even tougher winter next year as natural gas stocks are used up and as new supplies to replace Russian gas, including increased shipments from the United States or Qatar, are slow to come online, the International Energy Agency said in its annual World Energy Outlook, released last week.

Europe’s activity appears to be accelerating a global transition toward cleaner technologies, the I.E.A. added, as countries respond to Russia’s invasion of Ukraine by embracing hydrogen fuels, electric vehicles, heat pumps and other green energies.

But in the short term, countries will be burning more fossil fuels in response to the natural gas shortages.

gas fields in Groningen, which had been slated to be sealed because of earthquakes triggered by the extraction of the fuel.

Eleven countries, including Germany, Finland and Estonia, are now building or expanding a total of 18 offshore terminals to process liquid gas shipped in from other countries. Other projects in Latvia and Lithuania are under consideration.

Nuclear power is winning new support in countries that had previously decided to abandon it, including Germany and Belgium. Finland is planning to extend the lifetime of one reactor, while Poland and Romania plan to build new nuclear power plants.

European Commission blueprint, are voluntary and rely on buy-ins from individuals and businesses whose utility bills may be subsidized by their governments.

Energy use dropped in September in several countries, although it is hard to know for sure if the cause was balmy weather, high prices or voluntary conservation efforts inspired by a sense of civic duty. But there are signs that businesses, organizations and the public are responding. In Sweden, for example, the Lund diocese said it planned to partially or fully close 150 out of 540 churches this winter to conserve energy.

Germany and France have issued sweeping guidance, which includes lowering heating in all homes, businesses and public buildings, using appliances at off-peak hours and unplugging electronic devices when not in use.

Denmark wants households to shun dryers and use clotheslines. Slovakia is urging citizens to use microwaves instead of stoves and brush their teeth with a single glass of water.

website. “Short showers,” wrote one homeowner; another announced: “18 solar panels coming to the roof in October.”

“In the coming winter, efforts to save electricity and schedule the consumption of electricity may be the key to avoiding electricity shortages,” Fingrad, the main grid operator, said.

Businesses are being asked to do even more, and most governments have set targets for retailers, manufacturers and offices to find ways to ratchet down their energy use by at least 10 percent in the coming months.

Governments, themselves huge users of energy, are reducing heating, curbing streetlight use and closing municipal swimming pools. In France, where the state operates a third of all buildings, the government plans to cut energy use by two terawatt-hours, the amount used by a midsize city.

Whether the campaigns succeed is far from clear, said Daniel Gros, director of the Centre for European Policy Studies, a European think tank. Because the recommendations are voluntary, there may be little incentive for people to follow suit — especially if governments are subsidizing energy bills.

In countries like Germany, where the government aims to spend up to €200 billion to help households and businesses offset rising energy prices starting next year, skyrocketing gas prices are hitting consumers now. “That is useful in getting them to lower their energy use,” he said. But when countries fund a large part of the bill, “there is zero incentive to save on energy,” he said.

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US Economy Grew at 2.6% Annual Rate in Q3, GDP Report Shows

The U.S. economy grew slowly over the summer, adding to fears of a looming recession — but also keeping alive the hope that one might be avoided.

Gross domestic product, adjusted for inflation, returned to growth in the third quarter after two consecutive quarterly contractions, according to government data released Thursday. But consumer spending slowed as inflation ate away at households’ buying power, and the sharp rise in interest rates led to the steepest contraction in the housing sector since the first months of the pandemic.

The report underscored the delicate balance facing the Federal Reserve as it tries to rein in the fastest inflation in four decades. Policymakers have aggressively raised interest rates in recent months — and are expected to do so again at their meeting next week — in an effort to cool off red-hot demand, which they believe has contributed to the rapid increase in prices. But they are trying to do so without snuffing out the recovery entirely.

