Oil poised for first monthly gain since September as Middle East on brink of wider conflict
Oil prices are on pace for the first monthly gain since September as the U.S. and Iran stand on the brink of a more direct confrontation in the Middle East.
The West Texas Intermediate contract for March was last down $1.09, or 1.40%, to trade at $76.73 a barrel on Wednesday. The Brent contract for March was trading at $81.90 a barrel, down 97 cents or 1.17%.
Prices fell Tuesday after China factory activity contracted for the fourth consecutive month. WTI and Brent, however, are up 6.98% and 6.31% respectively for January.
“The factory data confirms our view that China, at least for now, is an impediment to global oil demand growth,” Tamas Varga, an analyst with the crude broker PVM, wrote in a Tuesday note.
Though Chinese economic data is weighing on the market, prices have risen for the month on stronger than expected U.S. growth, disruptions to crude supplies in the U.S. due to winter storms, and Beijing’s efforts to simulate its economy.
The market is also waiting for the Federal Reserve’s decision on interest rates Wednesday as well as crude inventory data in the U.S.
U.S., Iran on the brink
Geopolitical tensions are also simmering in the Middle East with the U.S. and Iran standing on the precipice of a more direct confrontation, highlighting the potential risk to crude supplies in the region.
“The spreading conflict in the Middle East remains the most visible and growing risk for energy markets,” Natasha Kaneva, head of global commodities research at JPMorgan, told clients in a research note Tuesday.
“While escalation cannot be written off, it remains unlikely in our view, as main parties in the conflict have strong incentives to avoid direct confrontation, and so far they have acted accordingly,” Kaneva wrote.
Iran-allied militants have killed three U.S. soldiers in a drone strike in Jordan and hit an oil tanker with a missile in the Gulf of Aden in a series of major escalations since Friday.
President Joe Biden said Tuesday that he has decided on a response to the death of U.S. troops and holds Iran responsible for supplying the militants with weapons. Defense Secretary Lloyd Austin said the administration “will take all necessary actions to defend the United States, our troops, and our interests.”
U.S. officials told NBC News on Wednesday that the White House is planning a “campaign” that could last several weeks. The targets, which have not yet been finalized, are expected to include Iranian targets outside Iran in multiple places in several countries and locations, the officials said.
Iran has denied involvement in the attack that killed U.S. troops. Tehran said Wednesday it would “take decisive action in case of any US aggression,” according to the state news agency IRNA.
The response in the oil markets to the simmering tensions in the Middle East has been muted so far because there has not been a major disruption to crude supplies. Analysts have repeatedly warned that a direct confrontation between the U.S. and Iran could send oil prices higher if there’s a major disruption in the Strait of Hormuz, the crucial chokepoint for crude flows.
Retired U.S. Navy Admiral James Stavridis, former NATO Supreme Allied Commander, told CNBC Tuesday that the death of U.S. troops raises the risk of a wider conflict, though he noted that neither the U.S. nor Iran want a wider war.
An Oakland, California, school district is the first in the US to transition to a 100% electric school bus system with vehicle-to-grid (V2G) technology.
Modern student transportation platform Zum has provided Oakland Unified School District with a fleet of 74 electric school buses and bidirectional chargers. Utility Pacific Gas and Electric (PG&E) supplied 2.7 megawatts (MW) of load to Zum’s Oakland EV-ready facility. The fleet will be managed through Zum’s AI-enabled technology platform.
“Oakland becoming the first in the nation to have a 100% electric school bus fleet is a huge win for the Oakland community and the nation as a whole,” said Kim Raney, executive director of transportation at Oakland Unified School District. “The families of Oakland are disproportionately disadvantaged and affected by high rates of asthma and exposure to air pollution from diesel fuels.”
The 100% electric school bus fleet is not only emissions-free but also plays a critical dual role as a Virtual Power Plant (VPP), giving 2.1 gigawatt hours (GWh) of energy back to the power grid at scale annually. Here’s how it works:
Student transportation is the largest mass transit system in the United States, moving 27 million students twice daily. Today, over 90% of the US’s 500,000 school buses run on carbon-based fuels, releasing over 8.4 million tons of greenhouse gases annually.
