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  • Trump says US is taking control of Venezuela’s oil reserves. Here’s what it means

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    (CNN) — President Donald Trump on Saturday said the US would take control of Venezuela’s massive oil reserves and recruit American companies to invest billions of dollars to refurbish the country’s gutted oil industry.

    Venezuela is sitting on a massive 303 billion barrels worth of crude — about a fifth of the world’s global reserves, according to the US Energy Information Administration (EIA). That trove of crude will play a central role in the country’s future.

    Oil futures don’t trade on the weekend, so the near-term impact on the price of oil is a bit of a guessing game, but Trump said the US would operate the Venezuelan government for the time being.

    “We’re going to have our very large United States oil companies — the biggest anywhere in the world — go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure,” Trump said at a news conference at Mar-a-Lago.

    A US-led revamp could eventually make Venezuela a much bigger supplier of oil and could create opportunities for Western oil companies and could serve as a new source of production. It could also keep broader prices in check, although lower prices might disincentivize some US companies from producing oil.

    Even if international access were fully restored tomorrow, it could take years and incredible expense to bring Venezuelan oil production fully back online. Venezuelan state-owned oil and natural gas company PDVSA says its pipelines haven’t been updated in 50 years, and the cost to update the infrastructure to return to peak production levels would cost $58 billion.

    “For oil, this has the potential for a historic event,” said Phil Flynn, senior market analyst at the Price Futures Group. “The Maduro regime and (former Venezuelan President) Hugo Chavez basically ransacked the Venezuelan oil industry.”

    Control of Venezuela’s oil trove

    Venezuela is home to the largest proven oil reserve on Earth, but its potential far outweighs its actual output: Venezuela produces only about 1 million barrels of oil per day — about 0.8% of global crude production.

    That’s less than half of what it produced before Maduro took control of the country in 2013 and less than a third of the 3.5 million barrels it was pumping before the Socialist regime took over.

    International sanctions on the Venezuelan government and a deep economic crisis contributed to the decline of the country’s oil industry — but so did a lack of investment and maintenance, according to the EIA. Venezuela’s energy infrastructure is deteriorating, and its capacity to produce oil has been greatly diminished over the years.

    Venezuela simply doesn’t produce enough oil to make that big a difference.

    Oil prices have been in check this year because of oversupply fears. OPEC has ramped up production, but demand has fallen off a bit as the global economy continues to struggle with inflation and affordability after the post-pandemic price shock.

    US oil briefly rose above $60 a barrel when the Trump administration began seizing oil from Venezuelan vessels, but it has since fallen to $57 a barrel again. So the market’s reaction — if investors believe the strike is bad news for oil supply — will almost certainly be muted.

    “Psychologically it might give it a bit of a boost, but Venezuela has oil that can be easily replaced by a combination of global producers,” Flynn said.

    Venezuela’s oil potential

    The kind of oil Venezuela is sitting on — heavy, sour crude — requires special equipment and a high level of technical prowess to produce. International oil companies have the capability to extract and refine it, but they’ve been restricted from doing business in the country.

    The United States, the world’s largest oil producer, has light, sweet crude, which is good for making gasoline but not much else. Heavy, sour crude like the oil from Venezuela is crucial for certain products made in the refining process, including diesel, asphalt and fuels for factories and other heavy equipment. Diesel is in tight supply around the world — in large part because of sanctions on Venezuelan oil.

    Unlocking Venezuelan oil could be particularly beneficial to the United States: Venezuela is nearby and its oil is relatively cheap — a result of its sticky, sludgy texture that requires significant refining. Most US refineries were constructed to process Venezuela’s heavy oil, and they’re significantly more efficient when they’re using Venezuelan oil compared to American oil, according to Flynn.

    “If indeed this continues to go smoothly — and it looks like a masterful operation so far — and US companies are allowed to go back and rebuild the Venezuelan oil industry, it could be a game-changer for the global oil market,” Flynn said.

    Trump called Venezuela’s oil business “a total bust.”

    “They were pumping almost nothing by comparison to what they could have been pumping and what could have taken place,” Trump said.

    “We’re going to have our very large United States oil companies — the biggest anywhere in the world — go in, spend billions of dollars, fix the badly broken infrastructure, the oil infrastructure, and start making money for the country,” he added.

    What’s next for oil prices

    It is unclear how energy prices will be impacted by the US intervention in Venezuela.

    Bob McNally, president of Washington, DC-based consulting firm Rapidan Energy Group, told CNN that he thinks the impact on prices would be “modest,” but he doesn’t expect much of an impact “unless we see signs of widespread social unrest and things look messy. More likely if this looks ‘stable.’”

    “The prospect is then how quickly could a Venezuela that is pro-US increase its production. That will be the parlor game. Perception may race ahead of reality. People will assume Venezuela can add oil faster than they actually can,” he said.

    “Venezuela can be a huge deal but not for 5 to 10 years,” McNally said.

    Oil markets open on Sunday night. Prices will depend on whether Trump “can manifest the turnaround” of Venezuela’s oil sector, according to Helima Croft, head of global commodity strategy at RBC Capital Markets.

    “It all hinges on whether Venezuela defies the recent history of US-led regime change efforts,” Croft told CNN. “President Trump signaled the US is back in ‘nation-building mode,’ and that US companies will make the requisite investments to ensure the revival of the oil sector. I think we need far more details before we declare ‘Mission Accomplished.’”

    CNN’s Matt Egan contributed to this report.

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  • Pump prices could rise after US, EU hit Russian oil companies with new sanctions and oil spikes

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    Oil prices spiked Thursday after the U.S. announced massive new sanctions on Russia’s oil industry in an attempt to get Russian President Vladimir Putin to the negotiating table and end Moscow’s brutal war on Ukraine.U.S. benchmark crude jumped 6%, to $62 per barrel midday Thursday and analysts say if the situation remains static, U.S. consumers will soon be paying more at the pump.Patrick De Haan, head of petroleum analysis for GasBuddy, said while it was difficult to predict with certainty because of the number of moving parts, consumers will likely see a bump in prices as early as next week, if not sooner.“We’ll probably start to see motorists be impacted by the sanctions at the pump in the next couple days and it might take five days for that to be fully passed along,” De Haan said, adding that the full impact also depends on whether the Russian or U.S. positions change.“Russia will feel pressure to come to the table in light of the new developments or President Trump may react when he sees oil prices rising to levels that become uncomfortable, so I don’t think this is going to be very long lasting,” De Haan said.Oil prices have been relatively low for the past few years and last week the cost for barrel of U.S. benchmark crude fell below $57, its lowest level since early 2021. The price for a barrel of U.S. benchmark crude did rise near $79 a barrel early this year, just before President Donald Trump took office, a price not necessarily considered outrageously elevated by most analysts.The broad, extended decline in oil prices pushed the average price for a gallon of gas in the U.S. last week under $3 for the first time since December of last year, according to GasBuddy.For much of 2025, inflation has been held mostly in check, partly due to cheaper prices at the pump. However, that could change quickly as higher energy costs have a downstream effect on prices for virtually all products and services across industries.“The impact to a lot of Americans is that products derived from crude, gasoline, diesel and jet fuel are all likely to see price increases,” De Haan said.The main reason oil and gas have stabilized at lower levels this year is that the group of countries that are part of the OPEC+ alliance of oil-exporting countries have continued to boost production. Earlier this month, OPEC+ leaders announced they would raise oil production by 137,000 barrels per day in November, the same amount announced for October. The group has been raising output slightly in a series of boosts all year after announcing cuts in 2023 and 2024.Russia is the leading non-OPEC member in the 22-country alliance. The group’s next meeting is scheduled for Nov. 2.The sanctions against Russian oil giants Rosneft and Lukoil follows calls from Ukrainian President Volodymyr Zelenskyy as well as bipartisan pressure on Trump to hit Russia with harder sanctions on its oil industry, the economic engine that has allowed Russia to continue to execute the grinding conflict even as it finds itself largely internationally isolated. The European Union on Thursday announced its own measures targeting Russian oil and gas.The price for Brent crude, the international standard, rose $3.57 on Thursday to $66.15 per barrel.

