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  • OPEC Fast Facts | CNN

    OPEC Fast Facts | CNN

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    CNN
     — 

    Here’s a look at the Organization of the Petroleum Exporting Countries, headquartered in Vienna, Austria.

    The purpose of OPEC is to “coordinate and unify the petroleum policies of its Member Countries and ensure the stabilization of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.”

    OPEC members collectively supply about 28.89% of the world’s crude oil production.

    Together, OPEC members control about 79.49% of the world’s total proven crude reserves.

    OPEC member countries monitor the market and decide collectively to raise or lower oil production in order to maintain stable prices and supply.

    A unanimous vote is required on raising or lowering oil production.

    Each member country controls the oil production of its country, but OPEC aims to coordinate the production policies of member countries.

    Oil and energy ministers from OPEC member countries usually meet twice a year to determine OPEC’s output level. They also meet in extraordinary sessions whenever required.

    Read More: Oil and Gasoline Fast Facts

    Algeria – 1969-present
    Congo – 2018-present
    Equatorial Guinea – 2017-present
    Gabon – 1975-1995; 2016-present
    Iran – 1960-present
    Iraq – 1960-present
    Kuwait – 1960-present
    Libya – 1962-present
    Nigeria – 1971-present
    Saudi Arabia – 1960-present
    United Arab Emirates – 1967-present
    Venezuela – 1960-present

    Angola – 2007-2024
    Ecuador – 1973-1992; 2007-2020
    Indonesia – 1962-2009; 2016
    Qatar – 1961-2019

    September 14, 1960 – OPEC is formed in Baghdad, Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.

    November 6, 1962 – OPEC is registered with the United Nations Secretariat (UN Resolution No. 6363).

    1973-1974 – Due to United States support of Israel in the Arab-Israeli conflict, the members of OPEC decide to raise the cost of oil from $3/barrel to around $12/barrel.

    October 1973 – OPEC issues an embargo against the United States, halting oil exports. Customers in the United States experience long lines at gas stations and shortages.

    March 18, 1974 – At an OPEC meeting, seven members lift the ban on exports to the United States: Algeria, Saudi Arabia, Kuwait, Qatar, Bahrain, Egypt and Abu Dhabi. Libya and Syria refuse to drop the ban, and Iraq boycotts the talks.

    December 31, 1974 – Libya lifts its oil embargo against the United States.

    November 2007 – Ecuador rejoins OPEC after a 15-year absence.

    May 2008 – Indonesia announces that it will leave OPEC in 2009.

    January 1, 2009 – Indonesia suspends its membership in OPEC.

    January 1, 2016-November 30, 2016 – Indonesia rejoins OPEC, but suspends its membership after 11 months.

    July 2016 – Gabon rejoins OPEC.

    May 25, 2017 – Equatorial Guinea joins OPEC.

    June 22, 2018 – OPEC announces that the Republic of the Congo has joined the organization.

    December 3, 2018 – Qatar’s state oil company, Qatar Petroleum, announces that the country will leave OPEC on January 1, 2019. One of OPEC’s oldest members, Qatar says it plans to focus on natural gas production.

    January 1, 2020 – Ecuador leaves OPEC.

    March 2020 – To offset the collapse in demand caused by the coronavirus pandemic, OPEC unveils a plan to reduce output among its members by 1 million barrels per day, and says it will seek an additional 500,000 barrels per day in cuts from longstanding allies, including Russia.

    April 1, 2021 – OPEC and allied producers announce that they have agreed to gradually increase their output over the next three months. The move follows a sharp increase in oil prices, and a call from the United States to keep energy affordable.

    October 5, 2022 – OPEC and its allies, known as OPEC+, announce they will cut oil production by 2 million barrels per day, the biggest cut since the start of the pandemic.

    January 1, 2024 – Angola leaves OPEC. Oil minister Diamantino Azevedo said earlier that membership was not serving Angola’s interests.

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  • Oil Spills Fast Facts | CNN

    Oil Spills Fast Facts | CNN

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    CNN
     — 

    Here’s a look at oil spill disasters. Spill estimates vary by source.

    1. January 1991 – During the Gulf War, Iraqi forces intentionally release 252-336 million gallons of oil into the Persian Gulf.

    2. April 20, 2010 – An explosion occurs on board the BP-contracted Transocean Ltd. Deepwater Horizon oil rig, releasing approximately 168 million gallons of oil in the Gulf of Mexico.

    3. June 3, 1979 – Ixtoc 1, an exploratory well, blows out, spilling 140 million gallons of oil into the Bay of Campeche off the coast of Mexico.

    4. March 2, 1992 – A Fergana Valley oil well in Uzbekistan blows out, spilling 88 million gallons of oil.

    5. February 1983 – An oil well in the Nowruz Oil Field in Iran begins spilling oil. One month later, an Iraqi air attack increases the amount of oil spilled to approximately 80 million gallons of oil.

    6. August 6, 1983 – The Castillo de Bellver, a Spanish tanker, catches fire near Cape Town, South Africa, spilling more than 78 million gallons of oil.

    7. March 16, 1978 – The Amoco Cadiz tanker runs aground near Portsall, France, spilling more than 68 million gallons of oil.

    8. November 10, 1988 – The tanker Odyssey breaks apart during a storm, spilling 43.1 million gallons of oil northeast of Newfoundland, Canada.

    9. July 19, 1979 – The Atlantic Empress and the Aegean Captain tankers collide near Trinidad and Tobago. The Atlantic Empress spills 42.7 million gallons of oil. On August 2, the Atlantic Empress spills an additional 41.5 million gallons near Barbados while being towed away.

    10. August 1, 1980 – Production Well D-103 blows out, spilling 42 million gallons of oil southeast of Tripoli, Libya.

    Union Oil Company
    January 28, 1969 – Inadequate casing leads to the blowout of a Union Oil well 3,500 feet deep about five miles off the coast of Santa Barbara, California. About three million gallons of oil gush from the leak until it can be sealed 11 days later, covering 800 square miles of ocean and 35 miles of coastline and killing thousands of birds, fish and other wildlife.

    The disaster is largely considered to be one of the main impetuses behind the environmental movement and stricter government regulation, including President Richard Nixon’s signing of the National Environmental Policy Act, the creation of the Environmental Protection Agency in 1970. It also inspired Wisconsin Senator Gaylord Nelson to found the first Earth Day.

    Exxon Valdez
    March 24, 1989 – The Exxon Valdez runs aground on Bligh Reef in Prince William Sound, Alaska, spilling more than 11 million gallons of oil.

    March 22, 1990 – Captain Joseph Hazelwood is acquitted of all but one misdemeanor, negligent discharge of oil. Hazelwood is later sentenced to 1,000 hours of cleaning around Prince William Sound and is fined $50,000.

    July 25, 1990 – At an administrative hearing, the Coast Guard dismisses charges of misconduct and intoxication against Captain Joseph Hazelwood, but suspends his captain’s license.

    October 8, 1991 – A federal judge approves a settlement in which Exxon and its shipping subsidiary will pay $900 million in civil payments and $125 million in fines and restitution. Exxon says it has already spent more than $2 billion on cleanup.

    September 16, 1994 – A federal jury orders Exxon to pay $5 billion in punitive damages to fishermen, businesses and property owners affected by the oil spill.

    November 7, 2001 – The US Court of Appeals for the Ninth Circuit rules that the $5 billion award for punitive damages is excessive and must be cut.

    December 6, 2002 – US District Judge H. Russel Holland reduces the award to $4 billion.

    December 22, 2006 – The Ninth Circuit Court of Appeals reduces the award to $2.5 billion.

    June 25, 2008 – The US Supreme Court cuts the $2.5 billion punitive damages award to $507.5 million.

    June 15, 2009 – The Ninth Circuit Court of Appeals orders Exxon to pay $470 million in interest on the $507.5 million award.

    BP Gulf Oil Spill
    April 20, 2010 – An explosion occurs aboard BP-contracted Transocean Ltd Deepwater Horizon oil rig stationed in the Gulf of Mexico. Of the 126 workers aboard the oil rig, 11 are killed.

    April 22, 2010 – The Deepwater Horizon oil rig sinks. An oil slick appears in the water. It is not known if the leak is from the rig or from the underwater well to which it was connected.

    April 24, 2010 – The US Coast Guard reports that the underwater well is leaking an estimated 42,000 gallons of oil a day.

    April 28, 2010 – The Coast Guard increases its spill estimate to 210,000 gallons of oil a day.

    May 2, 2010 – President Barack Obama tours oil spill affected areas and surveys efforts to contain the spill.

    May 4, 2010 – The edges of the oil slick reach the Louisiana shore.

    May 26, 2010 – BP starts a procedure known as “top kill,” which attempts to pump enough mud down into the well to eliminate the upward pressure from the oil and clear the way for a cement cap to be put into place. The attempt fails.

    June 16, 2010 – BP agrees to create a $20 billion fund to help victims affected by the oil spill.

    July 5, 2010 – Authorities report that tar balls linked to the oil spill have reached the shores of Texas.

    July 10, 2010 – BP removes an old containment cap from the well so a new one can be installed. While the cap is removed, oil flows freely. The new cap is finished being installed on July 12.

    July 15, 2010 – According to BP, oil has stopped flowing into the Gulf.

    August 3, 2010 – BP begins the operation “static kill” to permanently seal the oil well.

    August 5, 2010 – BP finishes the “static kill” procedure. Retired Adm. Thad Allen says this will “virtually assure us there’s no chance of oil leaking into the environment.”

    January 11, 2011 – The National Commission on the BP Deepwater Horizon Oil Spill and Offshore Drilling releases their full report stating that the explosion of the Deepwater Horizon rig launched the worst oil spill in US history, 168 million gallons (or about 4 million barrels).

    September 14, 2011 – The final federal report is issued on the Gulf oil spill. It names BP, Transocean and Halliburton as sharing responsibility for the deadly explosion that resulted in the April 2010 Gulf of Mexico oil spill.

    January 26, 2012 – A federal judge in New Orleans rules that Transocean, the owner of the Deepwater Horizon rig, is not liable for compensatory damages sought by third parties.

    January 31, 2012 – A federal judge in New Orleans rules that Halliburton is not liable for some of the compensatory damages sought by third parties.

    March 2, 2012 – BP announces it has reached a settlement with attorneys representing thousands of businesses and individuals affected by the 2010 oil spill.

    April 18, 2012 – Court documents are filed revealing the March 2, 2010 settlement BP reached with attorneys representing thousands of businesses and individuals affected by the oil spill. A federal judge must give preliminary approval of the pact, which BP estimates will total about $7.8 billion.