Zum, which already has a presence in 14 states, says its next step is to electrify the school bus fleets of San Francisco Unified and Los Angeles Unified school districts, which have fleets three and six times the size of Zum’s Oakland fleet, respectively.
Read more: EPA announces $1B in grants for electric school buses and heavy-duty vehicles
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China’s leading electric car maker, BYD, just hit a new YTD EV sales record last week in its home country. BYD expects the momentum to continue with new EVs rolling out in key segments globally.
BYD hit a new weekly EV sales record in May
New data from Morgan Stanley (via Investing.com) shows electric vehicles outpaced their gas-powered rivals last week after recovering from the recent holiday in China.
Domestic brands had the biggest gains, with automakers like BYD, Li Auto, and NIO all seeing double-digit week-over-week (WOW) sales improvements. BYD had the biggest WOW improvement, with registrations up 30% to 69,500 last week.
Through May 12, BYD had 101,300 registrations in China. BYD sold 300,114 EVs globally in the first three months of the year, up 13.4% YOY. In April, BYD sold another 134,465 EVs, up 17% over April 2023. Through the first four months of 2024, BYD sold 434,579 electric cars.
Other domestic EV makers like Li Auto saw sales climb 50% WOW to around 8,000. NIO had a 23% improvement with new promotions pushing sales to 4,400 units.
NIO introduced the first EV, the L60 electric SUV, under its mass-market Onvo brand Wednesday. Starting at just $30,500 (219,900 yuan), NIO aims to compete with Tesla’s Model Y.
Meanwhile, Tesla’s sales declined 11% in China last week, with around 9,800 units sold. According to China Passenger Car Association data, Tesla sold 31,421 cars in China in April, down nearly 50% from the 62,398 sold in March.
New models launching
BYD launched its own Tesla Model Y rival last week, the Sea Lion 07. The BYD Sea Lion 07 starts at $26,250 (189,900 yuan) as the first EV based on its new e-Platform 3.0 Evo.
Designed by ex-Lamborghini and Audi designer Wolfgang Egger, you can see influence from the iconic brands integrated into the electric SUV’s design.
The new electric SUV is available in three powertrains, two single-motor, and one dual-motor AWD option.
| BYD Sea Lion 07 trim | Starting price | Range (CLTC) |
| 550 Standard | 189,800 yuan ($26,250) | 550 km (341 miles) |
| 610 Long Range | 199,800 yuan ($27,625) | 610 km (379 miles) |
| 610 Smart | 219,800 yuan ($30,389) | 610 km (379 miles) |
| 550 4WD Smart Navigation | 239,800 yuan ($33,154) | 550 km (341 miles) |
The single motor variants are offered with 71.8 kWh or 80.64 kWh BYD Blade batteries for up to 550 km (341 mi) or 610 km (341 mi) CLTC range, respectively. The dual motor model gets up to 550 km (341 mi) CLTC range.
BYD’s new electric SUV undercuts Tesla’s best-selling Model Y, which starts at 249,900 yuan ($34,550) with up to 554 km (344 mi) CLTC range.
The new electric SUV comes after BYD revealed a series of lower-cost “Honor Edition” versions of its most popular EVs. For example, its cheapest Seagull EV Honor Edition starts at just $9,700 (69,800 yuan).
BYD plans to launch a new Seal electric car, which currently competes with the Tesla Model 3. Little is known about the new EV, but it’s expected to debut in June.
The automaker is expanding into new segments like luxury with its Yangwang brand launching several new EVs.
Most recently, BYD introduced its first PHEV pickup, the BYD Shark, this week in Mexico. The BYD Shark will start at 969,800 pesos ($58,100) to rival the Toyota Hilux and Ford Ranger.
Source: CnEVPost, Investing.com
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