Oil Falls On Easing Russia Supply Concerns After Trump-Putin Meet

Summary:

Oil prices slipped on Monday as the U.S. did not exert more pressure on Russia to end the Ukraine war by implementing further measures to disrupt Russian oil exports after the presidents from both countries met on Friday.

Brent crude futures dropped 26 cents, or 0.39%, to $65.59 a barrel by 0028 GMT while U.S. West Texas Intermediate crude was at $62.62 a barrel, down 18 cents, or 0.29%.

U.S. President Donald Trump met Russian President Vladimir Putin in Alaska on Friday and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first.

Trump will meet Ukrainian President Volodymyr Zelenskiy and European leaders on Monday to strike a quick peace deal to end Europe's deadliest war in 80 years.

The U.S. president said on Friday he did not immediately need to consider retaliatory tariffs on countries such as China for buying Russian oil but might have to "in two or three weeks", cooling concerns about a disruption in Russian supply.

China, the world's biggest oil importer is the largest Russian oil buyer followed by India.

"What was primarily in play were the secondary tariffs targeting the key importers of Russian energy, and President Trump has indeed indicated that he will pause pursuing incremental action on this front, at least for China," RBC Capital analyst Helima Croft said in a note.

"The status quo remains largely intact for now," Croft said, adding that Moscow will not walk back on territorial demands while Ukraine and some European leaders will balk at the land-for-peace deal.

Investors are also watching Federal Reserve Chairman Colin Powell's comments at the Jackson Hole meeting this week to search for clues on the path of interest rate cuts that could boost stocks to more record highs.

"It’s likely he will remain non-committal and data-dependent, especially with one more payroll and CPI (Consumer Price Index) report before the September 17th FOMC meeting," IG market analyst Tony Sycamore said in a note.

Source: Yahoo Finance

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James Whitman

Economic

Battery investors are piling into Australia, chasing profits from the world’s most volatile power market by deploying storage that buys low and sells high.

Australia this month overtook the UK to become the world’s third-largest market for big batteries by installed capacity, after the US and China, according to Rystad Energy. That growth is set to continue, with utility-scale battery power uptake expected to jump eightfold from 2024 levels by 2035, when most of the coal plants that form the backbone of the grid are set to retire, according to BloombergNEF.

The nation of almost 28 million is phasing out aging coal plants and aims to more than double renewable generation to 82% of the total by 2030, making it a test case for the global energy transition. A rooftop solar boom has aided the shift but also created midday power gluts, giving big batteries the chance to buy electricity cheaply and sell it back when prices rebound.

“Australia has a unique situation — or maybe you could call it a challenge — where all this surplus energy spills into the market every day,” said David Guiver, vice president and general manager of trading at the local unit of Shell Plc, which has stakes in several big batteries. “That why we have seen a lot of large scale battery energy storage investment.”

Large amounts of solar coming online, and frequent breakdowns at coal plants, have created an imbalance between supply and demand — even causing an unprecedented market failure in 2022. Prices are often negative around midday — meaning users are paid to consume electricity — and soar during peak demand hours in the early evening, providing arbitrage opportunities.

Australia is the latest market where energy traders are betting on batteries to pad profits. After making fortunes hauling oil, gas and metals around the world, trading houses in Europe including Vitol Group and Trafigura Group have been turning their attention to opportunities to store and sell energy back to the grid. In the US, batteries have helped to prevent blackouts, although their rapid rollout has been hampered as tariffs add to costs.

Electricity prices in Australia’s main grid were negative or zero during a record 23% of the grid’s five-minute intervals in the fourth quarter of last year, which includes most of the southern hemisphere spring. That number fell to almost 11% in the first quarter, but is still above the rates seen in most European markets.

Last year, A$3.7 billion ($2.4 billion) was committed to large-scale battery projects in Australia, following a record A$6.9 billion in 2023, according to the Clean Energy Council. Meanwhile, rooftop solar installations were the most since 2021 — despite one in three homes already having panels, the highest penetration globally.

“Volatility is a massive opportunity that’s highly undervalued by the market,” said Nick Carter, chief executive officer of Akaysha Energy, a Blackrock Inc. unit that has battery projects in Australia, Japan and the US. That spread will likely hold or even widen over the next five to 10 years, he said.

