China reaps energy windfall as West shuns Russian supplies

China is buying more of less expensive energy supplies from Russia, reaping the benefits of a plunge in European purchases. Beijing emerges the ready buyer when Moscow is searching alternative markets.

The growing cooperation is likely to deepen further after Chinese President Xi Jinping's meeting with Russia's Vladimir Putin in Uzbekistan, a boon for both the countries. 

China has gained access to cheaper energy while Russia is able to offset losses from the European Union and other allies scaling back on purchases of Russian exports due to the recent imposition of the sanctions.

Closer Chinese-Russian ties have also promoted the use of their yuan and rouble currencies in commodities trade, lessening reliance on the US dollar.

China, the world's largest energy consumer and top buyer of crude oil, liquefied natural gas and coal, has imported 17% more Russian crude between April and July as compared to the same period a year ago.

It has also bought over 50% more LNG and 6% more coal from Russia during the same period while electricity imports from Russia, mainly via a cross-broader transmission line connecting northeast China and Russia's Far East, soared by 39%.

China's oil, gas, coal and electricity purchases from Russia amount to US$43.68 billion so far this year.

Russian crude oil gains market share in China despite decline in overall imports

Cheaper Russian energy supplies are helping to control inflation in China, where the economy narrowly avoided contracting in the second quarter amid COVID-19 lockdowns.

The recent meeting between Xi and Putin is likely to fortify China's ties with Russia in energy trade for mutual benefit, particularly at a time when Russia is grappling with intensified western sanctions, while China is in need of low-cost energy to shore up its sagging economy.

Russia became China's top crude supplier from May to July, accounting for 19% of China's imports, versus 15% in the same period of 2021. Russia's share could grow to more than 20% this year.

China saved about US$3 billion in buying Russian oil. At an average, China paid about US$708 per ton for Russian crude while the value of imports from the rest of countries was US$816 per ton.

For LNG, China's imports from Russia rose 26% in the first seven months as compared to the same period a year ago, while exports jumped to 66,798 tons in July, the highest since 2019, on re-exports to Europe and Japan.

"China is taking advantage of the disrupted trade flows, including by buying discounted Russian oil and LNG cargoes, while swapping out alternative volumes back into Europe at higher prices, delivering a profitable trade," said Saul Kavonic, head of Integrated Energy and Resources Research at Credit Suisse.

China also has long-term incentives for Russian supply as it strives to meet new carbon emissions targets and boosts gas consumption. That prompted a February deal for a new pipeline from Russia to start in the next two to three years.

China's coal imports from Russia jumped to their highest in at least five years in July, as it bought discounted coal while Europe shunned Russian cargoes ahead of a ban that came into force on August 11, 2022

Russian thermal coal with a heating value of 5,500 kilocalories (kcal) traded around US$150 a ton on a cost-and-freight basis in late July, while coal of the same quality at Australia's Newcastle port was assessed at more than US$210 a ton on a free-on-board (FOB) basis.

China has increased coal imports from Russia although it cut back overall imports of the fuel

Though Russian supplies meet only about 1% of Chinese needs, some traders expect more Russian coal to arrive in the fourth quarter when utilities build stocks for the winter heating season.

Analysts said that while the gains for China are clear, Russia remains more reliant on the trade than China.

It is apparent that Russia can no longer rely on its major energy export markets in Europe for the foreseeable future, and the redirection of its energy and commodity exports towards the East will gather pace.

 

India levies 20% export duty on rice

Reportedly, India has slapped a 20% export duty on a number of rice grades to discourage the shipment of the grain to tame prices in the domestic market, a move that poses repercussions for importing countries.

India has imposed the tax on the exports of paddy, husked rice and semi-milled or wholly milled rice effective immediately.

The move raises concerns regarding the impact on the prices of rice in Bangladesh, which slashed import duty on rice to 15% to encourage private imports and contain prices.

It came less than two weeks after a dry spell affected the cultivation of Aman, the second-biggest source of grain for the country after Boro.

