Saudi Arabia Cuts Oil Production to Boost Prices

Riyadh to tackle oil cuts alone

Crude oil and natural gas rallied this morning after Saudi Arabia, the world’s largest exporter, announced a 1 million barrel-per-day production cut at this weekend’s OPEC+ summit to boost sluggish energy prices.

But the negotiations that led to this move, and the more complex adjustments to the cartel’s production quotas, have raised tensions between many of the world’s major oil producers given the balance of global oil prices. It suggests.

Saudi Arabia is going almost alone. After years of lobbying for such a move, the United Arab Emirates has seen an increase in production quotas while other countries have lowered their targets. This complex arrangement was negotiated furiously over a period of time. The most tense OPEC meeting Most recently, African producers were unhappy with UAE efforts to increase production quotas.

The deal, which was revealed on Sunday, is a Riyadh-led compromise, Saudi Oil Minister Prince Abdulaziz bin Salman said. Known as the “Saudi Lollipop” This is intended to make prices sweeter for oil traders. The reduction is limited to July, but it may be extended.

What stood out at the talks was the plunge in oil prices. Brent crude, the global benchmark, was trading around $120 a barrel a year ago and is now around $77.

Saudi Arabia is in “do whatever mode”. Helima Croft, head of global commodity strategy at RBC Global Markets, wrote in an investor note this morning: The state’s willingness to “finance alone increases the credibility of the cuts and suggests that real barrels will come off the market.”

Analysts estimate the Brent rate needs to rise above $80 for Saudi Arabia to keep its budget in balance and fund an ambitious infrastructure plan backed by Saudi Crown Prince Mohammed bin Salman. are doing.

Saudi officials, meanwhile, are obsessed with narrowing down short-sellers betting on oil prices, and Mr. Abdulaziz last month warned such investors to “be careful.”

The long-term implications of this move are not clear. Goldman Sachs analysts say it could be raise the price of brent An increase of $1 to $6 per barrel. But in the United States, where gasoline prices have fallen 25% over the past year, such price increases are unlikely to hurt consumers or turn gasoline prices into a powerful political threat.

At the same time, Russia is widely believed to be supplying large amounts of cheap oil to support its war-torn economy, even as it cuts quotas. In addition, the prospect of slowing economic growth in the world economy, especially in China, is holding back crude oil price hikes.

what is going on here

Markets are bracing for an oversupply of US Treasuries. The Treasury Department is expected to begin selling over $1 trillion in new securities after President Biden signed into law a deal on the debt ceiling.Some warn against auctions Short-term borrowing costs could skyrocket Bank of America estimates the effect is equivalent to a 0.25% rate hike by the Fed.

Apple is ready to join the metaverse. The iPhone maker is expected to unveil virtual reality headsets, a set of high-tech goggles that blend the virtual and physical worlds, at its developer conference on Monday.The company may also reportedly launch an app designed to help users Better monitor your mental and physical health As part of our foray into this space.

Hollywood directors and studios agree interim labor contracts. The Directors Guild of America said it had achieved success in negotiating wage agreements, streaming residue and protecting workers from the rise of artificial intelligence. The deal will prevent the three major trade unions from going on strike at the same time.

Major banks are reportedly required to recapitalize. Regulators close to implementation What is the new rule Limits could be raised by about 20 percent The Wall Street Journal reported that it was set up to bolster the banking system after many midsize banks failed this year. The largest increase is expected to be concentrated in large financial institutions with substantial trading operations.

Allstate is pulling out of California, citing worsening weather and construction costs. The nation’s fourth-largest insurer has stopped offering new home, condominium and commercial insurance in the state, citing wildfire risks and soaring home repair costs. The decision follows a similar move by State Farm last week.

US government and companies send mixed messages about China

The fiery rhetoric of US and Chinese officials over the weekend was a warm welcome to JPMorgan Chase’s Jamie Dimon at a business event the two held in China that week, and a fiery demeanor in Elon Musk’s case. It was a stark contrast to what I was greeted with.

The cacophony highlights the challenges of companies trying to work with the world’s second-largest economy amid rising tensions between the United States and China.

The US and Chinese military leaders said in a stern tone:

• Secretary of Defense Lloyd Austin has pledged that US warships will continue patrols near China, while calling for more dialogue.

• Chinese Defense Minister Li Sangfu refused to meet with Mr Austin at a security conference in Singapore, where Mr Austin attended. And senior PLA officials criticized US public support for Taiwan and what they called US surveillance of China’s coast.

