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Oil surges past $108 as Hormuz attack and Saudi pipeline shutdown rattle markets

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The oil market spent Monday morning pricing in a weekend of bad news from the Gulf.


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Brent for October and November deliveries gained over 3% and crossed $108 a barrel, while the US benchmark WTI for October rose 2.3% to around $102, both extending last week’s advance after each reclaimed the $100 threshold.

Prices moved following Saudi Arabia’s announcement that its East-West pipeline is temporarily closed after drone attacks.

The line carries crude across the kingdom to Red Sea ports, allowing oil to reach export terminals without passing through the Strait of Hormuz, so its loss removes the main alternative at the moment the strait itself is most dangerous.

That danger was also demonstrated on Sunday, when a merchant vessel was hit in the strait, killing one person and injuring three others, according to Iranian authorities.

Passage through the waterway now works very differently from before the war.

Vessels must obtain Iranian permission to transit, and Tehran is weighing a mechanism to charge service fees. Ships that fail to comply are routinely targeted, while US forces periodically bomb the Iranian coastline to contest Tehran’s claim to control the strait.

Diplomatic efforts have stalled too.

Oman has postponed planned talks between Iran and Gulf states on the future of the waterway, which carries a large share of the world’s seaborne oil trade.

Record fuel prices and finger-pointing

The consequences are extremely visible at American pumps.

The US national average price of diesel crossed $6 a gallon on Friday for the first time in history, up from around $5.85 a week earlier and roughly 60% above the $3.71 drivers paid a year ago.

Petrol is also averaging $4.22 after setting records over the Labor Day weekend.

US President Donald Trump has pointed the finger elsewhere.

Speaking to reporters in Ireland on Sunday, where he was attending the Irish Open at his Doonbeg golf resort, Trump stated Ukrainian President Volodymyr Zelenskyy “has to stop knocking out diesel fuel in Russia.”

“Let him go after targets, but not diesel fuel, because he’s causing a shortage of diesel fuel,” Trump added.

Ukraine has struck more than 20 Russian refinery targets this summer, prompting Moscow to ban diesel exports.

On the flight back from his state visit to Ireland this weekend, Trump reiterated the claim.

However, the supply arithmetic suggests otherwise.

Analysts attribute roughly 800,000 barrels a day of lost diesel supply to Russia’s export ban, against about 1.2 million from disruption around the Strait of Hormuz, according to Lipow Oil Associates.

The wider picture is more lopsided still as crude flows through the strait have fallen from around 20 million barrels a day before the war to about 7 million.

Between them, the two wars have also shut refineries representing around 5 million barrels a day of capacity.

Additional sources • AFP

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House passes short-term funding bill to avoid a shutdown before the election

The House passed a short-term measure Tuesday to fund the federal government into early December, a move designed to avoid a chaotic shutdown as lawmakers campaign for reelection.

Lawmakers needed to act before the fiscal year concludes at the end of September to avoid a funding lapse. They were determined not to bump up against that deadline during the campaign season following this past year’s historic shutdowns.

The House passed the bill by a vote of 370-48. The Senate has already overwhelmingly approved the measure, so it now moves to President Donald Trump’s desk for his signature.

“It gives the nation and our constituents certainty, certainty that the government will remain open, certainty that our service members will be paid,” said Rep. Tom Cole, the Republican chairman of the House Appropriations Committee.

A record 43-day shutdown occurred last fall when the two parties disagreed on renewing an expiring tax credit that lowers the cost of health coverage obtained through Affordable Care Act marketplaces. Then came the shutdown of the Department of Homeland Security, which lasted 76 days before lawmakers agreed to fund much of the department but not its immigration enforcement operations.

Lawmakers were wary of a repeat before voters go to the polls. They also blamed the other party for the recent impasses.

“We’re going to avoid the threat of another Democratic shutdown,” House Speaker Mike Johnson told reporters in advance of the vote.

Rep. Rosa DeLauro, the lead Democrat on the House Appropriations Committee, encouraged her Democratic colleagues to vote for the measure during a closed-door meeting Tuesday morning.

She said the bill was much improved from the product that passed the House earlier this summer on a mostly party-line basis. For example, she said it prevents the Department of Homeland Security from transferring funds to the Border Patrol, and it delays a proposed rule that would give political appointees in the Trump administration more authority to stop federal grants from going out for programs they view as not in line with the president’s agenda. Those changes were made when the Senate approved its version of the bill.