“This is uncomfortable news for us because the private sector is supposed to import a lot of rice. We are also supposed to import 100,000 tons of rice under a government contract,” said Md Ismiel Hossain, Food Secretary.

The food ministry is looking for alternative sources.

Bangladesh government has signed a contract to buy 230,000 tons of rice from Vietnam. The cabinet recently approved a plan to buy 200,000 tons rice from Myanmar.

“We are trying to import rice from Thailand. Recently, they have responded positively,” Hossain said.

Bangladesh, the world’s third-biggest producer of rice, first cut the import duty on rice to 25% from 62.5% to increase the supply to cool off rice prices in the fourth week of June amid repeated floods.

Since then, the government has permitted private firms to import more than one million tons rice, mostly from India.

Lately, prices of fine rice declined 3.65% in Dhaka city. But the price of coarse grain, a benchmark followed by the government to track the price of the staple, has gone up by 1.2%, according to the Trading Corporation of Bangladesh.

Chitta Majumder, Managing Director of Majumder Group of Industries said the move by India may not raise the import cost of his firm as it has placed orders for the rice grades that have not drawn any fresh levy.

“But if the export duty is slapped on the rice imported by others, the local market may become unstable,” he warned.

The tax would discourage buyers from making purchases from India and prompt them to shift towards rivals Thailand and Vietnam, which have been struggling to increase shipments and raise prices, reports Reuters.

India has excluded parboiled and basmati rice from the export duty, but white and brown rice will draw the duty, which accounts for more than 60% of India’s exports, said BV Krishna Rao, President of the All India Rice Exporters Association.

India has been the world’s largest rice exporter in the last decade. Its export earnings grew 9%YoY to US$9.6 billion in 2021-22.

Out of the 21 million tons rice shipment in 2021-22, India exported more than 17 million tons of non-basmati rice and the rest of the volume was aromatic and long grain basmati rice, data from the Indian Commerce Ministry showed.

In terms of volume, Bangladesh, China, Benin and Nepal are major export destinations of Indian rice.

India’s rice production in the 2022-23 could decline to 128.5 million tons mainly because of deficiency in monsoon rains, especially in eastern India where rice planting has shrunk. This could be the first decline in rice production since 2015-16.

The fresh levy on rice exports came four months after India imposed strict curbs on the shipment of wheat due to depleting domestic stocks.

 

Growing Arab Israel Military alliance and Iranian Response

Lately, the Israel Defense Forces (IDF) Chief of Staff Aviv Kochavi announced preparations for a potential upcoming military operation, foreshadowing a possible move against Iran.

Kochavi’s announcement came shortly after Israel and Foreign Ministers of four Arab nations — Morocco, Egypt, the UAE, and Bahrain — along with US Secretary of State Antony Blinken, met at the Negev Summit in the Israeli desert to lay the foundation for a strategic military alliance to deter "Iran and its associated militias," as the then Israeli Foreign Minister Yair Lapid put it.

The conflict between Iran and other regional states, including both Israel and Arab nations, spans over four decades. The battle for dominance in the Middle East began in 1979 with the Islamic Revolution in Iran.

The former supreme leader of Iran, Ayatollah Ruhollah Khomeini, declared Iran to be the legitimate nation of Islam, and began a campaign to export the revolution, as he believed it should be used as a model for other nations in the region. He thought that, through mass mobilization, Islamic values would triumph over corruption, repression, and Western influence.

The Islamic Republic believed that it could destabilize the region and rebuild it in its image. "Our revolution will not win unless it is exported," said Abolhassan Banisadr, the Islamic Republic’s first president.

 "We are going to create a new order in which deprived people will not always be deprived," he stated, referring to Shi’a Muslims. The new regime used this cause as a veneer for its efforts to further its ideological, geopolitical, and economic ambitions.