    April 24, 2012 – The first criminal charges are filed in connection with the oil spill. Kurt Mix, a former engineer for BP, is charged with destroying 200-plus text messages about the oil spill, including one concluding that the undersea gusher was far worse than reported at the time.

    November 15, 2012 – Attorney General Eric Holder announces that BP will plead guilty to manslaughter charges related to the rig explosion and will pay $4.5 billion in government penalties. Separate from the corporate manslaughter charges, a federal grand jury returns an indictment charging the two highest-ranking BP supervisors on board the Deepwater Horizon on the day of the explosion with 23 criminal counts.

    November 28, 2012 – The US government issues a temporary ban barring BP from bidding on new federal contracts. The ban is lifted on March 13, 2014.

    December 21, 2012 – US District Judge Carl Barbier signs off on the settlement between BP and businesses and individuals affected by the oil spill.

    January 3, 2013 – The Justice Department announces that Transocean Deepwater Inc. has agreed to plead guilty to a violation of the Clean Water Act and pay $1.4 billion in fines.

    February 25, 2013 – The trial to determine how much BP owes in civil damages under the Clean Water Act begins. The first phase of the trial will focus on the cause of the blowout.

    September 19, 2013 – In federal court in New Orleans, Halliburton pleads guilty to destroying test results that investigators had sought as evidence. The company is given the maximum fine of $200,000 on the charge.

    September 30, 2013 – The second phase of the civil trial over the oil spill begins. This part focuses on how much oil was spilled and if BP was negligent because of its lack of preparedness.

    December 18, 2013 – Kurt Mix, a former engineer for BP, is acquitted on one of two charges of obstruction of justice for deleting text messages about the oil spill.

    September 4, 2014 – A federal judge in Louisiana finds that BP was “grossly negligent” in the run-up to the 2010 disaster, which could quadruple the penalties it would have to pay under the Clean Water Act to more than $18 billion. Judge Carl Barbier of the US District Court for the Eastern District of Louisiana also apportions blame for the spill, with “reckless” BP getting two thirds of it. He says the other two main defendants in the more than 3,000 lawsuits filed in the spill’s wake, Transocean and Halliburton, were found to be “negligent.”

    January 15, 2015 – After weighing multiple estimates, the court determines that 4.0 million barrels of oil were released from the reservoir. 810,000 barrels of oil were collected without contacting “ambient sea water” during the spill response, making BP responsible for a maximum of 3.19 million barrels.

    January 20-February 2, 2015 – The final phase of the trial to determine BP’s fines takes place. The ruling is expected in a few months.

    July 2, 2015 – An $18.7 billion settlement is announced between BP and five Gulf states.

    September 28, 2015 – In a Louisiana federal court, the city of Mobile, Alabama, files an amended complaint for punitive damages against Transocean Ltd., Triton Asset Leasing, and Halliburton Energy Services, Inc., stating that “Mobile, its government, businesses, residents, properties, eco-systems and tourists/tourism have suffered and continue to suffer injury, damage and/or losses as a result of the oil spill disaster.” As of April 20, 2015, Mobile estimated the losses had exceeded $31,240,000.

    October 5, 2015 – BP agrees to pay more than $20 billion to settle claims related to the spill. It is the largest settlement with a single entity in the history of the Justice Department.

    November 6, 2015 – The remaining obstruction of justice charge against Kurt Mix is dismissed as he agrees to plead guilty to the lesser charge of “intentionally causing damage without authorization to a protected computer,” relating to deletion of a text message, a misdemeanor. He receives six months’ probation and must complete 60 hours of community service.

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  • The IMF sees greater chance of a ‘soft landing’ for the global economy | CNN Business

    The IMF sees greater chance of a ‘soft landing’ for the global economy | CNN Business

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    London
    CNN
     — 

    The International Monetary Fund (IMF) sees better odds that central banks will manage to tame inflation without tipping the global economy into recession, but it warned Tuesday that growth remained weak and patchy.

    The agency said it expected the world’s economy to expand by 3% this year, in line with its July forecast, as stronger-than-expected growth in the United States offset downgrades to the outlook for China and Europe. It shaved its forecast for growth in 2024 by 0.1 percentage point to 2.9%.

    Echoing comments made in July, the IMF highlighted the global economy’s resilience to the twin shocks of the pandemic and the Ukraine war while warning in its World Economic Outlook that risks remained “tilted to the downside.”

    “Despite war-disrupted energy and food markets and unprecedented monetary tightening to combat decades-high inflation, economic activity has slowed but not stalled,” IMF chief economist Pierre-Olivier Gourinchas wrote in a blog post. “The global economy is limping along,” he added.

    The IMF’s projections for growth and inflation are “increasingly consistent with a ‘soft landing’ scenario… especially in the United States,” Gourinchas continued.

    But he cautioned that growth “remains slow and uneven,” with weaker recoveries now expected in much of Europe and China compared with predictions just three months ago.

    The 20 countries using the euro are expected to grow collectively by 0.7% this year and 1.2% next year, a downgrade of 0.2 percentage points and 0.3 percentage points respectively from July.

    The IMF now expects China to grow 5% this year and 4.2% in 2024, down from 5.2% and 4.5% previously.

    “China’s property sector crisis could deepen, with global spillovers, particularly for commodity exporters,” it said in its report

    By contrast, the United States is expected to grow more strongly this year and next than expected in July. The IMF upgraded its growth forecasts for the US economy to 2.1% in 2023 and 1.5% in 2024 — an improvement of 0.3 percentage points and 0.5 percentage points respectively.

    “The strongest recovery among major economies has been in the United States,” the IMF said.

    The agency expects that inflation will continue to fall — bolstering the case for a “soft landing” in major economies — but it does not expect it to return to levels targeted by central banks until 2025 in most cases.

    The IMF revised its forecasts for global inflation to 6.9% this year and 5.8% next year — an increase of 0.1 percentage point and 0.6 percentage points respectively.

    Commodity prices pose a “serious risk” to the inflation outlook and could become more volatile amid climate and geopolitical shocks, Gourinchas wrote.

    “Food prices remain elevated and could be further disrupted by an escalation of the war in Ukraine, inflicting greater hardship on many low-income countries,” he added.

    Oil prices surged Monday on concerns that the latest conflict between Israel and Hamas could cause wider instability in the oil-producing Middle East. Brent crude prices were already elevated following supply cuts by major producers Saudi Arabia and Russia.

    High oil and natural gas prices, leading to skyrocketing energy costs, helped drive inflation to multi-decade highs in many economies in 2022. The latest jump in oil prices could cause a fresh bout of broader price rises.

    Bond investors are already on edge. They dumped government bonds last week in the expectation that the world’s major central banks would keep interest rates “higher for longer” to bring inflation down to their targets.

    The IMF also pointed to concerns that high inflation could become a self-fulfilling prophecy. If households and businesses expect prices to go on rising, that could cause them to set higher prices for their goods and services, or demand higher wages.

    “Expectations that future inflation will rise could feed into current inflation rates, keeping them high,” the IMF noted.

    It added that the “expectations channel is critical to whether central banks can achieve the elusive ‘soft landing’ of bringing the inflation rate down to target without a recession.”

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  • Dow tumbles by more than 400 points, on pace for biggest one-day decline since March | CNN Business

    Dow tumbles by more than 400 points, on pace for biggest one-day decline since March | CNN Business

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    New York
    CNN
     — 

    Stocks tumbled Tuesday after a slew of economic data stoked fears about the US economy’s cloudy outlook and further interest rate hikes from the Federal Reserve.

    The benchmark S&P 500 index slid 1.2%, on track for its lowest close since June. The Dow Jones Industrial Average fell 416 points, or 1.2%, on pace for its biggest one-day drop since March; and the Nasdaq Composite lost 1.5%.

    The S&P 500 is hovering around the threshold that it passed to enter bull market territory earlier this summer, which represents a climb of more than 20% off its most recent low last October.

    Housing data released Tuesday morning showed that new home sales fell 8.7% in August from July, as mortgage rates edged above 7% to the highest levels in decades.

    At the same time, US home prices climbed to a record high in July, marking the sixth straight month of increases as a tight supply of homes continues to drive up prices, according to the latest Case-Shiller home prices index.

    “The Fed will see the reacceleration of house prices as a reason to keep interest rates higher for longer,” said Bill Adams, chief economist at Comerica Bank. “The Fed cannot afford to look past house prices’ influence on the cost of living.”

    Investors have been on edge since the Fed last week indicated it could hike interest rates once more this year and delay rate cuts for longer than expected. That sent yields soaring to their highest level in decades, as investors recalibrate their expectations for how long rates will stay higher.

    Oil prices gained on Tuesday after paring back their recent gains earlier. West Texas Intermediate crude futures, the US benchmark, rose to roughly $90 a barrel. Brent crude, the international benchmark, climbed to $94 a barrel.

    JPMorgan Chase CEO Jamie Dimon said Tuesday in an interview with the Times of India that he is preparing the bank’s clients for a 7% interest rate scenario, further spooking investors.

    The possibility of a government shutdown also looms over Wall Street as the fiscal year’s end on September 30 fast approaches without any spending deal.

    Moody’s warned Monday that such an event could be negative for America’s credit rating, which already saw a downgrade from Fitch earlier this year after the federal government narrowly avoided breaching the debt ceiling.

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  • US retail spending picked up in August, mostly due to sales at gas stations | CNN Business

    US retail spending picked up in August, mostly due to sales at gas stations | CNN Business

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    Washington, DC
    CNN
     — 

    US retail sales picked in August, boosted by higher gas prices, as spending on other items grew modestly.

    Retail sales, which are adjusted for seasonal swings but not inflation, rose 0.6% in August, the Commerce Department reported Thursday. That’s a slightly faster pace than July’s revised 0.5% gain, and marks the fifth straight month of growth. It’s also well above economists’ expectation of a 0.2% increase.

    The increase was largely driven by spending at gas stations, which advanced 5.2% last month. Spiking oil prices due to OPEC+ production cuts, strong demand and disruption from a deadly flood in Libya have pushed up prices at the pump. The national average for regular gasoline stood at $3.86 a gallon on Thursday, according to AAA, the highest level in 10 months.

    Excluding sales at gasoline stations, retail spending advanced a more modest 0.2% in August from July.

    Retail spending increased across most categories, including at restaurants and grocery stores. Sales of furniture and at specialty stores, such as those that sell sporting goods, fell 1% and 1.6% respectively. Online retail sales in August were flat, after jumping in July due to Amazon’s Prime Day promotional event.

