OPEC+ to Maintain Slight Output Hike in August

OPEC+ sticks to a planned oil output hikes this summer (Reuters)
OPEC+ sticks to a planned oil output hikes this summer (Reuters)
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OPEC+ to Maintain Slight Output Hike in August

OPEC+ sticks to a planned oil output hikes this summer (Reuters)
OPEC+ sticks to a planned oil output hikes this summer (Reuters)

OPEC+ agreed on Thursday to stick to a planned oil output hike this summer but avoided discussing policy from September onwards as prices have risen on tight supplies and worries that the group has little ability to pump more.

The group, which comprises the Organization of the Petroleum Exporting Countries and an informal group of non-OPEC members led by Russia and produces over 40% of global supply, concluded a meeting on Thursday via videoconference by deciding to stay the course with its production policy.

It means it will increase monthly overall production for the month of August to 648,000 barrels per day (bpd).

The meeting was held ahead of US President Joe Biden’s scheduled trip to the Middle East in mid-July that includes a visit to Saudi Arabia, pushing energy policy into the spotlight as the US and other countries face soaring fuel prices that are driving up inflation.

Asked at a news conference in Spain if he would ask the Saudi leaders to increase oil production, Biden replied, “No.”

Instead, he would continue to make the case that all Gulf states should raise oil output, he said.

To face the price hike, France on Monday urged oil producing nations to boost their output in an “exceptional manner,” to help bring down soaring crude prices fueled by the war in Ukraine.

“We need producing countries to produce in an exceptional measure,” said the French presidency on the sidelines of the G7 summit in the Bavarian Alps.

At its June 2 meeting, OPEC+ decided to increase output each month by 648,000 barrels per day in July and August, up from a previous plan to add 432,000 bpd per month, citing increased demand due to the summer travel season.

Washington welcomed June's decision, which followed months of pressure from the West on OPEC+ to raise production to help lower oil prices.

International prices hit their highest since the record levels of 2008 after the West imposed sanctions on Russia over its invasion of Ukraine begun on Feb. 24, which Moscow calls “a special military operation.”

They have since eased but rose above $115 this week because of tight supply and concern that OPEC has little ability to raise output.

Meanwhile, Russian Deputy Prime Minister Alexander Novak said on Thursday that attempts to limit the price of Russian oil could lead to “disbalance” in the market and push prices higher.

His comments come after G7 leaders agreed on Tuesday to explore “the feasibility of introducing temporary import price caps” on Russian fossil fuel, including oil, and tasked ministers to evaluate the proposal urgently.

European Union officials told Reuters on Thursday that Germany and other EU governments are cautious about the idea.



Trump Says Steep Copper Tariffs in Store as He Broadens His Trade War

A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
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Trump Says Steep Copper Tariffs in Store as He Broadens His Trade War

A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)
A worker makes copper trays inside a workshop in Kolkata, India, October 26, 2017. Picture taken October 26, 2017. (Reuters)

US President Donald Trump on Tuesday said he would impose a 50% tariff on imported copper and soon introduce long-threatened levies on semiconductors and pharmaceuticals, broadening his trade war that has rattled markets worldwide.

One day after he pressured 14 trading partners, including powerhouse US suppliers like South Korea and Japan, with sharply higher tariffs, Trump reiterated his threat of 10% tariffs on products from Brazil, India and other members of the BRICS group of countries.

He also said trade talks have been going well with the European Union and China, though he added he is only days away from sending a tariff letter to the EU.

Trump's remarks, made during a White House cabinet meeting, could inject further instability into a global economy that has been shaken by the tariffs he has imposed or threatened on imports to the world's largest consumer market.

US copper futures jumped more than 10% after Trump's announcement of new duties on a metal that is critical to electric vehicles, military hardware, the power grid and many consumer goods. They would join duties already in place for steel, aluminum and automobile imports, though it was unclear when the new tariffs might take effect.

US pharmaceutical stocks also slid following Trump's threat of 200% tariffs on drug imports, which he said could be delayed by about a year.

Other countries, meanwhile, said they would try to soften the impact of Trump's threatened duties after he pushed back a Wednesday deadline to August 1.

Trump's administration promised "90 deals in 90 days" after he unveiled an array of country-specific duties in early April. So far only two agreements have been reached, with the United Kingdom and Vietnam. Trump has said a deal with India is close.

Trump said countries have been clamoring to negotiate.

"It's about time the United States of America started collecting money from countries that were ripping us off ... and laughing behind our back at how stupid we were," he said.

Trading partners across the globe say it has been difficult to negotiate even framework agreements with the US given the haphazard way new tariffs are announced, complicating their internal discussions about concessions.

HIGHEST LEVELS SINCE 1934

Following Trump's announcement of higher tariffs for imports from the 14 countries, US research group Yale Budget Lab estimated consumers face an effective US tariff rate of 17.6%, up from 15.8% previously and the highest in nine decades.

Trump's administration has been touting those tariffs as a significant revenue source. Treasury Secretary Scott Bessent said Washington has taken in about $100 billion so far and could collect $300 billion by the end of the year.

The United States has taken in about $80 billion annually in tariff revenue in recent years.

The S&P 500 finished slightly lower on Tuesday, a day after Wall Street markets sold off sharply following Trump's new tariffs announcement.

Trump said he will "probably" tell the European Union within two days what rate it can expect for its exports to the US, adding that the 27-member bloc had been treating his administration "very nicely" in trade talks.

The EU, the largest bilateral trade partner of the US, aims to strike a deal before August 1 with concessions for key export industries such as aircraft, medical equipment and spirits, according to EU sources. Brussels is also considering an arrangement that would protect European automakers with large US production facilities.

However, German Finance Minister Lars Klingbeil warned that the EU was prepared to retaliate if necessary.

"If we don't reach a fair trade deal with the US, the EU is ready to take counter measures," he said in the lower house of parliament. Japan, which faces a possible 25% tariff, wants concessions for its large automobile industry and will not sacrifice its agriculture sector, a powerful domestic lobby, for the sake of an early deal, top trade negotiator Ryosei Akazawa said on Tuesday.

South Korea, which also faces a possible 25% tariff, said it planned to intensify trade talks over the coming weeks "to reach a mutually beneficial result."

Washington and Beijing agreed to a trade framework in June, but with many of the details still unclear, traders and investors are watching to see if it unravels before a separate, US-imposed August 12 deadline or leads to a lasting detente.

"We have had a really good relationship with China lately, and we're getting along with them very well. They've been very fair on our trade deal, honestly," Trump said, adding that he has been speaking regularly with Chinese President Xi Jinping.

Trump said the United States would impose tariffs of 25% on goods from Tunisia, Malaysia and Kazakhstan; 30% on South Africa and Bosnia and Herzegovina; 32% on Indonesia; 35% on Serbia and Bangladesh; 36% on Cambodia and Thailand; and 40% on Laos and Myanmar.

Cambodia hailed as a big success a reduction in the tariff rate from 49% to 36% and said it was seeking to negotiate a further cut. The tariffs have been an issue for Cambodia's garments and footwear sector, the biggest driver of its economy.

The US is also the main export market for Bangladesh's ready-made garments industry, which accounts for more than 80% of its export earnings and employs 4 million people.