The third-quarter data — G.D.P. rose 0.6 percent, the Commerce Department said, a 2.6 percent annual rate of growth — suggested that the path to such a “soft landing” remained open, but narrow.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

President Biden cheered the report in a statement Thursday morning. “For months, doomsayers have been arguing that the U.S. economy is in a recession, and congressional Republicans have been rooting for a downturn,” he said. “But today we got further evidence that our economic recovery is continuing to power forward.”

By one common definition, the U.S. economy entered a recession when it experienced two straight quarters of shrinking G.D.P. at the start of the year. Officially, however, recessions are determined by a group of researchers at the National Bureau of Economic Research, who look at a broader array of indicators, including employment, income and spending.

Most analysts don’t believe the economy meets that more formal definition, and the third-quarter numbers — which slightly exceeded forecasters’ expectations — provided further evidence that a recession had not yet begun.

But the overall G.D.P. figures were skewed by the international trade component, which often exhibits big swings from one period to the next. Economists tend to focus on less volatile components, which have showed the recovery steadily losing momentum as the year has progressed. One closely watched measure suggested that private-sector demand stalled out almost completely in the third quarter.

Mortgage rates passed 7 percent on Thursday, their highest level since 2002.

“Housing is just the single largest trigger to additional spending, and it’s not there anymore; it’s going in reverse,” said Diane Swonk, chief economist at the accounting firm KPMG. “This has been a stunning turnaround in housing, and when things start to go really quickly, you start to wonder, what are the knock-on effects, what are the spillover effects?”

The third quarter was in some sense a mirror image of the first quarter, when G.D.P. shrank but consumer spending was strong. In both cases, the swings were driven by international trade. Imports, which don’t count toward domestic production figures, soared early this year as the strong economic recovery led Americans to buy more goods from overseas. Exports slumped as the rest of the world recovered more slowly from the pandemic.

Both trends have begun to reverse as American consumers have shifted more of their spending toward services and away from imported goods, and as foreign demand for American-made goods has recovered. Supply-chain disruptions have added to the volatility, leading to big swings in the data from quarter to quarter.

Few economists expect the strong trade figures from the third quarter to continue, especially because the strong dollar will make American goods less attractive overseas.

Jim Tankersley contributed reporting.

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Saudi Arabia ‘maturer guys’ in spat with U.S., energy minister says

  • OPEC+ oil output cut led to U.S., Saudi spat
  • Saudi Arabia and U.S. “solid allies” – minister
  • Big Wall St turnout at flagship Saudi investment summit

RIYADH, Oct 25 (Reuters) – Saudi Arabia decided to be the “maturer guys” in a spat with the United States over oil supplies, the kingdom’s energy minister Prince Abdulaziz bin Salman said on Tuesday.

The decision by the OPEC+ oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom’s Future Investment Initiative (FII) forum, which drew top U.S. business executives.

The two traditional allies’ relationship had already been strained by the Joe Biden administration’s stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh’s growing ties with China and Russia.

When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the Dec. 5 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: “I think we as Saudi Arabia decided to be the maturer guys and let the dice fall”.

“We keep hearing you ‘are with us or against us’, is there any room for ‘we are with the people of Saudi Arabia’?”

Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their “unwarranted” spat, highlighting long-standing corporate and institutional ties.

“If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted,” he said.

While noting that Saudi Arabia and the United States were “solid allies” in the long term, he highlighted the kingdom was “very strong” with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.

The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.

Biden pledged that “there will be consequences” for U.S. relations with Saudi Arabia after the OPEC+ move.

Princess Reema bint Bandar Al Saud, the kingdom’s ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with “everybody across the board”.

“And by the way, it’s okay to disagree. We’ve disagreed in the past, and we’ve agreed in the past, but the important thing is recognizing the value of this relationship,” she said.

She added that “a lot of people talk about reforming or reviewing the relationship” and said that was “a positive thing” as Saudi Arabia “is not the kingdom it was five years ago.”

FULL ATTENDENCE AT FII

Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world’s top oil exporter.

JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.

“I can’t imagine any allies agreeing on everything and not having problems – they’ll work it through,” Dimon said. “I’m comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly.”

The FII is a showcase for the Saudi crown prince’s Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.