Utility-scale batteries connected to the National Energy Market earned A$120.8 million in revenue from arbitrage last quarter — more than quadruple their income a year earlier. Batteries set prices in the grid 8% of the time, and were the highest-cost source at more than triple that of hydro, the most frequent price-setter.

That is a relatively new phenomenon — battery owners used to get most of their revenue by being paid to help balance demand and supply in the grid, known as ancillary services. However, the business model and technology have evolved rapidly since Elon Musk’s successful bet in 2017 that he could get the world’s first 100-megawatt model up and running in 100 days to help prevent outages in South Australia.

“Arbitrage is replacing ancillary services as the primary revenue stream for batteries, which we anticipate to remain the case,” said Andrew Steil, head of energy markets at Edify Energy Pty, a John Laing Group-backed renewable and storage developer. “This is the new normal.”

Akaysha, which doesn’t own power-generation assets or have retail customers, looks to arbitrage or government contracts for revenue. The company earlier this month started an A$1 billion super battery that’s set to be one of the world’s biggest at more than eight times the size of the original one Tesla Inc. helped build.

However, for traditional power utilities such as AGL Energy Ltd. and Origin Energy Ltd., batteries also serve as a means of limiting financial losses. They help manage portfolio risk due to outages, coal plant retirements and increasing price swings.

Origin has committed about A$1.7 billion to developing two utility-scale batteries and has secured offtake agreements for two more that are under construction. Meanwhile, AGL — Australia’s biggest coal generator — operates two grid-scale batteries and expects to start a third early next year.

“Batteries have solved the need for short duration storage and quick response capacity,” said Simon Sarafian, general manager trading and origination at AGL. “We’ve been very happy with how our batteries have been performing, and we’re looking to roll out more.”

Earnings from the units will more than offset higher coal and gas procurement costs from 2028, AGL Chief Executive Officer Damien Nicks said during the company’s half-year earnings presentation on Wednesday.

“So many batteries and so much capacity needs to be built in this market,” he said. “Don’t underestimate the sheer amount of batteries that are required in this market over the coming decade. It is enormous.”

Source: Bloomberg

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James Whitman

Political

Russia-Ukraine Conflict

European leaders will join Volodymyr Zelenskiy to meet Donald Trump in Washington, they said on Sunday, seeking to shore up Zelenskiy's position as the U.S. president presses Ukraine to accept a quick peace deal to end Europe's deadliest war in 80 years.

Trump is leaning on Zelenskiy to strike an agreement after he met Kremlin chief Vladimir Putin in Alaska and emerged more aligned with Moscow on seeking a peace deal instead of a ceasefire first. Trump and Zelenskiy will meet on Monday.

"If peace is not going to be possible here and this is just going to continue on as a war, people will continue to die by the thousands ... we may unfortunately wind up there, but we don't want to wind up there," Secretary of State Marco Rubio said in an interview with CBS' "Face the Nation."

Trump on Sunday promised "BIG PROGRESS ON RUSSIA" in a social media post without specifying what this might be.

Sources briefed on Moscow's thinking told Reuters the U.S. and Russian leaders have discussed proposals for Russia to relinquish tiny pockets of occupied Ukraine in exchange for Kyiv ceding a swathe of fortified land in the east and freezing the front lines elsewhere.

Top Trump officials hinted the fate of Ukraine's eastern Donbas region - which incorporates Donetsk and Luhansk and which is already mostly under Russian control - was on the line, while some sort of defensive pact was also on the table.

"We were able to win the following concession, that the United States could offer Article 5-like protection," Trump envoy Steve Witkoff told CNN's "State of the Union" on Sunday, suggesting this would be in lieu of Ukraine seeking NATO membership. He said it was "the first time we had ever heard the Russians agree to that."

Article 5 of NATO's founding treaty enshrines the principle of collective defense, the notion that an attack on a single member is considered an attack on them all.

That pledge may not be enough to sway leaders in Kyiv to sign over Donbas. Ukraine's borders were already meant to have been guaranteed when Ukraine surrendered a Soviet-era nuclear arsenal in 1994, and it proved to be little deterrent when Russia absorbed Crimea in 2014 and then launched its full-scale invasion in 2022. The war has now dragged on for 3-1/2 years and killed or wounded more than 1 million people.