In response to Iranian expansionism, six Persian Gulf states — Saudi Arabia, the UAE, Kuwait, Oman, Bahrain, and Qatar — formed the Gulf Cooperation Council (GCC) in 1981. Saudi Arabia and Kuwait, along with other Gulf states, supported Iraq's Saddam Hussein in a full-scale invasion of Iran in late 1980, driving Iran and Arab nations further apart. 

Iran has successfully kept this growing regional conflict outside its borders by starting proxies in weaker states situated between it and its rivals. Iran has been accused of meddling in Lebanon, Syria, Iraq, and Yemen's domestic affairs and helping pro-Iranian actors gain or remain in power.

The result has been to undermine the regional order, and the Middle East is now home to several failing states, civil wars, and major humanitarian crises.

In addition, the Islamic Republic's belligerent expansionism has pushed Arab nations and Israel closer to each other, slowly at first but much more rapidly in recent years. 

Iran presents a substantial military threat

Tehran’s missile and drone capabilities exceed those of nearly all of its regional adversaries and it has embraced unmanned aerial vehicles (UAVs), significantly enhancing its air superiority. Former CENTCOM Commander Gen. Kenneth F. McKenzie Jr. warned that, thanks to Iran's drone program, the US is "operating without complete air superiority” for the first time since the Korean War.

The Islamic Revolutionary Guard Corps (IRGC) shares these capabilities with Iranian-backed militias — including Hezbollah, Islamic Jihad, Hamas, the Popular Mobilization Forces, and the Houthis — to be used in proxy wars or in attacks within the borders of Israel, Saudi Arabia, and the UAE. 

In recent years, and especially since the signing of the Abraham Accords in late 2020, Israel has proven to be a viable ally for Arab nations facing the threat of Iran.

In mid-February 2022, Israeli forces carried out a devastating attack on an airbase in western Iran, destroying hundreds of Iranian drones. The Times of Israel reported that Israel is cooperating with Middle East allies to build a “joint defense system” to counter Iranian missiles and drones.

Like the Middle East Strategic Alliance (MESA) proposed by the Trump administration, the alliance will be modeled after the North Atlantic Treaty Organization (NATO). The strategic alliance will focus on shared air defenses and pave the way for sharing intelligence and military operational plans to prevent attacks. 

Information that comes out of Tehran is strictly controlled; nevertheless, there are other sources from which we can learn about Iran's response to this new alliance.

In 2018, Ayatollah Ali Khamenei accused Saudi leaders of treason against the world of Islam for cooperating with the U.S. and Israel. Even though Iran has never declared war on Saudi Arabia, there have been hundreds of Houthi attacks on the kingdom, striking oil facilities and civilian areas. Saudi Arabia's Ministry of Energy has condemned the Islamic Republic for enabling and arming the Houthis. While Iran tries to mask its actions against other Muslim nations, it does not shy away from making its intentions with Israel clear has claimed that Israel will not exist in 25 year.

In addition, any association with Israel will get a country in trouble with the IRGC. Hossein Salami, the IRGC’s commander-in-chief, sees the new Arab-Israeli alliance as a direct threat to the IRGC's security, since it aims to create a new regional order. It would also, for the first time, give Israel a foothold in the Persian Gulf. Salami asked the GCC nations to reconsider their alliance and warned them that cooperation with Israel would lead to harsh consequences. He reiterated the IRGC forces’ combat readiness in various strategic positions in the Persian Gulf. 

IRGC-linked media outlets, such as Tasnim and Fars, have pushed a similar narrative. Some have added that the Israeli-Arab NATO-style regional alliance is a continuation of former President Donald Trump's Iran policy. Hossein Dalirian, a former editor of Fars turned social media influencer, has repeatedly supported Iran-backed Houthi attacks in Saudi Arabia and Yemen and even mocked the IDF’s inability to prevent the killing of five Israeli civilians in a recent terror attack.

As for Iranian academics’ perspectives, Islamic Azad University professor Mehdi Motaharnia expressed that the formation of the Arab-Israeli coalition against Iran is a response to the recent attacks carried out by Iran's proxies in Saudi Arabia and the UAE.