No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.

The Saudi government invested $2 billion with a firm incorporated by Kushner after Trump left office.

FII organisers said this year’s edition attracted 7,000 delegates compared with 4,000 last year.

After its inaugural launch in 2017, the forum was marred by a Western boycott over Khashoggi’s killing by Saudi agents. It recovered the next year, attracting leaders and businesses with strategic interests in Saudi Arabia, after which the pandemic hit the world.

Reporting by Aziz El Yaakoubi, Hadeel Al Sayegh and Rachna Uppal in Riyadh and Nadine Awadalla, Maha El Dahan and Yousef Saba in Dubai; Writing by Ghaida Ghantous and Michael Geory; Editing by Louise Heavens, Mark Potter, Vinay Dwivedi, William Maclean

Our Standards: The Thomson Reuters Trust Principles.

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Saudi Arabia ‘maturer guys’ in spat with U.S., says energy minister

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  • OPEC+ oil output cut led to U.S., Saudi spat
  • Saudi Arabia and U.S. “solid allies” – minister
  • Big Wall St turnout at flagship Saudi investment summit

RIYADH, Oct 25 (Reuters) – Saudi Arabia decided to be the “maturer guys” in a spat with the United States over oil supplies, the kingdom’s energy minister Prince Abdulaziz bin Salman said on Tuesday.

The decision by the OPEC+ oil producer group led by Saudi Arabia this month to cut oil output targets unleashed a war of words between the White House and Riyadh ahead of the kingdom’s Future Investment Initiative (FII) forum, which drew top U.S. business executives.

The two traditional allies’ relationship had already been strained by the Joe Biden administration’s stance on the 2018 murder of Saudi journalist Jamal Khashoggi and the Yemen war, as well as Riyadh’s growing ties with China and Russia.

When asked at the FII forum how the energy relationship with the United States could be put back on track after the cuts and with the Dec. 5 deadline for the expected price-cap on Russian oil, the Saudi energy minister said: “I think we as Saudi Arabia decided to be the maturer guys and let the dice fall”.

“We keep hearing you ‘are with us or against us’, is there any room for ‘we are with the people of Saudi Arabia’?”

Saudi Investment Minister Khalid al-Falih said earlier that Riyadh and Washington will get over their “unwarranted” spat, highlighting long-standing corporate and institutional ties.

“If you look at the relationship with the people side, the corporate side, the education system, you look at our institutions working together we are very close and we will get over this recent spat that I think was unwarranted,” he said.

While noting that Saudi Arabia and the United States were “solid allies” in the long term, he highlighted the kingdom was “very strong” with Asian partners including China, which is the biggest importer of Saudi hydrocarbons.

The OPEC+ cut has raised concerns in Washington about the possibility of higher gasoline prices ahead of the November U.S. midterm elections, with the Democrats trying to retain their control of the House of Representatives and the Senate.

Biden pledged that “there will be consequences” for U.S. relations with Saudi Arabia after the OPEC+ move.

Princess Reema bint Bandar Al Saud, the kingdom’s ambassador to Washington, said in a CNN interview that Saudi Arabia was not siding with Russia and engages with “everybody across the board”.

“And by the way, it’s okay to disagree. We’ve disagreed in the past, and we’ve agreed in the past, but the important thing is recognizing the value of this relationship,” she said.

She added that “a lot of people talk about reforming or reviewing the relationship” and said that was “a positive thing” as Saudi Arabia “is not the kingdom it was five years ago.”

FULL ATTENDENCE AT FII

Like previous years, the FII three-day forum that opened on Tuesday saw a big turnout from Wall Street, as well as other industries with strategic interests in Saudi Arabia, the world’s top oil exporter.

JPMorgan Chase & Co Chief Executive Jamie Dimon, speaking at the gathering, voiced confidence that Saudi Arabia and the United States would safeguard their 75-year-old alliance.

“I can’t imagine any allies agreeing on everything and not having problems – they’ll work it through,” Dimon said. “I’m comfortable that folks on both sides are working through and that these countries will remain allies going forward, and hopefully help the world develop and grow properly.”

