Tag: Oil and gas industry

OPEC+ oil producers face uncertainty over Russian sanctions

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FRANKFURT, Germany — The Saudi-led OPEC oil cartel and allied producing countries, including Russia, are expected to decide how much oil to supply to the global economy amid weakening demand in China and uncertainty about the impact of new Western sanctions against Russia that could take significant amounts of oil off the market.

The 23-country OPEC+ alliance are scheduled to meet Sunday, a day ahead of the planned start of two measures aimed at hitting Moscow’s oil earnings in response to its war in Ukraine. Those are a European Union boycott of most Russian oil and a $60-per-barrel price cap on Russian exports imposed by the EU and Group of Seven democracies.

Russia rejected the price cap approved Friday and threatened to stop supplying the nations that endorsed it.

Oil has been trading lower on fears that coronavirus outbreaks and China’s strict zero-COVID restrictions would reduce demand for fuel in one of the world’s major economies. Concerns about recessions in the U.S. and Europe also raise the prospect of lower demand for gasoline and other fuel made from crude.

That uncertainty is the reason OPEC+ gave in October for a slashing production by 2 million barrels per day starting in November, which some saw as a possible move to help Russia weather the European embargo. The impact had some limitations because OPEC+ countries already can’t meet their quotas.

With the global economy slowing, oil prices have been falling since summertime highs, with international benchmark Brent closing Friday at $85.42 per barrel, down from $98 a month ago. That has eased gasoline prices for drivers in the U.S. and around the world.

On the other side, the price cap and EU boycott could take an unknown amount of Russian oil off the global market, tightening supply and driving up prices. To prevent a sudden loss of Russian crude, the price cap allows shipping and insurance companies to transport Russian oil to non-Western nations at or below that threshold. Most of the globe’s tanker fleet is covered by insurers in the G-7 or EU.

Russia would likely try to evade the cap by organizing its own insurance and using the world’s shadowy fleet of off-the-books tankers, as Iran and Venezuela have done, but that would be costly and cumbersome, analysts say.

Facing those uncertainties for the global oil market, OPEC oil ministers led by Saudi Arabia could leave production levels unchanged or cut output again to keep prices from declining further. Low prices mean less revenue for governments of producing nations.

“We feel that the meeting will be fairly short, and the alliance will stick to the current output targets,” said Gary Peach, oil markets analyst with Energy Intelligence. Standing pat makes sense “all the more so because oil is at $87 per barrel (earlier Friday), which is a good price for everybody. … Of course, $98 is better, but right now I think they see the market as adequately priced, adequately supplied and there’s no reason to rock the boat.”

Analysts at Clearview Energy Partners, on the other hand, expect OPEC+ to announce a production cut of 1 million barrels per day. Some members are underproducing, so that would more likely amount to a production cut of roughly 580,000 barrels per day.

A cut of that magnitude wouldn’t cause a problem with global supplies, even when taking into consideration the EU ban on Russian oil, which is expected to pull another 1 million barrels off the market, said Jacques Rousseau, managing director at Clearview Energy Partners. Oil use declines in the winter, in part because fewer people are driving.

But the G-7 price cap could prompt Russia to retaliate and take more oil off the market. The Saudis are “likely to share the Kremlin’s interest in quashing the G-7’s rising buyers’ cartel,” said Kevin Book, another managing director at Clearview.

The cap of $60 a barrel is near the current price of Russian oil, meaning Moscow could continue to sell while rejecting the cap in principle.

“If Russia ends up taking off more oil than about a million barrels per day, then the world becomes short on oil, and there would need to be an offset somewhere, whether that’s from OPEC or not,” Rousseau said. “That’s going to be the key factor — is to figure out how much Russian oil is really leaving the market.”

———

Bussewitz reported from New York.

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December 4, 2022
US intel chief thinking ‘optimistically’ for Ukraine forces

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KYIV, Ukraine — The head of U.S. intelligence says fighting in Russia’s war in Ukraine is running at a “reduced tempo” and suggests Ukrainian forces could have brighter prospects in coming months.

Avril Haines alluded to past allegations by some that Russian President Vladimir Putin’s advisers could be shielding him from bad news — for Russia — about war developments, and said he “is becoming more informed of the challenges that the military faces in Russia.”

“But it’s still not clear to us that he has a full picture of at this stage of just how challenged they are,” the U.S. director of national intelligence said late Saturday at the Reagan National Defense Forum in Simi Valley, California.

Looking ahead, Haines said, “honestly we’re seeing a kind of a reduced tempo already of the conflict” and her team expects that both sides will look to refit, resupply, and reconstitute for a possible Ukrainian counter-offensive in the spring.

“But we actually have a fair amount of skepticism as to whether or not the Russians will be in fact prepared to do that,” she said. “And I think more optimistically for the Ukrainians in that timeframe.”

In recent weeks, Russia’s military focus has been on striking Ukrainian infrastructure and pressing an offensive in the east, near the town of Bakhmut, while shelling sites in the city of Kherson, which Ukrainian forces liberated last month after an 8-month Russian occupation.

In his nightly address on Saturday, Ukrainian President Volodymyr Zelenskyy lashed out at Western efforts to crimp Russia’s crucial oil industry, a key source of funds for Putin’s war machine, saying their $60-per-barrel price cap on imports of Russian oil was insufficient.

“It is not a serious decision to set such a limit for Russian prices, which is quite comfortable for the budget of the terrorist state,” Zelenskyy said, referring to Russia. He said the $60-per-barrel level would still allow Russia to bring in $100 billion in revenues per year.

“This money will go not only to the war and not only to further sponsorship by Russia of other terrorist regimes and organisations. This money will be used for further destabilisation of those countries that are now trying to avoid serious decisions,” Zelenskyy said.

Australia, Britain, Canada, Japan, the United States and the 27-nation European Union agreed Friday to cap what they would pay for Russian oil at $60 per barrel. The limit is set to take effect Monday, along with an EU embargo on Russian oil shipped by sea.

Russian authorities have rejected the price cap and threatened Saturday to stop supplying the nations that endorsed it.

In yet another show of Western support for Ukraine’s efforts to battle back Russian forces and cope with fallout from the war, U.S. Under Secretary of State for Political Affairs Victoria Nuland on Saturday visited the operations of a Ukrainian aid group that provides support for internally displaced people in Ukraine, among her other visits with top Ukrainian officials.

Nuland assembled dolls out of yarn in the blue-and-yellow colors of Ukraine’s flag with youngsters from regions including northeastern Kharkiv, southern Kherson, and eastern Donetsk.

“This is psychological support for them at an absolutely crucial time,” Nuland said.

“As President Putin knows best, this war could stop today, if he chose to stop it and withdrew his forces — and then negotiations can begin,” she added.

———

Merchant reported from Washington, D.C.

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December 4, 2022
Ukraine urges tougher Western squeeze on Russian oil prices

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KYIV, Ukraine — The office of Ukrainian President Volodymyr Zelenskyy called Saturday for a lower price cap on Russian oil than the one agreed to by Ukraine’s Western supporters, while Russian authorities called the $60-per-barrel cap harmful to free, stable markets.

Andriy Yermak, the head of Zelenskyy’s office, wrote on social media that the price ceiling set by the European Union, Australia, Britain, Canada, Japan, and the United States on Friday didn’t go far enough. The cap is set to take effect Monday, along with an EU embargo on Russian oil shipped by sea.

“It would be necessary to lower it to $30 in order to destroy the enemy’s economy faster,” Yermak wrote on Telegram, staking out a position also favored by Poland — a leading critic of Russian President Vladimir Putin’s war in Ukraine.

