Saudi Energy Minister Says OPEC+ Has Done a Lot to Stabilize Global Energy Markets

Saudi Energy Minister Prince Abdulaziz bin Salman. (SPA)
Saudi Energy Minister Prince Abdulaziz bin Salman. (SPA)
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Saudi Energy Minister Says OPEC+ Has Done a Lot to Stabilize Global Energy Markets

Saudi Energy Minister Prince Abdulaziz bin Salman. (SPA)
Saudi Energy Minister Prince Abdulaziz bin Salman. (SPA)

Saudi Energy Minister Prince Abdulaziz bin Salman said the Organization of Petroleum Exporting Countries (OPEC) and its allies, referred to as OPEC+, have "done a lot" to stabilize global energy markets.

Speaking about energy security at the Abu Dhabi Sustainability Week Summit at Expo 2020 in Dubai, the minister added: "We believe we as OPEC Plus have done a lot in bringing about stability."

The minister made it clear that it is the prerogative of the US government whether to release supply from the strategic petroleum reserves.

Last November, the US administration released 50 million barrels of crude from the US Strategic Petroleum Reserve to help cool oil prices in cooperation with other countries such as China, India, South Korea, Japan, and Britain.

"This is a matter for the American government," the Saudi minister told reporters in Dubai in response to a question about whether the United States could pump more oil from its reserves, given the price hike.

Reuters reported that China would release crude oil from its national strategic stockpiles around the Lunar New Year holidays that start on February 1 as part of a plan coordinated by the US with other major consumers to reduce global prices.

Oil prices rose on Monday, with Brent crude futures at their highest in more than three years, as investors bet supply will remain tight amid restrained output by major producers with global demand unperturbed by the Omicron coronavirus variant.

Brent crude futures gained 42 cents, or 0.5 percent, to $86.48 a barrel. The contract touched its highest since October 2018, $86.71 earlier in the session.

US West, Texas Intermediate crude, was up 62 cents, or 0.7 percent, at $84.44 a barrel, after hitting $84.78, the highest since November 10, 2021, earlier in the session.

The gains followed a rally last week when Brent rose 5.4 percent, and WTI climbed 6.3 percent.

Traders said that frantic oil buying, driven by supply outages and signs the Omicron variant won't be as disruptive as feared for fuel demand, has pushed some crude grades to multi-year highs, suggesting the rally in Brent futures could be sustained a while longer.

OPEC+ are gradually relaxing output cuts implemented when demand collapsed in 2020.

However, many small producers cannot increase supplies, and others are concerned about pumping too much oil in case of renewed COVID-19 setbacks.

On Friday, US officials voiced fears that Russia was preparing to attack Ukraine if diplomacy failed. Russia, which is massing about 100,000 troops on the border with Ukraine, released pictures of its forces' movement.

Two US officials and two energy sources told Reuters on Friday that the US government held talks with several international energy companies about contingency plans to supply natural gas to Europe if the conflict between Russia and Ukraine disrupted Russian supplies.

US crude oil stockpiles fell more than expected to their lowest levels since October 2018, but gasoline inventories surged with weak demand, according to the US Energy Information Administration data.



US Fed Set to Hold Rates Steady in the Face of Trump Pressure

An eagle tops the US Federal Reserve building's facade in Washington, July 31, 2013. (Reuters)
An eagle tops the US Federal Reserve building's facade in Washington, July 31, 2013. (Reuters)
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US Fed Set to Hold Rates Steady in the Face of Trump Pressure

An eagle tops the US Federal Reserve building's facade in Washington, July 31, 2013. (Reuters)
An eagle tops the US Federal Reserve building's facade in Washington, July 31, 2013. (Reuters)

The US central bank is expected to keep interest rates unchanged for a fourth straight policy meeting this week, despite President Donald Trump's push for rate cuts, as officials contend with uncertainty sparked by the Republican's tariffs.

While the independent Federal Reserve has started lowering rates from recent highs, officials have held the level steady this year as Trump's tariffs began rippling through the world's biggest economy.

The Fed has kept interest rates between 4.25 percent and 4.50 percent since December, while it monitors the health of the jobs market and inflation.

"The hope is to stay below the radar screen at this meeting," KPMG chief economist Diane Swonk told AFP. "Uncertainty is still very high."

"Until they know sufficiently, and convincingly that inflation is not going to pick up" either in response to tariffs or related threats, "they just can't move," she said.

Since returning to the presidency, Trump has slapped a 10 percent tariff on most US trading partners. Higher rates on dozens of economies are due to take effect in July, unless an existing pause is extended.

Trump has also engaged in a tit-for-tat tariff war with China and imposed levies on imports of steel, aluminum and automobiles, rattling financial markets and tanking consumer sentiment.

But economists expect it will take three to four months for tariff effects to show up in consumer prices.

Although hiring has cooled slightly and there was some shrinking of the labor force according to government data, the unemployment rate has stayed unchanged.

Inflation has been muted too, even as analysts noted signs of smaller business margins -- meaning companies are bearing the brunt of tariffs for now.

At the end of the Fed's two-day meeting Wednesday, analysts will be parsing through its economic projections for changes to growth and unemployment expectations and for signs of the number of rate cuts to come.

The Fed faces growing pressure from Trump, citing benign inflation data, to lower rates more quickly, a move the president argues will help the country "pay much less interest on debt coming due."

On Wednesday, Trump urged Fed Chair Jerome Powell to slash interest rates by a full percentage point, and on Thursday, he called Powell a "numbskull" for not doing so.

He said Powell could raise rates again if inflation picked up then.

But Powell has defended US central bank independence over interest rates when engaging with Trump.

- 'Cautious patience' -

For their part, Fed policymakers have signaled "little urgency" to adjust rates, said EY chief economist Gregory Daco.

He believes they are unwilling to get ahead of the net effects from Trump's trade, tax, immigration and regulation policy changes.

Powell "will likely strike a tone of cautious patience, reiterating that policy remains data dependent," Daco said.

While economists have warned that Trump's tariffs would fuel inflation and weigh on economic growth, supporters of Trump's policies argue the president's plans for tax cuts next year will boost the economy.

On the Fed's path ahead, HSBC Global Research said: "Weak labor market data could lead to larger cuts, while elevated inflation would tend to imply the opposite."

For now, analysts expect the central bank to slash rates two more times this year, beginning in September.

The Fed is likely to be eyeing data over the summer for inflationary pressures from tariffs, said Ryan Sweet, chief US economist at Oxford Economics.

"They want to make sure that they're reading the tea leaves correctly," he said.

Swonk warned the US economy is in a different place than during the Covid-19 pandemic, which could change how consumers react to price increases.

During the pandemic, government stimulus payments helped households cushion the blow from higher costs, allowing them to keep spending.

It is unclear if consumers, a key driver of the economy, will keep their dollars flowing this time, meaning demand could collapse and complicate the Fed's calculus.

"If this had been a world without tariffs, the Fed would be cutting right now. There's no question," Swonk said.