The FII is a showcase for the Saudi crown prince’s Vision 2030 development plan to wean the economy off oil by creating new industries that also generate jobs for millions of Saudis, and to lure foreign capital and talent.

No Biden administration officials were visible at the forum on Tuesday. Jared Kushner, a former senior aide to then-President Donald Trump who enjoyed good ties with Prince Mohammed, was featured as a front-row speaker.

The Saudi government invested $2 billion with a firm incorporated by Kushner after Trump left office.

FII organisers said this year’s edition attracted 7,000 delegates compared with 4,000 last year.

After its inaugural launch in 2017, the forum was marred by a Western boycott over Khashoggi’s killing by Saudi agents. It recovered the next year, attracting leaders and businesses with strategic interests in Saudi Arabia, after which the pandemic hit the world.

Reporting by Aziz El Yaakoubi, Hadeel Al Sayegh and Rachna Uppal in Riyadh and Nadine Awadalla, Maha El Dahan and Yousef Saba in Dubai; Writing by Ghaida Ghantous and Michael Geory; Editing by Louise Heavens, Mark Potter, Vinay Dwivedi, William Maclean

Our Standards: The Thomson Reuters Trust Principles.

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World is in its ‘first truly global energy crisis’ – IEA’s Birol

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SINGAPORE, Oct 25 (Reuters) – Tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis”, the head of the International Energy Agency (IEA) said on Tuesday.

Rising imports of LNG to Europe amid the Ukraine crisis and a potential rebound in Chinese appetite for the fuel will tighten the market as only 20 billion cubic meters of new LNG capacity will come to market next year, IEA Executive Director Fatih Birol said during the Singapore International Energy Week.

At the same time the recent decision by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, to cut 2 million barrels per day (bpd) of output is a “risky” decision as the IEA sees global oil demand growth of close to 2 million bpd this year, Birol said.

“(It is) especially risky as several economies around the world are on the brink of a recession, if that we are talking about the global recession…I found this decision really unfortunate,” he said.

Soaring global prices across a number of energy sources, including oil, natural gas and coal, are hammering consumers at the same time they are already dealing with rising food and services inflation. The high prices and possibility of rationing are potentially hazardous to European consumers as they prepare to enter the Northern Hemisphere winter.

Europe may make it through this winter, though somewhat battered, if the weather remains mild, Birol said.

“Unless we will have an extremely cold and long winter, unless there will be any surprises in terms of what we have seen, for example Nordstream pipeline explosion, Europe should go through this winter with some economic and social bruises,” he added.

For oil, consumption is expected to grow by 1.7 million bpd in 2023 so the world will still need Russian oil to meet demand, Birol said.

G7 nations have proposed a mechanism that would allow emerging nations to buy Russian oil but at lower prices to cap Moscow’s revenues in the wake of the Ukraine war.

Birol said the scheme still has many details to iron out and will require the buy-in of major oil importing nations.

A U.S. Treasury official told Reuters last week that it is not unreasonable to believe that up to 80% to 90% of Russian oil will continue to flow outside the price cap mechanism if Moscow seeks to flout it.

“I think this is good because the world still needs Russian oil to flow into the market for now. An 80%-90% is good and encouraging level in order to meet the demand,” Birol said.

While there is still a huge volume of strategic oil reserves that can be tapped during a supply disruption, another release is not currently on the agenda, he added.

ENERGY SECURITY DRIVES RENEWABLES GROWTH

The energy crisis could be a turning point for accelerating clean sources and for forming a sustainable and secured energy system, Birol said.

“Energy security is the number one driver (of the energy transition),” said Birol, as countries see energy technologies and renewables as a solution.

The IEA has revised up the forecast of renewable power capacity growth in 2022 to a 20% year-on-year increase from 8% previously, with close to 400 gigawatts of renewable capacity being added this year.