In addition, he says that the prospect of the Biden administration withdrawing the IRGC from the list of foreign terrorist groups has given impetus to the creation of an Arab-Israeli NATO. Mehdi writes, "Israel is trying to redefine the security, military, political, diplomatic, economic, commercial, and even social" structure of the region to coexist with the Arab world and confront Iran.

Even though the Arab-Israeli alliance is an existential threat to the Iranian regime, it is unlikely that the regime will abandon its foundational ideologies, as doing so would delegitimize its cause. 

Moreover, Khamenei and the IRGC's expansionist agenda overshadows other perspectives within Iran, including that of the Ministry of Foreign Affairs. In 2019, then-Iranian President Hassan Rouhani unveiled a plan to bring security, peace, stability, and progress in the Persian Gulf, calling it the Coalition for Hope. It was the last attempt at uniting Iran and the GCC states. Unfortunately, the coalition failed to gain traction among the GCC states, as distrust between the two sides runs deep. Since then, the Islamic Republic has done little to restore trust and has instead doubled down on its antagonistic policies.

Khamenei and Salami's tone suggests that Iran's future foreign policy will be more of the same. If Khamenei, the IRGC, and their associated militias continue to undermine their own Foreign Ministry’s efforts to improve relations with neighboring nations, Iran will remain isolated and surrounded by enemies. Ironically, Iran’s strong-man foreign policy will fuel the alliance between the regional rivals that most threatens its security. Iran’s incendiary rhetoric and violent interference have forced a marriage of convenience between Israel and Arab nations that likely otherwise would not come together.

 

 

Beware it is United States and allies fighting war against Russia

According to the western media, the United States has played a quiet but crucial role as Ukrainian troops have made stunning gains this week in a counteroffensive that dealt an embarrassing blow to Russian forces. 

Kyiv’s military strategy, which has allowed it to take back thousands of kilometers worth of Russian-occupied territory within days, is the culmination of months’ worth of planning helped by US war modeling and expertise.  

In addition, artillery and heavy weapons provided by the US have provided immediate firepower and long-term confidence that Ukraine’s troops will remain equipped for the longer fight. 

“What you’re seeing now is real unity in action,” a senior defense official told The Hill, adding that Ukraine’s current successes are the result of “incredible resolve from our allies, partners, and from the Ukrainian people, really, at every level.” 

As of Thursday, Ukrainian troops had taken back nearly the entire Kharkiv province in the northeast and continued to liberate several villages in the southern Kherson region, according to officials in the country. 

The gains are part of a two-front counteroffensive that began at the start of September and made major headway in the past week — particularly in Kharkiv, where Ukrainian troops’ lightning-fast advance seemed to catch Russians forces on the back foot and forced them to rapidly retreat. 

President Volodymyr Zelensky said earlier this week that Ukrainian forces had retaken 6,000 square kilometers (2317 square miles) of Russian-held territory since the beginning of the month — about 3,400 kilometers (2113 miles) of that in the north just in the last week.   

The rapid territory gains — more than the Russians have made in the past five months — even took Ukrainian and Western officials by surprise. 

But the counteroffensive was the result of months of discussions, war strategizing and intelligence sharing between senior US and Ukrainian officials, as well as a steady buildup of Ukrainian firepower with the help of US weapons shipments, according to defense officials and experts.  

Zelensky in midsummer relayed to his top military brass that he wanted to make a major push to show that Ukraine could kick back at the Russian incursion, and had his generals create a plan for a broad offensive across the south and east, CNN first reported. 

The strategy, which was then shared with US defense officials, was assessed to likely fail, and the Ukrainians went back to the drawing board, according to The New York Times. 

The senior defense official confirmed that “over the summer,” the Pentagon “provided advice during the war games, and then the Ukrainians internalized that and made their own decisions.” 