The Russian Embassy in Washington insisted that Russian oil “will continue to be in demand” and criticized the price limit as “reshaping the basic principles of the functioning of free markets.” A post on the embassy’s Telegram channel predicted the per-barrel cap would lead to “a widespread increase in uncertainty and higher costs for consumers of raw materials.”

The price cap aims to put an economic squeeze on Russia and further crimp its ability to finance a war that has killed an untold number of civilians and fighters, driven millions of Ukrainians from their homes and weighed on the world economy for more than nine months.

The General Staff of the Ukrainian Armed Forces reported that since Friday Russia’s forces had fired five missiles, carried out 27 airstrikes and launched 44 shelling attacks against Ukraine’s military positions and civilian infrastructure.

Kyrylo Tymoshenko, the deputy head of the president’s office, said the attacks killed one civilian and wounded four others in eastern Ukraine’s Donetsk region. According to the U.K. Defense Ministry, Russian forces “continue to invest a large element of their overall military effort and firepower” around the small Donestsk city of Bakhmut, which they have spent weeks trying to capture.

In southern Ukraine’s Kherson province, whose capital city of the same name was liberated by Ukrainian forces three weeks ago following a Russian retreat, Gov. Yaroslav Yanushkevich said evacuations of civilians stuck in Russian-held territory across the Dnieper River would resume temporarily.

Russian forces pulled back to the river’s eastern bank last month. Yanushkevich said a ban on crossing the waterway would be lifted during daylight hours for three days for Ukrainian citizens who “did not have time to leave the temporarily occupied territory.” His announcement cited a “possible intensification of hostilities in this area.”

Kherson is one of four regions that Putin illegally annexed in September and vowed to defend as Russian territory. From their new positions, Russian troops have regularly shelled Kherson city and nearby infrastructure in recent days, leaving many residents without power. Running water remained unavailable in much of the city.

The other regions annexed in violation of international law are Donetsk, Luhansk and Zaporizhzhia.

Ukrainian authorities also reported intense fighting in Luhansk and Russian shelling of northeastern Ukraine’s Kharkiv region, which Russia’s soldiers mostly withdrew from in September.

The mayor of the northeastern city of Kharkiv, said some 500 apartment buildings were damaged beyond repair, and nearly 220 schools and kindergartens were damaged or destroyed. He estimated the cost of the damage at $9 billion.

———

Inna Varenytsia in Kherson, Ukraine, contributed to this report.

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December 3, 2022
Ukraine urges tougher Western squeeze on Russian oil prices

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KYIV, Ukraine — The office of Ukrainian President Volodymyr Zelenskyy called Saturday for a lower price cap on Russian oil than the one agreed to by Ukraine’s Western supporters, while Russian authorities called the $60-per-barrel cap harmful to free, stable markets.

Andriy Yermak, the head of Zelenskyy’s office, wrote on social media that the price ceiling set by the European Union, Australia, Britain, Canada, Japan, and the United States on Friday didn’t go far enough. The cap is set to take effect Monday, along with an EU embargo on Russian oil shipped by sea.

“It would be necessary to lower it to $30 in order to destroy the enemy’s economy faster,” Yermak wrote on Telegram, staking out a position also favored by Poland — a leading critic of Russian President Vladimir Putin’s war in Ukraine.

The Russian Embassy in Washington insisted that Russian oil “will continue to be in demand” and criticized the price limit as “reshaping the basic principles of the functioning of free markets.” A post on the embassy’s Telegram channel predicted the per-barrel cap would lead to “a widespread increase in uncertainty and higher costs for consumers of raw materials.”

The price cap aims to put an economic squeeze on Russia and further crimp its ability to finance a war that has killed an untold number of civilians and fighters, driven millions of Ukrainians from their homes and weighed on the world economy for more than nine months.

The General Staff of the Ukrainian Armed Forces reported that since Friday Russia’s forces had fired five missiles, carried out 27 airstrikes and launched 44 shelling attacks against Ukraine’s military positions and civilian infrastructure.

Kyrylo Tymoshenko, the deputy head of the president’s office, said the attacks killed one civilian and wounded four others in eastern Ukraine’s Donetsk region. According to the U.K. Defense Ministry, Russian forces “continue to invest a large element of their overall military effort and firepower” around the small Donestsk city of Bakhmut, which they have spent weeks trying to capture.

In southern Ukraine’s Kherson province, whose capital city of the same name was liberated by Ukrainian forces three weeks ago following a Russian retreat, Gov. Yaroslav Yanushkevich said evacuations of civilians stuck in Russian-held territory across the Dnieper River would resume temporarily.

Russian forces pulled back to the river’s eastern bank last month. Yanushkevich said a ban on crossing the waterway would be lifted during daylight hours for three days for Ukrainian citizens who “did not have time to leave the temporarily occupied territory.” His announcement cited a “possible intensification of hostilities in this area.”

Kherson is one of four regions that Putin illegally annexed in September and vowed to defend as Russian territory. From their new positions, Russian troops have regularly shelled Kherson city and nearby infrastructure in recent days, leaving many residents without power. Running water remained unavailable in much of the city.

The other regions annexed in violation of international law are Donetsk, Luhansk and Zaporizhzhia.

Ukrainian authorities also reported intense fighting in Luhansk and Russian shelling of northeastern Ukraine’s Kharkiv region, which Russia’s soldiers mostly withdrew from in September.

The mayor of the northeastern city of Kharkiv, said some 500 apartment buildings were damaged beyond repair, and nearly 220 schools and kindergartens were damaged or destroyed. He estimated the cost of the damage at $9 billion.

———

Inna Varenytsia in Kherson, Ukraine, contributed to this report.

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December 3, 2022
Venezuela and Chevron sign oil contract in Caracas | CNN

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CNN
—

The Venezuelan government and American oil company Chevron have signed a contract in Caracas on Friday to resume operations in Venezuela, according to the country’s state broadcaster VTV.

“This contract aims to continue with the productive and development activities in this energy sector, framed within our Constitution and the Venezuelan laws that govern oil activity in the country,” said Venezuelan oil minister Tareck El Aissami, who was slapped with United States sanctions in 2017.

He attended the signing ceremony along with representatives from Venezuelan state-owned oil and natural gas company PDVSA and Chevron.

April 2023 will mark Chevron’s 100th anniversary in Venezuela, El Aissami said at the event.

The move comes after the United States granted Chevron limited authorization to resume pumping oil from Venezuela last week, following an announcement that the Venezuelan government and the opposition group had reached an agreement on humanitarian relief and will continue to negotiate for a solution to the country’s chronic economic and political crisis.

The US has been looking for ways to allow Venezuela to begin producing more oil and selling it on the international market, thereby reducing the world’s energy dependence on Russia, US officials told CNN in May.

A 6-month license was granted to Venezuela by the US Treasury Department’s Office of Foreign Assets Control (OFAC) last week, and the US can revoke it at any time. Additionally, any profits earned will go to repaying debt to Chevron and not to the Maduro regime, according to a senior official.

In 2017, OFAC said El Aissami had played a “significant role in international narcotics trafficking,” according to a news release.

The Treasury Department said he “facilitated shipments of narcotics from Venezuela to include control over planes that leave from a Venezuelan air base, (and) narcotics shipments of over 1,000 kilograms from Venezuela on multiple occasions, including those with the final destinations of Mexico and the United States.”

In addition, the department said El Aissami is linked to coordinating drug shipments to Los Zetas, a violent Mexican drug cartel, and provided protection to a Colombian drug lord.

