Global oil stockpiles 'scarily thin,' says Saudi Aramco chief
Global oil stockpiles are “scarily thin” because of the US-Israeli war against Iran, according to the boss of Saudi Aramco, the state-owned oil company.
Chief executive Amin Nasser talked about the strain on the global energy system, days after G7 nations agreed to release more of their oil stocks to ease supply fears.
In his first in-person speech since the start of the war in late February, he told the Energy Intelligence Forum in London:
He warned that it could take a couple of years to replenish oil stocks.
After the US and Iran launched surprise air strikes on Iran on 28 February, Tehran effectively closed the strait of Hormuz, choking exports through one of the world’s most crucial shipping bottlenecks. Traffic through the strait has dwindled, with only a few vessels attempting to sail through on a daily basis.
On a brighter note, it emerged last week that exports of crude from the strait have largely returned to levels seen before the outbreak of the Iran war, as oil producers and the shipping industry have found alternative ways of transporting crucial fuel out of the Middle East.
Pipeline exports and ship-to-ship transfers are among the methods being used, according to analysts tracking the situation, while the US military continues to escort some vessels. However, flows of refined products such as diesel remain constrained, pushing prices higher.
At least 16.5m barrels per day (bpd) left the region in September, according to figures from the global trade intelligence firm Kpler, equalling the pre-war average, excluding Iran. The figure is 10.5m bpd higher than the monthly average for March, during the first weeks of the Iran war.
Closing summary
Sainsbury’s held merger talks with rival Morrisons this year, in a deal that could have been the biggest shake-up for UK supermarkets in decades, according to reports.
The two companies held exploratory talks earlier this year, according to the Financial Times and Sky, which first reported the news. It is believed that the supermarkets are no longer in live discussions.
Morrisons, which was once one of the big four grocers in the UK alongside Sainsbury’s, Tesco and Asda, was bought by the US private equity firm Clayton Dubilier & Rice in 2021.
The deal loaded it with more than £7bn in debt on its balance sheet and it has since struggled to grow as fast as its rivals. This year it was overtaken by the German discounter Lidl in market share.
A merger between Sainsbury’s and Morrisons would create a business with a 23.6% market share, putting it still some way behind Britain’s biggest retailer Tesco, which has 27.8% of the market, according to analysts at Worldpanel by Numerator.
The last attempt to merge two of the big four supermarkets came in 2019, when Asda and Sainsbury’s almost joined forces. The £7bn deal was blocked by the Competition and Markets Authority on the basis that it would result in a loss of competition and higher prices for customers.
Global oil stockpiles are “scarily thin” because of the US-Israeli war against Iran, according to the boss of Saudi Aramco, the state-owned oil company.
Chief executive Amin Nasser talked about the strain on the global energy system, days after G7 nations agreed to release more of their oil stocks to ease supply fears.
European shares have notched up modest gains, with the UK’s FTSE 100 index advancing 0.2%, while France’s CAC slid 1.1%. On Wall Street, the S&P 500 is 0.2% ahead while the Dow Jones and the Nasdaq have lost 0.4% and 0.3% respectively.
Some calm has returned to bond markets after last week’s selloff, with French 10-year bond yields pulling back, bringing some relief to the French government amid worries over its high debt burden. Other European bond yields reversed earlier falls and are slightly higher on the day.
The euro has fallen 0.6% below $1.12 against the dollar, currently trading at $1.1187, after hitting $1.1161 in Asian trade, a 17-month low.
Some of our other big stories today:
Thank you for reading. We’ll be back tomorrow! Bye – JK
French bond yields dip while US, UK yields head higher
Some calm has returned to bond markets, with French yields pulling back, while US and UK government debt yields headed higher.
The yield, or interest rate, on the benchmark 10-year UK government bond rose 5 basis points to 5.41% while the 30-year gilt yield was up a similar amount to 5.93%.
The yield on the 10-year US Treasury bond edged 2.6 basis points higher to 5.3% while the 30-year yield is up 4bps to 5.66%.
Germany’s 10-year Bund yield, the benchmark for the eurozone, edged 2.3bps higher to 3.47%, after dipping earlier.
