Commodity

New US legislation passed by Congress authorizes the president to impose tariffs of up to 100% on India and other buyers of Russian oil. Indian refiners say replacing Russian crude—47% of their imports—would be difficult under current market conditions, with some key suppliers already unavailable. They cite disrupted Saudi supply after drone attacks on a major pipeline and depleted global inventories, alongside logistical hurdles in sourcing alternative barrels and ships. Executives warned that a simultaneous scramble for replacements could send oil prices sharply higher.

The Middle East conflict has pushed crude oil above $US105 a barrel and widened the diesel “crack spread” to $69 from $24, boosting refinery margins. Australia, which imports about 80% to 90% of its diesel, is particularly exposed to price swings that are cutting into farmers’ profitability. Higher transport costs are also feeding inflation pressures, with the risk that cost increases spread more quickly through supply chains to the wider economy.

Gold rebounded after three days of declines as falling oil prices helped ease inflation concerns and US Treasury yields pulled back. Spot bullion rose as much as 2.8% to $4,380 an ounce. Yields had jumped after the Federal Reserve’s unanimous decision to raise rates by a quarter percentage point, its first increase since 2023. Data released last week showed US core inflation rose faster than expected in August.

Reports and images circulating online show some U.S. gas stations running short of diesel as prices jump. The U.S. Energy Information Administration (EIA) forecasts distillate fuel oil inventories will fall to a five-year low and remain there through much of 2027. Supplies have tightened after Ukrainian strikes damaged Russian refineries and Moscow limited exports, cutting global diesel exports by an estimated 1.6 million barrels per day since February.

India’s 2025-26 oil-year soyabean imports are expected to reach a record 1 million tonnes as domestic supplies fall short. Imports in October-August have already reached 9.34 lakh tonnes, according to the Soyabean Processors Association of India (SOPA). The group also cut its harvested-area estimate to 10.5 million hectares, down 6% from its earlier forecast.

MSMEs in Coimbatore, India, are facing rising input costs after copper prices surged nearly 75% over the past year, with one kg now at ₹1,450 versus ₹800₹900 a year earlier. Prices had earlier touched ₹1,500 a kg before easing slightly. Local industry groups say once the increase crossed 60%, firms could pass on only 10%15% of the rise to customers, leaving engineering and electrical manufacturers with sharply compressed margins.

European gas storage stands at about 68%, with Germany at 56%, stoking concerns over winter supply. Benchmark contracts rose as much as 4% before easing, settling near €81 per megawatthour. Market analyses say prices could approach €100 per megawatthour this winter if Middle East supply restrictions persist, and could exceed €120 per megawatthour if the conflict escalates.

India’s sugar industry has lowered its 2025-26 sugar production estimate to 31 million tonnes from nearly 35 million tonnes, citing weaker sugarcane output and the diversion of more than 3 million tonnes of cane to ethanol. E20 petrol—containing 20% ethanol—is set to become the nationwide standard from 1 April 2026, keeping ethanol demand elevated. Grain ethanol producers say maize-based ethanol demand could rise by 40-50% next year if rice supplies are unchanged, potentially tightening supplies for poultry feed.

UK inflation rose to 3.1% in August, up from 2.9% in July and moving further away from the Bank of England’s 2% target, according to the Office for National Statistics. Higher petrol and diesel prices, along with costlier airfares, pushed annual transport costs up 4.6%. The UK’s policy rate is 3.75%, and the Bank of England meets on Thursday to decide whether to change it.

WTI crude rose $4.93 to $106.31, the highest since May, and has finished higher in 11 of the past 12 sessions. The rally has unfolded amid signs of a tightening supply picture. Saudi Arabia’s spare pipeline is offline and repairs are expected to take three to six weeks or longer, while loadings at a Red Sea port have been suspended. Separately, the U.S. 10-year Treasury yield touched 5.04%, its highest level since 2007.