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December 2, 2022
EU edges closer to $60-per-barrel Russian oil price cap

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BRUSSELS — The European Union was edging closer to setting a $60-per-barrel price cap on Russian oil — a highly anticipated and complex political and economic maneuver designed to keep Russia’s supplies flowing into global markets while clamping down on President Vladimir Putin’s ability to fund his war in Ukraine.

EU nations sought to push the cap across the finish line after Poland held out to get as low a figure as possible, diplomats said Thursday. “Still waiting for white smoke from Warsaw,” said an EU diplomat, who spoke on condition of anonymity because the talks were still ongoing.

The latest offer, confirmed by 3 EU diplomats, comes ahead of a deadline to set the price for discounted oil by Monday, when a European embargo on seaborne Russian crude and a ban on shipping insurance for those supplies take effect. The diplomats also spoke on condition of anonymity because the legal process was still not completed.

The $60 figure would mean a cap near the current price of Russia’s crude, which fell this week below $60 per barrel, and is meant to prevent a sudden loss of Russian oil to the world following the new Western sanctions. It is a big discount to international benchmark Brent, which traded at about $88 per barrel Thursday, but could be high enough for Moscow to keep selling even while rejecting the idea of a cap.

When the final number is in place, a new buyer’s cartel — which is expected to be made up of formal and informal members — will be born. Western allies in the Group of Seven industrial powers led the price cap effort and still need to approve the figure.

Oil is the Kremlin’s main pillar of financial revenue and has kept the Russian economy afloat so far despite export bans, sanctions and the freezing of central bank assets that began with the February invasion. Russia exports roughly 5 million barrels of oil per day.

The risks of the price cap’s failure are immense to the global oil supply. If it fails or Russia retaliates by stopping the export of oil, energy prices worldwide could skyrocket. Putin has said he would not sell oil under a price cap and would retaliate against nations that implement the measure.

U.S. and European consumers could feel the ramifications in more spikes to gasoline prices, and people in developing countries could face greater levels of food insecurity.

With the EU and U.K. banning insurance for Russian oil shipments, the price ceiling allows companies to keep insuring tankers headed for non-EU countries as long as the oil is priced at or under the cap. That would avoid a price spike from the loss of supplies from the world’s No. 2 oil producer and put a ceiling on Russia’s oil income near current levels.

The Treasury Department has released guidance meant to help firms and maritime insurers understand how to abide by the price ceiling, saying the price cap could fluctuate depending on market conditions.

Robin Brooks, chief economist at the Institute of International Finance in Washington, said the cap should have been implemented earlier this year, when oil was hovering around $120 per barrel.

“Since then, obviously oil prices have fallen and global recession is a real thing,” he said. “The reality is that it is unlikely to be binding given where oil prices are now.”

Critics of the price cap measure, including former Treasury Secretary Steve Mnuchin, have called the plan “ridiculous.”

Mnuchin told CNBC during a panel in November at the Milken Institute’s Middle East and Africa Summit that the price cap was “not only not feasible, I think it’s the most ridiculous idea I’ve ever heard.”

Rachel Ziemba, an adjunct senior fellow at the Center for a New American Security, said that while a worst-case scenario envisions Russia cutting off the global supply of its oil, “the Saudis and Emiratis would boost production.”

“Russia has made is clear the countries that abide by the cap won’t receive their oil and that could result in cuts to natural gas exports as well,” she said. “This will be an interesting few weeks and few months.”

———

Hussein reported from Washington. AP Business Writer David McHugh contributed from Frankfurt, Germany.

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December 1, 2022
Asian shares gain after Fed chair signals slower rate hikes

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BANGKOK — Shares advanced in Europe and Asia on Thursday after a rally on Wall Street spurred by the Federal Reserve chair’s comments on easing the pace of interest rate hikes to tame inflation.

Signs that China may be shifting its approach to containing COVID-19 outbreaks to focus more on vaccinations, while some cities have lifted pandemic lockdowns, also helped lift sentiment.

In Europe, Germany’s DAX gained 0.5% to 14,472.99 while the CAC 40 in Paris edged 0.1% higher to 6,750.81. Britain’s FTSE 100 also was 0.1% higher, at 7,580.56. The future for the S&P 500 was down 0.1% while that for the Dow industrials fell 0.2%.

Stocks on Wall Street roared higher Wednesday after Fed Chair Jerome Powell, said in comments at the Brookings Institution that the central bank could begin moderating its pace of rate hikes as soon as December, when its policymaking committee will hold its next meeting.

“We have a risk management balance to strike,” Powell said. “And we think that slowing down (on rate hikes) at this point is a good way to balance the risks.”

The benchmark S&P 500 rose 3.1%, snapping a three-day losing streak. The Dow Jones Industrial Average gained 2.2% and the Nasdaq composite climbed 4.4%. The Russell 2000 index rose 2.7%.

“The optimism in the market is that perhaps the worse is over for the U.S. in terms of inflation reading, and the Fed isn’t going to increase the interest aggressively,” Naeem Aslam of Avatrade said in a commentary.

In Asia on Thursday, Tokyo’s Nikkei 225 index added 0.9% to 28,226.08 while the Hang Seng in Hong Kong advanced 0.8% to 18,736.44. The Shanghai Composite index climbed 0.5% to 3,165.47. In Seoul, the Kospi picked up 0.3% to 2,479.84. Australia’s S&P/ASX 200 gained 1% to 7,354.40.

Bangkok’s SET rose 0.8% a day after the central bank raised its key interest rate by a quarter point to 1.25%, aiming to curb inflation.

The stronger gains seen early in Asian trading had faded by the day’s end.

Markets have wobbled all year as the Fed has fought high inflation with aggressive interest rate increases.

“While it could be argued that Jerome Powell’s comments on Wednesday were relatively balanced — slower tightening now but rates high for longer — the last year has proven that anticipating the path of inflation even a short period ahead is incredibly difficult,” Craig Erlam of Oanda said in a commentary.

Powell stressed that the Fed will push rates higher than previously expected and keep them there for an extended period to ensure inflation comes down sufficiently.

“History cautions strongly against prematurely loosening policy,” he said. “We will stay the course until the job is done.”

Wall Street has been hoping that the Fed will slow the scale and pace of its interest rate hikes. It has raised its benchmark interest rate six times since March, driving it to a range of 3.75% to 4%, the highest in 15 years. The goal is to make borrowing more costly and generally slow the economy in order to tame inflation.

Higher mortgage rates have caused home sales to plunge and higher interest rates also have raised costs for most other consumer and business loans.

The economy has been slowing, and many economists expect the U.S. to slip into a recession next year. But there are strong pockets of growth. The government said Wednesday that the economy expanded at a 2.9% annual rate from July through September, an upgrade from its initial estimate.

Consumers have continued spending, despite inflation squeezing wallets. Overall, employment remains strong, though job openings dropped in October more than economists had anticipated and human resources company ADP reported an easing in private sector hiring in November.

Investors will get more data Thursday on the employment sector with a report on weekly unemployment claims. The closely watched monthly report on the job market will be released on Friday.

In other trading, U.S. benchmark crude oil lost 12 cents to $80.43 a barrel in electronic trading on the New York Mercantile Exchange. It climbed 3% on Wednesday.

Brent crude, the pricing basis for international trading, shed 14 cents to $86.83 a barrel.

The U.S. dollar fell to 136.31 Japanese yen from 138.09 yen. The euro rose to $1.0435 from $1.0409.

