Business
Oil supply tightens in Europe over Red Sea disruptions
The structure of the global benchmark Brent crude futures market and some physical markets in Europe and Africa have been reflecting tighter supply partly over concerns about shipping delays as vessels avoid the Red Sea due to missile and drone attacks.
The disruptions – which have been the largest to global trade since the COVID-19 pandemic – have combined with other factors such as rising Chinese demand to increase competition for crude supply that does not have to transit the Suez Canal, and analysts say this is most evident in European markets.
In a sign of tighter supply, the market structure of Brent – which is used to price nearly 80 percent of the world’s traded oil – hit its most bullish in two months on Friday, as tankers diverted from the Red Sea following recent air strikes by the United States and United Kingdom on targets in Yemen.
In response to Israel’s war on Gaza, rebels from the Iran-aligned group that controls northern Yemen and its western coastline have launched a wave of assaults on ships in the Red Sea.
By targeting vessels with perceived links to Israel, the Houthis are attempting to force Tel Aviv to stop the war and allow humanitarian aid into the Gaza Strip.
Houthi activity has so far been concentrated in the narrow strait of Bab al-Mandeb, which connects the Gulf of Aden to the Red Sea. Approximately 50 ships sail through the strait every day, heading to and from the Suez Canal – a central artery for global trade.
Some of the world’s largest shipping companies have suspended transit in the region, forcing vessels to sail around the Cape of Good Hope in Southern Africa. The lengthier route has raised freight rates due to higher fuel, crew and insurance costs.
“Brent is the most impacted futures contract when it comes to Red Sea/Suez Canal disruptions,” Viktor Katona, lead crude analyst at Kpler, told the Reuters news agency. “So who suffers the most on the physical front? Undoubtedly, it is European refiners.”
The premium of the first-month Brent contract to the six-month contract LCOc1-LCOc7 rose to as much as $2.15 a barrel on Friday, the highest since early November. This structure, called backwardation, indicates a perception of tighter supply for prompt delivery.
Less Middle Eastern crude is heading to Europe, with the volume nearly halved to about 570,000 barrels per day (bpd) in December from 1.07 million bpd in October, Kpler data showed.
Ships travelling through the Suez Canal have taken on greater strategic significance since the war in Ukraine, as sanctions against Russia have made Europe more dependent on oil from the Middle East, which supplies one-third of the world’s Brent crude.
But it’s challenging to measure the impact of Red Sea shipping separately, one crude trader told Reuters. “It’s a strong market everywhere, but people are very nervous.”
Other developments have also tightened the European crude market including a drop in Libyan supply due to protests, the first such disruption for months, and lower Nigerian exports.
Angolan crude, which also heads to Europe without having to pass through the Suez Canal, is seeing higher demand from China and India because of issues around Iranian and Russian crude, reducing the supply that could come to Europe.
China’s oil trade with Iran has stalled as Tehran withholds shipments and demands higher prices, while India’s imports of Russian crude have fallen due to currency challenges, although India attributed the drop to unattractive prices.
Meanwhile, Russia leapfrogged Saudi Arabia to become China’s top crude oil supplier in 2023, data showed on Saturday, as the world’s biggest crude importer defied Western sanctions over Russia’s 2022 invasion of Ukraine to buy vast quantities of discounted oil for its processing plants.
Russia shipped a record 107.02 million metric tonnes of crude oil to China last year, equivalent to 2.14 million bpd, the Chinese customs data showed, far more than other major oil exporters such as Saudi Arabia and Iraq.
Imports from Saudi Arabia, previously China’s largest supplier, fell 1.8 percent to 85.96 million tonnes, as the Middle East oil giant lost market share to cheaper Russian crude.
(Aljazeera)
Sri Lanka’s decision to invest Rs. 2.5 billion in restoring the heavily polluted Beira Lake marks one of the most significant urban environmental interventions in recent years, underscoring a growing recognition that ecological rehabilitation is also an economic imperative.
The multi-pronged project—covering the closure of illegal sewage discharge points, large-scale dredging, and the installation of aeration systems—is expected to not only revive aquatic life but also unlock commercial, tourism and real estate value in the heart of Colombo.
Officials say the initiative is designed to transform Beira Lake from a long-neglected liability into a productive urban asset.
A senior official from the Ministry of Environment told The Island Financial Review that untreated wastewater and illegal sewer connections had been the primary contributors to the lake’s degradation for decades. “Closing these illegal sewage points is the most critical intervention. Without that, any dredging or aeration would only offer temporary relief, the official said, adding that enforcement will be carried out in coordination with the Colombo Municipal Council (CMC) and other regulatory agencies.
From a business perspective, the clean-up is being viewed as a catalyst for urban regeneration. Urban Development Authority (UDA) sources noted that a healthier Beira Lake would significantly enhance the attractiveness of surrounding commercial developments, hospitality projects and public spaces. “Environmental remediation directly impacts land values and investor confidence. A clean, living lake changes the entire economic profile of the area, an UDA official said.