The equivalent French bond yield slipped 1.3bps to 4.85%, bringing some relief to the French government. It came close to hitting 5% last week, a level last breached in the early 2000s.
The Italian yield also pulled back earlier but is now up 1bps at 4.63%, while the Spanish yield rose nearly 2bps to 4.1%. Spanish prime minister Pedro Sánchez has called a snap election for 29 November.
Barclays analysts said bond markets were right to be concerned about France, but added that stress levels are far from the eurozone debt crisis in the early 2010s.
Money markets scaled back bets on interest rate hikes last week and are no longer fully pricing in a rate rise from the European Central Bank this year, forecasting a 20% chance of a rate hike at its next meeting later this month.
Regarding Spain, Capital Economics’ Europe economist Harry Chambers said:
Sainsbury's and Morrisons held talks over potential multi-billion-pound merger, reports say
Two of the UK’s biggest supermarkets, Sainsbury’s and Morrisons held talks over a potential multi-billion-pound deal earlier this year, according to reports.
Sainsbury’s held preliminary discussions with its smaller, private equity-owned rival between November 2025 and February, the Financial Times reported.
This would test regulators’ appetite for dealmaking in the hugely competitive supermarket industry.
There are no talks between the two sides at present although they did not rule out reopening them, according to the FT, citing unnamed sources.
A combination of Britain’s second- and fifth-largest supermarkets would create a business with a 23.6% market share, behind Britain’s biggest retailer Tesco, which controls 27.8% of the market, according to Worldpanel by Numerator.
However, Sainsbury’s would almost certainly be ordered to sell some stores to get the green light, with any deal attracting close scrutiny from the Competition and Markets Authority.
In 2019, the watchdog blocked Sainsbury’s £7.3bn attempt to buy Asda, the UK’s third-largest supermarket, because, it argued, it threatened to push up prices and reduce the choice and quality of products on sale in stores.
Similarly, Sky News reported that the Morrissons owner, the private equity firm Clayton Dubilier & Rice, would remain open to a tie-up with one of the chain’s major competitors.
Asda, which is also owned by private equity investors, could also become a takeover target again, according to analysts.
Michelle Quinn, a partner at Grosvenor Law said:
Accept ‘bad things’ in return for benefits of AI, says Sam Altman
Sam Altman says he believes the world should accept “bad things” happening with AI in exchange for the benefits of the technology.
The chief executive of OpenAI cited hacks, scams and “other bad things that will happen” in an interview that sparked an instant backlash from critics of the major AI companies. His comments came after one of his company’s safety experts resigned, saying at the weekend that its “culture is broken”.
In an interview released on Monday, Altman was asked about how OpenAI’s approach to safety differed from that of Anthropic, which has called for the industry to slow down after one of its researchers quit, warning that AI experts believed “it could kill us all by the end of the decade”.
Altman said:
Average five-year fixed mortgage rate hits 6% for first time in three years
The average cost of a five-year fixed-rate mortgage has hit the 6% barrier for the first time in three years, as jitters in the money markets make the loans more expensive for lenders to offer.
Figures from financial information provider Moneyfacts show the average is now 6.00%, its highest point since September 2023, while the average two-year fixed rate is not far behind at 5.98%, its highest since December of the same year.
In recent weeks most big banks and building societies have put up prices as turmoil in global bond markets has increased expectations of a base rate rise.
Meanwhile, borrowers in Great Britain have seen their choice of fixed-rate mortgages costing below 5% shrivel to only nine options, according to Moneyfacts. That marks a 99% plunge in the market since the start of last month, when there were 1,494 deals priced below that level.
There has been no change in the Bank of England base rate since December last year, but volatility in the bond markets has driven up the swap rates that affect the pricing of fixed-rate mortgages.
Rachel Springall, a finance expert at Moneyfacts, said the impact on rates had been “brutal”.
UK considering tariffs on Chinese car imports to align with EU
The UK is considering whether to impose tariffs on Chinese car imports to align itself with the EU and strengthen its case to be included in new legislation designed to protect the European manufacturing sectors including autos and chemicals.
It is understood the EU has raised the question of tariffs with the UK as part of the discussions on the upcoming “Made in Europe” legislation, known as the Industrial Accelerator Act.