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December 1, 2022
Stocks waver on Wall Street ahead of speech by Fed chair

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NEW YORK — Stocks are wavering in early trading on Wall Street ahead of a speech by Jerome Powell, the chair of the Federal Reserve, on the outlook for the economy and inflation. Treasury yields were higher and crude oil prices rose. The S&P 500 index was hovering around the breakeven line after the first few minutes of trading Wednesday. The tech-heavy Nasdaq was up 0.3% and the Dow Jones Industrial Average fell 0.2%. European markets were trading higher and Asian markets closed mixed overnight. The yield on the 10-year Treasury note, which influences mortgage rates, rose to 3.77%.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

U.S. markets are flat ahead of a highly anticipated that may give clues about future interest rate hikes.

On the last trading day of the month, futures for the Dow Jones industrials and the S&P 500 appeared static. Major U.S. indices are clinging to small gains in November, which if they hold, would be the second straight month of advances after a miserable September.

There is hope on Wall Street that the Fed will slow the scale and pace of its interest rate hikes and investors are closely watching the latest data on inflation, consumer spending and the employment market. They’ll be looking for any signs of a shift in policy when Powell speaks at the Brookings Institution about the outlook for the U.S. economy and the labor market on Wednesday.

The Fed’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March.

The U.S. government will be releasing several reports about the labor market this week. A report about job openings and labor turnover for October will be released Wednesday, followed by a weekly unemployment claims report Thursday. The closely watched monthly report on the job market will be released on Friday.

Investors were also keeping tabs on China, where protests have erupted over the “zero-COVID” strategy that has confined millions of people to their homes, sometimes for months.

China has eased some controls after demonstrations in at least eight mainland cities and Hong Kong. It’s unclear if protests will start up again after authorities detained an unknown number of people and stepped up surveillance.

Renewed restrictions on businesses and other activity have hit manufacturing, with an official survey announced Wednesday showing the purchasing managers index falling to 48.0 in November from 49.2 the month before. The index is on a scale of 0 to 100 where readings 50 and above show expansion.

“A further fall in the new orders and new export orders indices suggests this was largely driven by weakening domestic and foreign demand,” Capital Economics said in a report. “Today’s surveys suggest that intensified virus disruption has delivered another blow to the economy this month.”

Japan’s benchmark Nikkei 225 lost 0.2% to finish at 27,968.99 after reports said industrial production contracted 2.6% in October, compared with 1.7% in September, amid weakening demand from China and other world markets.

Other regional markets advanced.

Hong Kong’s Hang Seng added 2.1% to 18,584.49. The Shanghai Composite index inched up less than 0.1% to 3,151.34. Australia’s S&P/ASX 200 rose 0.4% to 7,284.20, while South Korea’s Kospi rose 1.6% to 2,472.53.

“Due to a more reflective approach to the recent zero-COVID measures, Chinese stocks have taken substantial leaps and bounds this week. However, that optimism is giving way to hawkish contemplation as traders twiddle their thumbs awaiting a speech from Federal Reserve Chair Jerome Powell later Wednesday,” Stephen Innes, a managing partner at SPI Asset Management, said in a report.

Shares in Europe climbed higher at midday after a report showed that inflation in the 19 countries that use the euro currency eased for the first time in more than a year as energy prices retreated from painful highs. But the 10% rate, a drop from 10.6% in October, still hovers near a record that has robbed consumers of their spending power and led economists to predict a recession.

Britain’s FTSE 100 and France’s CAC 40 each added 0.8%, while Germany’s DAX gained 0.4%.

In energy trading, benchmark U.S. crude gained $1.67 to $79.87 a barrel. Brent crude, the international standard, added $1.72 to $85.97 a barrel.

In currency trading, the U.S. dollar rose to 138.72 Japanese yen from 138.65 yen. The euro cost $1.0365, up from $1.0331.

———

Kageyama reported from Tokyo; Ott reported from Washington.

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November 30, 2022
Qatar to supply liquefied natural gas to Germany from 2026

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DOHA, Qatar — Qatar is to supply liquefied natural gas to Germany under a 15-year deal signed Tuesday as the European economic powerhouse scrambles to replace Russian gas supplies that have been cut during the ongoing war in Ukraine.

Officials gave no dollar value for the deal, which would begin in 2026. Under the agreement, Qatar would send up to 2 million tons of the gas to Germany through an under-construction terminal at Brunsbuettel.

The deal involves both Qatar Energy, the nation’s state-run firm, and ConocoPhillips, which has stakes in Qatar’s offshore natural gas field in the Persian Gulf that it shares with Iran.

As European countries have supported Ukraine after Russia’s invasion in February, Moscow has slashed supplies of natural gas used to heat homes, generate electricity and power industry. That has created an energy crisis that is fueling inflation and increasing pressure on companies as prices have risen.

Germany, which got more than half its gas from Russia before the war, hasn’t received any gas from Russia since the end of August.

The country is building five liquefied natural gas terminals as a key part of its plan to replace Russian supplies, and the first are expected to go into service shortly. Much of Germany’s current gas supply comes from or via Norway, the Netherlands and Belgium.

Germany’s drive to prevent a short-term energy crunch also includes temporarily reactivating old oil- and coal-fired power stations and extending the life of the country’s last three nuclear power plants, which were supposed to be switched off at the end of this year, until mid-April.

German Economy Minister Robert Habeck, who is also responsible for energy, visited Qatar in March — about a month after Russia invaded Ukraine — as part of the government’s effort to diversify gas supplies. Chancellor Olaf Scholz was there in September.

Habeck said Tuesday he wouldn’t say much about the deal because “the political talks were always only framework talks; the companies remained in contact after that.”

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November 29, 2022
Asian shares rise except Japan as markets eye China protests

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TOKYO — Asian shares were mostly higher Tuesday as jitters over protests in China set off by growing public anger over COVID-19 restrictions subsided.

U.S. futures edged higher. Oil prices rose more than $1 per barrel.

Chinese shares rebounded after they were hit by sharp losses on Monday following protests over the weekend in various Chinese cities. Hong Kong’s Hang Seng jumped 4% to 17,981.31, while the Shanghai Composite added 2.3% to 3,148.17.

Japan’s Nikkei 225 lost 0.5% to 28,016.58. Australia’s S&P/ASX 200 gained 0.3% to 7,249.80. South Korea’s Kospi added 0.8% to 2,427.13.

Although market sentiment has been weighed down by the recent demonstrations in China, some analysts noted calm could return in coming sessions. The world’s second largest economy has been stifled by a “zero COVID” policy which includes lockdowns that continually threaten the global supply chain.

“The absence of any clear escalation in protests could aid to bring some calm to markets,” said Yeap Jun Rong, market strategist at IG.

The unrest has stoked worries on Wall Street that if Chinese leader Xi Jinping cracks down further on dissidents there or expands the lockdowns, it could slow the Chinese economy, which would hurt oil prices and global economic growth, said Sam Stovall, chief investment strategist at CFRA.

“A lot of people are worried about what the fallout will be, and basically are using that as an excuse to take some recent profits,” he said.

Stephen Innes, managing partner at SPI Asset Management, said business was returning as usual, although the heavy police presence may unnerve a Western audience.

“Chinese markets are rallying early in the session as local investors take a more pragmatic approach to the current COVID proceedings. Indeed, a probable outcome is a quicker loosening of restrictions once the current COVID wave and numerous protest flash points subside,” he said.

Japanese government data released Tuesday showed that the unemployment rate for October was unchanged from September at 2.6%. Separately, data released by another ministry showed a slight increase in the number of available jobs per job-seeker at 1.35. The increase has continued for 10 months.

Hiring was up in anticipation of tourists returning in droves to Japan. Borders that have been basically closed during the coronavirus pandemic have reopened at a time when the declining value of the yen against the U.S. dollar and other currencies make Japan an attractive destination for tourists.