German Chancellor Friedrich Merz, French President Emmanuel Macron, and British Prime Minister Keir Starmer hosted a meeting of allies on Sunday to bolster Zelenskiy's hand, hoping in particular to lock down robust security guarantees for Ukraine that would include a U.S. role.

The Europeans are keen to help Zelenskiy avoid a repeat of his last Oval Office meeting in February. That went disastrously, with Trump and Vice President JD Vance giving the Ukrainian leader a public dressing-down, accusing him of being ungrateful and disrespectful.

European Commission President Ursula von der Leyen will also travel to Washington, as will Finland's President Alexander Stubb, whose access to Trump included rounds of golf in Florida earlier this year, and Italian Prime Minister Giorgia Meloni, who is an admirer of many of Trump's policies.

EUROPEAN SHOW OF UNITY

European leaders at the Sunday meeting projected unity, welcoming U.S. talk of a security guarantee but stressing no discussions over territory could take place without Kyiv's involvement and clear arrangements to safeguard the rest of Ukraine's land.

Some called for an immediate ceasefire, something Trump originally said he was trying to secure during his summit with Putin. Trump later changed course and agreed with the Russians that peace negotiations could come without a ceasefire, an idea that was dismissed by some of Ukraine's European allies.

"You cannot negotiate peace under falling bombs," Poland's foreign ministry said in a statement.

A joint communique released by Britain, France and Germany after the meeting said their leaders were ready "to deploy a reassurance force once hostilities have ceased, and to help secure Ukraine's skies and seas and regenerate Ukraine's armed forces."

Some European countries, led by Britain and France, have been working since last year on such a plan, but other countries in the region remain reluctant to become involved militarily, underlining how fraught peace discussions are even among Kyiv's allies.

Zelenskiy said on social media platform X there had been "clear support for Ukraine's independence and sovereignty" at the meeting. "Everyone agrees that borders must not be changed by force."

He added that any prospective security guarantees "must really be very practical, delivering protection on land, in the air, and at sea, and must be developed with Europe's participation."

Rubio said both Russia and Ukraine would need to make concessions to reach a peace deal and that security guarantees for Ukraine would be discussed on Monday. He also said there would have to be additional consequences for Russia if no deal was reached.

"I'm not saying we're on the verge of a peace deal, but I am saying that we saw movement, enough movement to justify a follow-up meeting with Zelenskiy and the Europeans, enough movement for us to dedicate even more time to this," Rubio told broadcaster CBS.

For his part, Putin briefed his close ally, Belarusian President Alexander Lukashenko, about the Alaska talks, and also spoke with Kazakhstan's President Kassym-Jomart Tokayev.

Trump said on Friday that Ukraine should make a deal to end the war because "Russia is a very big power, and they're not."

After the Alaska summit, Trump phoned Zelenskiy and told him the Kremlin chief had offered to freeze most front lines if Ukraine ceded all of Donetsk, a source familiar with the matter said. Zelenskiy rejected the demand.

Source: Reuters

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Gerik

Economic

Renewable Capacity Trails Behind Soaring Digital Demand

Southeast Asia is witnessing an explosive rise in its digital economy, with the region’s data center capacity projected to triple to between 5.2 and 6.5 GW by 2030, according to Boston Consulting Group. Malaysia is emerging as a key growth hub, expected to surpass Singapore in energy demand from data centers. However, this expansion far outpaces the region’s ability to generate and distribute clean energy at scale.

The fundamental challenge lies in the mismatch between ambitions for sustainability and the structural limitations of energy infrastructure. National grids remain dependent on fossil fuels with Malaysia still sourcing about 70% of its electricity from such inputs and lack the resilience and flexibility to absorb distributed renewable energy sources.

This structural misalignment between centralized fossil fuel-based grids and decentralized renewable sources results in significant losses and inefficiencies. As noted by Edwin Khew from the Sustainable Energy Association of Singapore, this disconnect undermines the feasibility of widespread renewable integration into the power supply of data centers.