    Despite 11 interest rate hikes from the Federal Reserve intended to cool demand, the US economy remains on strong footing, with American shoppers still doling out cash thanks to a strong job market.

    But after a summer of robust spending, US consumers are facing a number of economic challenges for the rest of the year, including student loan payments restarting and tougher lending standards, which could curb spending.

    “Fitch continues to view the consumer as relatively healthy, supported by low unemployment and somewhat declining goods inflation,” wrote David Silverman, senior director at Fitch Ratings, in an analyst note.

    However, he noted that “headwinds are emerging,” citing lower consumer savings and the resumption of student loan payments this fall.

    The US economy is widely expected to cool in the coming months, and since consumer spending accounts for about two-thirds of economic output, a weaker economy typically means softer spending. But economists don’t expect a recession this year. While Goldman Sachs recently reduced its bet of a US recession, the Wall Street bank still thinks there’s a 15% chance of an economic downturn.

    The job market is also expected to slow, which would include softer wage growth. That could prompt US consumers to pump the brakes on their spending.

    “Slowing labor market gains and softer disposable income growth in the coming months will likely mean ongoing consumer cautiousness. And it appears that consumers are already taking note,” wrote Lydia Boussour, senior economist at EY-Parthenon, in a note.

    However, if inflation slows in the months ahead, that could actually maintain economic activity, since it means consumers have regained some spending power.

    “Encouragingly, falling inflation should continue to provide a tailwind to real wages and avoid a retrenchment in consumer activity,” Boussour added.

    The Consumer Price Index rose 3.7% in August from a year earlier, up from July’s 3.2% rise, largely due to higher gas prices. Economists still expect inflation to cool later in the year, despite volatile energy markets. But gasoline prices are highly visible indicators of inflation, so more pain at the pump could also dampen consumers’ attitudes.

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  • Hurricane Idalia and Labor Day could send gas prices and inflation higher | CNN Business

    Hurricane Idalia and Labor Day could send gas prices and inflation higher | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Labor Day — one of the busiest driving holidays in the US — is on the horizon, and so is Hurricane Idalia. That’s potentially bad news for gas prices.

    The storm, which is expected to make landfall in Florida as a Category 3 hurricane on Wednesday, could bring 100 mile-per-hour winds and flooding that extends hundreds of miles up the east coast. The impact could take gasoline refinery facilities offline and may limit some Gulf oil production and supplies. Plus, demand for gas is expected to surge as residents of the impacted areas evacuate.

    “Idalia… could pose risk to oil and gas output in the US Gulf,” wrote the Nasdaq Advisory Services Energy Team.

    The storm is expected to make landfall as drivers nationwide load into their vehicles for the Labor Day weekend, pushing up the demand for gasoline even further.

    All together it means the price of oil and gasoline could remain elevated well into the fall.

    Generally, summer demand for oil tends to wane in September, but so does supply as refineries shift from summer fuels to “oxygenated” winter fuels, said Louis Navellier of Navellier and Associates. Since the 1990s, the US has required manufacturers to include more oxygen in their gasoline during the colder months to prevent excessive carbon monoxide emissions.

    With the storm approaching, that trend may not play out.

    What’s happening: Gas prices are already at $3.82 a gallon. That’s the second highest price for this time of year since at least 2004, according to Bespoke Investment Group. (The only time the national average has been higher for this period was last summer, when prices hit $3.85 a gallon).

    Geopolitical tensions have been supporting high oil and gas prices for some time. Recently, increased crude oil imports into China, production cuts by Russia and Saudi Arabia and extreme heat set off a late-summer spike in gas prices. And the threat of powerful hurricanes could send them even higher.

    Analysts at Citigroup have warned that this hurricane season could seriously impact power supplies.

    “Two Category 3 or higher hurricanes landing on US shores could massively disrupt supplies for not weeks but months,” Citigroup analysts wrote in a note last week. In 2005, for example, gas prices surged by 46% between Memorial Day and Labor Day because of the landfall of Hurricane Katrina, according to Bespoke.

    What it means: The Federal Reserve and central banks around the world have been fighting to bring down stubbornly high inflation for more than a year. This week we’ll get some highly awaited economic data: The Fed’s preferred inflation gauge, the Personal Consumption Expenditures index, is due out on Thursday. But the task of inflation-busting is a lot more difficult when energy prices are high, and it’s even harder when they’re on the rise.

    The PCE price index uses a complicated formula to determine how much weight to give to energy prices each month, but they typically comprise a significant chunk of the headline inflation rate.

    “Crude oil price remains elevated, even after the surge at the start of the Russia-Ukraine War,” said Andrew Woods, oil analyst at Mintec, a market intelligence firm. “Energy prices have been a major contributor to persistently high inflation in the US, so the crude oil price will remain a watch-out factor for future inflation.”

    High oil and gas prices are one of the largest contributing factors to inflation. That’s bad news for drivers but tends to be great for the energy industry, as oil prices and energy stocks are closely interlinked.

    Energy stocks were trading higher on Monday. The S&P 500 energy sector was up around 0.75%. Exxon Mobil (XOM) was 0.85% higher, BP (BP) was up 1.36% and Chevron (CVX) was up 0.75%.

    OpenAI, will release a version of its popular ChatGPT tool made specifically for businesses, the company announced on Monday.

    OpenAI unveiled the new service, dubbed “ChatGPT Enterprise,” in a company blog post and said it will be available to business clients for purchase immediately.

    The new offering, reports my colleague Catherine Thorbecke, promises to provide “enterprise-grade security and privacy” combined with “the most powerful version of ChatGPT yet” for businesses looking to jump on the generative AI bandwagon.

    “We believe AI can assist and elevate every aspect of our working lives and make teams more creative and productive,” the blog post said. “Today marks another step towards an AI assistant for work that helps with any task, is customized for your organization, and that protects your company data.”

    Fintech startup Block, cosmetics giant Estee Lauder and professional services firm PwC have already signed on as customers.

    The highly-anticipated announcement from OpenAI comes as the company says employees from over 80% of Fortune 500 companies have already begun using ChatGPT since it launched publicly late last year, according to its analysis of accounts associated with corporate email domains.

    A multitude of leading newsrooms, meanwhile, have recently injected code into their websites that blocks OpenAI’s web crawler, GPTBot, from scanning their platforms for content. CNN’s Reliable Sources has found that CNN, The New York Times, Reuters, Disney, Bloomberg, The Washington Post, The Atlantic, Axios, Insider, ABC News, ESPN, and the Gothamist, among others have taken the step to shield themselves.

    American Airlines just got smacked with the largest-ever fine for keeping passengers waiting on the tarmac during multi-hour delays.

    The Department of Transportation is levying the $4.1 million fine, “the largest civil penalty that the Department has ever assessed” it said in a statement, for lengthy tarmac delays of 43 flights that impacted more than 5,800 passengers. The flights occurred between 2018 and 2021, reports CNN’s Gregory Wallace.

    In the longest of the delays, passengers sat aboard a plane in Texas in August 2020 for six hours and three minutes. The 105-passenger flight had landed after being diverted from the Dallas-Fort Worth International Airport due to severe weather, with the DOT alleging that “American (AAL) lacked sufficient resources to appropriately handle several of these flights once they landed.”

    Federal rules set the maximum time that passengers can be held without the opportunity to get off prior to takeoff or after landing, at three hours for domestic flights and four hours for international flights. Current rules also require airlines provide passengers water and a snack.

    American told CNN the delays all resulted from “exceptional weather events” and “represent a very small number of the 7.7 million flights during this time period.”

    The company also said it has invested in technology to better handle flights in severe weather and reduce the congestion at airports.

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  • Inside efforts to avert environmental ‘catastrophe’ in the Red Sea | CNN

    Inside efforts to avert environmental ‘catastrophe’ in the Red Sea | CNN

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    Editor’s Note: A version of this story appears in CNN’s Meanwhile in the Middle East newsletter, a three-times-a-week look inside the region’s biggest stories. Sign up here.



    CNN
     — 

    Moored five miles off the coast of Yemen for more than 30 years, a decaying supertanker carrying a million barrels of oil is finally being offloaded by a United Nations-led mission, hoping to avert what threatened to be one of the world’s worst ecological disasters in decades.

    Experts are now delicately handling the 47-year-old vessel – called the FSO Safer – working to remove the crude without the tanker falling apart, the oil exploding, or a massive spill taking place.

    Sitting atop The Endeavor, the salvage UN ship supervising the offloading, UN Resident and Humanitarian Coordinator for Yemen David Gressly said that the operation is estimated to cost $141 million, and is using the expertise of SMIT, the dredging and offshore contractor that helped dislodge the Ever Given ship that blocked the Suez Canal for almost a week in 2021.

    How to remove one million barrels of oil from a tanker

    Twenty-three UN member states are funding the mission, with another $16 million coming from the private sector contributors. Donors include Yemen’s largest private company, HSA Group, which pledged $1.2 million in August 2022. The UN also engaged in a unique crowdfunding effort, contributing to the pool which took a year to raise, according to Gressly.

    The team is pumping between 4,000 and 5,000 barrels of oil every hour, and has so far transferred more than 120,000 barrels to the replacement vessel carrying the offloaded oil, Gressly said. The full transfer is expected to take 19 days.

    The tanker was carrying a million barrels of oil. That would be enough to power up to 83,333 cars or 50,000 US homes for an entire year. The crude on board is worth around $80 million, and who gets that remains a controversial matter.

    Here’s what we know so far:

    The ship has been abandoned in the Red Sea since 2015 and the UN has regularly warned that the “ticking time bomb” could break apart given its age and condition, or the oil it holds could explode due to the highly flammable compounds in it.

    The FSO Safer held four times the amount of oil spilled by the Exxon Valdez off Alaska in 1989 which resulted in a slick that covered 1,300 miles of coastline. A potential spill from this vessel would be enough to make it the fifth largest oil spill from a tanker in history, a UN website said. The cost of cleanup of such an incident is estimated at $20 billion.

    The Red Sea is a vital strategic waterway for global trade. At its southern end lies the Bab el-Mandeb strait, where nearly 9% of total seaborne-traded petroleum passes. And at its north is the Suez Canal that separates Africa from Asia. The majority of petroleum and natural gas exports from the Persian Gulf that transit the Suez Canal pass through the Bab el-Mandeb, according to the US Energy Information Administration.

    The sea is also a popular diving hotspot that boasts an impressive underwater eco-system. In places its banks are dotted with tourist resorts, and its eastern shore is the site of ambitious Saudi development projects worth hundreds of billions of dollars.