On Monday, more than 90% of the stocks in the S&P 500 closed in the red, with technology companies the biggest weights on the broader market. Apple, which has seen iPhone production hit hard by lockdowns in China, fell 2.6%.

Several casino operators gained ground as the Chinese gambling haven of Macao tentatively renewed their licenses. Las Vegas Sands rose 1.1% and Wynn Resorts gained 4.4%.

The fallout from the collapse of crypto exchange FTX continued. Cryptocurrency lender BlockFi is filing for Chapter 11 bankruptcy protection. Cryptocurrency exchange Coinbase Global fell 4% and the price of Bitcoin slipped 2.1%.

The S&P 500 fell 1.5% to 3,963.94. The Dow dropped 1.4% to 33,849.46. The tech-heavy Nasdaq lost 1.6% to close at 11,049.50.

Anxiety remains high over the ability of the Federal Reserve to tame inflation by raising interest rates without going too far and causing a recession. The central bank’s benchmark rate currently stands at 3.75% to 4%, up from close to zero in March. It has warned it may have to ultimately raise rates to previously unanticipated levels to rein in high prices on everything from food to clothing.

Federal Reserve Chair Jerome Powell will speak at the Brookings Institution about the outlook for the U.S. economy and the labor market on Wednesday.

The Conference Board will release its consumer confidence index for November on Tuesday. That could shed more light on how consumers have been holding up amid high prices and how they plan on spending through the holiday shopping season and into 2023.

The U.S. government will release several reports about the labor market this week that could give Wall Street more insight into one of the strongest sectors of the economy. A report about job openings and labor turnover for October will be released on Wednesday, followed by a weekly unemployment claims report on Thursday. The closely watched monthly report on the job market will be released on Friday.

In energy trading, benchmark U.S. crude added $1.37 to $78.61 a barrel in electronic trading on the New York Mercantile Exchange. Brent crude, the international standard, rose $1.81 to $85.00 a barrel.

In currency trading, the U.S. dollar fell to 138.53 Japanese yen from 138.90 yen. The euro cost $1.0387, up from $1.0344.

———

Yuri Kageyama is on Twitter at https://twitter.com/yurikageyama

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November 28, 2022
Russian energy giant says no further gas cuts to Moldova

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BUCHAREST, Romania — Russian energy giant Gazprom announced Monday that it will not further reduce natural gas to Moldova as it had threatened to do after claiming that bills went unpaid and that flows crossing through Ukraine were not making it to Moldova.

Gazprom tweeted that Moldovagaz has “eliminated the violation of payment” for November supplies and that “funds for the gas deposited on the territory of Ukraine, intended for consumers in Moldova, have been received.”

Last week, Moldova and Ukraine hit back at Gazprom’s claim that Russian gas moving through the last pipeline to Western Europe was being stored in Ukraine, saying all supplies that Russia sends through the war-torn country get “fully transferred” to Moldova.

“The volumes of gas that Gazprom refers to as remaining in Ukraine are our savings and reserves stored in warehouses in Ukraine,” Moldovan Infrastructure Minister Andrei Spinu said last week. “These volumes were and will be fully paid for by our country.”

The Russia state-owned company alleged “regular violation by the Moldovan side of contractual obligations in terms of payment for Russian gas supplies,” adding that it “reserves the right to reduce or completely stop gas supplies in case of violation of their payment.”

It comes as Europe’s poorest country — which had relied entirely on Russia for natural gas — is facing an acute energy crisis after Moscow dramatically reduced supplies in October and halved them in November as cold weather took hold. Moscow’s attacks on Ukraine’s energy infrastructure also have triggered massive blackouts in several cities in Moldova.

Russia has cut off most natural gas to Europe amid the war in Ukraine, which European leaders have called energy blackmail. Gazprom’s threats to further reduce flows raised concerns about rising prices heading into winter, when natural gas is needed to heat homes as well as generate electricity and power factories, with higher bills already squeezing households and businesses.

With inflation high all around, there were fears consumers in Moldova, a former Soviet republic of about 2.6 million, would struggle to pay their heating and electricity costs.

The European Union pledged 250 million euros (nearly $262 million) in aid to Moldova this month to help it weather the crisis. Last week, an international aid conference in Paris raised more than 100 million euros to support the country through the energy crisis.

———

Cristian Jardan contributed from Chisinau, Moldova.

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November 28, 2022
China markets tank as protests erupt over Covid lockdowns | CNN Business

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Hong Kong
CNN Business
—

China’s major stock indices and its currency have opened sharply lower Monday, as widespread protests against the country’s stringent Covid-19 restrictions over the weekend roiled investor sentiment.

Hong Kong’s Hang Seng

(HSI) Index fell as much as 4.2% in early trading. It has since pared some losses and last traded 2% lower. The Hang Seng

(HSI) China Enterprises Index, a key index that tracks the performance of mainland Chinese companies listed in Hong Kong, lost 2%.

In mainland China, the benchmark Shanghai Composite briefly fell 2.2%, before trimming losses to 0.9% lower than Friday’s close. The tech-heavy Shenzhen Component Index dropped 1.1%.

The Chinese yuan, also known as the renminbi, plunged against the US dollar on Monday morning. The onshore yuan, which trades in the tightly controlled domestic market, briefly weakened 0.9%. It was last down 0.6% at 7.206 per dollar. The offshore rate, which trades overseas, dropped 0.3% to 7.212 per dollar.

The plunging yuan suggests that “investors are running ice cold on China,” said Stephen Innes, managing partner of SPI Asset Management, adding that the currency market might be “the simplest barometer” to gauge what domestic and overseas investors think.

The markets tumble comes after protests erupted across China in an unprecedented show of defiance against the country’s stringent and increasingly costly zero-Covid policy.

In the country’s biggest cities, from the financial hub of Shanghai to the capital Beijing, residents gathered over the weekend to mourn the dead from a fire in Xinjiang, speak out against zero-Covid and call for freedom and democracy.

Such widespread scenes of anger and defiance, some of which stretched into the early hours of Monday morning, are exceptionally rare in China.

Asian markets were also broadly lower. South Korea’s Kospi lost 1%, Japan’s Nikkei 225

(N225) shed 0.6%, and Australia’s S&P/ASX 200 fell by 0.3%.

US stock futures — an indication of how markets are likely to open — fell, with Dow futures down 0.5%, or 171 points. Futures for the S&P 500 were down 0.7%, while futures for the Nasdaq dropped 0.8%.

Oil prices also dropped sharply, with investors concerned that surging Covid cases and protests in China may sap demand from one of the world’s largest oil consumers. US crude futures fell 2.7% to trade at $74.19 a barrel. Brent crude, the global oil benchmark, lost 2.6% to $81.5 per barrel.

On Friday, a day before the protests started, China’s central bank cut the amount of cash that lenders must hold in reserve for the second time this year. The reserve requirement ratio for most banks (RRR) was reduced by 25 percentage points.

The move was aimed at propping up an economy that had been crippled by strict Covid restrictions and an ailing property market. But analysts don’t think the move will have a significant impact.

“Cutting the RRR now is just like pushing on a string, as we believe the real hurdle for the economy is the pandemic rather than insufficient loanable funds,” said analysts from Nomura in a research report released Monday.

“In our view, ending the pandemic [measures] as soon as possible is the key to the recovery in credit demand and economic growth,” they said.

Innes from SPI Asset Management said China’s economy is currently caught in the midst of a tug-of-war between weakening economic fundamentals and increasing reopening hopes.

