The White House has accused Opec+ of aligning with Russia after Saudi Arabia led the group in agreeing deep oil production cuts, threatening further inflationary pressures on a global economy already burdened by an energy crisis.
The Opec+ group said it would reduce production targets by 2mn barrels a day, equivalent to 2 per cent of global supply, following its first in-person meeting in two years in Vienna.
The aggressive decision to cut production, which will result in about 1mn bpd fewer on the world market, came despite extensive lobbying by the US government before the meeting and marked a significant breach with the Biden administration. The White House is seeking to drive down oil and petrol prices ahead of crucial midterm elections in November and to starve Russia of energy revenues.
The Biden administration called the cuts “shortsighted”. White House spokesperson Karine Jean-Pierre told reporters on Air Force One it was “clear” Opec+ was “aligning with Russia”.
After rising in the run-up to the meeting, oil prices have stabilised today. Brent crude futures edged up 4 cents to $93.41 per barrel, up from $84 a barrel last week. US West Texas Intermediate futures gained 2 cents to $87.78 per barrel.
Following the Opec+ decision, the US government said it would continue to release oil from its strategic stockpiles “as appropriate” and that it was exploring “additional responsible actions” to lift domestic oil supply.
Explainer: The implications of Opec+’s decision reaches well beyond the oil price to the future of the relationship between the US and Saudi Arabia, as our energy team explains.
What do you think the US should do about rising energy prices? Should it seek a closer relationship with Saudi Arabia and Russia to guarantee cheaper fuel? Email me at firstname.lastname@example.org or reply to this email — Gordon
Five more stories in the news
1. Investors reap rewards from bets on Musk closing Twitter deal Carl Icahn, Hindenburg Research and Florida-based hedge fund Pentwater Capital Management are among investors who predicted the billionaire would close the deal.
Musk’s ‘everything app’ plan for Twitter In a tweet on Tuesday, Elon Musk hinted at a WeChat-style makeover for Twitter. Tim Bradshaw has seen a pitch deck shared with investors earlier this year and explains the billionaire’s vision.
Thank you to everyone who took part in yesterday’s poll. Fifty-four per cent of respondents said Twitter should not go ahead with Musk’s offer to buy the company.
2. Goldman Sachs pursues purchases in UK pensions fire sale A group of investors including Goldman Sachs is seeking to buy cut-price private assets from UK pension funds, which are rushing to raise cash after last week’s government bond market turmoil. Many funds have already sold liquid assets and are now planning sales of more illiquid holdings, including property, private credit and stakes in buyout funds.
3. Xi Jinping cracks down on disloyalty ahead of Communist party congress In the weeks leading up to this month’s party congress, China’s courts have orchestrated a series of high-profile corruption trials of senior cadres from the state’s police and security apparatus, including the former justice minister and the former deputy minister of public security.
4. Travis Kalanick-linked lobby group to fight food delivery apps The Digital Restaurant Association, a US lobbying group with ties to Travis Kalanick’s “dark kitchen” start-up, has set itself up to battle food delivery apps over fees and customer data. The campaign pits Kalanick against his former employer Uber as well as other popular food apps like DoorDash and Grubhub.
5. Niemann likely cheated at chess over 100 times online, says report Hans Niemann, the 19-year-old at the centre of chess cheating allegations, probably did so more than 100 times in online games, according to a 72-page statement by chess.com. Unlike cheating over the board, which is viewed as a major crime, there is a widespread tolerance of the practice online.
The day ahead
Economic data The latest weekly employment claim figures due today will continue a week of heightened scrutiny of the domestic jobs market and come ahead of the closely watched non-farm payrolls data due on Friday.
Monetary policy Lisa Cook will give her first speech as a US Federal Reserve governor when she provides remarks on the US economic outlook before the Peterson Institute for International Economics, a Washington-based think-tank. Meanwhile, Fed governor Chris Waller will appear at the University of Kentucky’s business school as part of a workshop series.
Treasury US treasury secretary Janet Yellen is set to deliver the curtain raiser speech for the joint IMF and World Bank meetings that kick off in person on Monday. She will address the Center for Global Development this morning, which will host next week’s meetings, on the changes needed for multilateral development banks to better address 21st century global challenges.
Company earnings Results from several food and beverage companies this morning should provide further insights into American consumer behaviour, inflation and supply chains. Constellation Brands, the maker of Corona and Modelo beers, ConAgra and spices producer McCormick all report earnings.
Inaugural meeting of European leaders The European Political Community meets for the first time today. The brainchild of Emmanuel Macron, the group of 44 political leaders, including the UK’s Liz Truss, will meet in Prague to discuss common interests including migration and energy. Our Brussels Briefing newsletter previews the meeting.
Nobel Prize in Literature The prize will be announced in Stockholm. Yesterday, a Danish and two American scientists won the chemistry prize for discovering “click chemistry”, a way of putting molecules together that has transformed pharmaceutical and medical research.
Correction: Yesterday we wrongly stated that Levi’s was reporting earnings. The company is in fact releasing earnings today. We apologise for the error.
What else we’re reading
Investing in America Miami has been ranked the best city in the US for foreign multinationals to do business, in the inaugural Investing in America ranking compiled by the Financial Times and Nikkei. Last year the Florida city pulled in the most foreign direct investment per capita of any place studied.
Martin Wolf speaks with Larry Summers In the latest edition of our Economists Exchange series, the former US Treasury secretary delivers his verdict on the UK’s fiscal statement that sent markets spinning: “You went from a stable . . . situation to a catastrophic one within a matter of a few days.”
Spare a thought for Kim Kardashian The reality star has been forced to settle $1.26mn, or about 0.07 per cent of her reported net worth, for “unlawfully touting” a “crypto security” (cue the sound of tiny violins). While Jemima Kelly does not defend Kardashian, she writes that regulators should keep an eye on more egregious crypto behaviour.
Why Big Tech shreds storage devices it could reuse Companies such as Amazon and Microsoft as well as banks, police and governments destroy millions of data-storing devices each year in the name of digital security, the Financial Times has learnt. But industry insiders say there is a better option.
How Wall Street became infatuated with the music industry Years of low interest rates sent investors hunting for creative ways to generate returns. One unlikely place they found was inside the song catalogues of some of the top musicians and songwriters of the last few decades. In the latest Behind The Money podcast, Anna Nicolaou and Kaye Wiggins explain the rise of one of the hottest recent trends on Wall Street and how it could soon have to face the music.
The serial killer beside me Was the notorious Midwestern murderer known as the Co-Ed Killer actually several men? A story adapted from Jessi Hempel’s literary memoir The Family Outing.