Key events
Bloomberg: Pakistan oil tanker transits Hormuz
A tanker laden with crude oil appears to have cleared the Strait of Hormuz and is now sailing to Pakistan, Bloomberg are reporting.
This makes The Karachi, controlled by Pakistan’s National Shipping Corp., the latest vessel to leave the Persian Gulf since the Iranian war began.
By this morning, the Pakistan-flagged Aframax was seen in the waters off Oman’s Sohar, they report, saying:
The 2022-built Karachi made its way across Hormuz and around Iran’s Larak Island, the vessel-tracking data show. It then proceeded eastbound close to Iran’s coastline, before leaving the strait Sunday evening. Other ships leaving the strait also appear to have taken a route on the Iranian side of Hormuz.
The Karachi most recently loaded crude in the United Arab Emirates, according to ship-tracking data. Draft readings indicate that the ship isn’t fully laden.
This map, from my LSEG terminal, appears to confirm The Karachi travelled through the strait last weekend:
FTSE 100 opens higher
The London stock market has opened with gains.
The FTSE 100 index of blue-chip shares is up 33 points at the open to 10,293, a rise of 0.33%.
Retail group Kingfisher (+1.75%) are the top riser, followed by oil giant BP (+1.7%).
The pound is creeping up from the three-month low hit at the end of last week.
Sterling has gained 0.2 of a cent to $1.324 this morning, after dropping on Friday after the economy failed to grow in January.
Kathleen Brooks, research director at XTB, says:
The pound is coming under pressure as the dollar resurgence continues, however, it was not the weakest performer in the G10 even though UK GDP at the start of the year showed no growth.
Although inflation remains a key risk for the UK economy, the rising unemployment rate suggests that the UK economy is not operating at full employment, which may tilt the BOE away from rate hikes this year and towards remaining on hold instead. If the sharp rise in UK Gilt yields ease, then the pound may take a breather from its recent sell off.
Mortgage shelf-life nosedives amid market uncertainty
The average shelf-life of a UK mortgage has shrivelled, even before the surge in energy price hammered hopes for interest rate cuts.
Data provider Moneyfacts has calculated that the average shelf-life of a mortgage fell to 14 days, on the first of March, the lowest since August 2023.
In “a complete turn-around from the seasonal slowdown during January”, the market is now entering a period of uncertainty amid global pressures, Moneyfacts reports.
Lenders have been scrambling to reprice mortgage products this month, as the financial markets have ripped up their previous forecasts for several cuts to UK interest rates this year.
This pushed average mortgage rates in the UK past 5% last week.
Lenders may well pull more products until the future path of interest rates becomes clearer, Moneyfacts predicts.
The Bank of England is now widely expected to leave interest rates on hold on Thursday, with the money markets fully pricing in a rise in a year’s time.
Rachel Springall, finance expert at Moneyfacts, says:
“Borrowers looking to refinance would be wise to act quickly to secure a new deal, as the significant push in mortgage activity during February has led to a significant fall in the average shelf-life of a mortgage to just 14 days.
This is a complete contrast to the notable seasonal slowdown in activity during January. However, since this data was captured, there has been a notable shift in swap rates, amid the unrest seen in the Middle East. It is worth noting that the average shelf-life of a mortgage has not been this low (14 days) for over two years, last lower for August 2023, at 13 days. This was just one month after a record low of 12 days recorded for July 2023.
Introduction: Oil higher after attack on Kharg Island
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
For the third Monday running, the oil price is rising as the Iranian war threatens to hurt the global economy.
Brent crude, the international benchmark, has gained around 2.6% so far today to $105.80 a barrel, further above the $100/barrel it crossed last week for the first time since 2022. US crude is up 1.5% at just over $100 a barrel.
That’s beneath the overnight highs, as Brent had been as high as $106.50/bbl when markets reopened last night.
Crude prices are rising after the US struck Iran’s vital Kharg Island oil hub last weekend, through which 90% of the country’s oil exports typically flow.
With the strait of Hormuz badly disrupted, Donald Trump is now urging other countries to send ships to help reopen it, waggling the threat that “it will be very bad for the future of Nato,” if they don’t.
Iran’s Foreign Minister, though, has denied that the strait is closed – insisting it is open to all nations except the United States, Israel, and their allies.
That has cooled some of the anxiety in the oil market, as Tony Sycamore, market analyst at IG, explains:
This context is crucial: China and India alone account for approximately 50% of all oil that normally transits the Strait of Hormuz.
Additionally, Saudi Arabia’s East-West pipeline is rerouting 7 million barrels per day, bypassing Hormuz entirely, with reports indicating tankers are lined up ready to collect this redirected cargo.