    WASHINGTON —

    Oil prices spiked Thursday after the U.S. announced massive new sanctions on Russia’s oil industry in an attempt to get Russian President Vladimir Putin to the negotiating table and end Moscow’s brutal war on Ukraine.

    U.S. benchmark crude jumped 6%, to $62 per barrel midday Thursday and analysts say if the situation remains static, U.S. consumers will soon be paying more at the pump.

    Patrick De Haan, head of petroleum analysis for GasBuddy, said while it was difficult to predict with certainty because of the number of moving parts, consumers will likely see a bump in prices as early as next week, if not sooner.

    “We’ll probably start to see motorists be impacted by the sanctions at the pump in the next couple days and it might take five days for that to be fully passed along,” De Haan said, adding that the full impact also depends on whether the Russian or U.S. positions change.

    “Russia will feel pressure to come to the table in light of the new developments or President Trump may react when he sees oil prices rising to levels that become uncomfortable, so I don’t think this is going to be very long lasting,” De Haan said.

    Oil prices have been relatively low for the past few years and last week the cost for barrel of U.S. benchmark crude fell below $57, its lowest level since early 2021. The price for a barrel of U.S. benchmark crude did rise near $79 a barrel early this year, just before President Donald Trump took office, a price not necessarily considered outrageously elevated by most analysts.

    The broad, extended decline in oil prices pushed the average price for a gallon of gas in the U.S. last week under $3 for the first time since December of last year, according to GasBuddy.

    For much of 2025, inflation has been held mostly in check, partly due to cheaper prices at the pump. However, that could change quickly as higher energy costs have a downstream effect on prices for virtually all products and services across industries.

    “The impact to a lot of Americans is that products derived from crude, gasoline, diesel and jet fuel are all likely to see price increases,” De Haan said.

    The main reason oil and gas have stabilized at lower levels this year is that the group of countries that are part of the OPEC+ alliance of oil-exporting countries have continued to boost production. Earlier this month, OPEC+ leaders announced they would raise oil production by 137,000 barrels per day in November, the same amount announced for October. The group has been raising output slightly in a series of boosts all year after announcing cuts in 2023 and 2024.

    Russia is the leading non-OPEC member in the 22-country alliance. The group’s next meeting is scheduled for Nov. 2.

    The sanctions against Russian oil giants Rosneft and Lukoil follows calls from Ukrainian President Volodymyr Zelenskyy as well as bipartisan pressure on Trump to hit Russia with harder sanctions on its oil industry, the economic engine that has allowed Russia to continue to execute the grinding conflict even as it finds itself largely internationally isolated. The European Union on Thursday announced its own measures targeting Russian oil and gas.

    The price for Brent crude, the international standard, rose $3.57 on Thursday to $66.15 per barrel.

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  • Oil prices climb with Israel considering strikes on Iranian oil facilities

    Oil prices climb with Israel considering strikes on Iranian oil facilities

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    Oil prices climb with Israel considering strikes on Iranian oil facilities – CBS News


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    As the Middle East waits to see how Israel will respond to Tuesday’s massive missile attack by Iran, oil prices have risen over the prospect of possible Israeli strikes on Iran’s oil facilities. CBS News foreign correspondent Ramy Inocencio has more.

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  • Exxon to Close Pioneer Deal as FTC Forces Out Sheffield

    Exxon to Close Pioneer Deal as FTC Forces Out Sheffield

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    (Bloomberg) — The US Federal Trade Commission declined to challenge Exxon Mobil Corp.’s $60 billion purchase of Pioneer Natural Resources Co. but asserted that Scott Sheffield, Pioneer’s co-founder, must not take a seat on the supermajor’s board.

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    The decision, announced Thursday in a filing, will ease concern the Biden administration will seek to block a series of oil and gas mega-mergers, but it came at a hefty price. The antitrust agency says it found evidence Sheffield sought to communicate with OPEC and fellow US producers about oil pricing and output, potentially driving up costs for consumers.

    “Mr. Sheffield’s past conduct makes it crystal clear that he should be nowhere near Exxon’s boardroom. American consumers shouldn’t pay unfair prices at the pump simply to pad a corporate executive’s pocketbook,” Deputy Director of the FTC’s Bureau of Competition Kyle Mach said in a statement.

    The FTC says its order will prevent Sheffield from engaging in “collusive activity” that would could drive up crude prices and force US consumers to pay higher fuel prices. The agency says he exchanged hundreds of text messages with OPEC representatives and officials about the oil market.

    Exxon shares rose 0.3% before the start of regular trading in New York. Pioneer shares were unchanged.

    The proposed consent order also bars Sheffield from serving in any advisory capacity at Exxon and prohibits the oil giant from appointing any Pioneer employee or director to its board for five years.

    Exxon said in a statement that the company learned of the FTC’s allegations regarding Sheffield from the agency and that they are “entirely inconsistent with how we do business.” Exxon has agreed to the terms of the consent decree and plans to close its acquisition of Pioneer on May 3, the company said.

    Pioneer said it was surprised by the FTC’s allegations and disagrees with the agency’s conclusions.

    “Mr. Sheffield and Pioneer believe that the FTC’s complaint reflects a fundamental misunderstanding of the US and global oil markets and misreads the nature and intent of Mr. Sheffield’s actions,” the company said in a statement.

    Selling his company to Exxon and landing a seat on the board were a career capstone for Sheffield, who led Pioneer for more than 20 years and was one of the earliest proponents of fracking in the Permian Basin. After closing the merger, Exxon will be far and away the biggest producer in the Permian Basin of Texas and New Mexico, which now pumps more oil per day than Iraq, the second-largest OPEC-member.

    More than 50 lawmakers urged the FTC in March to increase scrutiny over fears a $230 billion wave of consolidation in the past year would increase energy prices for consumers, squeeze suppliers and suppress wages. Investors had feared the agency, which has become more aggressive under Chair Lina Khan, would stand in the way of several large deals, especially in an election year when the Biden administration is seeking to prove its climate credentials and contain gasoline prices.

    Chevron Corp., Occidental Petroleum Corp. and Chesapeake Energy Corp. are among companies with large pending takeover deals that are undergoing in-depth reviews before the FTC.