The UK is an outlier in choosing not to put import taxes on Chinese vehicles, even as the US has shut them out almost entirely. Brussels believes the UK would have to introduce tariffs to create a level playing field to qualify for inclusion in the scheme and match the tariffs of up to 45% it has levied on Chinese cars since October 2024.
Imposing tariffs on Chinese cars would probably prompt a hostile response from Beijing and test Andy Burnham’s desire for a reset in the post-Brexit relationship with the EU.
It would also involve a lengthy World Trade Organization process. It took the EU 13 months between the launch of the investigation into state subsidies in production and transport lines and finally imposing tariffs in October 2024.
The UK has been lobbying hard to be included in the upcoming legislation, which will require manufacturers to procure components from the continent to protect against the growing presence of China in supply chains, particularly the auto and chemicals sector.
Returning to Spain’s snap election in November, Lizzy Galbraith, senior political economist at the UK fund manager Aberdeen, has sent us her thoughts.
Spanish prime minister Pedro Sánchez has called a snap election for 29 November.
Middle East oil exports top pre-war levels despite attacks, new shipping data shows
Middle East oil exports exceeded pre-war levels in September, new shipping data showed on Monday, as Gulf producers ramped up cargoes despite attacks on vessels crossing the Strait of Hormuz.
Merchant ships transiting the key chokepoint face a “heightened and increasingly unpredictable kinetic threat” given the recent sharp increase in traffic, Reuters reported, citing Marisks, a shipping intelligence service.
Over the seven days to 30 September, crude oil exports averaged 18.3m barrels per day, according to provisional data from Kpler. In the 12 months before the start of the US-Israeli war with Iran, crude exports from the region averaged about 18m bpd.
Cargoes exceeded pre-war levels on 14 days in September, including transits via Hormuz, the Red Sea and exports from terminals.
Before September, oil shipments from the region matched or exceeded pre-war levels on a handful of days in June and July, Kpler data showed, after Washington and Tehran reached a memorandum of understanding to end the war but it has since lapsed.
The export surge has been driven by Saudi Arabia exporting from both the Red Sea and the Gulf, three weeks after an ttack on its East-West pipeline on 10 September, Kpler said.
Also, Iraq’s state-owned Oil Tanker Company and some refiners have chartered tankers to load Basrah crude inside the strait, after Baghdad secured Iranian permission for Iraqi oil tankers to pass through Hormuz.
Energy intelligence firm Vortexa said that the 14-day moving average for Middle East crude and condensate exports hit 18.6 million bpd, exceeding the 10-year seasonal average and returning to pre-conflict levels. (Condensate exports are a mixture of low-density liquid hydrocarbons that remain liquid at standard atmospheric pressure.)
Senior market analyst Xavier Tang at Vortexa said.
Liquefied natural gas cargoes exiting the strait of Hormuz also rose in September to their highest levels since February.
Almost 3bn barrels of oil supply have been lost since the start of the conflict, according to Amin Nasser, chief executive of Saudi Aramco.
Speaking at the Energy Intelligence Forum in London, he said 1bn barrels of oil had been released from global stocks, Reuters reported.
Refilling all inventories would equate to an extra 2m barrels per day (bpd) of demand over the next 18 months. Global daily oil demand is just over 100 million bpd.
Saudi Arabia’s maximum sustainable production capacity of 12 million bpd could be made available within days, Nasser said, as its strategic reserves and flexibility in its system have remained intact.
But adding to the supply pressure, much of the remaining 6bn barrels or so in storage is “not practically available,” Nasser said – up to 90% is in pipelines or is needed to ensure the minimum volume for storage tanks to operate.
Saudi Arabia has ways to bypass the strait of Hormuz and Nasser told the conference that Aramco is assessing additional routes, as well as making use of more overseas storage to help cover short-term disruptions.
Its East-West pipeline allows Saudi Arabia to move oil to its Red Sea terminals. Nasser said that without that pipeline, Brent crude futures would have hit $200 per barrel.
Brent crude, the global oil benchmark, reversed earlier moderate losses and is trading 42 cents, or 0.4%, higher at $102.63 a barrel.
Global oil stockpiles 'scarily thin,' says Saudi Aramco chief
Global oil stockpiles are “scarily thin” because of the US-Israeli war against Iran, according to the boss of Saudi Aramco, the state-owned oil company.