Many countries in Europe and elsewhere are accelerating the installation of renewable capacity by cutting the permitting and licensing processes to replace the Russian gas, Birol said.

Reporting by Florence Tan, Muyu Xu and Emily Chow; Editing by Jacqueline Wong and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

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UK police charge two women after soup thrown at van Gogh’s ‘Sunflowers’

LONDON, Oct 15 (Reuters) – Two women have been charged with criminal damage after climate change protesters threw soup over Vincent van Gogh’s painting “Sunflowers” at London’s National Gallery, British police said on Saturday.

A video posted by the Just Stop Oil campaign group, which has been holding protests for the last two weeks in the British capital, showed two of its activists on Friday throwing tins of Heinz tomato soup over the painting, one of five versions on display in museums and galleries around the world.

The gallery said the incident had caused minor damage to the frame but the painting was unharmed. It later went back on display.

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Police said two women, aged 21 and 20, would appear later at Westminster Magistrates’ Court charged with “criminal damage to the frame of van Gogh’s Sunflowers painting”.

Another activist will also appear in court accused of damaging the sign outside the New Scotland Yard police headquarters in central London.

Police said in total 28 people had been arrested during protests on Friday.

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Reporting by Michael Holden; Editing by Emelia Sithole-Matarise

Our Standards: The Thomson Reuters Trust Principles.

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Global Fallout From Rate Moves Won’t Stop the Fed

The Federal Reserve has embarked on an aggressive campaign to raise interest rates as it tries to tame the most rapid inflation in decades, an effort the central bank sees as necessary to restore price stability in the United States.

But what the Fed does at home reverberates across the globe, and its actions are raising the risks of a global recession while causing economic and financial pain in many developing countries.

Other central banks in advanced economies, from Australia to the eurozone, are also lifting rates rapidly to fight their inflation. And as the Fed’s higher interest rates attract money to the United States — pumping up the value of the dollar — emerging-market economies are being forced to raise their own borrowing costs to try to stabilize their currencies to the extent possible.

Altogether, it is a worldwide push toward more expensive money unlike anything seen before in the 21st century, one that is likely to have serious ramifications.

warned the damage could be particularly acute in poorer nations. Developing economies had already been dealing with a cost-of-living crisis because of soaring food and fuel prices, and now their American imports are growing steadily more expensive as the dollar marches higher.

The Fed’s moves have spurred market volatility and worries about financial stability, as higher rates elevate the value of the U.S. dollar, making it harder for emerging-market borrowers to pay back their dollar-denominated debt.

It is a recipe for globe-spanning turmoil and even recession. Despite that, the Fed is poised to continue raising interest rates. That’s because the Fed, like central banks around the world, is in charge of domestic economy goals: It’s supposed to keep inflation slow and steady while fostering maximum employment. While occasionally called “central banker to the world” because of the dollar’s foremost position, the Fed goes about its day-to-day business with its eye squarely on America.

loss of purchasing power over time, meaning your dollar will not go as far tomorrow as it did today. It is typically expressed as the annual change in prices for everyday goods and services such as food, furniture, apparel, transportation and toys.

The threat facing the global economy — including the Fed’s role in it — is expected to dominate the conversation next week as economists and government officials convene in Washington for the annual meeting of the International Monetary Fund and World Bank.

In a speech at Georgetown University on Thursday, Kristalina Georgieva, the managing director of the I.M.F., offered a grim assessment of the world economy and the tightrope that central banks are walking.

“Not tightening enough would cause inflation to become de-anchored and entrenched — which would require future interest rates to be much higher and more sustained, causing massive harm on growth and massive harm on people,” Ms. Georgieva said. “On the other hand, tightening monetary policy too much and too fast — and doing so in a synchronized manner across countries — could push many economies into prolonged recession.”

Noting that inflation remains stubbornly high and broad-based, she added: “Central banks have to continue to respond.”

The World Bank warned last month that simultaneous interest-rate increases around the world could trigger a global recession next year, causing financial crises in developing economies. It urged central banks in advanced economies to be mindful of the cross-border “spillover effects.”