    Oil executives claim the deals will benefit shareholders, consumers and the environment. Exxon Chief Executive Officer Darren Woods has said the Pioneer deal would lower its cost of production, making US barrels more competitive in the global market and provide a strong platform for growth, which would ultimately benefit consumers. Exxon also pledged to make Pioneer’s operations net zero by 2035, accelerating the prior target by 15 years.

    Sheffield is a rare outspoken leader in the US shale patch, frequently appearing in media interviews and industry conferences. He was an early advocate of the industry’s push for capital discipline rather than ramping up production at all costs, and was one of the first CEOs to call on his company and others to reducing flaring.

    But it was Sheffield’s public and private communications with OPEC and other industry executives that caught the attention of the FTC. He was a leading advocate of government-mandated rationing of Texas oil production during the early-2020 crude market collapse that saw prices plunge below zero. His efforts to convince the Texas Railroad Commission that oversees that state’s oil industry to impose output caps for the first time in decades was ultimately unsuccessful.

    The Biden administration has frequently been at odds with the industry, but easing through what many executives see as the necessary consolidation of the oil patch is likely to improve relations. With crude prices up more than 10% this year and tensions rising the Middle East, the administration is vulnerable to Republican attacks on measures that hurt the oil industry and raise gas prices.

    The Pioneer deal will combine two fast-growing Permian operations, lifting Exxon’s production in the basin to about 2 million barrels of oil equivalent a day by 2027, up from about 600,000 last year.

    –With assistance from Joe Carroll, Joe Ryan and Mitchell Ferman.

    (Adds statements from Exxon and Pioneer.)

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    ©2024 Bloomberg L.P.

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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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  • Stocks close out 2023 with a 24% gain, buoyed by a resilient economy

    Stocks close out 2023 with a 24% gain, buoyed by a resilient economy

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    Investors have plenty to cheer as 2023 draws to a close, with the S&P 500 ending the year with a gain of more than 24% and the Dow finishing near a record high. Easing inflation, a resilient economy and the prospect of lower interest rates buoyed investors, particularly in the last two months of the year.

    The benchmark S&P 500 index inched lower Friday, the last trading day of 2023, but ended the year with a 24.2% gain. The Dow Jones Industrial Average rose more than 13% this year, and the Nasdaq soared 43%, driven by gains in big technology companies, including Nvidia, Amazon and Microsoft. 

    The rally that started in November helped broaden the gains within the market beyond just the big technology companies. Investors were also buoyed by a December forecast from the Federal Reserve that it plans to cut interest rates three times in 2024.

    The rally marked a big psychological shift for investors, said Quincy Krosby, chief global strategist at LPL Financial.

    “Investors were able to accept that fact that the market would close the year on a higher note,” Krosby said. “Above all else, it was broad participation in the market that reinforced and confirmed gains for smaller company stocks were particularly important.”

    Most major indexes were able to erase their losses from a dismal 2022. Smaller company stocks had a late rally, but managed to erase the bulk of their losses from last year. The Russell 2000 index finished 2023 with a 15.1% gain after falling 21.6% in 2022.

    “Broadening participation predicated on falling interest rates and signs of a soft-landing scenario have underpinned the recovery,” noted Adam Turnquist, chief technical strategist for LPL Financial, in a research note earlier this month. 

    It’s possible the rally could continue, he added. “Over the last 100 years, and filtering for record highs occurring at least three months apart, upside momentum has historically continued,” he noted.

    The Magnificent 7

    The broader market’s gains were driven largely by the so-called Magnificent 7 companies, which include Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta Platforms and Tesla. They accounted for about two-thirds of the gains in the S&P 500 this year, according to S&P Dow Jones Indices. Nvidia lead the group with a gain of about 239%.

    Investors in the U.S. came into the year expecting inflation to ease further as the Federal Reserve pushed interest rates higher. The trade-off would be a weaker economy and possibly a recession. But while inflation has come down to around 3%, the economy has chugged along thanks to solid consumer spending and a healthy job market.

    The stock market is now betting the Fed can achieve a “soft landing,” where the economy slows just enough to snuff out high inflation, but not so much that it falls into a recession. As a result, investors now expect the Fed to begin cutting rates as early as March.

    The Fed’s signal that it will make three quarter-point cuts to the benchmark rate next year could add more fuel to the broader market’s momentum in 2024. That rate is currently sitting at its highest level, between 5.25% and 5.50%, in two decades.

    High interest rates and Treasury yields hurt prices for investments, so a continued reversal means more relief from that pressure. Wall Street is forecasting stronger earnings growth for companies next year after a largely lackluster 2023, with companies wrestling with higher input and labor costs and a shift in consumer spending.

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  • IEA expects oil demand slowdown to persist in 2024 as prices fall on oversupply concerns

    IEA expects oil demand slowdown to persist in 2024 as prices fall on oversupply concerns

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    A Petroleos de Venezuela SA oil pumpjack on Lake Maracaibo in Cabimas, Zulia state, Venezuela, on Friday, Nov. 17, 2023.

    Gaby Oraa | Bloomberg | Getty Images

    The International Energy Agency on Thursday said evidence of softening global oil demand is mounting and a slowdown is expected to continue into 2024, reaffirming a starkly different outlook compared to oil producing group OPEC.

    The IEA said oil market sentiment had turned “decidedly bearish” in recent weeks, even after some members of OPEC and non-OPEC oil-exporting allies — collectively known as OPEC+ — on Nov. 30 announced a new round of voluntary production cuts in the first quarter of next year.

    Oil prices were higher on Thursday morning, paring losses after recently falling to their lowest level since late June on gnawing oversupply concerns.

    International benchmark Brent crude futures with February expiry traded 1.4% higher at $75.31 per barrel at 9 a.m. London time, while U.S. West Texas Intermediate crude futures for front-month January traded 1.3% higher at $70.36 per barrel.

    In its latest monthly oil market report, the IEA said global oil demand was on course to rise 2.3 million barrels per day to 101.7 million barrels per day in 2023, noting that this forecast “masks the impact of a further weakening of the macroeconomic climate.”

    The energy agency warned that “evidence of a slowdown in oil demand is mounting,” with the pace of expansion poised to “slow drastically” from 2.8 million barrels per day year-on-year in the third quarter to 1.9 million barrels per day in the final three months of 2023.

    It prompted a downward revision of the IEA’s global consumption growth forecast of nearly 400,000 in the fourth quarter, with weaker-than-anticipated demand in Europe, Russia and the Middle East accounting for the bulk of that adjustment.

    Looking ahead, the IEA said oil consumption growth is projected to halve next year, falling to 1.1 million barrels per day as global economic growth stays below trend in major economies, and as Covid-19-related distortions fade.

    IEA vs. OPEC

    OPEC, meanwhile, struck a markedly different tone in its latest monthly report.

    The oil producer group, which has frequently clashed with the IEA in recent years over issues such as peak oil demand and the need for investment in new supplies, on Wednesday said that it remained “cautiously optimistic” about oil market dynamics in 2024.

    OPEC blamed “exaggerated concerns” about oil demand growth for a recent downturn in oil prices and maintained its relatively high oil use prediction for next year.

    It reaffirmed its outlook for world oil demand growth in 2023 at 2.46 million barrels per day, roughly in line with the IEA’s forecast.

    For next year, OPEC said it sees world oil demand at 2.25 million barrels per day, unchanged from the previous month, but a sharply higher estimate than the IEA’s prediction of 1.1 million barrels per day for the period.