Democrats fear the administration will use the proposed regulation on grants to steer money away from Democratic-led states. DeLauro called the delay an important first step, but said more must be done to block the policy from taking effect.

“Whether a community receives disaster relief should not depend on who they voted for in the last election,” DeLauro said.

The short-term measure funds federal agencies generally at current levels through Dec. 11. It will give lawmakers more time to find compromise on a full-year measure, though that will likely be quite difficult.

Republicans are seeking hundreds of billions of dollars in additional spending for the military while cutting most non-defense programs. Democrats say that’s a non-starter and insist on a bipartisan approach that treats domestic programs with parity.

Freking writes for the Associated Press.

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House lawmakers return to Washington with a stopgap funding bill atop the list of priorities

House lawmakers return to Washington on Monday with a short to-do list after five weeks back in their home districts. The first order of business is likely a vote on a stopgap spending bill designed to keep the federal government fully funded through early December, removing the possibility of a shutdown before the midterm elections.

With election season getting underway, votes are also expected on measures designed to amplify the GOP’s messaging strategy going into November, most notably a resolution condemning socialism. Republicans are trying to tie the Democratic Party in general to the democratic socialist candidates who have succeeded this year in running for office.

Another item that could make its way onto the agenda is a Senate-passed bill that imposes sanctions on key segments of the Russian economy and allows President Donald Trump to impose steep tariffs on goods imported from countries that buy the vast majority of Russian oil and gas. The effort led by the late Sen. Lindsey Graham aims to deprive Russian President Vladimir Putin of revenue used to finance the war against Ukraine.

The bill passed 86-11 in the Senate. House passage would send the bill to Trump’s desk for his signature. However, some key House Democrats oppose the bill. The bill grants Trump sweeping new tariff authorities that some lawmakers fear could be used to punish allies rather than foes.

A vote on the bill is not scheduled this week, but proponents are working to have it taken up before lawmakers leave Washington to focus solely on their reelection campaigns.

The return to Washington also brings a renewed focus on improper behavior by lawmakers as the House will have its first chance to act on a recommendation from the House Ethics Committee to censure Rep. Chuck Edwards, R-N.C., for engaging in persistent unprofessional and inappropriate conduct toward two young female aides in his congressional office.

Edwards implores colleagues to reject censure vote

Edwards has disputed the committee’s conclusion that he failed to adhere to the spirit of the rules prohibiting sexual harassment and unwanted advances to House staffers. He points to the committee’s conclusion that found no evidence he “engaged in sexual activity or explicitly propositioned any individual under his employ.”

Edwards said he was not asking lawmakers to approve of every gift, compliment or social interaction, but to distinguish between conduct that someone might find unconventional and conduct that actually establishes sexual harassment.

“Individual acts that were not themselves prohibited were gathered together, assigned the most damaging possible interpretation, and then used collectively to support a conclusion far more serious than the underlying evidence,” Edwards wrote in a letter to colleagues first reported by NOTUS.

The committee said Edwards provided the two staffers with lavish and recurrent gifts, made comments regarding their dress and appearance, invited them to intimate dinners and vacations, sent notes regarding his effusive affection and invited them to other activities as a way to spend time together.

A vote to censure registers the House’s deep disapproval of a lawmaker’s conduct that does not meet the threshold for expulsion. Edwards dropped his reelection plans after the committee’s report came out.

Avoiding another shutdown

House Speaker Mike Johnson is expected to tee up the funding bill early in the week. The bill underwent some significant changes in the Senate, which made it more palatable for Democrats. It delays a proposed rule from the Office of Management and Budget that would give political appointees more power over the distribution of federal grants. It also includes language to ensure the administration can’t transfer funds to the Border Patrol.

But a provision that delays for one month a federal ban on intoxicating hemp THC products has prompted criticism from many GOP lawmakers. As a result, GOP leaders will likely place the bill on a fast-track process that avoids a separate procedural vote. Suspension bills require a two-thirds vote to pass, meaning a significant number from both parties need to support the measure for it to pass and advance to Trump’s desk.

Lawmakers are anxious to avoid the possibility of a shutdown as voters weigh their options going into November. The funding bill passed by a 90-6 vote in the Senate, showing that lawmakers from both political parties want to avoid a repeat of the two historic shutdowns that occurred this past year.

Freking writes for the Associated Press.

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