The dredging component of the project is aimed at removing decades of accumulated sludge, which has reduced water depth and contributed to foul odours and fish die-offs. According to officials involved in project planning, the dredged material will be disposed of following environmental guidelines to avoid secondary pollution risks—an issue that has undermined similar efforts in the past.
Meanwhile, the installation of modern aerators is expected to improve dissolved oxygen levels, a key requirement for sustaining fish and other aquatic organisms. “Restoring aquatic life is not just about biodiversity; it is about creating a water body that can safely support recreational activities and public engagement, a senior CMC engineer explained.
Economists point out that the Rs. 2.5 billion allocation, while substantial, should be seen against the long-term cost savings and revenue potential. Reduced public health risks, lower water treatment costs downstream, increased tourism activity and higher commercial footfall could deliver returns that far exceed the initial outlay.
By Ifham Nizam
CSE activities kicked off on a negative note initially but later experienced some recovery yesterday because most investors were anticipating positive third quarter result shortly, market analysts said.
Amid those developments, the market indicated mixed reactions. The All Share Price Index went down by 4.13 points, while the S and P SL20 rose by 14.02 points. Turnover stood at Rs 5.17 billion with 11 crossings.
Top seven crossings were reported in Renuka Holdings where eight million shares crossed to the tune of Rs 324 million; its shares traded at Rs 40.50, Tokyo Cement one million shares crossed to the tune of Rs 113 million; its shares traded at Rs 113, Distilleries 1.85 million shares crossed for Rs 111 million; its shares traded at Rs 60, ACL Cables 500,000 shares crossed for Rs 51.5 million, its shares sold at Rs 103 Chevron Lubricants 250,000 shares crossed for Rs 47.5 million; its shares traded at Rs 190, Ambeon Capital 738600 shares crossed at Rs 40.50 each and Melstacope 150,000 shares crossed for Rs 27 million; its shares traded at Rs 180.
In the retail market top seven companies that mainly contributed to the turnover were; Colombo Dockyard Rs 1.26 billion (12 million shares traded), ACL Cables Rs 348 million (3.3 million shares traded), HNB (Non-Voting) Rs 152 million (425,000 shares traded), Hayleys Rs 109 million (507,000 shares traded), Tokyo Cement (Non-Voting) Rs 94 million (989,000 shares traded) Lanka Realty Investments Rs 80 million (1.6 million shares traded) and Sampath Bank Rs 77 million (498,000 shares traded). During the day 135 million share volumes changed hands in 38398 transactions.
It is said that manufacturing sector counters, especially Tokyo Cement and ACL Cables, performed well. Further, Colombo Dockyard became the most preferred share for investors. The Banking sector also performed well.
Browns Beach Hotels said that the company will delist from the CSE, having made arrangements with majority shareholders Melstacope and Aitken Spence Hotel Holdings to buy back shares from minority shareholders at an exit offer price of Rs 30.
Yesterday the rupee was quoted at Rs 309.75/85 to the US dollar in the spot market, from Rs 309.72/77 the previous day, having depreciated in recent weeks, dealers said, while bond yields were down.
A bond maturing on 15.05.2026 was quoted at 8.25/35 percent.
A bond maturing on 15.02.2028 was quoted at 9.00/10 percent, down from 9.05/10 percent.
A bond maturing on 15.12.2029 was quoted at 9.65/70 percent, up from 9.65/69 percent.
A bond maturing on 01.03.2030 was quoted at 9.72/75 percent, from 9.70/76 percent.
A bond maturing on 15.03.2031 was quoted at 9.95/10.00 percent, down from 10.00/10 percent.
A bond maturing on 01.10.2032 was quoted at 10.30/50 percent.
A bond maturing on 01.06.2033 was quoted at 10.72/75 percent, down from 10.70/80 percent.
A bond maturing on 15.06.2035 closed at 11.05/10 percent, down from 11.07/11 percent.
The telegraphic transfer rates for the American dollar were 306.2500 buying, 313.2500 selling; the British pound was 409.9898 buying, and 421.3080 selling, and the euro was 354.1773 buying, 365.5655 selling.
By Hiran H Senewiratne
Ceylon Theatres Limited, in partnership with British Council, is proud to present the first ever screening of National Theatre (NT) Live’s Hamlet starring Hiran Abeysekara in Asia. The first screening will happen at Regal Cinema in Dematagoda (Colombo 9) at 5:30 pm on Sunday, 25 January. Sri Lankan actor Hiran Abeysekera stars in the title role—the first Asian actor to play Hamlet in a National Theatre production.
For Sri Lankan audiences, this screening is both a celebration and a homecoming. It reflects the British Council’s long-standing commitment to nurturing creative talent, widening access to world-class culture, and building deep, people-to-people connections between Sri Lanka and the United Kingdom through theatre and the creative arts. To celebrate the inaugural screening, the British Council is inviting winners and runners-up of the All-Island Inter-School Shakespeare Drama Competition, alongside drama teachers and university actors, to attend the premiere.
Further details on screening dates, venues, and ticketing can be found at: https://ceylontheatres.com/ and on the British Council Instagram page https://www.instagram.com/britishcouncilsrilanka/ or call: 0766192370
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