High Green Energy Costs Undermine Market Incentives

Economic viability is another critical hurdle. Although Malaysia’s recently launched CRESS (Corporate Green Energy Supply) mechanism allows businesses to procure renewable energy directly, its system access charges (SAC) are up to 80% higher than those for fossil fuel-based electricity.

Moreover, the SAC is fixed only for a three-year term, with potential adjustments up to 15%, creating price volatility that discourages long-term commitments from data center operators. Consequently, most continue to purchase electricity from national utilities to mitigate cost and policy risks, perpetuating dependence on fossil sources.

Malaysia’s low-cost electricity currently the cheapest in the region further complicates the transition. Any shift to renewables must present a cost profile that remains competitive or at least economically justifiable. Without significant price restructuring, renewable uptake will remain slow.

Interconnection and Storage Remain Key Structural Gaps

The absence of a unified ASEAN-wide power grid exacerbates the limitations of national systems. With grids designed around centralized thermal plants, integrating intermittent sources like solar or wind requires not only technical upgrades but also substantial investments in battery storage and grid balancing mechanisms.

Solar power, while increasingly deployed, cannot yet support the round-the-clock demands of data centers without expensive storage solutions. As a result, natural gas is currently serving as a transitional fuel. According to Thorbjorn Fors of Siemens Energy, many operators still rely on gas-fired turbines to ensure power stability, though there is growing interest in turbines adaptable to low-carbon fuels like hydrogen and ammonia.

While these developments suggest a shift in fuel diversity, the immediate dependency on fossil energy remains deeply entrenched. The role of LNG today serves as a precedent: fuels such as hydrogen or ammonia might become mainstream only if supported by long-term infrastructure development, pricing mechanisms, and policy alignment.

Policy Uncertainty Slows Private Sector Adoption

Even as governments signal a push toward green energy, inconsistent policies and slow regulatory reforms remain deterrents. Industry experts emphasize that for initiatives like CRESS or the upcoming CGPP (Corporate Green Power Programme) to gain traction, pricing structures must be transparent and provide long-term security for investors.

The current policy landscape does not offer that clarity. Consequently, while the private sector expresses interest in green electricity, operators await stronger assurances from governments, particularly regarding subsidies, long-term SAC stability, and mechanisms for cross-border energy trading.

Path Forward: Aligning Market, Infrastructure, and Policy

For Southeast Asia to overcome these obstacles, rapid scaling of large-scale renewable projects, investment in battery storage systems, and modernization of transmission infrastructure are imperative. Governments must also play a more active role in enabling regional interconnection and stabilizing green electricity pricing.

On the demand side, data center operators are increasingly in a position to shape the region’s energy direction. By setting firm procurement targets for clean electricity, they can create the market pressure necessary to accelerate renewable energy deployment. However, this depends on governments unlocking large-scale access and resolving current price and grid constraints.

The current situation reflects a complex interplay of cost structures, infrastructure legacy, and regulatory inertia. While the demand for clean energy is real and growing, without immediate and coordinated interventions, Southeast Asia’s data center boom may continue to rely on fossil fuels an outcome misaligned with its digital sustainability goals.

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Gerik

Economic

Diplomatic Standstill Rooted in Regulatory Language

The trade declaration between the United States and the European Union, originally anticipated to be finalized in mid-August 2025, is currently mired in unresolved disputes over non-tariff barriers. At the center of the disagreement lies the EU’s Digital Services Act (DSA) a flagship regulation aimed at ensuring online safety and curbing illegal content on digital platforms. While Brussels views the DSA as a necessary legislative safeguard for digital accountability, Washington interprets it as a restrictive policy that disproportionately affects American tech firms, potentially infringing on free speech and inflating compliance costs.

US negotiators have classified the DSA as part of the broader category of “non-tariff barriers” and seek language in the declaration that leaves room for future concessions or adjustments. The EU, however, has drawn a firm line, asserting that relaxing the DSA’s provisions would compromise core regulatory principles and is therefore non-negotiable. This reflects a fundamental divergence in governance philosophies between the two transatlantic partners one emphasizing corporate autonomy and market access, the other prioritizing consumer protection and regulatory sovereignty.