“For China’s official institutions, there are no easy paths. Accelerating reopening plans when new Covid cases are rising is unlikely, given the low vaccination coverage of the elderly,” he said. “Mass protests would deeply tilt the scales in favor of an even weaker economy and likely be accompanied by a massive surge in Covid cases, leaving policymakers with a considerable dilemma.”

In the near term, he said, Chinese equities and currency will likely price in “more significant uncertainty” around Beijing’s reaction to the ongoing protests. He expects social discontent could increase in China over the coming months, testing policymakers’ resolve to stick to its draconian zero-Covid mandates.

But in the longer term, the more pragmatic and likely outcome should be “a quicker loosening of [Covid] restrictions once the current wave subsides,” he said.

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November 27, 2022
Biden eases Venezuela sanctions as opposition talks resume

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WASHINGTON — The Biden administration on Saturday eased some oil sanctions on Venezuela in an effort to support newly restarted negotiations between President Nicolás Maduro’s government and its opposition.

The Treasury Department is allowing Chevron to resume “limited” energy production in Venezuela after years of sanctions that have dramatically curtailed oil and gas profits that have flowed to Maduro’s government. Earlier this year the Treasury Department allowed the California-based Chevron and other U.S. companies to perform only basic upkeep of wells it operates jointly with state-run oil giant PDVSA.

Under the new policy, profits from the sale of energy would be directed to paying down debt owed to Chevron, rather than providing profits to PDVSA.

Talks between the Maduro government and the “Unitary Platform” resumed in Mexico City on Saturday after more than a yearlong pause. It remained to be seen whether they would take a different course from previous rounds of negotiations that have not brought relief to the political stalemate in the country.

A senior U.S. administration official, briefing reporters about the U.S. action under the condition of anonymity, said that easing the sanctions was not connected to the administration’s efforts to boost global energy production in the wake of Russia’s invasion of Ukraine and that the decision was not expected to impact global energy prices.

The official said the U.S. would closely monitor Maduro’s commitment to the talks and reserved the right to reimpose stricter sanctions or to continue to ease them depending on how the negotiations proceed.

“If Maduro again tries to use these negotiations to buy time to further consolidate his criminal dictatorship, the United States and our international partners must snap back the full force of our sanctions that brought his regime to the negotiating table in the first place,” said Democratic Sen. Bob Menendez of New Jersey, chairman of the Senate Foreign Relations Committee, in a statement.

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November 26, 2022
Asian shares mixed as investors eye Tokyo inflation data

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TOKYO — Asian shares were mixed Friday as worries deepened about the regional economy and Japan reported higher-than-expected inflation.

Benchmarks fell in Tokyo, Seoul and Hong Kong, but rose in Sydney and Shanghai. Oil prices advanced.

Investors have their eyes on China‘s lockdowns and restrictions to curb the spread of coronavirus infections, as the direction China takes will have great impact on the rest of Asia.

“Reopening policies have pivoted in China, which will be a gradual process. COVID control measures will vary across cities, but positive top-down approaches will be ongoing,” said Stephen Innes, Stephen Innes, managing partner at SPI Asset Management.

Japan’s benchmark Nikkei 225 lost 0.3% in morning trading to 28,286.40. Australia’s S&P/ASX 200 rose 0.3% to 7,262.40. South Korea’s Kospi edged down 0.1% to 2,438.19. Hong Kong’s Hang Seng slipped 0.8% to 17,521.11. The Shanghai Composite gained 0.5% to 3,105.36.

Data on inflation in Tokyo for November beat analysts’ expectations, with the core consumer price index showing a 3.6% rise, the highest in more than four decades.

The Federal Reserve and the world’s other central banks have been raising interest rates to try to rein in decades-high inflation. But the Bank of Japan has resisted tightening monetary policy, a move that would counter inflationary pressures by discouraging borrowing by businesses and consumers.

“With the Bank of Japan being one of the few outliers which has not embarked on a rate-hiking process, the point of pivot will be a key question into next year,” Jun Rong Yeap of IG said in a commentary.

Shares finished higher Thursday in France, Germany and Britain. U.S. markets were closed for Thanksgiving. Wall Street will have a shortened session on Friday.

In energy trading, benchmark U.S. crude rose 46 cents to $78.40 a barrel in electronic trading on the New York Mercantile Exchange. It gave up $3.01 to $77.94 per barrel on Thursday. Brent crude, the international standard, added 29 cents to $85.55 a barrel in London.

In currency trading, the U.S. dollar rose to 138.64 Japanese yen from 138.58 yen. The euro cost $1.0410, inching down from $1.0411.

———

Yuri Kageyama is on Twitter https://twitter.com/yurikageyama

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November 24, 2022
EXPLAINER: What’s the effect of Russian oil price cap, ban?

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FRANKFURT, Germany — Western governments are aiming to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.

The cap is set to take effect on Dec. 5, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.

The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.

Here are basic facts about the price cap, the EU embargo and what they could mean for consumers and the global economy:

WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?

U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim is to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.

Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most of the insurers are located in the EU or the United Kingdom and could be required to participate in the cap. Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it.

HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?

Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.

Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.

One purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.

“It is essential for the global crude markets that Russian oil still finds markets to be sold, after the EU ban is operative,” he added. “In the absence of that, global oil prices would skyrocket.”

WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?

A cap of between $65 and $70 per barrel could let Russia keep selling oil and while keeping its earnings to current levels. Russian oil is trading at around $63 per barrel, a considerable discount to international benchmark Brent.

A lower cap — at around $50 per barrel — would make it difficult for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”

However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.

WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?

Russian has said it will not observe a cap and will halt deliveries to countries that do. A lower cap of around $50 could be more likely to provoke that response, or Russia could halt the last of its remaining natural gas supplies to Europe.

China and India might not go along with the cap, while China could form its own insurance companies to replace those barred by U.S., U.K. and Europe.

Galimberti says China and India are already enjoying discounted oil and may not want to alienate Russia.

“China and India get Russia’s crude at a huge discount to Brent, therefore, they don’t necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”

Russia could also turn to schemes such as transferring oil from ship to ship to disguise its origins and mixing its oil with other types to skirt the ban.

So it remains to be seen what effect the cap would have.

WHAT ABOUT THE EU EMBARGO?

The biggest impact from the EU embargo may come not on Dec. 5, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.

Europe will have to turn to alternative supplies from the U.S., Middle East and India. “There is going to be a shortfall, and this will result in very high prices,” Galimberti said.

Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy.

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November 24, 2022
EXPLAINER: What’s the effect of Russian oil price cap, ban?

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FRANKFURT, Germany — Western governments are aiming to cap the price of Russia’s oil exports in an attempt to limit the fossil fuel earnings that support Moscow’s budget, its military and the invasion of Ukraine.

The cap is set to take effect on Dec. 5, the same day the European Union will impose a boycott on most Russian oil — its crude that is shipped by sea. The EU was still negotiating what the price ceiling should be.

The twin measures could have an uncertain effect on the price of oil as worries over lost supply through the boycott compete with fears about lower demand from a slowing global economy.

Here are basic facts about the price cap, the EU embargo and what they could mean for consumers and the global economy:

WHAT IS THE PRICE CAP AND HOW WOULD IT WORK?

U.S. Treasury Secretary Janet Yellen has proposed the cap with other Group of 7 allies as a way to limit Russia’s earnings while keeping Russian oil flowing to the global economy. The aim is to hurt Moscow’s finances while avoiding a sharp oil price spike if Russia’s oil is suddenly taken off the global market.

