U.S. Strike Killing Key Iranian Military Leader Brings Uncertainty into Energy Markets
The U.S. military performed an airstrike last Thursday killing a top Iranian Commander Qassem Solemani. This causes heightened tensions between the U.S. and the Middle East. The airstrike was justified due to Soleimani actively developing plans to attack American diplomats and service members in Iraq and the Middle East. Iran quickly responded with a threat for “harsh revenge” and the country has also expelled all U.S. troops in the region and will not comply with nuclear-enrichment limits.
Energy markets overreacted in after-hours trading the night of the airstrikes, with West Texas Intermediate (WTI) and diesel spot prices increasing $2.79/barrel and 7¢/gallon, respectively. As the market opened, crude oil and diesel prices did not move nearly as much. WTI prices rose $1.87 per barrel and diesel spot regions jumped roughly 4¢ per gallon. The energy price increases also were contributed by a large draw in U.S. crude oil inventories of 11.5 million barrels. For more on the airstrike and how it affects energy prices, see our Advisor Pulse.
California Trucking Gets Temporary Reprieve from Law Restricting Independent Contractors
Owner-operators got a temporary reprieve from California’s AB5 law that took effect January 1. The law limits the use of owner-operators in the state, as the law would require most to be considered employees instead of independent contractors. The suspension on the law for trucking companies came after U.S. District Court judge Roger T Benitez issues a temporary restraining order on December 31 that protects the trucking industry from the law in the short term.
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President Trump blamed Iran after demonstrators breached the compound’s outer wall. Tensions are high after American airstrikes killed members of an Iran-backed militia.
President Trump ordered a U.S. airstrike that killed Maj. Gen. Qassem Soleimani, leader of the foreign wing of Iran’s Islamic Revolutionary Guard Corps, in an attack that is expected to stoke heightened tensions between Washington and Tehran and inflame frictions in the volatile Middle East.
Oil companies in the Middle East are tightening security as U.S. officials say American energy infrastructure in the region is a likely target for Iranian retaliation following the killing by the U.S. of Islamic Revolutionary Guard Corps commander Qassem Soleimani.
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Trucking got a temporary reprieve from California’s AB5, a new law in effect Jan. 1 severely limiting the ability to use independent contractors. In the final hours of New Year’s Eve, U.S. District Judge Roger Benitez issued a temporary restraining order preventing state officials from enforcing the law against motor carriers.
The relentless decline in North American rail volumes over the past year is bringing pain to financial institutions. Banks including Wells Fargo, Citigroup, PNC Financial Services Group Inc. and CIT Group Inc. own hundreds of thousands of railcars, and the WSJ’s Rachel Louise Ensign writes that a business they once viewed as a dependable source of revenue has turned into a headache.
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The president, in a Tuesday morning tweet, said he would be joined at the White House signing by “high level” Chinese officials, but he did not specify who would attend. Mr. Trump also pledged to travel to Beijing to begin negotiations on the second phase of the trade deal “at a later date.”
The U.S. factory sector headed into 2020 on a weak footing, contracting in December for a fifth consecutive month as trade tensions continued to pressure manufacturers.