinians could be seen walking north Friday.
Two were shot and killed by Israeli troops and another 11 were wounded. An Associated Press journalist saw the two bodies and the wounded as they arrived at a hospital.
Sofian Abu Amer, who had fled Gaza City, said he decided to risk heading north to check on his home.
“We don’t have enough clothes, food and drinks,” he said. “The situation is disastrous. It’s better for a person to die.”
The hope is that “momentum” from the deal will lead to an “end to this violence,” said Majed al-Ansari, a spokesman for the Foreign Ministry of Qatar, which served as a mediator along with the United States and Egypt.
But hours before it came into effect, Israeli Defense Minister Yoav Gallant was quoted telling troops that their respite would be short and that the war would resume with intensity and continue for at least two more months.
Prime Minister Benjamin Netanyahu has also vowed to continue the war to destroy Hamas’s military capabilities, end its 16-year rule in Gaza and return all the hostages.
Israel’s northern border with Lebanon was also quiet on Friday, a day after the militant Hezbollah group, an ally of Hamas, carried out the highest number of attacks in one day since fighting there began Oct. 8.
Hezbollah is not a party to the ceasefire agreement but was widely expected to halt its attacks.
The war erupted when several thousand Hamas militants stormed into southern Israel, killing at least 1,200 people, mostly civilians, and taking scores of hostages, including babies, women and older adults, as well as soldiers.
The soldiers will only be released in exchange for all Palestinians imprisoned by Israel, according to the Islamic Jihad militant group, which is reportedly holding about 40 hostages.
It is not clear how many of the hostages are currently serving in the military or whether the militants also consider reserve soldiers to be “military hostages.”
According to the Palestinian Prisoners’ Club, an advocacy group, Israel is currently holding 7,200 Palestinians on security charges or convictions, including about 2,000 arrested since the start of the war.
The Israeli offensive has killed more than 13,300 Palestinians, according to the Health Ministry in Hamas-ruled Gaza, which resumed its detailed count of casualties in Gaza after stopping for weeks because of the health system’s collapse in the north.
The ministry says some 6,000 people have been reported missing, feared buried under rubble.
The ministry does not differentiate between civilians and militants in its death tolls. Women and minors have consistently made up around two-thirds of the dead, though the new number was not broken down. The figure does not include updated numbers from hospitals in the north.
Israel says it has killed thousands of Hamas fighters, without presenting evidence for its count.
WASHINGTON (AP) — The negotiations hardly ran smoothly. But, in the end, persistence paid off.
Six weeks ago, not long after Hamas killed more than 1,200 people in Israel and took scores of others hostage in a surprise assault, the government of Qatar quietly reached out to the United States to discuss how to secure the release of those who were taken captive by the militant group.
NICOSIA — A sea corridor from Cyprus to supply humanitarian aid to Gaza is creating some formidable logistical challenges and could require innovative fixes ranging from landing craft to a large floating platform, where ships can unload containers.
For now, the only aid route into the war-shattered coastal enclave is over land from Egypt at Rafah, but there is an increasing diplomatic push to use ships as they could deliver 500 times more aid than trucks. Israel’s Ambassador to Cyprus Oren Anolik has called the seaborne corridor a “positive initiative” but warns “there are plenty of details that need to be sorted out and discussed.” Egypt is also in favor.
The main practical challenges include the dangers posed by the war and the fact that Gaza’s port is too tiny to dock large freighters.
The idea is that international humanitarian aid will be sent and stored in Larnaca on the south coast of Cyprus, which is only 210 nautical miles from the conflict zone. It will then be inspected, with Israeli involvement, and loaded for delivery.
Afterwards, there are three scenarios on how aid can safely reach Gaza, taking into consideration the lack of port facilities: short, medium and long term.
The short-term scenario could be implemented immediately, if Israel agreed to a cease-fire, Cypriot officials explained. Aid would be transferred from Larnaca close to Gaza with large cargo ship and then offloaded to its shores via landing crafts. Cyprus has already been approached by some countries to offer this delivery method.
Under the medium-term scenario, a floating platform would be constructed for unloading containers of humanitarian aid.
The long-term scenario involves building enclosed port in the area.
Another alternative included in the Cypriot proposal, is aid being distributed via a port in Israel and then being taken to a northern entry point into Gaza. At the moment this is appears a remote prospect as Israel is reluctant for any aid to pass through its territory.