Insurance companies and other firms needed to ship oil would only be able to deal with Russian crude if the oil is priced at or below the cap. Most of the insurers are located in the EU or the United Kingdom and could be required to participate in the cap. Without insurance, tanker owners may be reluctant to take on Russian oil and face obstacles in delivering it.

HOW WOULD OIL KEEP FLOWING TO THE GLOBAL ECONOMY?

Universal enforcement of the insurance ban, imposed by the EU and U.K. in earlier rounds of sanctions, could take so much Russian crude off the market that oil prices would spike, Western economies would suffer, and Russia would see increased earnings from whatever oil it can ship in defiance of the embargo.

Russia, the world’s No. 2 oil producer, has already rerouted much of its supply to India, China and other Asian countries at discounted prices after Western customers shunned it even before the EU ban.

One purpose of the cap is to provide a legal framework “to allow the flow of Russian oil to continue and to reduce the windfall revenue for Russia at the same time,” said Claudio Galimberti, a senior vice president of analysis at Rystad Energy.

“It is essential for the global crude markets that Russian oil still finds markets to be sold, after the EU ban is operative,” he added. “In the absence of that, global oil prices would skyrocket.”

WHAT EFFECT WOULD DIFFERENT CAP LEVELS HAVE?

A cap of between $65 and $70 per barrel could let Russia keep selling oil and while keeping its earnings to current levels. Russian oil is trading at around $63 per barrel, a considerable discount to international benchmark Brent.

A lower cap — at around $50 per barrel — would make it difficult for Russia to balance its state budget, with Moscow believed to require around $60 to $70 per barrel to do that, its so-called “fiscal break-even.”

However, that $50 cap would be still be above Russia’s cost of production of between $30 and $40 per barrel, giving Moscow an incentive to keep selling oil simply to avoid having to cap wells that can be hard to restart.

WHAT IF RUSSIA AND OTHER COUNTRIES WON’T GO ALONG?

Russian has said it will not observe a cap and will halt deliveries to countries that do. A lower cap of around $50 could be more likely to provoke that response, or Russia could halt the last of its remaining natural gas supplies to Europe.

China and India might not go along with the cap, while China could form its own insurance companies to replace those barred by U.S., U.K. and Europe.

Galimberti says China and India are already enjoying discounted oil and may not want to alienate Russia.

“China and India get Russia’s crude at a huge discount to Brent, therefore, they don’t necessarily need a price cap to continue to enjoy a discount,” he said. “By complying with the cap set by the G-7, they risk alienating Russia. As a result, we do believe that the compliance with the price cap would not be high.”

Russia could also turn to schemes such as transferring oil from ship to ship to disguise its origins and mixing its oil with other types to skirt the ban.

So it remains to be seen what effect the cap would have.

WHAT ABOUT THE EU EMBARGO?

The biggest impact from the EU embargo may come not on Dec. 5, as Europe finds new suppliers and Russian barrels are rerouted, but on Feb. 5, when Europe’s additional ban on refinery products made from oil — such as diesel fuel — come into effect.

Europe will have to turn to alternative supplies from the U.S., Middle East and India. “There is going to be a shortfall, and this will result in very high prices,” Galimberti said.

Europe still has many cars that run on diesel. The fuel also is used for truck transport to get a huge range of goods to consumers and to run agricultural machinery — so those higher costs will be spread throughout the economy.

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November 24, 2022
IEA chief sees energy crunch for Europe next winter

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BERLIN — Europe should be able to cope with the natural gas supply crunch in the coming months thanks to considerable reserves although the continent could face a bigger energy crisis next winter, the head of the International Energy Agency said Thursday.

Fatih Birol said that, barring unforeseen events, “Europe will go through this winter with some economic and social headaches, bruises here and there” as a result of efforts to wean itself off Russian gas and the wider increase in energy costs resulting from the war in Ukraine.

“Next winter will be more difficult than this winter” he said.

Birol cited the fact that Russian gas supplies to Europe may end completely next year, while China’s demand for liquefied natural gas looks set to rebound as its economy recovers from the pandemic.

Meanwhile, the IEA projects new gas capacity coming online in 2023 to be the lowest in two decades, he said.

“(This) is the reason Europe needs to prepare today for next year,” Birol said, adding that solidarity among European nations was key.

Speaking at an energy symposium in Berlin hosted by the German government, the IEA chief said Russia can also expect to feel some costly effects of its falling out with European energy buyers over Ukraine.

With 75% of Russia’s gas exports and 55% of its oil going to Europe before the war, Moscow needs to find new markets for its output, he said.

Birol called it “completely wrong” to assume Russia will simply deliver to Asia, noting that pipelines through Siberia would take a decade to build and oil tankers need ten-times longer to reach clients in the East than in Europe.

Additionally, the departure of specialized oil and gas technology companies from Russia due to the sanctions means production at challenging extraction sites is likely to fall.

“Russia is set to lose the energy battle big time,” Birol said, adding that the IEA has calculated Moscow will lose about $1 trillion in revenue by 2030 because of its war in Ukraine.

While noting that the energy crisis also has severe impacts on developing nations, Birol said it would help speed up the transition to alternatives to fossil fuels.

“When I look at the (efforts to ensure) energy security, climate commitments and industrial policy drivers, I am optimistic that the current energy crisis will be a turning point in the history of energy policy making,” he said.

Still, this will require a five-fold increase in clean energy investments compared to today, said Birol.

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November 24, 2022
EU nations work on rift over gas price cap as cold sets in

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BRUSSELS — On winter’s doorstep, European Union nations have not been able to surmount bitter disagreements as they struggle to effectively shield 450 million citizens from massive increases in their natural gas bills as cold weather sets in.

An emergency meeting of energy ministers Thursday only shows how the energy crisis tied to Russia’s war in Ukraine has divided the 27-nation bloc in almost irreconcilable blocs.

A massive August spike in natural gas prices stunned all but the wealthiest in the EU, forcing the bloc to look for a cap to contain volatile prices that are fueling inflation. Following several delays, energy ministers are back trying to break a deadlock between nations that are demanding cheaper gas to ease household bills — including Greece, Spain, Belgium, France and Poland — and those like Germany and the Netherlands that are insisting a price cap could cut supplies.

A solution was nowhere near the horizon — to the frustration of many.

“It’s already minus 10 (Celsius) in Poland,” said the nation’s energy minister, Anna Moskwa. “It’s winter now.”

Natural gas and electricity prices have soared as Moscow has slashed gas supplies to Europe used for heating, electricity and industrial processes. European officials have accused Russia of energy warfare to punish EU countries for supporting Ukraine.

So finding a deal is not only about providing warmth to citizens but also about showing a united front to Russian President Vladimir Putin.

Talks have dragged on for months and even if a summit of EU leaders proclaimed some sort of breakthrough last month, nothing has been visible on the ground. Nations had been waiting for a proposal from the European Commission, the EU’s executive arm, to set a threshold for a price cap, and when it came Tuesday, there was dismay and accusations it could never work.

The commission set a threshold for a “safety price ceiling” to kick in if prices exceed 275 euros per megawatt hour for two weeks and if they are 58 euros higher than the price for liquefied natural gas on world markets.

In political language, it means that such a system might not even have averted hikes as high as in August.

“Setting a ceiling at 275 euros is not actually a ceiling,” said Greek Energy Minister Konstantinos Skrekas, who called for a cap that could go as low as 150 euros.

“We are losing valuable time without results,” he added.

In comparison, the price stood at 125 euros per megawatt-hour on Europe’s TTF benchmark Thursday. Since the price has fallen since the summertime peaks, diplomats have said the urgency has abated somewhat, even though it could pick up quickly again if the weather is colder than normal and supplies get tight.

