Trump's Russia diesel deal draws backlash as oil slips and Asia stays mixed

Asian shares were mixed on Monday and oil prices fell by about USD 1.50 a barrel, as US President Donald Trump's plan to buy diesel from Russia drew criticism from some lawmakers. US stock futures rose more than 0.3 per cent after Wall Street ended a record-setting week with gains, while investors looked ahead to fresh US data on inflation and retail sales and quarterly results from the biggest American banks.

Brent crude, the international benchmark, was down 1.4 per cent at USD 103.31 a barrel early Monday, while US benchmark crude fell 1.7 per cent to USD 90.31 a barrel. Oil prices have continued to swing because of uncertainty over when the war with Iran will allow the global energy industry to return to normal.

Trump said on social media on Friday that he had struck a deal to buy Russian diesel in a phone call with Russian President Vladimir Putin, with the aim of easing a rise in fuel prices ahead of the November 3 US midterm elections. He said Russia would immediately supply more than 300,000 tonnes of diesel to the American and global market, followed by another 500,000 tonnes in November and 1 million tonnes "immediately thereafter".

He added that Russia would deliver another 3 million tonnes "within a short period of time" after that. The plan runs against US efforts to reduce the flow of money Russia earns from oil and gas sales that can be used to fund its war against Ukraine.

Trump's announcement came only a few weeks after Congress passed legislation directing him to impose substantial tariffs on the biggest importers of Russian oil or natural gas, with an exception for countries that import less than 15 per cent of Russia's natural gas exports and have taken significant steps to reduce those imports. A bipartisan group of six senators said on Sunday that the administration should "immediately reverse course" on the plan.

In Asian trading, South Korea's Kospi fell 3.1 per cent to 6,416.17, while markets in Tokyo were closed for a holiday. Hong Kong's Hang Seng edged up 0.2 per cent to 24,253.70 and the Shanghai Composite slipped 0.1 per cent to 3,809.08. In Australia, the S&P/ASX 200 jumped 0.9 per cent to 8,790.70. Taiwan's Taiex fell 0.2 per cent and India's Sensex inched up 0.1 per cent.

On Friday, the S&P 500 climbed 0.6 per cent, the Dow Jones Industrial Average added 0.8 per cent and the Nasdaq composite rose 0.6 per cent. Share prices have been pushed higher by expectations of strong corporate profits, even as Americans say they are feeling the strain of high inflation.

A preliminary report from the University of Michigan said on Friday that US consumers are raising their expectations for inflation over the next year. They now expect inflation at 4.7 per cent, up from 4.6 per cent a month ago and 3.4 per cent in February before the war with Iran began. Consumer sentiment is falling sharply among lower-income Americans and those with smaller stock investments, who are less able to absorb the rapid rise in living costs.

Companies are under pressure to deliver strong profit growth after stock prices moved towards record levels despite the drag from high bond yields. This week will bring major earnings reports from large banks, including Citigroup, JPMorgan Chase and Wells Fargo, all due on Tuesday.

In other early Monday dealings, the US dollar rose to 158.27 Japanese yen from 158.23 yen, while the euro climbed to USD 1.1211 from USD 1.1191. Overall, markets began the week with mixed trading in Asia, lower oil prices and a sharp reaction to Trump's Russia diesel plan, while investors also prepared for key US economic data and bank earnings.

With PTI Inputs

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