Through “regular dialogue” with their Ukrainian counterparts, US officials were able to “understand evolving requirements” and “synchronize with allies, partners, and Ukraine around the clock” to provide needed weapons and intelligence to help the Ukrainian forces, the official said.    

And top Pentagon spokesperson Brig. Gen. Pat Ryder on Tuesday acknowledged that Washington has been sharing “time sensitive information” with Kyiv, but declined to provide specifics.  

The strategy ultimately deployed by Kyiv proved to amplify existing problems on the Russian side, including supply line and logistics issues, as well as a battered command and control that has hampered Russian troops in the six months since the war began.  

In droves, Russian forces fled from their positions, leaving behind ammunition stockpiles and equipment and, in some cases, falling back into their country across the northeastern border with Ukraine.  

“The biggest explanation you can give for why Ukraine is so successful is that they took the time, they were patient and they shaped the battlespace,” said Steven Horrell, a senior fellow at the Center for European Policy Analysis and a former US naval intelligence officer. “They were very well prepared for this.” 

The carefully planned operations were then bolstered by US weapons, including precision armaments such as the High Mobility Artillery Rocket System, which allows the Ukrainians to precisely strike and take out high-value Kremlin targets, Horrell said.  

As of this week, the US has committed nearly US$15 billion in lethal aid to Ukraine since the start of the Feb. 24 invasion, including a new $675 million package of weapons and equipment for Kyiv announced last week.  

Since April, the US government has also led a 50-country effort known as the Ukraine Contact Group to coordinate the flow of military assistance to Kyiv.  

“Definitely the Western assistance of equipment, training on that equipment, but also intelligence sharing, contributed to the current Ukrainian successes,” Horrell said. 

Despite Ukraine’s recent successes — with country officials calling it one of the major turning points of the war — others have warned the fight is still far from over.  

United Nations Secretary-General António Guterres said Wednesday he thinks a peace deal to end the conflict isn’t likely anytime soon. 

“We are far away from the end of the war,” he told reporters following a call Wednesday with Russian President Vladimir Putin, as reported by CNN. 

“A cease-fire is not in sight,” he added, “I would be lying if I said it would happen.” 

And Biden administration officials have been hesitant to label the quick Ukrainian territorial gains as a turning point in the war. 

US defense officials point out that the Russians still have large amounts of manpower and weapons in Ukraine and still hold important territory, including key cities and towns in the easternmost Luhansk region. 

Still unknown is whether Ukraine can keep the momentum and make headway into Luhansk, where Russian forces will try to hold the line.  

But Western governments say they are prepared for the long haul. 

“Russia’s efforts have not succeeded and will not succeed; and as we have made clear, we are committed to sustained assistance and support as Ukraine defends its sovereignty and territorial integrity,” the defense official said.

 

China plans sanctions on CEOs of Boeing Defense and Raytheon over Taiwan sales

China will impose sanctions on the Chief Executives of Boeing Defense and Raytheon over their involvement in Washington's latest arms sales to Taiwan, a Chinese Foreign Ministry spokesperson said on Friday, reports Reuters.

The sanctions on Boeing Defense, Space, and Security CEO Ted Colbert and Raytheon Technologies Corp boss Gregory Hayes are in response to the US State Department approval on September 02 of the sale of military equipment to Taiwan.

Those sales include 60 anti-ship missiles and 100 air-to-air missiles, of which the respective principal contractors are Boeing Defense, a division of Boeing Co. and Raytheon.

Colbert and Hayes will be sanctioned "in order to protect China's sovereignty and security interests" said foreign ministry spokesperson Mao Ning citing "their involvement in these arms sales."

Mao did not elaborate on what the sanctions would entail or on how they would be enforced. Neither company sells defense products to China, but both have robust commercial aviation businesses.

US defense procurement rules generally prohibit Chinese-origin content, so sanctions have had no impact on the US military.

"The Chinese side once again urges the US government and relevant entities to... stop selling arms to Taiwan and US-Taiwan military contacts."