Some 15 nations are united around these views, but Germany and the Netherlands lead another group wanting to ensure that gas supply ships would not bypass Europe because they could get better prices elsewhere.

“Security of supply is paramount. Europe still has to be an attractive gas market,” Estonian Economy Minister Riina Sikkut said.

No decisive breakthrough was expected at Thursday’s meeting.

Czech Industry Minister Jozef Síkela, who chaired the emergency meeting, said he was well aware of the “emotional reactions” the commission proposal had sparked and predicted that talks would be “rather spicy.”

As a result of trade disruptions tied to Russia’s war in Ukraine, EU nations have reduced the overall share of Russian natural gas imports to the EU from 40% before the invasion to around 7%. And gas storage has already far exceeded targets and stand nearly at capacity.

The EU has relied on increased imports of liquefied natural gas, or LNG, including from the United States, to help address the fall in Russian supplies.

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November 24, 2022
Opinion: ‘Africa’s COP’ made some big promises. Here’s how to deliver | CNN

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Editor’s Note: Adjoa Adjei-Twum. She is the Founder & CEO of the Africa-focused and UK-based advisory firm Emerging Business Intelligence and Innovation (EBII) Group for global investors interested in Africa and emerging markets.
The opinions expressed in this article are solely hers.

CNN
—

The recently-concluded COP27 was dubbed the “African COP” – with the continent center stage in the global effort to fight the causes and effects of climate change.

As negotiations in the Egyptian resort of Sharm el-Sheikh spilled over into the weekend, there was a significant breakthrough on one of the most fractious elements – creating a fund to help the most vulnerable developing nations hit by climate disasters.

The backdrop for COP27 was a series of catastrophic global weather events including record-breaking floods in Pakistan and Nigeria, the worst droughts in four decades in the Horn of Africa, and severe European heatwaves and hurricanes in the US.

The loss and damage fund – to pay for the sudden impacts of climate change which are not avoided by mitigation and adaptation – has been a major obstacle in COP talks.

The richest, most polluting nations have been reluctant to agree to a deal, worried that it could put them on the hook for costly legal claims for climate disasters.

I welcome progress here, as African nations are bearing the brunt of climate change. The continent contributes around 3% of global greenhouse gas emissions, according to the UN Environment Programme and the International Energy Agency (IEA).

Climate change is estimated to cost the continent between $7bn and $15bn a year in lost economic output or GDP, rising to $50bn a year by 2030, according to the African Development Bank (AfDB).

But my joy is muted – the devil is in the detail, as ever. As an African diaspora entrepreneur whose work focuses significantly on the impact of climate change on the risk profile of African financial institutions and nations, I am concerned about the lack of detail about how the fund would work, when it will be implemented, and the timescale. I fear these could take years.

During a recent visit to the US, I discussed reparation money with US Democrat Congresswoman Rep. Ilhan Omar. She said it was important for the US and other countries to make heavy investments, which could come in the form of reparations.

She spoke about the importance of consulting impacted communities in Africa to avoid exploitation and the need for countries such as the US and China to end fossil fuel expansion and phase out existing oil, gas, and coal in a way that is “fair and equitable.”

Adaptation is Africa’s big challenge – the AFDB estimates that the continent needs between $1.3 to $1.6 trillion by 2030 to adapt to climate change.

The bank’s Africa Adaptation Acceleration Program, in partnership with the Global Center on Adaptation (GCA), aims to mobilize $25bn in finance for Africa, for projects such as weather forecasting apps for farmers and drought-resistant crops.

It is now time for African nations to levy a climate export tax on commodities, such as cocoa and rubber, to help pay for climate adaptation. But it still falls short of the money Africa needs.

Adaptation is all about building resilience and capacity, and I believe our governments, banks, and businesses must also adapt.

I am calling on our governments, institutions, and companies to boost efforts to attract green finance and make Africa more resilient by improving governance, tax systems, anti-corruption efforts, and legal compliance.

Sustainability is not a business tax, it is essential for business survival. Only companies focused on the changing world around us – from regulation to consumer and investor attitudes – will survive the climate crisis.

Businesses that ignore this can expect fines, boycotts, and limited access to funding. Banks will suffer too. So the financial sector must be better prepared and more agile.

This message will be reinforced when I meet CEOs, banking executives, and Nigeria’s central bank at the 13th Annual Bankers’ Committee Retreat, organized by the Nigerian Bankers Committee, in Lagos next month. The aim is to support the country’s biggest banks as they navigate new international sustainability rules.

Increasingly, investment funds must conform to green taxonomies – a system that highlights which investments are sustainable and which are not. In other words, banks will only support investments by institutions in G20 countries if they conform to national or supranational rules, such as the European Union’s Green Taxonomy.

This will not only help tackle greenwashing but also help companies and investors make more informed green choices. Additionally, G20 countries are asking their banks to forecast how risky their loans are due to climate change.

African nations must implement robust systems to mobilize private capital and foreign direct investment in key sectors. Governments must ensure they have an enabling environment for increased green investments.

Regulators must strengthen their capacity to develop and effectively enforce climate-related rules. Companies, especially banks, should strengthen climate risk management teams, regulatory compliance expertise, and preparation of bankable projects for international climate finance. This is the foundation for a successful transition to a low–carbon economy.

Looking ahead, there are other actions we can take. The African Continental Free Trade Area (AfCFTA) – the world’s largest free trade area and single market of almost 1.3bn people – could protect Africa from the adverse impacts of climate change, such as food insecurity, conflict, and economic vulnerability.

It could lead to the development of regional and continental value chains, inter-Africa trade deals, job creation, security, and peace. A single market could drive less energy-intensive economic growth while keeping emissions low, for example by developing regional energy markets and manufacturing hubs.

But we need much better pan-Africa coordination, like the European Union, to accelerate the AfCFTA. I urge our governments to work together and take swift and concrete actions to ensure the full and effective implementation of the AfCFTA. There is no time to waste.

This will not be popular with some African regimes because they will be forced to be more transparent and accountable with their public finances.

This year’s COP may have been marred by chaos, rows between rich and poorer nations, and broken multi-billion-dollar pledges by developed countries who created the climate crisis.

Many observers point out the final deal did not include commitments to phase down or reduce the use of fossil fuels.

But, the deal to create a pooled fund for countries most affected by climate change is significant, and as UN secretary general António Guterres warned, it was no time for finger-pointing.

It is also no time for the blame game. It is a wake-up call for African governments, banks, institutions, and companies to unite, step up, and adapt to a new climate reality.

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November 24, 2022
Report: Norway sentences Russian for flying drone

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COPENHAGEN, Denmark — A 34-year-old Russian was sentenced to 90 days in prison on Wednesday for flying a drone and thereby breaching sanctions which came into force after Russia went to war against Ukraine.

The man, who was not identified, was not suspected of espionage, the Norwegian newspaper Bergens Tidende reported.

He admitted to flying the drone in southern Norway to photograph nature, the daily said, adding he claimed to be unaware that this was banned.

Under Norwegian law, it is prohibited for aircraft operated by Russian companies or citizens “to land on, take off from or fly over Norwegian territory.” Norway is not a member of the European Union but mirrors its moves and decided on the ban earlier this year after the invasion.

The prosecution had asked for a 120-day sentence. Prosecutor Marit Formo said she was “very satisfied with the verdict” of the Hordaland District Court.

Numerous drone sightings have been reported near offshore oil and gas platforms belonging to NATO member Norway, a major oil and gas producer, in recent weeks. Several Russian citizens have been detained over the past few weeks for flying drones or taking photographs of sensitive sites in Norway.

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November 23, 2022