Chief executive Amin Nasser talked about the strain on the global energy system, days after G7 nations agreed to release more of their oil stocks to ease supply fears.
In his first in-person speech since the start of the war in late February, he told the Energy Intelligence Forum in London:
He warned that it could take a couple of years to replenish oil stocks.
After the US and Iran launched surprise air strikes on Iran on 28 February, Tehran effectively closed the strait of Hormuz, choking exports through one of the world’s most crucial shipping bottlenecks. Traffic through the strait has dwindled, with only a few vessels attempting to sail through on a daily basis.
On a brighter note, it emerged last week that exports of crude from the strait have largely returned to levels seen before the outbreak of the Iran war, as oil producers and the shipping industry have found alternative ways of transporting crucial fuel out of the Middle East.
Pipeline exports and ship-to-ship transfers are among the methods being used, according to analysts tracking the situation, while the US military continues to escort some vessels. However, flows of refined products such as diesel remain constrained, pushing prices higher.
At least 16.5m barrels per day (bpd) left the region in September, according to figures from the global trade intelligence firm Kpler, equalling the pre-war average, excluding Iran. The figure is 10.5m bpd higher than the monthly average for March, during the first weeks of the Iran war.
Lidl GB’s sales soar by over 10%, helped by price cuts and Deluxe range
Lidl’s sales in Great Britain jumped 10% to more than £13bn this year, as shoppers sought out cheaper fresh meat, fruit and vegetables and snapped up its Deluxe range.
Pre-tax profit at the German-owned supermarket’s arm in Great Britain grew by 30% to £245.5m in the year ended in February, up from £156.8m in the previous year.
Shoppers have flocked to discounters such as Lidl amid rising food inflation, with in-store prices stepping up to an annual rate of 1.5% in August, up from 0.9% in July. Inflation for fresh produce remained high at 3%.
Lidl said it had spent £315m on price cuts and promotions such as its “pick of the week” product, while increasing numbers of shoppers were choosing its Deluxe upmarket food range.
Ryan McDonnell, the Lidl GB chief executive, said:
This year Lidl beat Morrisons to become the fifth largest grocer in Great Britain, with its market share hitting 8.6% in the 12 weeks to 17 May, according to figures from the market analysts Worldpanel by Numerator.
BT accused of ‘bullying’ customers by pausing broadband in digital landline push
In other broadband news… BT’s £400m takeover of TalkTalk comes after BT was accused of “bullying” customers by temporarily cutting off their broadband to pressure them to upgrade to a digital landline, as providers race to switch households over before the January deadline.
Telecoms companies have so far migrated 16-17m lines from the old copper network to digital voice over internet protocol (VoiP), which uses a broadband connection instead, in the biggest technological upgrade since the early 00s, when analogue TV was switched off.
However, as the date for the retirement of the old public switched telephone network (PSTN) approaches, Openreach, the BT subsidiary that maintains the vast majority of the UK broadband and telephony network, says there are still about 1.3m copper-based landlines yet to be migrated.
To hit the end-of-January deadline telecoms companies have started to ramp up pressure after years of direct customer communications and awareness campaigns – in BT’s case including using personalities including Moira Stuart and Clare Balding – have failed to prompt some to engage in the migration programme.
‘I didn’t know what to do’: collapse of providers of high-end digs leaves students in shock
I spoke to students heading off to university in recent weeks about finding affordable accommodation.
“It was dead in the middle of summer, it was a shock,” says Nathalie Sriwiboonrattan. The fourth-year game design student at Abertay University was at home with her family thousands of miles away in Thailand when she discovered the owner of her Scottish studio flat had abruptly gone bust.
“I was like, my hands are tied. I’m not in the country. I don’t know what to do,” she says. Sriwiboonrattan was forced to act quickly to secure new housing for the academic year, which has just begun, paying £850 to have her possessions moved.
Her sudden upheaval was emblematic of the wider crisis in student housing. While UK universities face a financial crisis, providers of accommodation are grappling with falling international student numbers, a cost of living squeeze and higher borrowing and build costs, exacerbated by the Iran war, affecting upgrades at older properties.