Aid reaching Gaza could be distributed by the United Nations using its network.
The European Commission, European Investment Bank, and Gulf countries have approached Cyprus to help fund the project, while others, like Greece and the Netherlands, offered practical assistance.
Cypriot Foreign Minister Constantinos Kombos traveled to Israel last week with a team of experts to discuss the practical dimensions of the scheme.
The idea is that international humanitarian aid will be sent and stored in Larnaca on the south coast of Cyprus, which is only 210 nautical miles from the conflict zone | Amir Makar/AFP via Getty Images
The idea of a sea corridor had been swirling some 12 years ago, when there were thoughts about an alternative to a seaport in Gaza, but nothing eventually materialized.
“Perhaps rather than a measure of immediate relief, it could be an initiative well worth considering for the day after the end of the war and during the phase of reconstruction,” said Harry Tzimitras, director of the Peace Research Institute Oslo Cyprus Center.
As Tzimitras explained, the crossing in Rafah is currently being used for the passage of around 100 lorries per day, while the need is for 400. This cannot be done because the scanners have not been upgraded and they can only cope with a limited number of checks.
“Unless there is a structure on the ground for the receipt and effective distribution of the aid, there’s no point in flooding the place with more humanitarian aid at this juncture,” he added.
Another scenario floated by the U.K. is airlifting aid using its bases in Cyprus.
California has committed to substantially reducing its greenhouse gas emissions, aiming for carbon neutrality by 2045. The pledge is key to Gov. Gavin Newsom’s claims of climate leadership, which featured prominently in his recent visits to China and the United Nations.
Imagine a smoker who promises to quit but continues to make broad exceptions for smoking at work and social events. Regardless of what the smoker tells the doctor, their lungs will reflect the truth.
California’s greenhouse gas inventory is likewise not just going in the wrong direction but also ignoring a lot of harmful sources of emissions. Indeed, the state even measures and lists some of these emissions in its reports. But they’re not counted toward its overall greenhouse gas footprint, which it uses to attest to its efforts to combat climate change.
These omitted emissions have serious consequences: Relying on CARB’s estimates alone, the state’s reported greenhouse gas footprint would be about 20% greater if it included its omitted emissions. And that doesn’t include the emissions the agency doesn’t even list in its inventory, such as those from wildfires, which are largely human-caused, measurable and manageable.
The omissions also have repercussions for California communities. Many of the industries whose greenhouse gas emissions are excluded from the official inventory — including shipping, aviation, refineries and biofuels — produce additional pollutants that affect nearby communities. People living near these facilities are harmed by that pollution regardless of whether officials choose to count those facilities’ emissions. Particularly in communities with historical and continuing environmental injustices, these omissions compound the problem.
The city of Stockton, for example, agreed to produce a greenhouse gas inventory as part of a settlement of a lawsuit alleging that its general plan did not adequately consider environmental impacts. Yet its greenhouse gas inventory excludes emissions from the very industries that contribute to local air pollution and environmental injustices. In fact, the emissions excluded by the city are four times greater than those it reported.
While the Paris agreement allows for such omissions, it doesn’t prevent countries from improving their accounting methods. What’s more, subnational governments such as California’s are not parties to the agreement and therefore not bound to its methodologies. In fact, unlike its national counterparts, California once counted transportation emissions from biofuels such as ethanol but reclassified them in 2016.
Nor is this issue confined to governments: Corporate emitters are also part of the problem. One study found that technology companies’ greenhouse gas declarations undercounted their emissions, sometimes by orders of magnitude. And corporate “net zero” pledges often arbitrarily count emissions in ways that don’t amount to actual reductions.
What’s the solution? Only a full account of greenhouse gas emissions can allow us to appropriately attribute responsibility to each emitter and determine its progress in reducing its contributions to climate change. We need greenhouse gas accounting systems that are rigorous, complete and interoperable.
This is a daunting task but not a hopeless one. Senate Bill 253, which Newsom recently signed into law, requires large corporations operating in California to disclose their greenhouse gas emissions and include emissions throughout their supply chains. That’s critical: Disclosing emissions across supply chains will help hold emitters responsible for their completegreenhouse gas footprints.
While SB 253 is a very good first step, the Air Resources Board should apply the same standard to the state’s greenhouse gas inventory. Measuring California’s complete footprint requires including upstream and downstream refinery emissions as well as those from aviation, shipping, biofuels and wildfires.