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  • Saudi Arabia could 'flush' the oil market with a flood of supply to regain control over prices in the face of rising US production, crude expert says

    Saudi Arabia could 'flush' the oil market with a flood of supply to regain control over prices in the face of rising US production, crude expert says

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    Photo by Christian Ender/Getty Images

    • Saudi Arabia may “flush” the market with a flood of supply that would sink prices, an expert said.

    • That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments.

    • Meanwhile, US crude output has been on a tear this year, hitting new record highs.

    Saudi Arabia may flood the market with more oil supplies, reversing its production curbs, as the world’s top crude exporter tries to regain control of prices, an energy market veteran said.

    That comes as OPEC+ concluded its latest meeting where members pledged voluntary production cuts without giving firm commitments, prompting oil prices to fall.

    “We’ve more or less been saying potentially Saudi needs to just flush this thing out,” Paul Sankey from Sankey Research told CNBC on Friday.

    He estimated that Saudi Arabia has capacity to ramp up its output by an additional 2.5 million barrels a day.

    For now, OPEC’s de factor leader is trying to prop up crude by pumping less. On Thursday, it extended its cut of 1 million barrel per day into the first quarter.

    But Sankey noted Saudi Arabia shocked markets in 2014, when it similarly tried to flush the market by sinking crude prices from highs of around $110 a barrel to $50.

    The drop in prices eventually forced higher-cost producers to exit the market as pumping was no longer profitable. Meanwhile, Saudi Arabia continued to pump as it was better able to withstand lower prices. As supplies from its rivals disappeared, the kingdom was able to regain traction over prices.

    Back then, like today, booming US oil supply is a headache for OPEC and Saudi Arabia. And Sankey said Friday that the oil cartel has “a huge problem with US production levels.”

    In fact, US crude output has been on a tear this year, with monthly production hitting a record high in September at more than 13.2 million barrels a day, according to data from the Energy Information Administration.

    Read the original article on Business Insider

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  • Oil extends gains as OPEC+ to mull deeper cuts

    Oil extends gains as OPEC+ to mull deeper cuts

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    By Florence Tan

    SINGAPORE (Reuters) – Oil futures nudged higher on Monday, extending gains on expectations of OPEC+ deepening supply cuts to shore up prices, which have fallen for four weeks on easing concern of Mid-East supply disruption brought about by the Israel-Hamas conflict.

    Brent crude futures climbed 11 cents, or 0.1%, to $80.72 a barrel by 0012 GMT while U.S. West Texas Intermediate crude was at $75.97 a barrel, up 8 cents. The front-month December contract expires later on Monday while the more active January futures gained 13 cents, or 0.2%, at $76.17 a barrel.

    Both contracts settled 4% higher on Friday after three OPEC+ sources told Reuters that the producer group, made up of the Organization of the Petroleum Exporting Countries and their allies including Russia, is set to consider whether to make additional oil supply cuts when it meets on Nov. 26.

    Oil prices have dropped by almost 20% since late September while prompt inter-month spreads for Brent and WTI slipped into contango last week. Prompt prices are lower than those in future months in a contango market, signalling sufficient supply.

    “Our statistical model of OPEC decisions suggests that deeper cuts should not be ruled out given the fall in speculative positioning and in timespreads, and higher-than-expected inventories,” Goldman Sachs analysts said in a note.

    The bank’s baseline forecast is that the existing group production cuts stay fully in place in 2024, and that the unilateral cut of 1 million barrels per day by Saudi Arabia will be extended through the second quarter of next year, and reversed only gradually from July.

    IG analyst Tony Sycamore said WTI prices may rise toward $80 a barrel on the back of the possibility that OPEC+ does announce deeper cuts at their upcoming meeting although a drop below $72 will encourage the Biden administration to refill the U.S. Strategic Petroleum Reserve.

    “All of which suggest that a rebound in prices is likely in the first half of this week,” he added.

    Investors are also eyeing disruption in Russian crude oil trade after Washington imposed sanctions on three ships that have sent Sokol crude to India.

    On Friday, Moscow lifted a ban on gasoline exports which could add to global supplies of the motor fuel. This comes after Russia scrapped most restrictions on exports of diesel last month.

    In the Middle East, U.S. and Israeli officials said a deal to free some of the hostages held in the besieged Gaza enclave was edging closer despite fierce fighting.

    (Reporting by Florence Tan; Editing by Christopher Cushing)

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  • Saudi Arabia and Russia move to extend oil cuts could drive up gas prices

    Saudi Arabia and Russia move to extend oil cuts could drive up gas prices

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    Saudi Arabia and Russia agreed Tuesday to extend their voluntary oil production cuts through the end of this year, trimming 1.3 million barrels of crude out of the global market and boosting energy prices.

    The dual announcements from Riyadh and Moscow pushed benchmark Brent crude above $90 a barrel in trading Tuesday afternoon, a price unseen in the market since last November.

    The countries’ moves likely will increase the cost for motorists filling up at the pump and put new pressure on Saudi Arabia’s relationship with the United States. President Joe Biden last year warned the kingdom there would be unspecified “consequences” for partnering with Russia on cuts as Moscow wages war on Ukraine.

    Saudi Arabia’s announcement, carried by the state-run Saudi Press Agency, said the country still would monitor the market and could take further action if necessary.

    “This additional voluntary cut comes to reinforce the precautionary efforts made by OPEC+ countries with the aim of supporting the stability and balance of oil markets,” the Saudi Press Agency report said, citing an unnamed Energy Ministry official.

    Russian news agency Tass quoted Alexander Novak, Russia’s deputy prime minister and former energy minister, as saying Moscow would continue its 300,000 barrel a day cut.

    The decision “is aimed at strengthening the precautionary measures taken by OPEC+ countries in order to maintain stability and balance of oil markets,” Novak said.


    Heat wave partly to blame for surge in gas prices

    02:22

    Patrick DeHaan, head of petroleum analysis at GasBuddy, noted in a post on X (formerly known as Twitter) that global crude prices rose to their level since November of 2022 after news surfaced of the extended Saudi and Russian production cuts. 

    Benchmark Brent crude traded Tuesday at $90 a barrel immediately after the announcement. Brent had largely hovered between $75 and $85 a barrel since last October.

    Gasoline prices across the U.S. averaged $3.81  for a gallon of regular, down from $3.83 in August but up slightly from $3.79 a year ago, according to AAA. Driving continues to be an expensive proposition for millions of U.S. motorists. In two states — California and Washington — gas prices continue to top $5 per gallon, while it tops $4 in eight states, data from AAA shows.

    Scorching temperatures this summer have also forced U.S. refineries to close, scaling back production and acting to further drive up gas prices.

    The Saudi reduction, which began in July, comes as the other OPEC+ producers have agreed to extend earlier production cuts through next year.

    A series of production cuts over the past year has failed to substantially boost prices amid weakened demand from China and tighter monetary policy aimed at combating inflation.

    Higher oil prices boost Russia war effort

    The Saudis are particularly keen to boost oil prices in order to fund Vision 2030, an ambitious plan to overhaul the kingdom’s economy, reduce its dependence on oil and to create jobs for a young population.

