Daily Commentary

MarketMinder’s View: After nine days offline in which Brent crude oil hit highs of $131 per barrel, Saudi Arabia is reportedly set to restart flows this week through the East-West Pipeline to the Red Sea port of Yanbu, a key Strait of Hormuz workaround for up to 5 million barrels per day of crude exports. Oil prices, unsurprisingly, are now falling. We covered the shutdown of the pipeline following a drone attack last week, noting the outage seemed likely to prove short-lived and smaller than feared. That reality seems to be coming into focus now: “The kingdom is aiming to restore exports via the pipeline later this week, one of the people said. They asked not to be identified because the information isn’t public. Multiple oil traders said there were already signs of tankers arriving at the port of Yanbu, from where the piped supply is exported. … When the pipeline was shut down, the kingdom pivoted its exports back to the Persian Gulf, with millions of barrels seen loading at the giant Ras Tanura terminal in recent days.” The rest of the article covers continued threats to oil infrastructure from the Houthis and other Iran-backed groups in the region, which is fair enough to weigh. But the Saudis have every incentive to keep exports flowing and they have the technical means to mitigate disruptions. Keep that in mind as headline fears emerge.

MarketMinder’s View: “Consumers and businesses in the EU are spending three times more on Chinese imports than their counterparts in China are buying from the bloc, a study has shown. Customs data showed the gap between the EU’s imports from China and exports to China, the trade deficit, ran at more than €1bn (£860m) a day in July.” And politicians seem increasingly convinced they need to do something about it, like implement quotas on Chinese imports or slap tariffs on them, echoing the illogic that underpins US President Donald Trump’s tariffs from last year. The fact the EU runs a goods trade deficit with China shouldn’t shock, given the latter has a huge industrial base. The EU is a services powerhouse above all else and runs a trade surplus in services with China. Moreover, the idea that slapping on tariffs or cutting and capping imports of Chinese goods would help EU growth is a fallacy. Trade deficits tell you nothing—nothing—about which economy is superior or likely to grow more sustainably ahead. This is doubly true when you consider that almost nothing in this globalized world is fully built in one nation or region. Many of these Chinese imports are likely raw materials, components, tools or intermediate goods that go into production of final products. Capping or taxing them just increases costs for European businesses that may use them. How does that help growth? We reckon it doesn’t.

MarketMinder’s View: As we covered here last week, Washington’s sweeping Russian sanctions bill was inked by President Donald Trump on Friday. We have previously noted the bill’s potentially elevating US presidents’ unilateral tariff authority, and this piece does a solid job explaining how it could uniquely drag on India’s economy. A quick refresher: The bill allows presidents to apply tariffs of up to 100% on the top five purchasers of Russian oil and natural gas, which likely includes India. Yet if India reduced these purchases to avoid this provision, it would mean importing pricier energy from elsewhere, adding pressure on consumers and businesses. India’s reliance on Russian imports has put it between a rock and a hard place, especially since the other sources the country relies on are in the Middle East and have been pressured by the Iran war. This dilemma encapsulates how the nascent “Sanctioning Russia Act of 2026” could apply economic pressure outside of Russia, including key importers in China, Turkey, the EU and Japan. MarketMinder is politically agnostic, but we see a possibility this bill’s passing could be a headwind for large, import-reliant countries. Now, it is also worth noting the bill—and its potential economic implications domestically and abroad—have been in the news for months, giving stocks plenty of time to digest it. And as we have seen globally, corporations have become pretty good at ducking or absorbing tariffs’ added pain—a silver lining if Washington applies new levies on New Delhi. But we recommend keeping an eye on this as it could influence Russian oil, which accounts for roughly 11% of global supply (per US Energy Information Administration).