The Pentagon announced the package in the wake of China's aggressive military drills around Taiwan following a visit last month by US House of Representatives Speaker Nancy Pelosi, the highest-ranking US official to travel to Taipei in years.

China has previously sanctioned Raytheon, Boeing Defense, and unspecified individuals involved in arms sales to Taiwan.

A Raytheon spokesman declined to comment. Boeing declined to comment immediately, but on Thursday said it plans to remarket some airplanes that it had earmarked for Chinese airlines as geopolitical tensions have delayed deliveries.

In December 2021, China approved the return of Boeing's 737 MAX to service after it had been grounded following two accidents involving the airliner that killed 346 people.

Despite the approval, Chinese airlines have not resumed flying the MAX and have not accepted deliveries of new MAX aircraft.

The US government has previously accused the Chinese government of blocking tens of billions of dollars of MAX deliveries to China.

Before the MAX was grounded, Boeing was selling a quarter of the planes it built annually to Chinese buyers, its largest customers.

Raytheon sells to China through its United Technologies engine business.

Friday's announcement marks the first time Beijing identified and imposed sanctions against individuals from these companies.

Beijing considers the self-ruled island of Taiwan a wayward province it has vowed to bring under control, by force if necessary.

Taiwan rejects China's sovereignty claims, saying only its people can decide their future, and vows to defend itself if attacked.

 

Saudi Arabia inaugurates Jazan Port

Hutchison Ports celebrated the inauguration of Jazan in Saudi Arabia with a visit from the royal commission.

In its first phase the port consists of three industrial berths, a Single Point Mooring (SPM) facility for the Saudi Aramco refinery, and three commercial berths for containers, general cargo and bulk goods.

The President of the Royal Commission for Jubail and Yanbu, HE Eng. Khalid Al-Salem that the Port is one of the most critical enablers supporting industrial growth at The Port of Jazan City for Primary and Downstream Industries (JCPDI Port).

Eric Ip, Group Managing Director of Hutchison Ports, said, “We have been in Saudi Arabia for 22 years, and it is a very important market for Hutchison Ports. Today’s ceremony marks a new chapter for us in the Kingdom and we look forward to working closely with the Royal Commission to make Hutchison Ports Jazan a success and help JCPDI reach its full potential and contribute to the Saudi Vision 2030.”

The port will use remote-controlled cranes and state of the art systems for handling containers and bulk goods to enable electronic transitions. Training programs will be run for local talent, said Hutchison Ports Jazan CEO, Charlie Darazi.

A berth depth of 16.5m will allow containerships of over 21,000 teu to call the port, and bulk ships with capacities over 100,000 tons.

The Port has a total berth length of 1,250 meters for containers, bulk and general cargo, with a design capacity of one million teu per year and around four million tons of cargo, in addition to a liquid terminal for oil tankers of Saudi Aramco.

Andy Tsoi, Hutchison Ports Managing Director for Middle East and Africa said that JCPDI Port represents an exciting new chapter. He added that from a strategic standpoint, JCPDI sits at the crossroads of the busy east-west trade lane and the rapidly growing north-south trade. JCPDI also has the potential to be the Kingdom’s first port of call from East Asia. Therefore, given the talented local human capital and the continuing support of development policies, the port is very well-positioned for the future of the Kingdom’s maritime industry.

Minister of Investment, HE Eng. Khalid Al-Falih said that Saudi economy was booming, with 11% growth in Q1 2022 and growth of 21.5% in its Industrial Production Index (IPI).

 

 

United States railroad strike averted

Major United States railroads and unions secured a tentative deal on Thursday after 20 hours of intense talks brokered by President Joe Biden's administration to avert a rail shutdown that could have hit food and fuel supplies across the country and beyond.

Biden called the deal a "big win for America" and for tens of thousands of rail workers. Thanking business and labor, the Democratic president promised more worker-company agreements in the future.

"I'm optimistic that we can do this in other fields as well," Biden said.