    The plan includes several massive infrastructure projects, including the construction of a futuristic $500 billion city called Neom.

    Higher prices would also help Russian President Vladimir Putin fund his war on Ukraine. Western countries have used a price cap to try to cut into Moscow’s revenues.

    Western sanctions mean Moscow is forced to sell its oil at a discount to countries like China and India.

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  • Portfolio manager says OPEC+ alliance could break — sending oil prices down to $35 a barrel

    Portfolio manager says OPEC+ alliance could break — sending oil prices down to $35 a barrel

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    Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman speaks during the 8th OPEC International Seminar in Vienna, Austria, July 5, 2023.

    Xinhua News Agency | Xinhua News Agency | Getty Images

    An influential oil producers’ alliance could collapse if unity dissolves around output policy, according to the managing partner of investing group Clean Energy Transition.

    Speaking to CNBC’s “Street Signs Europe” on Thursday, Per Lekander said waning oil demand growth and a lack of cooperation may facilitate the demise of OPEC+ — a group of 23 nations that produces roughly 40% of the world’s crude oil.

    The breakup of OPEC+, Lekander said, could send oil prices careening to as low as $35 per barrel.

    “In a growing market, time is your friend. You just need to wait a bit and things tighten up and improve,” Lekander said. “In a declining market, time is your enemy. You have to keep cutting, keep cutting, keep cutting.”

    He added, “The more negative growth [there] is, and the less cooperation you have — and remember the last OPEC decision, it was really the Saudis doing it on their own … so I would say, if my forecast is correct, and I’m very sure it is … it is going to break.”

    A spokesperson for OPEC was not immediately available to comment.

    OPEC+ has been trimming oil production since November. Oil prices, which are down sharply year-to-date, were trading slightly higher on Thursday afternoon.

    Brent crude futures with September expiry were up around 0.8% at $83.53 a barrel at around midday London time, while U.S. West Texas Intermediate crude futures with September delivery rose 1% to trade at $79.56 a barrel. Both contracts are up over 12% so far this month.

    “There was a period in the 1990s and the 2000s where supply was so much, they couldn’t jack up the price, but for most of the time, the oil price since 1974 has been artificially too high,” Lekander said.

    “If the cartel can’t operate, I would say short-term you go to $35 and mid-term probably $45,” he added.

    The OPEC+ group has sought to distance itself from accusations of cartel behavior, saying its policies target global supply inventories, rather than specific fixed prices. Nevertheless, some Middle East nations in the coalition, which heavily depend on fossil fuel revenues, list oil price assumptions and forecasts in their national budget plans.

    OPEC and allies

    The Organization of Petroleum Exporting Countries was initially formed in 1960 by five founding members: Iran, Iraq, Kuwait, Saudi Arabia and Venezuela. The alliance rose to international prominence through the following decade and has gradually expanded. OPEC joined forces with 10 non-OPEC partners — including heavyweight Russia — to jointly agree production policy in 2016, informally creating the coalition known as OPEC+.

    OPEC itself is actively seeking to recruit new members to the alliance, Secretary-General Haitham al-Ghais said in early July.

    OPEC+ officials have frequently stressed the group’s unity in policy-making, although allied countries typically also vie to protect national interests when accepting output commitments. OPEC+ cooperation briefly ceased for one month in 2020, triggering a price war as Russia and Saudi Arabia flooded the market. The alliance later reunited in May of that year, agreeing stark production cuts to address the drop in global demand triggered by lower transport fuel consumption, after the onset of the Covid-19 pandemic. Since then, the OPEC+ alliance has been careful to telegraph unity in its decision-making, including in its voluntary production cuts.

    In addition to their coalition commitments, several OPEC+ members are now carrying out 1.66 million barrels per day of discretionary output declines until the end of 2024. Saudi Arabia and Russia are further implementing an additional 1 million-barrels-per-day and a 500,000 barrels-per-day drop in their production and exports over July and August, respectively.

    The U.S., which is not a member of the OPEC+ group, has repeatedly called on the alliance to pump more to help the global economy and has criticized Riyadh’s cooperation with Moscow following Russia’s full-scale invasion of Ukraine.

    Saudi Arabia, meanwhile, has frequently ignored Washington’s demands and reportedly said earlier this month that it would do “whatever necessary” to support the market.

    Both OPEC+ officials and the Paris-based International Energy Agency have signaled a potential supply crunch in the second half of the year, when the institutions anticipate a pickup in demand.

    A technical committee of the OPEC+ group, the Joint Ministerial Monitoring Committee, will meet early next month to assess compliance and market fundamentals. The JMMC cannot change the existing OPEC+ policy, but it can call for a meeting of the group’s ministers to do so.

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  • Saudi Arabia cutting oil supply in move that could raise gas prices

    Saudi Arabia cutting oil supply in move that could raise gas prices

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    Saudi Arabia will reduce how much oil it sends to the global economy, taking a unilateral step to prop up the sagging price of crude after two previous cuts to supply by major producing countries in the OPEC+ alliance failed to push oil higher.

    The Saudi cut of 1 million barrels per day, to start in July, comes as the other OPEC+ producers agreed in a meeting in Vienna to extend earlier production cuts through next year.

    Calling the reduction a “lollipop,” Saudi Energy Minister Abdulaziz bin Salman said at a news conference that “we wanted to ice the cake.” He said the cut could be extended and that the group “will do whatever is necessary to bring stability to this market.”

    AUSTRIA-OPEC-ECONOMY-POLITCS-ENERGY-OIL
    Saudi Minister of Energy Prince Abdulaziz bin Salman al-Saud arrives for the 35th OPEC (Organization OF Petroleum Exporting Countries) and non-OPEC ministerial meeting in Vienna, Austria, on June 4,2023.

    JOE KLAMAR/AFP via Getty Images


    The new cut would likely push up oil prices in the short term, but the impact after that would depend on whether Saudi Arabia decides to extend it, said Jorge Leon, senior vice president of oil markets research at Rystad Energy.

    The move provides “a price floor because the Saudis can play with the voluntary cut as much as they like,” he said.

    The slump in oil prices has helped U.S. drivers fill their tanks more cheaply and gave consumers worldwide some relief from inflation.

    “Gas is not going to become cheaper,” Leon said. “If anything, it will become marginally more expensive.”

    That the Saudis felt another cut was necessary underlines the uncertain outlook for demand for fuel in the months ahead. There are concerns about economic weakness in the U.S. and Europe, while China’s rebound from COVID-19 restrictions has been less robust than many had hoped.

    Saudi Arabia, the dominant producer in the OPEC oil cartel, was one of several members that agreed on a surprise cut of 1.6 million barrels per day in April. The kingdom’s share was 500,000. That followed OPEC+ announcing in October that it would slash 2 million barrels per day, angering U.S. President Joe Biden by threatening higher gasoline prices a month before the midterm elections.

    All told, OPEC+ has now dropped production on paper by 4.6 million barrels a day. But some countries can’t produce their quotas, so the actual reduction is around 3.5 million barrels per day, or over 3% of global supply.

    AUSTRIA-OPEC-ECONOMY-POLITCS-ENERGY-OIL
    The logo of the Organization of Petroleum Exporting Countries (OPEC) is seen at its headquarters in Vienna on June 3, 2023.