    The first step of the mission was to stabilize and secure the vessel to avoid it collapsing, Gressly said. That has already been achieved in the past few weeks.

    “There are a number of things that had to be done to secure the oil from exploding,” Gressly told CNN, including pumping out gases in each of the 13 compartments holding the oil. Systems for pumping were rebuilt, and some lighting was repaired.

    Booms, which are temporary floating barriers used to contain marine spills, were dispersed around the vessel to capture any potential leaks.

    The second step is to transfer the oil onto the replacement vessel, which is now underway.

    exp Yemen tanker United Nations cnni world 072611ASEG1_00001402.png

    Oil being removed from tanker near Yemen in Red Sea

    After The Safer is emptied, it must then be cleaned to ensure no oil residue is left, Gressly said. The team will then attach a giant buoy to the replacement vessel until a decision about what to do with the oil has been made.

    “The transfer of the oil to (the replacement vessel) will prevent the worst-case scenario of a catastrophic spill in the Red Sea, but it is not the end of the operation,” Gressly said.

    While the hardest part of the operation would then be over, a spill could still occur. And even after the transfer, the tanker will “continue to pose an environmental threat resulting from the sticky oil residue inside the tank, especially since the tanker remains vulnerable to collapse,” the UN said, stressing that to finish the job, an extra $22 million is urgently needed.

    A spill would shut the Yemeni ports that its impoverished people rely on for food aid and fuel, impacting 17 million people during an ongoing humanitarian crisis caused by the country’s civil war and a Saudi-led military assault on the country. Oil could bleed all the way to the African coast, damaging fish stocks for 25 years and affect up to 200,000 jobs, according to the UN.

    A potential spill would cause “catastrophic” public health ramifications in Yemen and surrounding countries, according to a study by researchers at Stanford University School of Medicine. Yemen, Saudi Arabia and Eritrea would bear the brunt.

    Air pollution from a spill of this magnitude would increase the risk of hospitalization for cardiovascular or respiratory disease for those very directly exposed by 530%, according to the study, which said it could cause an array of other health problems, from psychiatric to neurological issues.

    “Given the scarcity of water and food in this region, it could be one of the most disastrous oil spills ever known in terms of impacts on human life,” David Rehkopf, a professor at Stanford University and senior author of the study, told CNN.

    Up to 10 million people would struggle to obtain clean water, and 8 million would have their access to food supplies threatened. The Red Sea fisheries in Yemen could be “almost completely wiped out,” Rehkopf added.

    The tanker has been an issue for many people in Yemen over the past few years, Gressly said. Sentiment on social media surrounding the removal of oil is very positive, as many in Yemen feel like the tanker is a “threat that’s been over their heads,” he said.

    The tanker issue remains a point of dispute between the Houthi rebels that control the north of Yemen and the internationally recognized government, the two main warring sides in the country’s civil conflict.

    While the war, which saw hundreds of thousands of people killed or injured, and Yemen left in ruins, has eased of late, it is far from resolved.

    Ahmed Nagi, a senior analyst for Yemen at the International Crisis Group think tank in Brussels, sees the Safer tanker issue as “an embodiment of the conflict in Yemen as a whole.”

    “The government sees the Houthi militias as an illegitimate group controlling the tanker, and the Houthis do not recognize (the government),” Nagi told CNN.

    The vessel was abandoned after the outbreak of the Yemeni civil war in 2015. The majority of the oil is owned by Yemeni state firm SEPOC, experts say, and there are some reports that it may be sold.

    “From a technical point of view, the owner of the tanker and the oil inside it is SEPOC,” Nagi said, adding that other energy companies working in Yemen may also share ownership of the oil.

    exp un yemen oil spill tanker achim steiner vause intv FST 071912ASEG2 cnni world_00003204.png

    U.N. begins high-risk operation to prevent catastrophic oil spill from Yemen tanker

    The main issue, Nagi added, is that the Safer’s headquarters are in the government-controlled Marib city, while the tanker is in an area controlled by the Houthis. The Safer is moored off the coast of the western Hodeidah province.

    Discussions to determine the ownership of the oil are underway, Gressly said. The rights to the oil are unclear and there are legal issues that need to be addressed.

    The UN coordinator hopes that the days needed to offload the oil will buy some time for “political and legal discussions that need to take place before the oil can be sold.”

    While the UN may manage to resolve half of the issue, Nagi said, there still needs to be an understanding of the oil’s status.

    “It still poses a danger if we keep it near a conflict zone,” he said.

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  • US oil prices sink below $70 on debt ceiling jitters and Russia-Saudi tensions | CNN Business

    US oil prices sink below $70 on debt ceiling jitters and Russia-Saudi tensions | CNN Business

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    New York
    CNN
     — 

    US oil prices dropped below $70 a barrel Tuesday on concerns about whether the debt ceiling deal will make it through Congress and on reports of tensions between Saudi Arabia and Russia ahead of a key OPEC+ meeting.

    Crude slumped 4.4% to close at $69.46 a barrel, the lowest settlement price in nearly four weeks.

    The selloff marks one of the worst days of the year for the oil market and could help keep a lid on pump prices. The national average for a gallon of regular gasoline is down by about $1 from a year ago.

    Oil market veterans blamed Tuesday’s decline in part on worries about whether conservatives in the House of Representatives will try to block the bipartisan deal to raise the debt ceiling forged over the weekend by President Joe Biden and House Speaker Kevin McCarthy.

    “It’s not a layup that the debt deal is going to get done. That’s spooking the market, no doubt about that,” said Robert Yawger, vice president of energy futures at Mizuho Securities.

    Patrick De Haan, head of petroleum analysis at GasBuddy, also pointed to “growing skepticism” about the debt ceiling agreement and the risk that a failure to raise the borrowing limit sets off a “deep recession” that curbs demand for oil.

    Treasury Secretary Janet Yellen has warned the government will not have enough funds to meet all of the nation’s obligations if Congress does not address the debt ceiling by June 5.

    Brent crude, the world benchmark, dropped by more than 4%, slipping below $74 a barrel.

    Meanwhile, there are new questions about the relationship between OPEC leader Saudi Arabia and Russia ahead of this weekend’s meeting of oil producers in Vienna.

    Saudi Arabia has expressed anger to Russia for failing to follow through on Moscow’s promise to cut production in response to Western sanctions, the Wall Street Journal reported, citing sources. The apparent tensions raises uncertainty about the status of OPEC+, the alliance between OPEC members like Saudi Arabia, the United Arab Emirates and Kuwait and non-OPEC nations led by Russia.

    “There is starting to be chatter about the Russian and Saudis not being the best of friends,” said Yawger.

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  • What the OPEC cuts mean for Putin and Russia | CNN Business

    What the OPEC cuts mean for Putin and Russia | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Some of the world’s largest oil exporters shocked markets over the weekend by announcing that they would cut oil production by more than 1.6 million barrels a day.

    OPEC+, an alliance between the Organization of the Petroleum Exporting Countries (OPEC) and a group of non-OPEC oil-producing countries, including Russia, Mexico, and Kazakhstan, said on Sunday that the cuts would start in May, running through the end of the year. The news sent both Brent crude futures — the global oil benchmark — and WTI — the US benchmark — up about 6% in trading Monday.

    OPEC+ was formed in 2016 to coordinate and regulate oil production and stabilize global oil prices. Its members produce about 40% of the world’s crude oil and have a significant impact on the global economy.

    What it means for Putin: OPEC+’s decision to cut oil production could have big implications for Russia.

    After Russia invaded Ukraine last year, the United States and United Kingdom immediately stopped purchasing oil from the country. The European Union also stopped importing Russian oil that was sent by sea.

    Members of the G7 — an organization of leaders from some of the world’s largest economies: Canada, France, Germany, Italy, Japan, the United Kingdom and the United States — have also imposed a price cap of $60 per barrel on oil exported by Russia, keeping the country’s revenues artificially low. If oil prices continue to rise, some analysts have speculated that the US and other western nations may have to loosen that price cap.

    US Treasury Secretary Janet Yellen said Monday that the changes could lead to reassessing the price cap — though not yet. “Of course, that’s something that, if we’ve decided that it’s appropriate to revisit, could be changed, but I don’t see that that’s appropriate at this time,” she told reporters.

    “I don’t know that this is significant enough to have any impact on the appropriate level of the price cap,” she added.

    Russia also recently announced that it would lower its oil production by 500,000 barrels per day until the end of this year.

    Just last week Putin admitted that western sanctions could deal a blow to Russia’s economy.

    “The illegitimate restrictions imposed on the Russian economy may indeed have a negative impact on it in the medium term,” Putin said in televised remarks Wednesday reported by state news agency TASS.

    Putin said Russia’s economy had been growing since July, thanks in part to stronger ties with “countries of the East and South,” likely referring to China and some African countries.

    Russia, China and Saudi Arabia: The OPEC+ announcement came as a surprise this week. The group had already announced it would cut two million barrels a day in October of 2022 and Saudi Arabia previously said its production quotas would stay the same through the end of the year.

    “The move to reduce supply is fairly odd,” wrote Warren Patterson, head of commodities strategy at ING in a note Monday.

    “Oil prices have partly recovered from the turmoil seen in financial markets following developments in the banking sector,” he wrote. “Meanwhile, oil fundamentals are expected to tighten as we move through the year. Prior to these cuts, we were already expecting the oil market to see a fairly sizable deficit over the second half or 2023. Clearly, this will be even larger now.”

    Saudi Arabia stated that the cut is a “precautionary measure aimed at supporting the stability of the oil market,” but Patterson says it will likely “lead to further volatility in the market,” later this year as less available oil will add to inflationary feats.

    Still, the changes signal shifting global alliances with Russia, China and Saudi Arabia around oil prices, said analysts at ClearView Energy Partners. Higher-priced oil could help Russia pay for its war on Ukraine and also boosts revenue in Saudi Arabia.

    The White House, meanwhile, has spoken out against OPEC’s decision. “We don’t think cuts are advisable at this moment given market uncertainty – and we’ve made that clear,” National Security Council spokesman John Kirby said Monday.

    – CNN’s Paul LeBlanc and Hanna Ziady contributed to this report

    The crisis triggered by the recent collapses of Silicon Valley Bank and Signature Bank is not over yet and will ripple through the economy for years to come, said JPMorgan Chase CEO Jamie Dimon on Tuesday.

    In his closely watched annual letter to shareholders, the chief executive of the largest bank in the United States outlined the extensive damage the financial system meltdown had on all banks and urged lawmakers to think carefully before responding with regulatory policy.