"Unions and management can work together for the benefit of everyone," Biden added.

If they accept the deal that was announced at about 0900 GMT, workers whose pay had been frozen will win double-digit increases and will be allowed to seek certain types of medical care without fear of being punished, union leaders said. The agreement includes an immediate 14.1% wage rise, the railroads said.

Unions, whose members bitterly rejected prior proposals, will now vote on the agreement. Even if those votes fail, a rail strike that could have happened as soon as a minute past midnight on Friday has been averted for several weeks due to the standard language included in such a deal, a person familiar with the negotiations said.

Biden's Labor Secretary Marty Walsh hosted contract talks in Washington that ran for 20 consecutive hours between unions representing 115,000 workers and railroads including Union Pacific, BNSF, CSX, Norfolk Southern and Kansas City Southern .

Officials are expected to host a news briefing later on Thursday.

A rail shutdown could have frozen almost 30% of US cargo shipments by weight, stoked inflation, cost the US economy as much as US$2 billion per day and unleashed a cascade of transport woes affecting the US energy, agriculture, manufacturing, healthcare and retail sectors.

Railroad shares pared initial pre-market gains after mixed economic data, with Union Pacific up 2.2% in mid-day trading and CSX down 2.0%. 

US natural gas futures dropped about 9% after soaring 10% in the prior session; oil futures fell about 4% to a one-week low. Diesel and gasoline futures also fell.

Investors expected that a rail strike would have threatened coal supplies to power plants and boost demand for rival energy sources.

Amtrak, which runs passenger rail, said it will resume normal service on Friday after cancelling long-distance trains in anticipation of a strike.

The impact of a shutdown would have stretched beyond US borders because trains link the United States to Canada and Mexico and provide vital connections to massive ships that ferry goods from around the globe.

Negotiations between the companies and a dozen unions had stretched for more than two years, leading Biden to appoint an emergency board in July to help break the impasse. Biden personally called Walsh and negotiators on Wednesday evening to prod them toward a deal, telling them "once again to recognize the harm" that a shutdown would have on families, farmers and businesses, according to a person aware of the negotiations.

National Retail Federation CEO Matthew Shay thanked Biden's administration for intervening, adding in a statement that his group is "relieved and cautiously optimistic." Emily Skor, CEO of the biofuel trade group Growth Energy, also praised the deal and noted that much of the country's ethanol moves by rail.

Freight railroads had halted transportation of hazardous goods, including chlorine for water purification and ammonia for fertilizer, as well as shipments of refrigerated food and other goods that use rail and at least one other mode of transport. Their goal was to prevent cargo from being stranded in unsafe locations.

The railroad industry slashed almost 30% of its workforce over the last six years, cutting pay and other costs as they increased profits, stock buybacks and dividends for investors. Profits at billionaire Warren Buffett's Berkshire Hathaway, which owns BNSF, rose 9.2% in the most recent quarter to US$1.7 billion.

The number of US railway workers has dropped from over 600,000 in 1970 to about 150,000 in 2022, according to the Bureau of Labor Statistics, due technology and cost-cutting. The result is that many industry workers are on call at all hours, waiting to respond at short notice to work for days at a time.

Biden, who has called himself the most union-friendly president in history and attacked companies for raking in "excessive" profits, praised a deal he said would give workers "better pay, improved working conditions, and peace of mind around their health care costs."

The president is not yet out of the woods when it comes to supply-chain labor issues. Some 22,000 union workers at 29 West Coast ports that handle almost 40% of US imports are also in high-stakes labor contract negotiations.

Administration officials wanted the disputes resolved ahead of November's midterm elections that will determine whether Biden's fellow Democrats retain control of Congress.

Senior congressional leaders had threatened to pass legislation imposing a resolution on the railroads and unions if the negotiations were not successful.

US House Speaker Nancy Pelosi praised the tentative agreement and said that Congress was "ready to act" but that "thankfully this action may not be necessary."