    JOE KLAMAR/AFP via Getty Images


    The previous cuts gave little lasting boost to oil prices. International benchmark Brent crude climbed as high as $87 per barrel but has given up its post-cut gains and been loitering below $75 per barrel in recent days. U.S. crude has recently dipped below $70.

    That has helped U.S. drivers kicking off the summer travel season, with prices at the pump averaging $3.55, down $1.02 from a year ago, according to auto club AAA. Falling energy prices also helped inflation in the 20 European countries that use the euro drop to the lowest level since before Russia invaded Ukraine.

    The Saudis need sustained high oil revenue to fund ambitious development projects aimed at diversifying the country’s economy.

    The International Monetary Fund estimates the kingdom needs $80.90 per barrel to meet its envisioned spending commitments, which include a planned $500 billion futuristic desert city project called Neom.

    The U.S. recently replenished its Strategic Petroleum Reserve — after Biden announced the largest release from the national reserve in American history last year — in an indicator that U.S. officials may be less worried about OPEC cuts than in months past.

    While oil producers like Saudi Arabia need revenue to fund their state budgets, they also have to take into account the impact of higher prices on oil-consuming countries.

    Oil prices that go too high can fuel inflation, sapping consumer purchasing power and pushing central banks like the U.S. Federal Reserve toward further interest rate hikes that can slow economic growth.

    The Saudi production cut and any increase to oil prices could add to the profits that are helping Russia pay for its war against Ukraine. Russia has found new oil customers in India, China and Turkey amid Western sanctions designed to limit Moscow’s crucial energy income.

    However, higher crude prices risk complicating trade by the world’s No. 3 oil producer if they exceed the $60-per-barrel price cap imposed by the Group of Seven major democracies.

    Russia has found ways to evade the price cap through “dark fleet” tankers, which tamper with location data or transfer oil from ship to ship to disguise its origin. But those efforts add costs.

    Under the OPEC+ deal, Russian Deputy Prime Minister Alexander Novak said Moscow will extend its voluntary cut of 500,000 barrels a day through next year, according to Russian state news agency Tass.

    But Russia might not be following through on its promises. Moscow’s total exports of oil and refined products such as diesel fuel rose in April to a post-invasion high of 8.3 million barrels per day, the International Energy Agency said in its April oil market report.

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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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  • Import prices rise in April for first monthly gain this year

    Import prices rise in April for first monthly gain this year

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    The numbers: The cost of U.S. imported goods rose 0.4% in April, the Labor Department said Friday. This was the first increase this year.

    Economists polled by the Wall Street Journal had forecast a 0.3% gain.

    Over the past 12 months, the costs of imports has dropped 4.8%. That followed a 12.5% gain in the prior year.

    Key details: The cost of imported fuel rose 4.5% in April after a 3.9% drop in the prior month. This was the first increase since last June.

    The cost of imports excluding fuel were flat in April after a 0.5% decline in the prior month. Over the past year, nonfuel import prices are down 1.9%.

    Exports prices rose 0.2% in April. They are down 5.9% over the past year.

    Big picture: The stronger dollar last year dampened import prices and was a source of disinflation, but with the dollar softer this year, prices are firming.

    One sign perhaps of the weaker dollar is that consumer goods prices ex-autos rose 0.2% in April and are up 1.1% annualized over the past three months, said Michael Gapen, U.S. economist at Bank of America Securities.

    What are they saying? “Perhaps imported inflation is the first early signal of how brutal the fight against inflation will be in the coming months. Investors and traders should remember that the Fed’s target is 2%,” said Alex Kuptsikevich, senior market analyst at FXPro.

    Market reaction: Stocks
    DJIA,
    -0.03%

    SPX,
    -0.16%
    were lower in volatile morning trading on Friday. The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    3.468%
    rose to 3.45%.

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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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  • OPEC announces cuts to oil production

    OPEC announces cuts to oil production

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    OPEC announces cuts to oil production – CBS News


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    OPEC unexpectedly announced cuts to oil production. The move will likely increase the price of gas.

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  • Here’s what OPEC’s shock oil production cuts mean for U.S. gas prices

    Here’s what OPEC’s shock oil production cuts mean for U.S. gas prices

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    Oil markets shuddered after a surprise announcement this weekend that Saudi Arabia and other oil-producing countries would cut their output of crude oil, potentially pushing up gas prices just as millions of Americans hit the road this summer.

    With the price of Brent crude, the international oil standard, jumping about 6% to $85 a barrel on Monday, motorists should expect prices at the pump to rise between 5 cents and 15 cents per gallon within the next two weeks, analysts told CBS MoneyWatch. By summer, the average national price for regular gas is likely to be around $4 a gallon.

    If the price of crude stays at or above $80 a barrel, “we could see the national average price move in the 8-to-12 cent range, and we haven’t seen it yet,” AAA spokesperson Andrew Grossman said. 

    The cost of crude accounts for about half of the overall price of gas, according to the Energy Department. From Sunday to Monday, average gas prices stayed steady at $3.50 a gallon, according to AAA, but Grossman said prices could increase by 5 or 10 cents by the end of the week. 

     For drivers, “the initial effect will be limited to a ballpark of 5-15c/gal,” Patrick De Haan, head of petroleum analysis at GasBuddy, said on Twitter.

    Gas prices soared to an average of $5.02 in June of 2022, stoked by the war in Ukraine, with prices at the pump in California soaring well above $6. But prices fell steadily in the ensuing months as global crude costs sank, shell-shocked motorists cut back on driving and U.S. refineries upped their oil production. 

    Seasonal effects

    Grossman said gas prices this time of year typically hover between $2 and $3.50 per gallon. That puts the current national average at the high end of the typical range, which he attributes to the higher driving demand because of the unusually warm spring in many parts of the country.

    Gas prices usually rise about 30 cents a gallon between spring and summer, Kevin Book, managing director of Clearview Energy Partners, told CBS News. That’s because gas sold in summer is required to have a less polluting, and more expensive, formulation, and Americans drive the most when it’s warm. 

    However, Book and other analysts cautioned that OPEC’s announcement could turn out less impactful than feared. Last fall, the oil cartel announced a production cut of 2 million barrels per day, but the actual cut turned out to be just half that. 

    “This is just an announcement,” AAA’s Grossman added. “Will the size of the cut really be a million [barrels per day] plus or will it be something less? That’s entirely possible. They have a month to figure out what they really want to do.”

    Pricing in the effects of more expensive crude oil and a seasonal 30-cent swing could bring the national average gas price to roughly $3.95 a gallon by the summer. Whether prices crack $4 also depends on how much Americans drive, and for now the trends in this area are pointing lower. 

    “Right now, U.S. gasoline demand is down 4.5 % from 2019 levels, but diesel demand is down 13%,” Troy Vincent, senior market analyst at DTN, told CBS MoneyWatch. 

    That’s in line with most economists’ expectation that the U.S. is likely to enter a mild recession later this year.

    “If you’re assuming demand [for gasoline] doesn’t change but supply now does, then it means higher price — but I don’t think it’s that simple,” he said. “You can’t look at the balance sheet without looking at the demand side as well. Demand has been weak for refined fuels and is likely to get worse.”