    “These failures were not good for banks of any size,” wrote Dimon, responding to reports that large financial institution benefited greatly from the collapse of SVB and Signature Bank as wary customers sought safety by moving billions of dollars worth of money to big banks.

    In a note last month, Wells Fargo banking analyst Mike Mayo wrote “Goliath is winning.” JPMorgan in particular, he said, was benefiting from more deposits “in these less certain times.”

    “Any crisis that damages Americans’ trust in their banks damages all banks – a fact that was known even before this crisis,” said Dimon. “While it is true that this bank crisis ‘benefited’ larger banks due to the inflow of deposits they received from smaller institutions, the notion that this meltdown was good for them in any way is absurd.”

    The failures of SVB and Signature Bank, he argued, had little to do with banks bypassing regulations and that SVB’s high Interest rate exposure and large amount of uninsured deposits were already well-known to both regulators and to the marketplace at large.

    Current regulations, Dimon argued, could actually lull banks into complacency without actually addressing real system-wide banking issues. Abiding by these regulations, he wrote, has just “become an enormous, mind-numbingly complex task about crossing t’s and dotting i’s.”

    And while regulatory change will be a likely outcome of the recent banking crisis, Dimon argued that, “it is extremely important that we avoid knee-jerk, whack-a-mole or politically motivated responses that often result in achieving the opposite of what people intended.” Regulations, he said, are often put in place in one part of the framework but have adverse effects on other areas and just make things more complicated.

    The Federal Deposit Insurance Corporation has said it will propose new rule changes in May, while the Federal Reserve is currently conducting an internal review to assess what changes should be made. Lawmakers in Congress, like Democratic Sen. Sherrod Brown, have suggested that new legislation meant to regulate banks is in the works.

    But, wrote Dimon, “the debate should not always be about more or less regulation but about what mix of regulations will keep America’s banking system the best in the world.”

    Dimon’s letter to shareholders touched on a number of pressing issues, including climate change. “The window for action to avert the costliest impacts of global climate change is closing,” he wrote, expressing his frustration with slow growth in clean energy technology investments.

    “Permitting reforms are desperately needed to allow investment to be done in any kind of timely way,” he wrote.

    One way to do that? “We may even need to evoke eminent domain,” he suggested. “We simply are not getting the adequate investments fast enough for grid, solar, wind and pipeline initiatives.”

    Eminent domain is the government’s power to take private property for public use, so long as fair compensation is provided to the property owner.

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  • Oil prices surge after OPEC+ producers announce surprise cuts | CNN Business

    Oil prices surge after OPEC+ producers announce surprise cuts | CNN Business

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    Hong Kong/Atlanta
    CNN
     — 

    Oil prices spiked during Asian trade Monday after OPEC+ producers said they would cut production in a surprise move.

    Brent crude, the global benchmark, jumped 4.8% to $83.73 a barrel, while WTI, the US benchmark, rose 4.9% to $79.36.

    Rising oil prices could mean inflation remains higher for longer, adding pressure to a hot-button issue for consumers around the world.

    On Sunday, Saudi Arabia announced that it would start “a voluntary reduction” in its production of crude oil, alongside other members or allies of the Organization of the Petroleum Exporting Countries (OPEC).

    The cuts will start in May and last through the end of the year, an official with the Saudi Ministry of Energy was quoted as saying by Saudi state-run news agency SPA.

    The reductions are on top of those announced by OPEC+ in October, according to SPA.

    That month, oil producers had agreed to slash output by 2 million barrels a day, the largest cut since the start of the pandemic and equivalent to about 2% of global oil demand.

    Saudi Arabia now says it will cut oil production by another half a million barrels a day.

    Meanwhile, Iraq will slash production by 200,000 barrels per day, and the United Arab Emirates will decrease output by 144,000 barrels per day.

    Kuwait, Algeria and Oman will also lower production by 128,000, 48,000 and 40,000 barrels per day, respectively.

    In a Sunday note, Goldman Sachs analysts said the move was unexpected but “consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share.”

    The collective output cut by the nine members of OPEC+ totals 1.66 million barrels per day, said the analysts, who hiked their price forecast for Brent this year to $95 per barrel.

    Saudi Arabia’s energy ministry described its latest reduction as a precautionary measure aimed at supporting the stability of the oil markets, according to SPA.

    The White House pushed back on that notion — as well as the latest cuts by OPEC+.

    “We don’t think cuts are advisable at this moment given market uncertainty — and we’ve made that clear,” a spokesperson for the National Security Council said. “We’re focused on prices for American consumers, not barrels.”

    In October, OPEC+’s decision to cut production had already rankled the White House.

    US President Joe Biden pledged at the time that Saudi Arabia would suffer “consequences.” But so far, his administration appears to have back off on its vows to punish the Middle East kingdom.

    Russia, a member of OPEC+, also said Sunday that it would extend a voluntary reduction of 500,000 barrels per day until the end of 2023. The move was announced by Russian Deputy Prime Minister Alexander Novak, as cited by state-run news agency TASS.

    That decision was less surprising. Goldman analysts said they had forecast the cut would last into the second half of the year.

    — CNN’s Hanna Ziady and Arlette Saenz contributed to this report.

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  • Russia’s economy is hurting despite Putin’s bluster | CNN Business

    Russia’s economy is hurting despite Putin’s bluster | CNN Business

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    London
    CNN
     — 

    When Russia launched its full-scale invasion of Ukraine one year ago, Western countries hit back with unprecedented sanctions to punish Moscow and pile pressure on President Vladimir Putin. The aim: to deal an economic blow so severe that Putin would reconsider his brutal war.

    Russia’s economy did weaken as a result. But it also showed surprising resilience. As demand for Russian oil fell in Europe, Moscow redirected its barrels to Asia. The country’s central bank staved off a currency crisis with aggressive capital controls and interest rate hikes. Military expenditure supported the industrial sector, while the scramble to replace Western equipment and technology lifted investment.

    “The Russian economy and system of government have turned out to be much stronger than the West believed,” Putin said in a speech to Russia’s parliament Tuesday.

    Yet cracks are starting to show and they will widen over the next 12 months. The European Union — which spent more than $100 billion on Russian fossil fuels in 2021 — has made huge strides in phasing out purchases. The bloc, which dramatically reduced its dependence on Russian natural gas last year, officially banned most imports of Russian crude oil by sea in December. It enacted a similar block on refined oil products this month.

    Those measures are already straining Russia’s finances as it struggles to find replacement customers. The government reported a budget deficit of about 1,761 billion rubles ($23.5 billion) for January. Expenditure jumped 59% year-over-year, while revenue plunged 35%. Deputy Prime Minister Alexander Novak announced that Russia would cut oil production by about 5% starting in March.

    “The era of windfall profits from the oil and gas market for Russia is over,” Janis Kluge, an expert on Russia’s economy at the German Institute for International and Security Affairs, told CNN.

    Meanwhile, the ruble has slumped to its weakest level against the US dollar since last April. The currency’s weakness has contributed to high inflation. And most businesses say they can’t conceive of growing right now given high levels of economic uncertainty, according to a recent survey by a Russian think tank.

    These dynamics place the country’s economy on a trajectory of decline. And they will force Putin to choose between ramping up military spending and investing in social goods like housing and education — a decision that could have consequences both for the war and the Russian public’s support of it.

    “This year could really be the key test,” said Timothy Ash, an associate fellow in the Russia and Eurasia program at Chatham House, a think tank.

    In a bid to bring Russia to heel for its aggression, Western countries have used their sway over the global financial system, unveiling more than 11,300 sanctions since the invasion and freezing some $300 billion of the country’s foreign reserves. At the same time, more than 1,000 companies, ranging from BP

    (BP)     to McDonald’s

    (MCD)     and Starbucks

    (SBUX)    , have exited or curtailed operations in the country, citing opposition to the war and new logistical challenges.

    Russia’s economic output duly contracted by 2.1% last year, according to a preliminary estimate from the government. But the hit was more limited than forecasters initially expected. When sanctions were first imposed, some economists predicted a contraction of 10% or 15%.

    One reason for Russia’s unexpected pluck was its push toward self-sufficiency following Putin’s annexation of Crimea from Ukraine in 2014. Through a policy known as “Fortress Russia,” the government boosted domestic food production and policymakers forced banks to build up their reserves. That created a degree of “durability,” said Ash at Chatham House.

    The swift intervention of Russia’s central bank, which jacked up interest rates to 20% after the invasion and implemented currency controls to buttress the ruble, was also a stabilizing force. So was the need for factories to increase production of military goods and replace items that had been imported from the West.

    But the greatest support came from high energy prices and the world’s continued thirst for oil and other commodities.

    Russia, the world’s second-largest exporter of crude, was able to send barrels that would have gone to Europe to countries like China and India. The European Union, which imported an average of 3.3 million barrels of Russian crude and oil products per day in 2021, was also still buying 2.3 million barrels per day as of November, according to the International Energy Agency (IEA).

    “It’s a question of natural resources,” Sergey Aleksashenko, Russia’s former deputy minister of finance, said at an event last month hosted by the Center for Strategic and International Studies, a think tank. That meant the economy experienced a decline, but “not a collapse,” he added.

    In fact, Russia’s average monthly oil export revenues rose by 24% last year to $18.1 billion, according to the IEA. Yet a repeat performance is unlikely, presaging increasingly tough decisions for Putin.

    The price of a barrel of Urals crude, Russia’s main blend, fell to an average of $49.50 in January after Europe’s oil embargo — as well as a Group of Seven price cap — took effect. By comparison, the global benchmark stood around $82. That suggests that customers like India and China, seeing a smaller pool of interested buyers, are negotiating greater discounts. Russia’s 2023 budget is based on a Urals price of more than $70 per barrel.

    Finding new buyers for processed oil products, which are also subject to new embargoes and price caps, won’t be easy either. China and India have their own network of refineries and prefer to buy crude, noted Ben McWilliams, an energy consultant at Bruegel.

    Meanwhile, gas exports to Europe have plunged since Russia shut its Nord Stream 1 pipeline.

    A motorcyclist rides past an oil depot in New Delhi, India, on Sunday, June 12, 2022.

    Russia’s government relied on the oil and gas sector for 45% of its budget in 2021. As it plans to maximize defense spending, lower revenues inevitably mean trade-offs. Spending plans for 2023 finalized in December involved a decrease in expenditure on housing and health care, as well as a category that includes public infrastructure.

    “Whatever energy resources are obtained, they’ll be spent on military needs,” said Gulnaz Sharafutdinova, acting director of the Russia Institute at King’s College London.

