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US Says Israel Proposes Cease-Fire in ‘Decisive Moment’ For War

  • Biden’s three-part plan for cease-fire, hostage release
  • First, a six-week “full and complete ceasefire” including “withdrawal of Israeli forces from all populated areas of Gaza, the release of a number of hostages including women, the elderly, [and] the wounded” and the release of “hundreds of Palestinian prisoners” by Israel.
  • The second phase would commence after further negotiations between Israel and Hamas. Biden stressed that the ceasefire would continue past the six-week first phase, if negotiations continue apace. 
  • The third phase would consist of a “major reconstruction plan” for Gaza along with the return of any remains of hostages who have died since being taken captive during the October 7 attacks.
     The US said Israel has put forward a fresh Gaza cease-fire proposal that would pause fighting with Hamas for at least six weeks, a move described by President Joe Biden as a “decisive moment” in the conflict after several failed attempts at peace. Biden said Hamas had been degraded to the point it could no longer carry out an attack like the one that started the war on Oct. 7. Detailing the proposal from the White House on Friday afternoon, he urged all parties to accept the deal. “Hamas says it wants a cease-fire,” Biden said. “Hamas needs to take the deal” and by doing so prove that they are really serious about wanting to end the war, he added. Hamas, designated a terrorist organization by the US and European Union, has said it’s ready “to deal positively and constructively with any proposal” based on an indefinite stop to the conflict. It called for a complete Israeli withdrawal from Gaza, the return of displaced people to their homes, and “the completion of a serious prisoner exchange deal” if Israel “declares its explicit commitment to that.” Israel and Hamas have continued back-and-forth negotiations via Qatari and Egyptian mediators throughout the nearly eight-month war that’s convulsed the Middle East and devastated the Gaza Strip. The two sides have been unable to reach an agreement to pause the fighting since late last year – including recently, when negotiators appeared close to striking an understanding, only for talks to fall apart. Friday’s developments, however, appeared to show fresh openness toward a deal, with Hamas saying it “views positively” what Biden laid out in Friday’s White House speech, particularly “his call for a permanent cease-fire.” US Secretary of State Antony Blinken spoke separately by phone about the proposal with his counterparts in Jordan, Saudi Arabia, and Turkey, all countries key to longer-term regional stability. Biden sought to frame the four-and-a-half page proposal as a precursor to an enduring peace. The progress came even as Israel’s military ratcheted up operations in the southern Gaza city of Rafah in recent days, defying world leaders who’ve called for a halt to the violence. The latest offer is almost identical to a cease-fire plan Hamas presented several weeks ago, according to a senior US official who briefed reporters after Biden spoke. The official, who requested anonymity to describe internal thinking, added that Hamas has privately been more open to a deal than its public statements would suggest.

The first phase would last for six weeks and see Israel withdraw from all populated areas of Gaza. Hamas would release some hostages and the bodies of some of those killed in captivity, while Israel would return some Palestinian prisoners.

The second phase would see the exchange of all remaining living hostages and the removal of Israeli troops from Gaza.

And a third phase that would see a major reconstruction plan commence.

Biden addressed tensions within Netanyahu’s government, which relies on the support of right-wing parties, saying that Israel risks draining its resources and becoming further isolated internationally the longer the war goes on. “The people of Israel should know they can make this offer without any further risk to their security,” Biden said. “I know there are those in Israel who will not agree with this plan.

But on Saturday, Netanyahu was adamant in declaring that for Israel’s war on Gaza to end, Hamas must be destroyed.

“Israel’s conditions for ending the war have not changed: the destruction of Hamas’s military and governing capabilities, the freeing of all hostages and ensuring that Gaza no longer poses a threat to Israel,” his office said in a statement. It said those conditions must be met, “before a permanent ceasefire is put in place”.

“The notion that Israel will agree to a permanent ceasefire before these conditions are fulfilled is a non-starter,” it added.

Abdullah al-Arian, professor of history at Georgetown University in Qatar, pointed out a “major contradiction” in the demand, with both Israel and its staunch ally the US saying they do not want a future in Gaza in which Hamas has any kind of political role left. “At the same time, this is an agreement that would have to be reached through negotiations with Hamas, so, how do you do that? How do you eliminate them as a political force and at the same time reach a negotiated solution that is agreed upon by all parties,” he told Al Jazeera.

NN:  BlackMask Market News and Commentary Titled:

not so fast

 

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Fed’s Favored Inflation Gauge Cools, Spending Unexpectedly Drops

  • Core PCE price index rose 0.2% in April, smallest gain of year
  • Inflation-adjusted spending fell, restrained by tepid services

The Federal Reserve’s preferred measure of underlying US inflation moderated in April and consumers dialed back their spending, supporting plans for an eventual reduction in interest rates. The so-called core personal consumption expenditures price index, which strips out the volatile food and energy components, increased 0.2% from the prior month. That marked the smallest advance of the year, according to Bureau of Economic Analysis data out Friday. Inflation-adjusted consumer spending unexpectedly fell 0.1%, dragged down by a decrease in outlays for goods and softer services spending. Wage growth, the primary fuel for demand, moderated. The report offers Fed officials some solace about the pathway for inflation after progress on price pressures was interrupted in the first quarter. At the same time, the April spending figures add to evidence that the year is off to a slow start for the economy.