“To achieve low inflation rates, currency stability and faster growth, policymakers could shift their focus from reducing consumption to boosting production,” David Malpass, the World Bank president, said.

Trade and Development Report said.

So far, major central banks have shown little appetite for stopping their inflation-busting campaigns. The Fed, which has made five rate increases this year, has signaled that it plans to raise borrowing costs even higher. Most officials expect to increase rates by at least another 1.25 percentage points this year, taking the policy rate to a range of 4.25 to 4.5 percent from the current 3 to 3.25 percent.

Even economies that are facing a pronounced slowdown have been lifting borrowing costs. The European Central Bank raised rates three-quarters of a point last month, even though the continent is approaching a dark winter of slowing growth and crushing energy costs.

according to the World Bank. Food costs in particular have driven millions further into extreme poverty, exacerbating hunger and malnutrition. As the dollar surge makes a range of imports pricier for emerging markets, that situation could worsen, even as the possibility of financial upheaval increases.

“Low-income developing countries in particular face serious risks from food insecurity and debt distress,” Ngozi Okonjo-Iweala, director-general of the World Trade Organization, said during a news conference this week.

In Africa, officials have been urging the I.M.F. and Group of 20 nations to provide more emergency assistance and debt relief amid inflation and rising interest rates.

“This unprecedented shock further destabilizes the weakest economies and makes their need for liquidity even more pressing, to mitigate the effects of widespread inflation and to support the most vulnerable households and social strata, especially young people and women,” Macky Sall, chairman of the African Union, told leaders at the United Nations General Assembly in September.

To be sure, central bankers in big developed economies like the United States are aware that they are barreling over other economies with their policies. And although they are focused on domestic goals, a severe weakening abroad could pave the way for less aggressive policy because of its implications for their own economic outlooks.

Waning demand from abroad could ease pressure on supply chains and reduce prices. If central bankers decide that such a chain reaction is likely to weigh on their own business activity and inflation, it may give them more room to slow their policy changes.

“The global tightening cycle is something that the Fed has to take into account,” said Megan Greene, global chief economist for the Kroll consulting firm. “They’re interested in what is going on in the rest of the world, inasmuch as it affects their ability to achieve their targets.”

his statement.

But many global economic officials — including those at the Fed — remain focused on very high inflation. Investors expect them to make another large rate increase when they meet on Nov. 1-2.

“We’re very attentive” to international spillovers to both emerging markets and advanced economies, Lisa D. Cook, a Fed governor, said during a question-and-answer session on Thursday. “But our mandate is domestic. So we’re very focused on inflation as it evolves in this country.”

Raghuram Rajan, a former head of India’s central bank and now an economist at the University of Chicago, has in the past pushed the Fed to take foreign conditions into account as it sets policy. He still thinks that measures like bond-buying should be pursued with an eye on global spillovers.

But amid high inflation, he said, central banks are required to pay attention to their own mandates to achieve price stability — even if that makes for a stronger dollar, weaker currencies and more pain abroad.

“The basic problem is that the world of monetary policy dances to the Fed’s tune,” Mr. Rajan said, later adding: “This is a problem with no easy solutions.”

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Biden disappointed by ‘shortsighted’ OPEC+ cut, more SPR releases possible

WASHINGTON, Oct 5 (Reuters) – President Joe Biden called on his administration and Congress to explore ways to boost U.S. energy production and reduce OPEC’s control over energy prices after the cartel’s “shortsighted” production cut, the White House said on Wednesday.

The Saudi Arabia-led OPEC+ cartel at a Vienna meeting on Wednesday ignored pleas from the White House to keep oil flowing and agreed to cut output by 2 million barrels per day, its deepest cuts in production since the 2020 COVID-19 pandemic.

The move drew a sharp response from Biden that underscores the growing rift between the United States and Saudi Arabia on energy policy.

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“The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of (Russian President Vladimir) Putin’s invasion of Ukraine,” national security adviser Jake Sullivan and National Economic Council Director Brian Deese said in a statement.