There is a clear disconnect between the approaches of Washington and American companies. Dimon and Musk met with government officials While traveling, I downplayed the idea that separate the US and Chinese economies.And their companies continue to do big business there: Tesla takes China to one of its largest marketsMeanwhile, JP Morgan deepen the bond to the country.

The era of US companies influencing US policy toward China may be over. Over the past few decades, Wall Street leaders such as Goldman Sachs’ John Thornton, Hank Paulson and Blackstone’s Steve Schwartzman have alluded to Washington’s willingness to take a tough stance on China. reportedly succeeded in softening the effort.

The Trump and Biden administrations appear to favor a stronger approach that includes sanctions. China has responded similarly, imposing its own trade restrictions and raids on consulting firm offices that have taken international business by surprise.

Washington has been trying to keep temperatures down in recent weeks. President Biden sent the CIA Director, Bill Burns, secretly traveling to China for talks. Commerce Secretary Gina Raimond also met with the Chinese side in Washington. But business leaders appear cautious about the prospect of a near-term easing of tensions. Dimon acknowledged that the situation was “much more complicated now” and expected trade between the two countries to decline.

What’s next for Jeff Zucker

As CNN continues to be plagued by internal tensions, some are excited about the length of the director’s new profile. Chris Licht — Former network leader Jeff Zucker is planning his next move, reports Ben Marin of The Times. (While, of course, he kept an eye on his former springboard.)

Zucker is now a billion dollar media investor. He leads Redbird IMI, which is backed by private equity firm Redbird Capital Partners and International Media Investments, a fund with ties to the Abu Dhabi government.

Zucker is currently one of at least three candidates for a majority stake in Air Mail, a media company founded by former Vanity Fair editor-in-chief Graydon Carter, and has joined online publishers Pak and Semaphore. have discussed the investment in In recent months, he has also met with Washington Post owner Jeff Bezos.

He told a close friend that he was interested in building a digital version that was essentially Condé Nast’s equivalent, with a stable publication for a variety of audiences.

what about CNN? During his nine years as president of the network, Zucker rebuilt the channel and claimed credit for its success. Since his dismissal last year, he has regularly and harshly criticized Mr. Licht, telling his colleagues that he would be interested in buying CNN if it was put up for sale. (Mullins also reported that CNN President Mark Zucker had preliminary talks with the Emerson Collective, led by Lauren Powell-Jobs, about a possible spin-out of the network from then-parent company AT&T. )

But Zucker said he’s not interested in buying CNN at this point, given the cost-cutting costs of the network’s current owner, Warner Bros. Discovery. It is also unclear if Warner Bros. Discovery would like to sell. A CNN sale could help pave the way for the conglomerate to sell itself to buyers like Comcast, but regulators are eyeing big M.&A deals. Muddy at best. And selling CNN in the near term (I’m told it could go for $8 billion, according to DealBook) risks hitting a rock bottom.

$88 million

— Advertising revenue generated by Twitter fell 59 percent year over year over the five weeks starting April 1st. According to an internal presentation Viewed by The Times.Reviving the company’s advertising business will be one of Twitter’s biggest challenges for Linda Yaccarino, who takes over as CEO on Monday.

next week

This week will be a relatively calm week for data and earnings. In addition, Fed officials are in a period of silence ahead of next week’s interest rate decision. Here are some highlights:

Monday: U.S. manufacturers will be watching the announcement of plant and durable goods orders due at 10 a.m. ET.

Wednesday: Former Vice President Mike Pence is expected to formally join the Republican presidential race. The OECD releases the latest economic outlook for its member countries.

Thursday: Campbell Soup and GameStop report the results.

Friday: China is due to release key inflation data in May along with the release of its consumer and producer price indexes.

speed reading

Information of sale

policy

• Florida Governor Ron DeSantis turned to major donors for the first round of fundraising for his presidential campaign. (New York Times)

• Military jets scrambled over Washington after civilian planes entered the restricted airspace. (New York Times)

• Twitter co-founder Jack Dorsey said: Endorsed Robert Kennedy Jr., another bitcoin supporter and known for his anti-vaccine views, is running for the Democratic presidential nomination. (New York Post)

best of the rest

• Hundreds of customers of cancer-detection test maker Grail Inc. have been wrongly told they may have cancer. (New York Times)

• Chuck Todd has stepped down as host of NBC’s Meet the Press and will be replaced by Kristen Welker. (New York Times)

• Edward Enninfulwill step down from Condé Nast amid speculation about a clash with British Vogue editor Anna Wintour. (Sunday Times)

• not even the hamptons, the traditional summer vacation of New York’s wealthy, is immune to a more difficult economic environment. (FT)

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