Metric Actual Estimate
PCE price index (MoM) +0.3% +0.3%
Core PCE price index (MoM) +0.2% +0.2%
PCE price index (YoY) +2.7% +2.7%
Core PCE price index (YoY) +2.8% +2.8%
Real consumer spending (MoM) -0.1% +0.1%

Central bankers pay close attention to services inflation excluding housing and energy, which tends to be more sticky. That metric climbed 0.3% after rising 0.4% in March, according to the BEA. Meanwhile household demand, while fueled by steady job and income growth, is showing signs of cooling. The BEA’s report showed inflation-adjusted outlays for services rose 0.1%, the smallest gain since August. Spending on merchandise decreased 0.4% last month .Goods outlays were restrained by declines in gasoline and vehicle purchases. While health care spending supported outlays for services, other categories such as restaurant meals, recreation and transportation decreased during the month. Looking ahead, with household debt hitting a record, consumer confidence generally trending lower and interest rates at a two-decade high, it remains to be seen to what extent consumers will continue powering the economy. A report out Thursday showed the US economy grew at a slower pace in the first quarter than initially reported, in part because consumer spending was marked down on weaker demand for goods — particularly motor vehicles.

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US removes temporary pier offshore Gaza

The United States completely removed its offshore temporary Gaza aid pier, Deputy Pentagon Press Secretary Sabrina Singh announced during a press briefing. “The IDF has fully removed the US-military built pier from the coast of Gaza. The pier sections have been relocated to Ashdod for repair and rebuilding,” Singh added while reiterating that the repairs are expected to take approximately one week. The US had previously suspended its shipments through the Joint Logistics Over-the-Shore initiative after the causeway connecting the pier to the beach was damaged by adverse weather conditions.

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Oil Prices Set for a Weekly Decline….. Oil Futures Market Swings Into Contango

Oil sank despite US data showing the biggest drop in the nation’s stockpiles in five weeks
  • West Texas Intermediate crude for July delivery slumped $1.32, or 1.7%, to close at $77.91 a barrel on the New York Mercantile Exchange.
  • July Brent crude settled at $81.86 a barrel on ICE Futures Europe, down $1.74, or 2.1%.
  • Back on Nymex, June gasoline dropped 2.4% to end at $2.404 a gallon, its lowest close since Feb. 29. June heating oil fell 2.8% to $2.369, its lowest finish since June 12.
  • July natural gas shed 3.5% to close at $2.572 per million British thermal units.
  •  Brent crude has weakened into a contango structure for the first time since January,
  • Spooked traders fear the market is oversupplied.

Oil futures ended lower Thursday, feeling pressure as equities and other assets perceived as risky extended a selloff, and government data showed an unexpected rise in fuel inventories. Investors are also preparing for a Sunday meeting of the Organization of the Petroleum Exporting Countries and its Russia-led allies, which is expected to lead to a rollover of voluntary production cuts otherwise due to expire at the end of June.

Oil has risen this year due to geopolitical conflicts and production curbs by the Organization of the Petroleum Exporting Countries and its allies. The group will likely consider factors including a drop in prices over the past month, a weaker Chinese demand outlook and healthy supplies from the Americas when ministers convene on Sunday.

The OPEC+ alliance is widely expected to prolong output cuts into the second half of 2024, which Brian Kessens, a managing director at Tortoise Capital Advisors LLC said “will add some certainty to the market.”

Through the end of this year, OPEC+ members have agreed to 3.66 million bpd in cuts, plus the 2.2 million bpd in voluntary cuts that are separate and set to end at the close of June. In total, the cuts equal just under 6% of global oil demand, with Algeria, Iraq, Kazakhstan, Kuwait, Oman, Russia, Saudi Arabia and the UAE ARE participating in the voluntary cuts. The oil market is likely to remain in a deficit this year if OPEC+ rolls over its voluntary output cuts, prolonging the constructive backdrop for prices. Demand growth has been modest amid soft industrial activity and mild weather (especially in Europe), though a surge in consumption points to undersupply in 2H.

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Oil Falls as Weak Treasury Auction Boosts Dollar

Oil retreated as another weak sale of Treasuries raised concerns about rising yields, stoking a risk-off mood across financial markets.  West Texas Intermediate settled below $80 as equities declined. The drop pared Tuesday’s 2.7% gains, which were driven by renewed geopolitical risks, including ship attacks in the Red Sea and Israel’s advance into the Gazan city of Rafah. US benchmark crude is up about 14% over the past 12 months because of tensions across the Middle East and output cuts by the Organization of the Petroleum Exporting Countries and its allies. Still, the conflict between Israel and Hamas has failed to disrupt flows, and supplies outside of OPEC+ have remained abundant, limiting the gains.