    The International Monetary Fund still expects Russia’s economy to expand by 0.3% this year and 2.1% the next. Yet any outlook is contingent on what happens in Ukraine.

    “Whether the economy shrinks or expands in 2023 will be determined by developments in the war,” Tatiana Orlova, an economist at Oxford Economics, wrote in a note to clients on Tuesday. Shortages of workers tied to military conscription and emigration pose a key risk, she noted.

    The impact of Western sanctions is poised to develop into a crisis over time. Bloomberg Economics estimates that Putin’s war in Ukraine will slash $190 billion off Russia’s gross domestic product by 2026 compared with the country’s prewar path.

    Sectors that rely on imports have been particularly vulnerable. Domestic car makers such as Avtovaz, which manufactures the iconic Ladas, have struggled with shortages of key components and materials.

    A man talks on his phone near a closed H&M store on December 15, 2022 in Moscow, Russia.

    Russia’s auto industry was already weakened after companies such as Volkswagen

    (VLKAF)    , Renault

    (RNLSY)    , Ford

    (F)     and Nissan

    (NSANF)     halted production and began to sell their local assets last year. Chinese firms have stepped up their presence, part of a broader trend. Even so, sales of new cars dropped 63% year-over-year in January, according to the Association of European Businesses.

    Across sectors, firms are struggling to plan for the future. A survey of more than 1,000 Russian businesses by the Stolypin Institute of Economic Growth in November found that almost half plan to maintain production over the next one to two years and aren’t thinking about growth. The group said this contributed to a high risk of “long-term stagnation of the Russian economy.”

    Given Putin’s ideological commitment to subsuming Ukraine, he’s unlikely to back down, according to Sharafutdinova at King’s College London. But his war chest “is likely, inevitably, to diminish,” she added.

    Prioritizing military spending will also come at a social cost, with a “slow and creeping” erosion of living standards, she added.

    “In normal times, we might have said that the population would protest against that,” Sharafutdinova said. “But of course, these are not normal times.”

    — Clare Sebastian and Olesya Dmitracova contributed reporting.

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  • Russia to cut oil output by 5% as sanctions bite | CNN Business

    Russia to cut oil output by 5% as sanctions bite | CNN Business

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    London
    CNN
     — 

    Russia will cut crude oil production by half a million barrels per day starting in March, a little over two months after the world’s major economies imposed a price cap on the country’s seaborne exports.

    “We will not sell oil to those who directly or indirectly adhere to the principles of the price ceiling,” Russian Deputy Prime Minister Alexander Novak said in a statement. “In relation to this, Russia will voluntarily reduce production by 500,000 barrels per day in March. This will contribute to the restoration of market relations.”

    The cut is equivalent to about 5% of Russian oil output.

    Futures prices for Brent crude, the global benchmark, jumped 2.7% Friday to $86 a barrel as traders anticipated a tightening in global supply. US oil gained 1% to trade at $79 a barrel.

    In June last year, the European Union agreed to phase out all seaborne imports of Russian crude oil within the following six months as part of unprecedented Western sanctions aimed at reducing Moscow’s ability to fund its war in Ukraine.

    In a move aimed at further tightening the screws, G7 countries and the European Union agreed in December to cap the price at which Western brokers, insurers and shippers can trade Russia’s seaborne oil for markets elsewhere at $60 a barrel. Earlier this month, EU countries also banned imports of Russia’s diesel and refined oil imports.

    Novak warned that the crude oil price cap could lead to “a decrease in investment in the oil sector and, accordingly, an oil shortage.”

    Neil Crosby, a senior analyst at oil data firm OilX, told CNN that a 500,000 barrel-a-day cut is not the “worst-case scenario” and is still a smaller hit to Russian production than most analysts were expecting last year.

    “But it sets a precedent for further cuts ahead if necessary or desired by Russian authorities,” Crosby said, adding that Moscow could be anticipating difficulty in finding enough demand for its crude.

    Russian Urals crude traded at a discount to Brent crude of $28 a barrel on Friday. Over the past few months, India and China have snapped up cheap oil from Moscow, just as the EU — once Russia’s biggest customer for crude — has ended all imports.

    “Russia currently has a limited pool of buyers for its crudes and has likely found a ceiling to its export sales in the near term, primarily to China and India,” said Alan Gelder, vice president of refining, chemicals and oil markets at Wood Mackenzie.

    According to Reuters, Russia took the decision to reduce its output without consulting the OPEC+ group of producers, which includes Saudi Arabia. OPEC+ decided in October to cut output by 2 million barrels per day and has not adjusted that stance since.

    A potential drop in global oil supply could come at a tricky time. China’s swift reopening of its economy in December after almost three years of strict coronavirus restrictions has pushed up estimates for global oil demand.

    Last month, the International Energy Agency said it expected global demand to surge by 1.9 million barrels per day to reach an all-time high of 101.7 million barrels per day, with China accounting for nearly half of the increase.

    Western sanctions — added to the grinding cost of war — are weighing on Russia’s economy. The country’s budget deficit ballooned to $45 billion last year, or 2.3% of its gross domestic product.

    But Russia’s central bank held its main interest rate at 7.5% Friday, saying that economic activity was better than expected and that inflation was likely to come down this year.

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  • Here’s what keeps Jerome Powell up at night and interest rates high | CNN Business

    Here’s what keeps Jerome Powell up at night and interest rates high | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Federal Reserve Chairman Jerome Powell threw markets into a tizzy on Tuesday as he spoke about the economy alongside his former boss, Carlyle Group co-founder David Rubenstein, at the Economic Club of Washington.

    Stocks struggled for direction as investors tried to get a read on Powell’s economic outlook, attitude towards inflation and on future interest rate hikes. Wall Street cheered as the Fed chair said the disinflationary process has begun, then soured when he said the road to reaching 2% inflation will be “bumpy” and “long” with more rate hikes ahead.

    Markets soared to new highs, before quickly falling to session lows and then recovering to close the day in the green.

    “Powell doesn’t want to play games with financial markets,” said EY Parthenon chief economist Gregory Daco after the conversation. But at the same time, he said Powell wanted to communicate that the Fed’s “base case was not for inflation to come down as quickly and painlessly as some market participants appear to expect.”

    Here’s why Powell thinks bringing down prices will be more difficult than investors anticipate.

    Structural changes in the labor market: The US economy added an astonishing 517,000 jobs in January, blowing economists’ expectations out of the water. The unemployment rate fell to 3.4% from 3.5%, hitting a level not seen since May 1969.

    The current labor market imbalance is a reflection of the pandemic’s lasting effect on the US economy and on labor supply, said Powell on Tuesday in answer to a question about the report. “The labor market is extraordinarily strong,” he said. Demand exceeds supply by 5 million people, and the labor force participation rate has declined. “It feels almost more structural than cyclical.”

    “If we continue to get, for example, strong labor market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more,” he said.

    Core services inflation: Powell noted that he’s seeing disinflation in the goods sector and expects to soon see declining inflation in housing. But prices remain stubborn for services. Service-sector inflation, which is more sensitive to a strong labor market, is up 7.5% from the year prior through the end of 2022, and has not abated, he said.

    “That sector is not showing any disinflation yet,” Powell said. “There has been an expectation that [higher prices] will go away quickly and painlessly and I don’t think that’s at all guaranteed.”

    Geopolitical uncertainties: Powell also cited concerns that the reopening of China’s economy after the sudden end of Covid-Zero restrictions, plus uncertainty about Russia’s war on Ukraine could also affect the inflation path in ways that remain unclear.

    ▸ The labor market is strong, but tech layoffs keep coming. There were around  50,000 tech jobs cut in January, and the trend has continued into February.

    Video conferencing service Zoom is one of the latest to announce layoffs. The company said Tuesday that it’s cutting 1,300 jobs or 15% of its workforce. 

    Zoom CEO Eric Yuan said in a blog post on Tuesday that Zoom ramped up employment  quickly due to increased demand during the pandemic. The company grew three times in size within 24 months, he said and now it must  adapt to changing demand for its services.

    “The uncertainty of the global economy, and its effect on our customers, means we need to take a hard — yet important — look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision,” he wrote.

    Yuan added that he plans to lower his own salary by 98% and forgo his 2023 bonus. Shares of Zoom closed nearly 10% higher on Tuesday. 

    The announcement comes just one day after Dell said it would lay off more than 6,500 employees.

    Amazon

    (AMZN)    , Microsoft

    (MSFT)    , Google and other tech giants have also recently announced plans to cut thousands of workers as the companies adapt to shifting pandemic demand and fears of a looming recession.

    ▸ Neel Kashkari, president of the Federal Reserve Bank of Minneapolis told CNN that he is starting to think that the US economy could avoid a recession and achieve a so-called soft landing.

    It’s hard to have a recession when the job market is still so robust, he told CNN’s Poppy Harlow on Tuesday on CNN This Morning.

    Still, “we have more work to do,” Kashkari told Harlow, adding that the labor market is “too hot” and that is a key reason why it is “harder to bring inflation back down.”

    Although many investors are starting to think the Fed may pause after just two more similarly small hikes, to a level of around 5%, Kashkari said he believes the Fed may have to raise rates further. Kashkari has a vote this year on the Federal Open Market Committee, the Fed’s interest-rate setting group.

    ▸ It’s a good time to be in the oil business. BP’s annual profit more than doubled last year to an all-time high of nearly $28 billion.

    The British energy company said in a statement that underlying replacement cost profit rose to $27.7 billion in 2022 from $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

    BP

    (BP)     also unveiled a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

    BP’s shares rose 6% in Tuesday trading following the news. Over the past 12 months, its shares have soared 24%.

    The earnings are the latest in a string of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of skyrocketing oil and gas prices.

    Last week, another energy major Shell reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices jumped following Russia’s invasion of Ukraine.

    On Wednesday it was TotalEnergie

    (TTFNF)    s turn. The French company posted annual profit of $36.2 billion for 2022, double the previous year’s earnings.

    Disney has found itself in the middle of a culture war battle that could end up transferring Disney World’s governance to a board appointed by Florida Gov. Ron DeSantis. And that may be the least of Disney’s problems, writes my colleague Chris Isidore.

    The company faces a media industry in turmoil, plunging cable subscriptions, a still-recovering box office, massive streaming losses, activist shareholders, possible reorganization and layoffs and growing labor disputes with employees. That’s a lot for CEO Bob Iger to handle.

    Iger, who retired as CEO in 2020 only to be brought back in November, has been mostly quiet about his plans for the company since his return. That ends at 4:30 p.m. ET Wednesday when he is set to begin an earnings call with Wall Street investors.