Biden warned that he will now continue to direct releases from the nation’s Strategic Petroleum Reserve “as necessary,” a shift from the White House’s previous comments that it would end the drawdown in the coming weeks.

Earlier this year, the Biden administration announced the largest sale ever from the reserve: 180 million barrels for six months beginning in May. Last month it extended that historic sale into November as only about 155 million barrels had been sold. It now aims to sell 165 million through November.

As a result, the amount of oil in the reserve has fallen to the lowest level since July 1984. It now holds about 416 million barrels of oil, well above what the United States is required by its membership in the International Energy Agency, at sites on the Texas and Louisiana coasts.

Rising oil and fuel prices are a risk to Biden’s fellow Democrats as they seek to keep control of Congress in the Nov. 8 midterm elections.

Biden also pledged to consult with Congress on additional tools to cut OPEC’s control over energy prices, a potential reference to a decades-long effort to open the cartel to antitrust lawsuits for orchestrating supply cuts.

The so-called NOPEC bill, which has brought up numerous times over the past 20 years but never enacted, easily passed a Senate committee in May.

The White House has previously expressed concerns about unintended consequences of the bill.

The White House is also worried about the cut cementing Saudi Arabia’s closer cooperation with Russia, also a member of OPEC+, as oil revenues fund Moscow’s war machine in Ukraine.

“Look it’s clear that OPEC Plus is aligning with Russia with today’s announcement,” White House spokesperson Karine-Jean Pierre told reporters aboard Air Force One on Wednesday.

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Reporting by Susan Heavey and Jarrett Renshaw; editing by Tim Ahmann and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

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As E.U. Seeks to Curb Russia’s Revenues, Oil Supply Cut Poses Obstacle

Credit…Getty Images

What impact a European price cap on Russian oil may have remains a matter of conjecture because many of the details, including the price, remain to be determined. But some analysts say it could have unintended consequences.

Henning Gloystein, a director at Eurasia Group, a political risk firm, said that the cap might wind up just continuing the status quo, since Russia is already selling oil to China and India at a 30 percent discount. The end result of the cap may be to simply replicate that discount on Russian oil exports to those nations, which have resisted joining the West in imposing sanctions. “It is formalizing something that is already there,” he said.

Others say that the cap, which is expected to gain final approval on Thursday, will add more bureaucratic procedures to a long series of sanctions already in place against Russia. Those extra steps may impede the flow of oil around the world and raise prices, causing the sort of major disruption that Washington appears to be trying to avoid.

“It adds new complexity to the task of redirecting Russian oil to new destinations,” Richard Bronze, head of geopolitics for Energy Aspects, a political risk firm, said.

That the specifics of the cap, including the price, have not been spelled out will likely make life difficult for people buying and selling oil, who need to make decisions several weeks in advance, Mr. Bronze said.

“They would not know what they would need to do or what price they would need to agree with a Russian seller if they wanted to abide by the price cap,” he said. “This is another example of how policymakers are not in tune with what the industry and the market are saying to make this policy work.”

China has leaned in favor of Russia during the Ukraine war, repeating Russian disinformation, but so far, Western government experts say, China has refrained from providing Moscow military assistance or helping Russia to evade sanctions.

China’s foreign ministry criticized the concept of price caps soon after the idea was first unveiled by Western leaders a month ago, warning that oil was too important to the global economy to be subject to the planned price controls. “Oil is a global commodity — ensuring global energy supply security is vitally important,” Mao Ning, a foreign ministry spokeswoman, said on Sept. 5.

Four days later, Ben Harris, the assistant secretary of the U.S. Treasury for economic policy, said at forum that price caps by other countries would allow China to demand deep discounts on the oil it purchases from Russia as well. The United States would be satisfied with that indirect effect on Russia’s prices, he said.

China’s foreign ministry is closed this week for a national holiday, and issued no immediate response to the European action on Wednesday.

Fatih Birol, the executive director of the International Energy Agency, said in an email on Wednesday that while Russia had profited in recent months from high world energy prices, the country would pay a long-term price.