Getting greenhouse gas accounting right is ultimately crucial to dealing with climate change. Until governments and corporations completely and accurately account for their contributions to the problem, their promised solutions will fall short.
Leehi Yona is a JD-PhD candidate and Knight-Hennessy Scholar at Stanford University whose research has focused on greenhouse gas emissions accounting.
For centuries, sailors have whispered tales of monstrous rogue waves capable of splitting ships and damaging oil rigs. These maritime myths turned real with the documented 26-meter-high rogue wave at Draupner oil platform in 1995.
Fast forward to 2023, and researchers at the University of Copenhagen and the University of Victoria have harnessed the power of artificial intelligence (AI) to predict these oceanic giants. They’ve developed a revolutionary formula using data from over a billion waves spanning 700 years, transforming maritime safety.
Decoding Rogue Waves: A Data-Driven Approach
The quest to understand rogue waves led researchers to explore vast ocean data. They focused on rogue waves, twice the size of surrounding waves, and even the extreme ones over 20 meters high. By analyzing data from buoys across the US and its territories, they amassed more than a billion wave records, equivalent to 700 years of ocean activity.
Using machine learning, the researchers crafted an algorithm to identify rogue wave causes. They discovered that rogue waves occur more frequently than imagined, with about one monster wave daily at random ocean locations. However, not all are the colossal 20-meter giants feared by mariners.
AI as a New-Age Oceanographer
The study stands out for its use of AI, particularly symbolic regression. Unlike traditional AI methods that offer single predictions, this approach yields an equation. It’s akin to Kepler deciphering planetary movements from Tycho Brahe’s astronomical data, but with AI analyzing waves.
The AI examined over a billion waves and formulated an equation, providing a “recipe” for rogue waves. This groundbreaking method offers a transparent algorithm, aligning with physics laws, and enhances human understanding beyond the typical AI black box.
Contrary to popular belief that rogue waves stem from energy-stealing wave combinations, this research points to “linear superposition” as the primary cause. Known since the 1700s, this phenomenon occurs when two wave systems intersect, amplifying each other momentarily.
The study’s data supports this long-standing theory, offering a new perspective on rogue wave formation.
Towards Safer Maritime Journeys
This AI-driven algorithm is a boon for the shipping industry, constantly navigating potential dangers at sea. With approximately 50,000 cargo ships sailing globally, this tool enables route planning that accounts for the risk of rogue waves. Shipping companies can now use the algorithm for risk assessment and choose safer routes accordingly.
The research, algorithm, and utilized weather and wave data are publicly accessible. This openness allows entities like weather services and public authorities to calculate rogue wave probabilities easily. The study’s transparency in intermediate calculations sets it apart from typical AI models, enhancing our understanding of these oceanic phenomena.
The University of Copenhagen’s groundbreaking research, blending AI with oceanography, marks a significant advancement in our understanding of rogue waves. By transforming a massive wave database into a clear, physics-aligned equation, this study not only demystifies a long-standing maritime mystery but also paves the way for safer sea travels. The algorithm’s potential to predict these maritime monsters will be a crucial tool for the global shipping industry, heralding a new era of informed and safer ocean navigation.
PANAMA CITY, PANAMA – SEPTEMBER 22: The container ship Maersk Bogor is guided by a tugboat as it prepares to enter the Miraflores locks while transiting the Panama Canal on September 22, 2023 in Panama City, Panama. The Panama Canal Authority is continuing to restrict the number of vessels that pass through the Panama Canal locks as drought has caused water levels at Gatun Lake to drop. The locks depend on millions of gallons of fresh water from the manmade lake to fill locks in Panama City and Colon in order to transit shipping vessels from the Pacific Ocean to the Caribbean Sea. Over one hundred ships are waiting to transit the canal and the backup could delay goods heading to the United States for the holiday season. It takes an average of 8-10 hours for a ship to transit the 50 miles through the canal versus several weeks to travel thousands of miles around Cape Horn and the southernmost parts of South America. (Photo by Justin Sullivan/Getty Images)
Starting Friday, the Panama Canal Authority is implementing additional vessel reductions in an effort to conserve water as a drought exacerbated by a severe El Nino weather system continues to plague water levels in the locks of the key global trade conduit.