    Click here to read more about what to look for on what is certain to be a closely-followed call.

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  • BP’s annual profit more than doubles to $28 billion | CNN Business

    BP’s annual profit more than doubles to $28 billion | CNN Business

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    Hong Kong
    CNN
     — 

    BP’s annual profit more than doubled last year to nearly $28 billion, extending a record run of earnings for the world’s oil majors that is adding to calls for higher taxes on the windfall gains.

    The British energy giant said in a statement that underlying replacement cost profit rose to $27.7 billion for 2022, compared with $12.8 billion the previous year. The metric is a key indicator of oil companies’ profitability.

    BP

    (BP)     also announced on Tuesday a further $2.75 billion in share buybacks and hiked its dividend for the fourth quarter by around 10% to 6.61 cents per share.

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    Last week, Shell

    (RDSA)     reported a record profit of almost $40 billion for 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    — This is a developing story and will be updated.

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  • Shell profits double to record $40 billion | CNN Business

    Shell profits double to record $40 billion | CNN Business

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    Hong Kong/London
    CNN
     — 

    Shell made a record profit of almost $40 billion in 2022, more than double what it raked in the previous year after oil and gas prices soared following Russia’s invasion of Ukraine.

    Europe’s largest oil company by revenue reported adjusted full-year earnings of $39.9 billion on Thursday — more than double the $19.3 billion it posted in 2021 — driven by a strong performance in its gas trading business. The company’s stock was up 1.7% in London.

    The company reported $9.8 billion in profit in the fourth quarter. Just over 40% of Shell’s full-year earnings came from its integrated gas business, which includes liquified natural gas trading operations.

    Shell CEO Wael Sawan said the results “demonstrate the strength of Shell’s differentiated portfolio, as well as our capacity to deliver vital energy to our customers in a volatile world.”

    The earnings are the latest in a series of record-setting results by the world’s biggest energy companies, which have enjoyed bumper profits off the back of soaring oil and gas prices.

    ExxonMobil this week posted record full-year earnings of $59.1 billion. Last month, Chevron

    (CVX)     reported a record full-year profit of $36.5 billion.

    That has led to renewed calls for higher taxation. Governments in the European Union and the United Kingdom have already imposed windfall taxes on oil company profits, with the proceeds used to help households struggling with rising energy bills.

    Shell said it expected to pay an additional $2.3 billion in tax related to the EU windfall tax and the UK energy profits levy. The company paid $13 billion in tax globally in 2022.

    Shell

    (RDSA)     also announced another $4 billion share buyback program and confirmed it would lift its dividend per share by 15% for the fourth quarter.

    — This is a developing story and will be updated.

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  • Biden administration takes another step toward advancing a controversial oil drilling project in Alaska | CNN Politics

    Biden administration takes another step toward advancing a controversial oil drilling project in Alaska | CNN Politics

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    CNN
     — 

    The Interior Department’s Bureau of Land Management on Wednesday advanced the controversial Willow oil drilling project on Alaska’s North Slope, releasing the final environmental impact statement before the project can be approved.

    The ConocoPhillips proposed Willow drilling plan is a massive and decadeslong project that the state’s bipartisan Congressional delegation says will create much-needed jobs for Alaskans and boost domestic energy production in the US.

    But environmental groups fear the impact of the planet-warming carbon pollution from the hundreds of millions of barrels of oil it would produce – and say it will deal a significant blow to President Joe Biden’s ambitious climate agenda.

    The final environmental report from the Bureau of Land Management recommends a slightly smaller version of what ConocoPhillips originally proposed, putting the number of drilling sites at three instead of five. The Department of Interior is also recommending other measures to try to lower the pollution of the project, and recommending a smaller footprint of gravel roads and pipelines.

    In a statement, the Interior Department said it “has substantial concerns about the Willow project and the preferred alternative as presented in the final SEIS, including direct and indirect greenhouse gas emissions and impacts to wildlife and Alaska Native subsistence.”

    The Biden administration now has 30 days to issue a final decision on the project, after which drilling could begin. In its statement, Interior said it could select a different alternative on the project, including taking no action or further reducing the number of drill sites.

    ConocoPhillips and members of the Alaska Congressional delegation have been pushing the administration to finalize the project by the end of February to take advantage of cold and icy conditions needed to drill in the Arctic. If the company misses that window, it could push the project’s start date to next year.

    Erec Isaacson, president of ConocoPhillips Alaska, said in a statement that nearly five years of regulatory review should conclude “without delay.” Isaacson added the project is “ready to begin construction immediately” after Interior’s final decision is issued.

    According to the Interior Department’s own estimation, the project would produce 629 million barrels of oil over the course of 30 years and would release around 278 million metric tons of planet-warming carbon emissions. Climate groups say that’s equivalent to what 76 coal-fired power plants produce every year.

    “The world and the country can’t afford to develop that oil,” said Jeremy Lieb, a senior attorney for environmental law firm Earthjustice. Lieb and other advocates are concerned that Willow may be the start of a future drilling boom in the area.

    “Willow is just the start based on what industry has planned,” Lieb said. “The total estimate for the amount of oil that could be accessible in the region around Willow is 7 or 8 billion barrels.”

    For the Willow project, ConocoPhillips is proposing five drilling sites on federal land in Alaska’s North Slope, and the project would include a processing facility, pipelines to transport oil, gravel roads, at least one airstrip and a gravel mine site.

    The project – and the public comment process leading up to it – has also received heavy criticism from the nearby Alaska Native village of Nuiqsut, which some villagers evacuated last year during a gas leak in a ConocoPhillips project in the area. Nuiqsut officials recently released a letter calling the Bureau of Land Management’s public input process “disappointing and inadequate,” criticizing both the Trump and Biden administration’s timeline.

    The bureau’s “engagement with us is consistently focused on how to allow projects to go forward; how to permit the continuous expansion and concentration of oil and gas activity on our traditional lands,” Nuiqsut officials wrote in their letter.

    Alaska’s entire Congressional delegation – including newly elected Rep. Mary Peltola, a Democrat – have urged the White House and Interior to approve the project, saying it would be a huge boost to state’s economy.

    Sen. Lisa Murkowski, in particular, has been urging the White House and Biden personally to greenlight Willow, she told CNN.

    “I’ve been pretty persistent on this,” she told CNN in an interview this summer. “Let’s just say, any conversation I’ve ever had with the White House, anyone close to the White House, I’ve brought up the subject of Willow.”

    As gas prices spiked last summer, Murkowski, Sen. Joe Manchin of West Virginia, a Democrat, and other Senate Republicans tightened the pressure on Biden to approve a major domestic oil drilling project. Environmental advocates, meanwhile, argued the project will not bring US gas prices down any time soon, as the infrastructure will take years to build.

    “When you think about those things that should be teed up and ready to go, this is one where in my view there’s really no excuse for why we should see further delay,” Murkowski said. “This is something that’s been in the works that’s gone through so much process, across multiple administrations.”

    This story has been updated with more information.

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  • Here’s why you should always wait for the earnings call | CNN Business

    Here’s why you should always wait for the earnings call | CNN Business

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    A version of this story first appeared in CNN Business’ Before the Bell newsletter. Not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.


    New York
    CNN
     — 

    Investors are pretty bad at living in the moment. We’re currently in the thick of fourth quarter earnings reports, but traders don’t seem to care about how companies fared during the final months of 2022. They’re more focused on what’s going to happen in the future.

    Case-in-point: Earnings calls, where top execs pontificate about their economic outlook, have been moving markets more than earnings-per-share and revenue reports.

    What’s happening: The mantra on Wall Street has become, as Ritholtz Wealth Management CEO Josh Brown puts it, “ignore the numbers, wait for the call.”

    Microsoft reported great fourth quarter earnings last Tuesday that beat Wall Street’s expectations, but the stock dropped 4% the next day. That’s because CEO Satya Nadella got on an earnings call with investors and warned of a slowdown in the company’s cloud business and software sales. His negative outlook came just as the company announced it was letting go of 10,000 employees, further spooking investors. 

    Other tech companies are following suit — while things are fine for the time being, they’re reporting that the future is foggy.

    IBM stock sank 4.5% last Thursday even as the tech titan beat Wall Street’s Q4 expectations. The reason for the drop might be because Jim Kavanaugh, IBM’s finance chief, warned on the conference call that it would be wise to expect the company’s total 2023 revenue growth to be on the low end. IBM also announced layoffs – the company said it plans to cut around 3,900 jobs or 1.5% of its total workforce. 

    The economic environment is rapidly changing. CEOs on earnings calls are talking more about recession than inflation now, according to an analysis by Purpose Investments.

    Wall Street is also beginning to fear an economic downturn more than painful rate hikes and as a result investors are putting more weight on CEO and CFO forecasts.

    And they’re looking bleak. As of Friday, 19 companies in the S&P 500 had issued forward earnings-per-share guidance for the first quarter of 2023, according to FactSet data. Of these 19 companies, 17, or 89%, issued negative guidance. That’s well above the 5-year average of 59%.

    “My best guess is that cautious tones on conference calls will be the norm, not the exception,” wrote Brown in a recent post. These slowdowns have been partially factored into stock prices, he said, “but not necessarily in full.”

    The upside: Market reaction appears to go both ways. American Express missed on earnings last week but said that credit card spending was hitting new records and that the future looks bright. The stock shot up more than 10%. 

    Prices at the pump typically fall during the coldest months as wintry weather keeps Americans off the roads. But something unusual is happening this year, reports my colleague Matt Egan. Gas prices are rocketing higher.

    The national average for regular gas jumped to $3.51 a gallon on Friday and remained there through the weekend, according to AAA. Although that’s a far cry from the record of $5.02 a gallon last June, gas prices have increased by 12 cents in the past week and 41 cents in the past month.

    All told, the national average has climbed by more than 9% since the end of last year – the biggest increase to start a year since 2009, according to Bespoke Investment Group.

    Why are gas prices jumping? It’s not because of demand, which remains weak, even for this time of the year. Instead, the problem is supply.

    The extreme weather in much of the United States near the end of last year caused a series of outages at the refineries that produce the gasoline, jet fuel and diesel that keep the economy humming. US refineries are operating at just 86% of capacity, down from the mid-90% range at the start of December, according to Bespoke.

    Beyond the refinery problems, oil prices have crept higher, helping to drive prices at the pump northward. US oil prices have jumped about 16% since December partially due to expectations of higher worldwide demand as China relaxes its Covid-19 policies and also because oil markets are no longer receiving massive injections of emergency barrels from the Strategic Petroleum Reserve.