“It’s clear at this stage that Russia isn’t winning the energy battle,” Mr. Birol said. “Its short-term gain in income from the crisis is outweighed by the long-term loss of both trust and revenues that it has brought about by ruining its relationship with the European Union, its biggest customer.”

Before the invasion of Ukraine, Mr. Birol pointed out, about 75 percent of Russia’s natural gas exports and 55 percent of its oil exports went to Europe. “Finding alternative markets on this scale cannot be done quickly or easily, especially in the case of natural gas,” he said.

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Oil maintains most of recent gains ahead of OPEC+ meeting

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  • OPEC+ met on Wednesday, cut output despite tight supply
  • U.S. crude, fuel stockpiles fell last week – EIA
  • Prices around $90 versus $120 in July
  • United States opposed to OPEC cuts, wants lower prices

NEW YORK, Oct 5 (Reuters) – Oil prices rose on Wednesday to three-week highs, as OPEC+ agreed to its deepest cuts to production since the 2020 COVID pandemic, despite a tight market and opposition to cuts from the United States and others.

Prices also rose on U.S. government data that showed crude and fuel inventories fell last week.

Brent crude rose $1.57, or 1.7%, to settle at $93.37 a barrel. Brent reached a session high of $93.96 per barrel, its highest since Sept. 15.

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U.S. West Texas Intermediate (WTI) crude rose $1.24, or 1.4%, to settle at $87.76 a barrel. It reached $88.42 per barrel during the session, the highest since Sept. 15.

Both Brent and WTI rose sharply in the last two days.

The 2 million-barrel-per-day (bpd) cut from OPEC+ could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago on fears of a global economic recession, rising U.S. interest rates and a stronger dollar.

Oil had been rising this week in anticipation of the cuts, said Fiona Cincotta, senior financial markets analyst at City Index.

“The real impact of a large cut would be smaller, given that some of the members are failing to reach their output quotas,” Cincotta added.

In August, OPEC+ missed its production target by 3.58 million bpd as several countries were already pumping well below their existing quotas.

“We believe new output targets will mostly be shouldered by core Middle East countries, led by Saudi Arabia, the UAE and Kuwait,” said Rystad Energy’s analyst Jorge Leon.

Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Wednesday that Russia may cut oil production in order to offset negative effects from price caps imposed by the West over Moscow’s actions in Ukraine. read more

The United States was pressing OPEC+ producers to avoid making deep cuts, a source familiar with the matter told Reuters, as President Joe Biden looks to prevent a rise in U.S. gasoline prices ahead of midterm congressional elections on Nov. 8. read more

Biden has been grappling with higher gasoline prices all year, which have eased after a spike, something his administration has touted as a major accomplishment.

In U.S. supply, crude stocks, gasoline and distillate inventories fell last week, the Energy Information Administration said. Crude inventories (USOILC=ECI) posted a surprise draw of 1.4 million barrels to 429.2 million barrels.

U.S. gasoline stocks (USOILG=ECI) fell more-than-expected by 4.7 million barrels, while distillate stockpiles (USOILD=ECI), which include diesel and heating oil, also posted a larger-than-expected draw, falling by 3.4 million barrels.

“We’re definitely seeing supplies of gasoline and diesel fall pretty dramatically,” said Phil Flynn, analyst at Price Futures Group in Chicago. “The mantra we’ve been seeing in recent weeks is the economy is slowing and oil prices were down because of peak demand, but these numbers seem to be holding up a lot better than people would think.”

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Reporting by Stephanie Kelly in New York, Bozorgmehr Sharafedin in London, Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Marguerita Choy, Elaine Hardcastle, Emelia Sithole-Matarise and David Gregorio

Our Standards: The Thomson Reuters Trust Principles.

Stephanie Kelly

Thomson Reuters

A New-York-based correspondent covering the U.S. crude market and member of the energy team since 2018 covering the oil and fuel markets as well as federal policy around renewable fuels.

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