According to Panama Canal authorities, the drought requires them to reduce the number of daily transits from 29 to 25 ships and in the proceeding weeks, they will reduce vessels transits even more until it declines to 18 ships a day in February. That represents between 40%-50% of full capacity. Under normal conditions, between 34-36 vessels traversed the canal a day. The drought and vessel reductions are having a major impact on the flow of trade, according to data from CNBC Supply Chain providers.
According to Project44, shipping containers going through the Panama Canal to the East Coast are being delayed in select ports, with the Port of Charleston seeing the longest in delays.
The Panama Canal is popular for East Coast trade because it is faster than other options. The shipping time for ocean cargo from Shenzhen, China, to Miami, Florida, using the Suez Canal takes 41 days. Traveling through the Panama Canal takes only 35 days.
“With a reduced transit schedule and an average of 26 daily arrivals by commercial ships per day on the Pacific side of the canal, and an average of 8 daily arrivals by commercial ships per day on the Atlantic side of the canal, the likelihood of cargo waiting idle will increase,” said Captain Adil Ashiq, head of North America for MarineTraffic.
According to MarineTraffic, wait times have increase on the Atlantic side from last week on average by 30% (0.4 days to 0.6 days) and on the Pacific side, wait times have increased to 2.2 days.
The delays are leading shippers sending cargo to U.S. East Coast and West Coast ports to make alternative plans, says Alan Baer, CEO of OL USA.
“The extra money and time traveling through the Suez may add a week to ten days for cargo to arrive, but you know when it will reach its final destination,” Baer said.
Jon Davis, chief meteorologist at global supply chain mapping and risk analytics company Everstream Analytics, tells CNBC that since a significant portion of global commerce is transported through the Canal, the items that are impacted cover all sectors.
“Coal is transported through the canal but the more important energy item is LNG (liquefied natural gas) which the U.S. exports around the world, especially to Asia,” said Davis. “Many agricultural products are shipped both from, and to, the U.S. The canal is a major corridor for container ships, so products coming to the U.S., from China for example, are being delayed.”
Containerships have priority in crossing the canal due to their contracts. The most impacted vessel types are wet bulk and dry bulk vessels, Ashiq said.
“This may start a shift in bookings for Transpacific freight destined to the U.S. East and Gulf through the Suez Canal, which is located in a region with significant geopolitical headwinds,” said Paul Brashier, vice president of drayage and intermodal at ITS Logistics.
In a recent speech before the Houston International Maritime Conference, Panama Canal Authority Administrator Ricaurte Vásquez, said, “This will be the worst El Nino recorded in recent history.”
In its water conservation battle, Dr. Vásquez emphasized the authority anticipates it can “provide and assure for as long as possible,” the current water levels so vessels do not have to further lighten their loads. At present conditions, vessels are traversing the canal 40% lighter. To meet the weight requirements, some containerships are unloading their containers and moving them either by rail or road across Panama to be loaded on vessels on the other side. Vásquez said the canal will attempt to keep current vessel weight requirements even if it requires further reductions in the number of transits.
According to the PCA, it takes around 50 million gallons of fresh water to move a vessel through one of the locks. The Panamax locks lose more water compared to the Neo-Panamax lock. The Neo-Panamax locks have a water recovery system which can reclaim 60% of the water used during a vessel’s transit through the locks. The Panamax lanes do not have the water-recapturing ability of the Neo-Panamax locks.
Forty percent of all U.S. container traffic travels through the Panama Canal every year, which in all, moves roughly $270 billion in cargo annually.
“There is no way around the fact that they have stolen our business in Russia, and we are not going to help them make that look legitimate.”
That’s new Carlsberg CEO Jacob Aarup-Anderson, according to a Reuters account of a journalist call on Tuesday, after Russian President Vladimir Putin this summer ordered the seizure of Carlsberg’s stake in its Baltika subsidiary. Earlier this month, Carlsberg ended license agreements that allow for its beers to be produced in the country.
According to the presidential decree, Carlsberg retains title to the shares in Baltika Breweries but no longer has any control or influence over the company.
Carlsberg reported a 3% decline in organic volume growth, as a 6.3% slide in Central and Eastern Europe and a 5.2% decline in Western Europe was partly offset by a 1.5% rise in Asia.
The brewer said two-thirds of the volume decline was due to bad weather and another one-third to consumer sentiment.
Organic revenue, however, rose by 5.8%, on price hikes. It kept its operating-profit guidance for the year unchanged at 4% to 7% growth, and launched a new stock-buyback program valued at 1 billion Danish crowns.