    What’s next: Expect more pain at the pump. Patrick De Haan, head of petroleum analysis at GasBuddy, worries the typical springtime jump in prices will be pulled forward.

    “Instead of $4 a gallon happening in May, it could happen as early as March,” De Haan told CNN. “There is more upside risk than downside risk.”

    A return of $4 gas would be painful to drivers and could dent consumer confidence. Moreover, pain at the pump would complicate the inflation picture as the Federal Reserve debates whether to slow its interest rate hiking campaign.

    Goldman Sachs had a rough time in 2022, and the investment bank’s CEO, David Solomon, is being punished for it. Well, kind of. 

    The investment banking giant said in a Securities and Exchange Commission filing Friday that Solomon received $25 million in annual compensation last year. While that is still a very large amount of money, it’s down nearly 30% from the $35 million that Solomon raked in during 2021, reports my colleague Paul R. La Monica. 

    Solomon’s $2 million annual salary is unchanged. But the company said that his “annual variable compensation,” paid in a mix of performance-based restricted stock units and cash, was well below 2021 levels.

    Goldman Sachs (GS) shares fell more than 10% in 2022. The company also  reported a 16% drop in revenue in the fourth quarter and profit plunge of 66% earlier this month, mainly due to the lack of merger activity and initial public offerings.

    Maybe Solomon can make that extra $10 million with payouts from his burgeoning DJ career. 

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  • Chevron earnings soar to a record | CNN Business

    Chevron earnings soar to a record | CNN Business

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    New York
    CNN
     — 

    Chevron reported a record full-year profit of $36.5 billion, buoyed by high oil prices.

    Adjusted earnings for the year more than doubled from the $15.6 billion Chevron earned in 2021 and up 36% from its previous record profit set in 2011.

    The oil company’s fourth-quarter earnings came in at $7.9 billion, up 61% from a year earlier but less than the record quarterly income of $11.4 billion it reported for the second quarter.

    The fourth quarter earnings per share of $4.09 fell short of the forecast of $4.38 a share from analysts surveyed by Refinitiv. But revenue in the quarter of $56.5 billion topped forecasts by nearly $2 billion and was up 17% from a year earlier.

    Full-year revenue of $246.3 billion was up 52% from 2021.

    Shares of Chevron

    (CVX)     were down slightly more than 1% in premarket trading.

    Ahead of Friday’s report Chevron, the nation’s second largest oil company, behind only ExxonMobil, had announced it was hiking its dividend by 6% along with a massive $75 billion share repurchase plan. The decision brought criticism from those who said oil companies should be investing their money in producing more oil and gasoline to increase supply and drive down prices for inflation-weary drivers.

    “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it,” said Abdullah Hasan, assistant press secretary at the White House, in a tweet Wednesday evening after the share repurchase was announced.

    Chevron said Friday its investments in operations increased by more than 75% from 2021, and annual US production increased to the equivalent of 1.2 million barrels of oil a day.

    The amount it spent on capital spending and exploration in 2022 was $12.3 billion, up 43% compared with $8.6 billion spent in 2021, but only slightly more than the $11 billion it spent on dividends or the $11.3 billion on share repurchases during the year.

    The record profit came primarily from the soaring oil prices during the year, not its increased production.

    Chevron and other major oil companies all benefited from the spike in oil and gasoline prices during 2022, in the wake of Russia’s invasion of Ukraine. While Russia, one of the world’s leading oil exporters, sent relatively little oil to the United States, sanctions placed on Russia following the invasion roiled global commodity prices which set the price of oil.

    Futures for a barrel of Brent crude oil, the global benchmark, hit a record of $123.58 close in early June, up more than 50% from six months earlier ahead of the war, and the average price of a gallon of regular gas in the United States broke the $5 mark a week later to reach a record $5.03.

    But oil and gas prices have fallen substantially since then. Brent closed Thursday at $87.47, slightly below the year-earlier level, while the average price of a gallon of regular gas stands at $3.51 a gallon, only slightly higher from the $3.35 average of a year ago.

    But prices have started to rise once again, partly because Covid lockdown rules in China have been lifted. Traders believe that’s a bullish sign for global demand for oil and gasoline. Refinery problems caused by winter weather are also pushing prices higher.

    The average US price of a gallon of regular gasoline is up nearly 12 cents in just the last week and up 41 cents, or 13%, in the last month. Brent oil is up 12% in the last three weeks.

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  • Gas prices had a wild ride this year, making 2023 tough to predict | CNN Business

    Gas prices had a wild ride this year, making 2023 tough to predict | CNN Business

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    New York
    CNN
     — 

    US drivers have never seen a year quite like 2022.

    Wild price swings at the gas pump throughout the year make predicting prices for 2023 even more difficult.

    Russia’s invasion of Ukraine and the sanctions that it sparked on Russian oil sent the price of crude soaring in February at the beginning of the conflict. And even though relatively little Russian crude oil was ever exported to US refineries, the fact that oil prices are set on global commodity markets meant that US drivers were not spared a spike in gas prices.

    Prices were far more volatile throughout 2022 than they were in other recent years, both during and before the pandemic roiled oil markets.

    By June, the average US gas price crossed $5 a gallon for the first time ever, hitting a record $5.02 on June 14. But after that came a prolonged slide in gas prices, prompted by a number of factors, including the release of oil from the US Strategic Petroleum Reserve, concerns about the possibility of a recession in both the US and global economies, and a surge in Covid cases that caused renewed lockdowns in Asia. By the end of the year, the national average price of a gallon of regular gas had fallen to just over $3, well below the pre-invasion price, back to the average price of late summer of 2021.

    But there was not the same level of relief for the price of diesel. Diesel prices fell 20% from their peak in June, only about half the decline for gasoline during the same period. And while gasoline is cheaper than it was a year ago, diesel remains close to the pre-2022 record price set in 2008. Greater demand for North American diesel by Europe in the wake of the war in Ukraine kept diesel prices so high.

    While relatively few US drivers use diesel for their private cars, it is still the fuel used by most heavy trucks, so it had an impact on the average American’s wallet. Most trucking companies charge a fuel surcharge to their customers when diesel prices increase. Because virtually all goods purchased by Americans are on a truck at some point before those purchases, that was a factor driving inflation higher.

    The wild swings in oil and gasoline prices were a major factor in battered consumer confidence during the year. But those swings were not felt evenly across the nation and throughout the year. Many of the western states faced much higher gas prices because of more limited refining capacity. But there were a number of refinery accidents throughout the year that caused spikes in other regions as well. So, everyone saw wide swings in prices, though not always at the same time.

    There is also the wide variation in gas taxes, from 68 cents a gallon in California to only 15 cents a gallon in Alaska. Some states temporarily halted their state gas taxes during the year in the face of high prices.

    But the difference in average income in the different states meant that drivers in some of the states with relatively low prices had to work almost as many hours to buy 15 gallons of gas as those drivers in high-priced states.

    For example, in Mississippi, where the hourly average wage in November was $24.52, according to the Labor Department, it took 1 hour and 41 minutes of work to earn enough to pay for 15 gallons at $2.75 a gallon at year’s end. In California, where the average price of regular was $4.38 a gallon, or about 60% more than in Mississippi, the average hourly wage of $37.61 meant that they only had to work four more minutes to buy those 15 gallons.

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  • Biden begins to refill Strategic Petroleum Reserve, while Keystone Pipeline leak prompts new emergency exchange | CNN Business

    Biden begins to refill Strategic Petroleum Reserve, while Keystone Pipeline leak prompts new emergency exchange | CNN Business

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    New York
    CNN
     — 

    The Biden administration announced plans Friday to provide nearly 2 million barrels of oil to refineries through an emergency exchange and simultaneously begin efforts to replenish the Strategic Petroleum Reserve early next year.

    The new emergency exchange is aimed at addressing “potential supply disruptions” caused by the shutdown of the Keystone Pipeline due to a leak earlier this month, the Energy Department said. Part of that key pipeline remains shuttered and no timeline has been issued for a full reopening.

    Emergency exchanges allow oil refineries to borrow oil from the SPR for a short period due to supply disruptions such as hurricanes or pipeline outages. Unlike with emergency sales such as the record-setting release of 180 million barrels announced in March, this oil must be returned.

    In this case, the Energy Department agreed to provide 1.2 million barrels of oil from the SPR to ExxonMobil and 600,000 barrels to Phillips 66.

    At the same time, the Biden administration is beginning plans to repurchase crude oil for the SPR for the first time since that unprecedented release earlier this year.

    The Energy Department is planning to solicit bids to repurchase up to 3 million barrels of oil for the SPR to be delivered in February, the senior administration official said. The repurchase will pilot a new approach to buy back the oil at a fixed price, the official said.

    “Small but a signal that pledges to refill are credible,” former Obama energy official Jason Bordoff said on Twitter in response to the new steps.

    The senior administration official conceded it will take months or even years to refill the SPR, whose stockpiles are at the lowest level in 38 years.

    Comprised of underground salt caverns in Texas and Louisiana, the SPR is the world’s largest supply of emergency crude oil. It has been used during times of war and natural disaster to ease supply crunches.

    The move to begin to refill the SPR — and to lock in a price — comes as oil prices have plunged to one-year lows amid recession fears.

    “This repurchase is an opportunity to secure a good deal for American taxpayers by repurchasing oil at a lower price than the $96 per barrel average price it was sold for, as well as to strengthen energy security,” the Energy Department said in a statement.

    The administration announced in October that it planned to repurchase oil for the SPR when prices are at or below roughly $67-$72 a barrel. Officials said at the time such a move would help boost demand and provide the oil industry with an incentive to keep pumping even during times of stress.

    Oil prices dropped nearly 4% on Friday morning to as low as $73.33 a barrel. Oil trimmed its losses after the Energy Department announced the SPR moves, with crude recently trading down 1.5% to $75 a barrel.

    Prices are currently in a “very useful” range to begin the process of refilling the SPR, the senior administration official said.

    Officials stressed that the efforts to refill the SPR won’t prevent future emergency releases in the future, if necessary.

    “The SPR remains ready to respond to energy security needs today. We will be prepared and as nimble as we can to make sure the SPR is doing everything it can on behalf of energy security and American consumers,” the senior administration official said.

    The Energy Department also took a bit of a victory lap for the decision to release 180 million barrels of oil following Russia’s invasion of Ukraine.

    Noting that gas prices are now at 15-month lows, the senior administration official said that historic release “helped provide some breathing room for American families at the pump,” the official said.

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