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  • The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

    The surprise OPEC+ oil production cuts will increase gas prices — here’s how much

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    Surprise crude oil production cuts from Saudi Arabia and other oil-rich countries shouldn’t produce worries of skyrocketing gas costs for U.S. drivers still smarting from last year’s pump price shocks, according to fuel industry experts.

    At a time when gas prices are already increasing because of rising seasonal demand, the slashed crude oil output that Saudi Arabia announced Sunday will translate into higher prices, they say. But compared to last year — when energy markets were absorbing the initial impact of Russia’s invasion of Ukraine — the altitude on those gas price increases may not feel so steep.

    On Monday, the national average for a gallon of gas was $3.50, according to AAA. That’s around 10 cents more than a month ago, but almost 70 cents less than the $4.19 average cost one year ago.

    The effects of decreased oil production could translate into initial price increases of up to 15 cents per gallon, according to two different energy sector watchers.

    There’s Patrick De Haan, head of petroleum analysis at GasBuddy.

    At OPIS, an outlet focused on energy sector news and analytics, Chief Oil Analyst Denton Cinquegrana said he was previously expecting summer gas prices to average around $3.60.

    “This move probably boosts that by about 10 – 15 cents to about $3.70-3.75/gal.” Cinquegrana told MarketWatch.

    OPIS is owned by Dow Jones, which also owns MarketWatch.

    It’s possible for gas price averages to hit around $3.60 in the next week or so, he said. The other 10 to 15 cents might filter into retail pump prices later this month or in early May, according to Cinquegrana.

    The surprise move came from Saudi Arabia and other members of OPEC+, the Organization of the Petroleum Exporting Countries and allies, including Russia. In Saudi Arabia, officials were reportedly “irritated” by recent remarks from U.S. Energy Secretary Jennifer Granholm.

    After the Biden administration tapped the country’s strategic petroleum reserve to combat last year’s high gas costs, Granholm said it will difficult to restock the reserve.

    By May, more than 1 million barrels of oil a day will be slashed from output in the global energy markets. That’s in addition to OPEC+ production cuts announced last fall.

    In cost breakdowns for a gallon of gas, the price of crude oil is responsible for more than half the price tag, according to the U.S. Energy Information Administration.

    In Monday morning trading, the price of West Texas Intermediate crude for May delivery jumped 6% to just over $80 on the New York Mercantile Exchange.

    For context, when gas prices were breaking records last year, the costs of West Texas Intermediate crude were in the triple digits. While retail prices surged in early March 2022, West Texas Intermediate crude briefly traded for more than $130 during the trading day on March 7, 2022.

    The national average for a gallon of gas hit a record $5.01 in mid-June, according to AAA. In the current context, Cinquegrana doesn’t see a return to $5 gas averages, he said. Gas prices vary across the nation. California drivers are paying $4.80 on average while Mississippi drivers are paying $3.02 per gallon. 

    Even if price increases are not as sharp as last year, hot inflation is retreating slowly. So any extra costs are unwelcome to millions of American drivers who are living their lives and more frequently commuting to the office.

    Like last year, oil prices are poised to increase, said AAA spokesman Devin Gladden.

    But the economy’s background noise right now could dampen the impact as downturn worries keep sticking around, he added. Furthermore, there can be discrepancies in the announced production reductions and the amounts that are actually reduced, Gladden said.

    “If recessionary concerns persist in the market, oil price increases may be limited due to the market believing lower oil demand will lead to lower prices this year,” he said.

    On Monday, energy sector stocks and related exchange traded funds were climbing after the production cut news. In early afternoon trading, the Dow Jones Industrial Average
    DJIA,
    +0.81%
    was up more than 200 points, or 0.7%, while the S&P 500
    SPX,
    -0.03%
    is little changed and the Nasdaq Composite
    COMP,
    -0.98%
    dropped 100 points, or 0.8%.

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  • Fed’s Bullard: Oil price jump may make inflation-fighting more difficult 

    Fed’s Bullard: Oil price jump may make inflation-fighting more difficult 

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    The spike in oil prices after the surprise OPEC+ production cut may make the Federal Reserve’s inflation-fighting job “a little more difficult,” but it is too soon to know for sure, said St Louis Fed President James Bullard, on Monday. “This was a surprise – this OPEC decision – but whether it will have a lasting impact, I think, is an open question,” Bullard said, in an interview on Bloomberg Television. “Oil prices fluctuate around – it is hard to track exactly. Some of that might feed into inflation and make our job a little more difficult,” he added. Bullard said he had already expected higher oil prices due to the recent upgrades to the economic outlook for both China and Europe. The St. Louis Fed president thinks the Fed should raise rates to a range of 5.5%-5.75%. That’s higher than the median Fed forecast of 5%-5.25%. “I think inflation will be stickier,” he said, noting that the Dallas trimmed mean price index, which excludes each month’s volatile components of inflation, was 4.6% in February, unchanged from the prior month.

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  • Erdogan’s political fate may be determined by Turkey’s Kurds | CNN

    Erdogan’s political fate may be determined by Turkey’s Kurds | CNN

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


    Abu Dhabi, UAE
    CNN
     — 

    Turkey’s persecuted pro-Kurdish party has emerged as a kingmaker in the country’s upcoming election, playing a decisive role that may just tip the balance enough to unseat two-decade ruler Recep Tayyip Erdogan.

    In a key setback to the Turkish president and leader of the Justice and Development Party (AK Party), the pro-Kurdish Peoples’ Democratic Party (HDP) last month announced that it would not put forward its own presidential candidate, a move analysts say allows its supporters to vote for Erdogan’s main rival.

    “We are facing a turning point that will shape the future of Turkey and (its) society,” said the HDP in a statement on March 23. “To fulfill our historical responsibility against the one-man rule, we will not field a presidential candidate in (the) May 14 elections.”

    It is a twist of irony for the Turkish strongman, who spent the better half of the past decade cracking down on the party after it began chipping away at his voter base. Its former leader Selahattin Demirtas has been in prison for nearly seven years and the party faces possible closure by a court for suspected collusion with the militant Kurdistan Workers’ Party (PKK) and affiliated groups. But its influence may nonetheless determine the course of Turkey’s politics.

    The HDP’s decision not to field a candidate came just three days after head of the Republican People’s Party (CHP) Kemal Kilicdaroglu, Erdogan’s main rival, visited the party’s co-chairs. He told reporters that the solution to Turkey’s problems, “including the Kurdish problem” lies in parliament,” according to Turkish media.

    Kilicdaroglu, who represents the six-party Nation Alliance opposition bloc, is the strongest contender to run against Erdogan in years. And while the HDP hasn’t yet announced whether it will put its weight behind him, analysts say it is the kingmaker in the elections.

    “It was a carefully crafted political discourse,” Hisyar Ozsoy, deputy co-chair of the HDP and a member of parliament from the predominantly Kurdish province of Diyarbakir, told CNN. “We are not going to have our own candidate, and we will leave it to the international community to interpret it the way they wish.”

    Experts say the crackdown on the HDP is rooted in the threat it poses to Erdogan politically, as well as its position as one of the main parties representing Turkey’s Kurds, an ethnic minority from which a separatist militant movement has emerged.