A string of tower blocks known as purpose-built student accommodation (PBSA), targeted at more affluent students, have run into financial difficulty.
It had been touted as the ultimate student living: smart city centre blocks with gyms, cinemas and rooftop terraces have sprung up across the UK. A world away from the traditional image of dirty and dingy shared digs, the flats have offered a spacious alternative for their relatively affluent residents – often international students. Now, some sit half empty, and several schemes have gone bust.
Sriwiboonrattan was among nearly 70 students in Dundee who were left scrambling to find accommodation in late July after the collapse of the owner of Marketgait Apartments, a 116-room city centre block that had a concierge and a shared games lounge with a pool table.
Despite the boom in housing developed by financial institutions in recent years, many students heading off to university this term faced a different dilemma. Rents at the tower blocks have grown much faster than maintenance loans for British students, leaving PSBAs financially out of reach.
From hotel suites to virtual reality, museums turn to licensing deals as costs rise
They are often free to visit but museums are bolstering their finances by putting their stamp on everything from upmarket hotel suites to trendy jumpsuits and virtual reality experiences.
Forget buying a T-shirt. If you can afford the “from £724” price tag, you can spend the night in the Natural History Museum family suite at the Park Plaza London Riverbank hotel, which has an interior inspired by the museum’s founder, Sir Richard Owen, complete with Tyrannosaurus rex bunk beds.
Deals such as this are becoming more commonplace as cultural institutions look to leverage their renowned collections and trusted brands in the face of funding cuts and rising costs.
Data shows that overall UK sales of licensed merchandise and services grew 7% to $19.2bn (£14.5bn) last year, according to the industry trade body Licensing International.
A breakdown of the UK market figures shows that the “art property” category, which includes museums, grew by more than 8%, while “attractions and promotions” (which includes immersive experiences at museums and art galleries) soared by 53%.
“Our licensing programme continues to grow consistently at about 15% year on year,” said Louisa Skevington, the licensing manager at the Natural History Museum, who added that “experiences” were becoming an increasingly important part of that. “
Coach services could be cut due to record diesel prices, UK operators warn
Coach operators have said record diesel prices could force cuts to services including school transport, as hauliers warn rising fuel costs are pushing hundreds of firms out of business.
The average price of diesel on UK forecourts hit a fresh record of more than £2 a litre last week, as the war in the Middle East continues to disrupt global fuel supplies.
Alison Edwards, the director of policy at the Confederation of Passenger Transport (CPT), said the cost of fuel had “surged this year to unsustainable levels, pushing coach operators’ already tight margins to breaking point”.
Edwards said 85% of independent coach operators are family businesses, and called on the government to provide temporary support with the cost of diesel, adding that the industry “needs help”.
Local bus operators in England have already received help with fuel costs via subsidies to help cover running costs. Coach companies, which say they carry out a similar role, have received no equivalent support.
British government ‘complacent about food as a national security matter’
Let’s take a look at some other stories this morning.
Britain does not have a plan for how to feed people in a crisis and is unprepared for potential future food shortages, according to a warning from more than 150 experts delivered to Andy Burnham.
The climate crisis, geopolitical shocks, cyber-attacks and energy outages are among the threats to food chain security, according to the open letter, which claims the government is “complacent about food as a national security matter”.
Academics, business leaders, community groups and food partnerships are urging the new government to treat food as a national security issue and work to make the UK’s food system more resilient, in a era when food supplies “can be weaponised”, they caution.
The signatories warn that the “just-in-time” delivery system built up over recent decades “is not fit for today’s or tomorrow’s challenges”, as little stock is held along the food supply chain and the UK does not have any national food storage. Ministers wound up the strategic food stockpile that had been in place since the second world war in the 1990s.
Here’s our full story on BT taking over TalkTalk in a £400m rescue deal:
At the energy regulator Ofgem, Tim Jarvis has been appointed as chief executive.
Jarvis, who has served as interim CEO since March, will take up the role on a permanent basis, following a “rigorous and competitive recruitment process,” the regulator said.
Mark McAllister, chair of Ofgem, said:
It comes as energy bills are set to hit nearly £2,000 a year. A typical bill is forecast to jump by £276 for about 20 million households in Great Britain from January.