Carlsberg said comparisons in the fourth quarter will be positive in China, in light of the year-ago lockdown, but the weak macro environment in Southeast Asia will continue to impact markets.
Carlsberg shares CARL.B, -0.83%
were steady on Tuesday but have dropped 8% this year.
Fuel prices, with the cost of gasoline and diesel at the pump both down from a month ago, don’t appear to be fazed by the escalating risks to oil supplies in the Middle East from the Israel-Hamas war, but they are.
The decline in fuel prices seen nationally is actually a “bit above what would be ‘normal’ for this time of year,” said Patrick De Haan, head of petroleum analysis at GasBuddy. However, he believes “prices won’t fall as far as they would have had the attacks on Israel not happened.”
On Friday, the average retail price for a gallon of regular gasoline stood at $3.528, down 5.7 cents from a week ago, while the average retail diesel price was at $4.465 a gallon on Friday, down 7.8 cents from Sept. 30, according to data from GasBuddy.
U.S. retail gasoline prices have fallen so far this month.
GasBuddy
“Geopolitical risk is now heightened, changing the calculus” for the fuel market, said Brian Milne, product manager, editor and analyst at DTN.
‘Seasonal component’
In considering retail gasoline prices during the fourth quarter, the “seasonal component is less pronounced than in years past,” said Milne. Demand for gasoline tends to fall following the summer travel season. Combined with a “strong slate of refinery maintenance,” which led to less fuel supply on the market, the rise in crude oil prices has slowed the decline in fuel prices, said Milne.
If not for the heightened geopolitical risk in the Middle East, he said he might have expected to see gasoline prices decline by another 30 cents to 40 cents per gallon into late December because of lower demand.
Retail gas prices may fall another 20 cents a gallon or more, depending on the location within the U.S., if we avoid broader hostilities in the Middle East, said Milne.
However, if a conflict breaks out beyond Israel and the Gaza Strip, gasoline prices are likely to move sharply higher because of a spike in crude costs, he said.
For its part, oil has seen volatile trading following the Hamas attack on Israel on Oct. 7, with futures prices for U.S. benchmark West Texas Intermediate crude CLZ23, -0.42%
For now, California, which typically is among the states that pays the most per-gallon for gasoline partly due to taxes on the fuel, is seeing prices “plummet” — down nearly 60 cents in the last three weeks, said GasBuddy’s De Haan.
“The West Coast is certainly seeing a much larger decline than is ‘normal’ and it’s due to the refinery situation now improving drastically,” as well as California’s RVP waiver, he said.
The California Air Resources Board allowed gasoline sold or supplied for use in California that exceeds the RVP, or Reid Vapor Pressure, limits through the end of Oct. 31, marking an early transition for the state from the lower RVP gas used in the summer to help cut gasoline emissions to the higher RVP gas used in the winter.
On Friday, the average price for a gallon of regular gasoline in California sold for $5.476, GasBuddy data show. That’s down 16.7 cents in just the last week.
Gas price outlook
De Haan said he does not expect to see a spike in gas prices nationally at this point, and there’s still room for prices to fall — just not as much following the Hamas attack on Israel.
“If we get to November and Iran gets involved in the situation, then we certainly could see gas prices impacted in some way as the current drops will likely be fully passed on by then, giving stations no ‘room’ to absorb higher prices reflected by a potential rise in oil,” said De Haan.
Still, falling demand, as well as “seasonality in general,” are what are pushing prices down, “enhanced by refinery improvements in areas” that saw price surges, he said.
Prices may even fall further after refinery maintenance season wraps up in mid-November, and refiners have to find places to put even more gasoline output, said De Haan.
He’s comfortable with the gasoline price forecasts GasBuddy issued in December of last year, which predicted a monthly national average for the fuel of $3.53 for October — matching the current price. The forecast also called for an average of $3.36 a gallon for November and $3.17 for December.
GasBuddy doesn’t have a forecast for 2024 yet, but prices may look similar to this year, as long as the situation in the Middle East doesn’t further crumble,” said De Haan.
View on diesel
Diesel, however, is another story.
Price for that fuel have dropped by 85.5 cents a gallon from a year ago to Friday’s $4.465 level, GasBuddy data show.
U.S. retail diesel prices are sharply lower than a year ago.
GasBuddy
While down from a year ago, diesel prices are currently at a “very high level historically” because global supply is low, said DTN’s Milne.