Link Between Trade Agreement and Automotive Tariffs

While the July 2025 agreement halved the threatened tariffs on EU imports from 30% to 15% further reduction in US car import duties has been withheld. Originally expected on August 15, the executive order from President Donald Trump to cut tariffs to 15% has not materialized. According to unnamed US officials cited by Financial Times, the signing is contingent upon the resolution of the digital regulatory dispute. This links digital policy negotiations directly with trade incentives, implying a conditional relationship wherein the US is leveraging tariff relief as a bargaining chip to extract policy flexibility from the EU.

The correlation here reveals a tactical move: Washington is using economic levers to reshape regulatory frameworks that it sees as unfavorable to its domestic industries. Meanwhile, the EU maintains that digital policy should not be negotiated under trade pressure, viewing such linkage as a threat to its regulatory autonomy.

Wider Trade Implications and Global Context

Despite the current impasse, the July 2025 provisional agreement marked a temporary de-escalation in what had been looming threats of a broader trade war. With the US and EU accounting for nearly 30% of global trade, sustained cooperation between them holds systemic importance. The ongoing stalemate illustrates how modern trade conflicts are increasingly shaped not just by tariffs but by policy frameworks surrounding data governance, platform liability, and digital sovereignty.

Should the disagreement persist, it could delay not only the formalization of the joint declaration but also subsequent executive orders and future regulatory harmonization initiatives. Nevertheless, EU officials remain cautiously optimistic that a resolution can be achieved by the following week a deadline that, if met, could reopen the door to finalizing both the statement and the associated tariff measures.

The delay in the US-EU trade declaration highlights a growing fault line in global economic diplomacy: the clash between market liberalism and regulatory control in the digital age. Whether the parties can bridge their differences will significantly influence the shape of future transatlantic economic integration and digital rule-setting worldwide. The situation underscores a causative relationship between regulatory frameworks and trade dynamics, with both sides leveraging their policy stances as strategic assets in a negotiation landscape increasingly shaped by digital governance.

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Gerik

Economic

An economy in prolonged contraction

Germany, Europe’s largest economy, is now facing its third consecutive year of decline. GDP fell 0.9 percent in 2023 and 0.5 percent in 2024, with another 0.3 percent contraction forecast for 2025. Adjusted for government spending, the private sector downturn is sharper, approaching a 4–5 percent decline. Industries that have long defined Germany’s strength automobiles, construction, and machinery are among the hardest hit.

Surveys by the German Chamber of Commerce and Industry (DIHK) underline the pessimism. Out of 21,000 companies polled in May 2025, only 23 percent expressed a positive outlook, while 30 percent expected further deterioration. One in three industrial firms anticipates fewer orders, and just 19 percent plan to increase investment.

US tariffs as a shock to transatlantic trade

The August 14 introduction of a 15 percent general tariff on German exports to the US has struck a blow to export-dependent firms. Automotive and machinery producers are the most exposed. According to DIHK data, 89 percent of firms active in the US reported immediate negative effects, while nearly three-quarters feared further tariff hikes. Over half are considering scaling back operations across the Atlantic.

This reflects a causal impact: higher tariffs directly erode competitiveness abroad, weaken order books, and reduce corporate willingness to invest. Political uncertainty in transatlantic trade relations compounds the problem, making long-term planning difficult.

Energy costs and the weight of climate regulation

Energy prices remain a structural handicap. German industrial firms face costs three times higher than US competitors and double those of French companies. Energy-intensive sectors, from chemicals to metallurgy, are increasingly unviable domestically. While large multinationals can relocate production or adapt supply chains, small and medium-sized enterprises (SMEs) the backbone of the German economy lack the capital to do so.

Here the relationship is both causal and selective: the EU’s Green Deal rules, designed to push climate transformation, impose compliance burdens that SMEs struggle to bear. At the same time, these rules unintentionally favor larger corporations that can absorb bureaucratic and financial costs, leading to a consolidation dynamic. The consequence has been stark: SME bankruptcies rose 9.4 percent in the first half of 2025 to 11,900 cases.

Structural weakness and the risk of deindustrialization

Germany’s difficulties go beyond cyclical shocks. High labor costs, worker shortages, and a rigid regulatory environment compound external pressures. Without decisive reforms, the erosion of industrial capacity could accelerate what many fear is a process of deindustrialization, threatening hundreds of thousands of jobs.