    The party and the Kurdish people have had a complicated relationship with Erdogan. The leader courted the Kurds in earlier years by granting them more rights and reversing restrictions on the use of their language. Relations with the HDP were also cordial once, as Erdogan worked with the party on a brief peace process with the PKK.

    But ties between Erdogan and the HDP later turned sour, and the HDP fell under a sweeping crackdown aimed at the PKK and their affiliates.

    Kurds are the biggest minority in Turkey, making up between 15% and 20% of the population, according to Minority Rights Group International.

    It is unclear if the HDP will endorse Kilicdaroglu, but analysts say that the deliberate distance may be beneficial for the opposition candidate.

    The accusations against the HDP place it in a precarious position during the elections. It currently faces a case in Turkey’s Constitutional Court over suspected ties to the PKK, which is designated as a terrorist group by Turkey, the United States and the European Union. Knowing it may be banned at any moment, its candidates are running under the Green Left Party in parliament.

    If the opposition is seen as allying with the HDP, Erdogan’s AK Party may use its influence in the media to discredit it as being pro-PKK, said Murat Somer, a political science professor at Koc University in Istanbul and author of Return to Point Zero, a book on the Turkish-Kurdish question in Turkey.

    The HDP’s threat to Erdogan’s hold on power became apparent after the June 2015 election, the first general election it participated in. It won 13% of the seats, denying the ruling AK Party its majority for the first time since 2002. Erdogan, however, called a snap election five months later, which led to a drop in the HDP’s support to 10.7%, as well as the restoration of the AK Party’s overall majority.

    “They are a kingmaker in these elections because the HDP gets about half of the votes of the Kurdish population in Turkey,” said Somer, adding that the other, more conservative Kurdish voters have traditionally voted for Erdogan’s AK Party. And last month, the Free Cause Party (HUDA-PAR), a tiny Kurdish-Islamist party announced support for Erdogan in the elections. The party has never won seats in parliament.

    The HDP knows that its position is key to the outcome of next month’s vote, but that it’s also in a delicate situation.

    “We want to play the game wisely, and we need to be very careful,” said Ozsoy, adding that the party wants to avoid a “contaminated political climate” where the elections are polarized “between a very ugly ultra-nationalist discourse against Kilicdaroglu and others.”

    The party was founded in 2012 with a number of aims, said Ozsoy, one of which was “peaceful and democratic resolution of the Kurdish conflict.”

    Somer said that the party was seen to be “an initiative” of the PKK, which later led to a heavy government crackdown on it in the name of counterterrorism.

    Its former leader Demirtas remains an influential figure.

    The Turkish government has been trying to link the HDP to the PKK but has so far failed to prove “a real connection,” said Asli Aydintasbas, a visiting fellow at the Brookings Institution in Washington, DC.

    A post-Erdogan Turkey may give some breathing space to the Kurds and Kurdish-dominated parties in Turkey, Aydintasbas told CNN, noting that many Kurdish voters have recently left Erdogan’s camp. “For HDP, this is more than just an ideological choice,” she said. “It’s a matter of survival.”

    Ozsoy says his party understands what’s at stake, not only for Turkey’s Kurds but for all its minorities.

    “We are aware of our responsibility here. We are aware of our role. We know we are in a kingmaker position,” the HDP lawmaker said.

    Two women arrested for not wearing hijab following ‘yogurt attack’

    Two women were arrested in Iran for failing to wear the hijab in public, after a man threw a tub of yogurt at them at a store in the city of Shandiz on Thursday, according to Mizan News Agency, the state-run outlet for Iran’s judiciary.

    • Background: A video and report published by the Mizan News Agency showed footage of the man approaching one of the unveiled women and speaking to her before he grabs a tub of yogurt and throws it, hitting both women on the head. The video appears to show a male staff member removing the man from the store. The two women were arrested, as well as the man who threw the yogurt, according to local media.
    • Why it matters: Iranians have taken to the streets in protest for several months against Iran’s mandatory hijab law, as well as other political and social issues across the country. The Iranian government has continued to crack down on the protests, and on Saturday, Iran’s Ministry of Interior said that the “hijab is an unquestionable religious necessity.”

    Oil prices surge after OPEC+ producers announce surprise cuts

    Oil prices spiked Monday after OPEC+ producers unexpectedly announced that they would cut output. Brent crude, the global benchmark, jumped 5.31% to $84.13 a barrel, while WTI, the US benchmark, rose 5.48% to $79.83. Both were the sharpest price rises in almost a year. The collective output cut by the nine members of OPEC+ totals 1.66 million barrels per day.

    • Background: The reductions are on top of the 2 million barrels per day (bpd) cuts announced by OPEC+ in October and bring the total volume of cuts by OPEC+ to 3.66 million bpd, equal to 3.7% of global demand. In a note Sunday, 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.”
    • Why it matters: The White House pushed back on the 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 backed off on its vows to punish the kingdom.

    Iran blames Israel for the killing of second IRGC officer, vows to respond

    A second Iranian Islamic Revolutionary Guard Corps (IRGC) officer died following an attack in Syria on Friday, according to Iranian state media on Sunday. Iranian state media said the Iranian military adviser died after an Israeli attack near the Syrian capital Damascus left him wounded. The attack also killed another IRGC officer. In a tweet on Sunday, Iranian government spokesman Ali Bahadori Jahromi said the alleged Israeli attack wouldn’t go unanswered. Iranian Foreign Ministry spokesman Nasser Kanaani said on Sunday that Iran has the right to respond to “state terrorism.”

    • Background: The Friday airstrike hit a “site in the Damascus countryside,” Syrian state news agency SANA said. Israel declined CNN’s request for comment on reports of airstrikes near Damascus on Friday, saying its military doesn’t comment on reports in the foreign media. Iranian influence has grown in Syria since a civil war broke out in the country more than a decade ago, with the IRGC building a substantial presence as “advisers” to the Syrian armed forces.
    • Why it matters: The Israeli military declined to comment, but it has previously claimed responsibility for attacks it has described as Iranian-linked targets in Syria. Israeli Prime Minister Benjamin Netanyahu said at a cabinet meeting Sunday: “We are exacting a high price from the regimes that support terrorism, beyond Israel’s borders. I suggest that our enemies not err. Israel’s internal debate will not detract one iota from our determination, strength and ability to act against our enemies on all fronts, wherever and whenever necessary.”

    Iranian-American comedian Maz Jobrani, who has been touring the Middle East, spoke to CNN’s Becky Anderson about his support for the protests in his homeland, saying that he used his standup comedy platform to highlight the “brutality against the Iranian people.”

    “It was an opportunity for me to say, ‘let’s keep fighting,’” he said.

    Watch the interview here.

    An Iranian state news outlet is gloating at what it sees as the demise of the US dollar.

    IRNA recreated a popular meme to mark China and Brazil’s decision to reportedly ditch the US dollar as an intermediary in trade, citing the Chinese state news outlet, China Daily. It shows two men representing China and Brazil posing in front of a grave labelled “USD.”

    The meme was pinned to the top of IRNA’s Twitter page, and was met with laughter and ridicule. “Dream on,” said another user, pointing to the dollar’s use as the main reserve currency around the world.

    China Daily said that the agreement was part of “the rising global use of the Chinese renminbi.” It would reportedly enable China and Brazil to conduct trade and financial transactions using local currencies instead of the dollar.

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