At this time in 2022 diesel fuel inventory was even tighter than it is now, and Europe was heading into winter without Russian natural gas after it was cutoff following the invasion of Ukraine, he said.
That led to a spike in natural-gas prices and prices for gasoil, a European heating oil, also surged, lifting heating oil and diesel prices globally, explained Milne.
Like gasoline, diesel prices could move “sharply higher if the war in Israel expands, and oil flow is put at greater risk,” he said.
De Haan, meanwhile, said diesel prices could climb closer to $5 a gallon if there’s a “squeeze,” with relief then [coming] in the spring/summer” seasons.
“ ‘You have to get yourself to believe that it’s not that hard, because it’s way harder than you think. If I go taking all of my knowledge now and I go back, and I said, I’m going to endure that whole journey again, I think it’s too much. It is just too much.’ ”
— Nvidia CEO Jensen Huang
That was one of the world’s most visionary tech-sector leaders, Nvidia NVDA, -1.86%
CEO Jensen Huang, who explained that building Nvidia was “a million times harder than I expected it to be” as he theorized that “nobody in their right mind would do it” if they were aware of the true personal toll.
The Taiwan-born 60-year-old, whose family relocated to Thailand and then the U.S. in his youth and is said to have co-founded Nvidia in 1993 following a meeting at a Denny’s restaurant in San Jose, Calif., after stints at AMD AMD, -0.49%
and LSI Logic, wouldn’t start his own company today, he said, if he were 30 years old.
The tech titan, however, posited in a recent interview with the podcast Acquired that a “superpower” among entrepreneurs is the ability to trick themselves into believing “it’s not that hard.”
Huang said that his biggest fear remains, as it has been since Nvidia’s early days, is failing to facilitate success among workers. “I’m afraid of the same things today that I was in the very beginning of this company, which is letting the employees down.”
Huang, who according to FactSet owns a 3.5% stake in Nvidia (market cap: $1.04 trillion), explained in the podcast interview that workers joining a company end up believing in its vision and taking on its aspirations as their own.
“You have a lot of people who joined your company because they believe in your hopes and dreams, and they’ve adopted it as their hopes and dreams,” Huang said. “You want to be right for them. You want to be successful for them. You want them to be able to build a great life. … The greatest fear is that you let them down.”
In explaining how he persevered, despite doubts and challenges, in building Nvidia into the company it is today, Huang credited a “support network” of people who never gave up on him during the three-decade journey.
He explained that the experience of leading Nvidia during those periods when its share price has been in seeming free fall was almost “too much to endure,” after the company was first listed on public markets in 1999. “It’s embarrassing no matter how you think about it.”
His comments come as Nvidia’s share price has, again, been in retreat, losing ground following a major 245% surge over the previous 12 months.
More recently, the Santa Clara–based company’s stock was hit by the Biden administration’s decision to introduce tougher controls on the export of semiconductors to China.
Looking ahead, Huang said developments in artificial intelligence now pose an “enormous” opportunity for companies like Nvidia. “The market opportunity has grown by probably a thousand times,” he said.
He said AI will “create more jobs” in the near term, but he also warned that the creation of those jobs doesn’t mean certain other jobs will not be lost to automation. “If you become more productive and the company becomes more profitable, usually they hire more people to expand into new areas,” Huang said.
“Now, obviously, net generation of jobs doesn’t guarantee that any one human doesn’t get fired. That’s obviously true. It’s more likely that someone will lose a job to someone else, some other human that uses an AI,” he added.
He advised people to “learn how to use AI” as he argued that “jobs will change.”
As to Nvidia itself, Huang explained, the company — in a reflection of the products it sells — is structured like a “computing stack.”
He said “Nvidia’s not built like a military” with a top-down command and control system. Instead, Huang said, the company is organized like a “neural network” with a decentralized structure, reflecting a belief that “your organization should be the architecture of the machinery of building the product.”
The first charter flight that the U.S. State Department is organizing has departed from Israel and is en route right now to a site in Europe, White House spokesman John Kirby told reporters on Friday. The flight comes as there is limited availability of commercial flights out of Israel and a high demand from U.S. citizens wanting to depart following the surprise attack a week ago by Hamas, according to Kirby.
If anyone wanted evidence that the market feels skittish just look at stocks related to electric vehicles. They are getting hammered on
capital raising activity that, frankly, should surprise no one.