Social risks are rising as well. A shrinking industrial base undermines tax revenues while expanding social welfare needs, creating fiscal strain. In this sense, today’s industrial decline is causally linked to tomorrow’s welfare deficits and political instability.

Political hesitation and limited policy room

Despite the bleak outlook, both policymakers and business leaders appear reluctant to challenge EU climate priorities or adopt more flexible energy strategies. The Green Deal remains politically untouchable, even as it drives up costs and limits competitiveness. For now, public spending acts as a buffer, but this approach masks underlying weaknesses rather than resolving them.

Germany is caught between the hammer of international trade tensions and the anvil of domestic structural burdens. Tariffs cut into exports, expensive energy undermines competitiveness, and rigid regulation weighs heavily on SMEs. Without bold reforms addressing energy policy, regulatory frameworks, and transatlantic trade strategy, Germany risks not just stagnation but systemic decline.

The warning signs are clear: unless structural adjustments are made, the coming autumn may indeed be “scorching” for both German industry and society.

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Economic

Study findings and economic impact

Research led by Professor Kim Deok-pa of Korea University, in collaboration with the Korea Chamber of Commerce and Industry, analyzed data across 17 administrative regions between 2012 and 2023. The study found a direct relationship: a 1 percent increase in foreign university graduates within the economically active population raises regional per capita GDP by about 0.11 percent.

Extrapolating from this correlation, the addition of one million foreign students graduating and joining the workforce would expand GDP by around 145 trillion won (104.3 billion USD), equivalent to 6 percent of national output. If South Korea were to leverage its existing 1.35 million registered foreign residents, the potential impact could rise to 361 trillion won. This suggests that demographic revitalization through skilled migration has measurable and significant economic returns.

Demographic urgency and workforce gaps

The push for foreign talent stems from demographic pressures. South Korea’s population stood at 51.68 million in July 2025, with 29.75 million in the economically active bracket. However, record-low fertility rates and the fastest aging population in the world are eroding the labor force at an unprecedented pace.

Despite this, the inflow of skilled foreign workers remains limited. In 2023, only 68,642 professionals held specialized visas such as E-1 (professors) or E-7 (skilled occupations). Graduate-level foreign enrollment was just 52,154 in 2024, highlighting a stark mismatch between industrial demand and available talent.

Beyond numbers: Productivity and competitiveness

Professor Kim emphasizes that attracting skilled foreign graduates is not simply about expanding headcount. Their presence boosts consumption, enhances productivity, and increases industrial competitiveness. This has a causal impact on modernization: knowledge spillovers, integration of global expertise, and innovation-driven growth can reposition South Korea in industries such as semiconductors, biotechnology, and advanced manufacturing.

The study outlines three strategic approaches. First, establish settlement-oriented cities with favorable visa conditions, tax incentives, and robust education and healthcare systems. Such hubs would encourage long-term integration, reducing the risk of foreign talent leaving after graduation.

Second, link industrial policy with talent attraction by encouraging global firms in semiconductors, AI, and advanced manufacturing to anchor operations in South Korea. In return, these firms would draw on foreign specialists, ensuring both workforce stability and regional industrial clustering.

Third, proactively cultivate talent pipelines from countries like Vietnam and Indonesia, where interest in Korean culture is strong. Preparing students abroad for careers in shipbuilding, biotech, and high-value manufacturing creates a smoother transition to permanent settlement and supports South Korea’s long-term labor supply.

Risks and consideration

While the economic rationale is strong, challenges remain. Social integration policies must address cultural adaptation, inequality, and public resistance to immigration. Additionally, scaling education and housing infrastructure in settlement hubs requires significant upfront investment. The correlation between talent inflows and GDP growth depends on successful absorption into the labor market otherwise, gains may be diluted.

South Korea’s pathway to sustaining growth in an aging society increasingly relies on people rather than machines alone. By aligning education, immigration, and industrial policy, the country can transform its demographic challenge into an opportunity. The causal logic is straightforward: more skilled graduates mean higher productivity, stronger industries, and greater economic resilience.

If Seoul acts decisively, the arrival of one million skilled foreign students may not just raise GDP by 6 percent it could reshape the future trajectory of the nation’s competitiveness in the global economy.

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