The producers’ group will hold an online meeting Sunday and is projected to extend its curbs into the second half of the year. The expectation has helped both WTI and Brent to break above their 100-day moving averages in recent days. NB: 

OPEC+ faces a darkening demand outlook in China as flagging factory strength and a housing crash reduce consumption of plastics and fuels used in construction. The Asian nation has also curbed some crude purchases from the de-facto leaders of the alliance — Saudi Arabia and Russia. In the US, Federal Reserve Bank of Minneapolis President Neel Kashkari said the central bank’s policy stance is restrictive, but additional interest-rate hikes haven’t been ruled out. Fed policymakers are widely expected to keep rates at a 23-year high when they meet next month in Washington.

Prices:

  • WTI for July delivery fell 0.8% to settle at $79.23 a barrel in New York
  • Brent for July settlement declined 0.7% to $83.60 a barrel.

 

 

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Iran supplied Houthis with Ghadr missiles

Iran provided Yemeni rebel group Houthis with medium-range ballistic missiles known as Ghadr, Tasnim news agency reported on Wednesday. Tasnim noted that these missiles are weapons that can pose “serious challenges” to the United States’ interests, and the country’s ally in the region, “the Zionist regime.” Meanwhile, the US Central Command (CENTCOM) shared that on Tuesday, “Iran-backed Houthis launched five ballistic missiles and five drones into the Red Sea,” damaging a ship.

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Oil Rebounds as Middle East Tensions Rise

Oil rebounded from last week’s selloff as tensions flared in the Middle East, with a vessel attacked in the Red Sea and Israeli tanks reaching the center of Rafah. West Texas Intermediate rose 2.7% to settle above $79 a barrel. The gains followed a drop to three-month lows last week brought futures to oversold territory. The attack on a Greek-managed bulk carrier in the Red Sea and Israel’s advance into the southern Gaza city revived the geopolitical risk premium that had gone missing last week, when signs of ample supplies also weighed on crude. “A confluence of factors suggest some upside sensitivity in oil — from fraught geopolitics to inventory drawdown to OPEC’s assumed preference to maintain curbs,” said Vishnu Varathan, Asia head of economics and strategy at Mizuho Bank Ltd. However, “the Gaza situation is only a warning not to be aggressively short, but not quite the unbridled bullish trigger.” Adding risks to oil markets was the killing of an Egyptian soldier in a clash with Israeli troops at a Gaza border crossing as well as an Israeli strike that killed an estimated 45 Palestinians at a camp for displaced people. Despite the war’s continued escalations, crude flows from the Middle East — which account for a third of global supply — haven’t been hampered. Still, the Houthi attacks in the Red Sea have rerouted some flows. Oil has risen this year on persistent geopolitical risks and OPEC+’s roughly 2 million barrels a day of output cuts, with the group expected to prolong its curbs into the second half of 2024 at a meeting on Sunday. Still, prices have dipped since early April amid signs of lackluster demand, causing Brent’s prompt spread to get closer to a bearish contango structure that indicates supply is plentiful relative to consumption. Investors will also be looking for signs of US fuel demand after the Memorial Day holiday, which traditionally marks the start of the summer driving season.

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Houthis launch missile attack on Red Sea

Iranian-backed Houthis fired five anti-ship ballistic missiles from Yemen into the Red Sea, according to the United States Central Command (CENTCOM). The Greek-owned bulk carrier M/V Laax, flagged under the Marshall Islands, reported being hit by three of these missiles. Despite the strikes, the vessel continued its voyage without injuries to the crew or other ships in the area, CENTCOM said.

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Oil prices up over 1% on geopolitical worries

Crude oil prices for front-month deliveries rose on Tuesday as the latest geopolitical developments spurred market investors’ concerns.

Namely, Spain, Ireland, and Norway officially recognized Palestine as a state, provoking Israel’s strong backlash. Additionally, Al Jazeera reported that the latest Israeli attack on Rafah left at least 21 persons killed and 64 wounded.

West Texas Intermediate (WTI) for July contracts surged 1.40% to $79.77 per barrel at 1:04 pm ET. At the same time, Brent for July deliveries jumped 1.32% to $84.14 per barrel.

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IAEA: Impossible to restart Zaporizhzhia nuclear plant

International Atomic Energy Agency (IAEA) Director-General Rafael Grossi  said on Tuesday that restarting the Zaporizhzhia nuclear power plant is impossible under existing conditions. The largest nuclear facility in Europe is in Ukrainian territory currently occupied by Russia and has been the target of attacks throughout the war. Grossi, who is visiting Russia today, told reporters that he was able to reach an agreement with Russian officials on strengthening the operational safety at the plant. Meanwhile, the general director of Russia’s atomic energy agency Rosatom Alexey Likhachev said that Zaporizhzhia is “absolutely safe” and that additional safety measures are in place, including drone defense and the protection of nuclear waste storage facilities.