OPEC Cuts Oil Production, Generating Renewed Concerns about Inflation
The signs appear to be pointing to recession.
I am so old that I remember when the US was an oil producing nation.
However, in the Biden era, that memory is becoming dimmer, and gas is likely to be much more expensive as Organization of the Petroleum Exporting Countries (OPE)C members have announced substantial production cuts.
Traders bid up crude prices after the news of cuts totaling more than 1.1 million barrels a day, or 1 percent of global production, beginning next month. Brent crude, the international benchmark, rose more than 6 percent, to nearly $84.93 a barrel. West Texas Intermediate crude, the U.S. standard, was up by a similar amount, trading over $80 a barrel.
Sunday’s surprise announcement signaled a potential new threat to global efforts to curb inflation and a challenge to the Biden administration, which has pushed for lower gasoline prices.
“We don’t think that the production cuts are advisable at this moment, given the market uncertainty. And we made that clear,” said John F. Kirby, a spokesman for the National Security Council. “But we also don’t have a seat at that table.”
While Mr. Kirby said the White House was given advance word of the cutback, the move could further aggravate strained relations between the United States and Saudi Arabia.
As a reminder, the Saudis are clearly immune to the Biden “magic.” The nation led the charge to cut oil production before last year’s November election.
Subsequently, the dollar wobbled as inflation concerns were renewed and manufacturing slumped.
The signs appear to be pointing to recession.
The Institute for Supply Management (ISM) survey showed on Monday that manufacturing activity fell to the lowest level in nearly three years in March as new orders continued to contract, with all subcomponents of its manufacturing PMI below the 50 threshold for the first time since 2009.
That sent the greenback broadly lower, tracking a slide in U.S. Treasury yields, as investors pared expectations on how much longer interest rates would need to remain in restrictive territory.
Against the sliding dollar, the British pound and the Australian and New Zealand dollars rose to multi-week highs in early Asia trade on Tuesday.
Sterling peaked at its highest since late January at $1.2425, extending the previous session’s 0.7% gain.
The kiwi rose 0.2% to $0.6310, its highest since mid-February, while the U.S. dollar index was marginally lower at 102.02, having fallen more than 0.5% on Monday.
“The ISM manufacturing report for March was a dud,” said economists at Wells Fargo. “The closest thing we get to good news in (the) report is that the slowing in the factory sector is pushing prices lower and supply chains are continuing to heal, benefiting from the slack.
“Beyond that, the rest of the themes were those that often precede an economic recession.”
However, Biden assures us it’s not as bad as we think.
Biden Says OPEC+ Production Cut Won’t Be ‘as Bad as You Think’
In fact it will be great. Just like the refilling of the SPR you promised at 72
— zerohedge (@zerohedge) April 3, 2023
Meanwhile, there appear to still be significant inflation challenges for small businesses.
The U.S. Chamber of Commerce’s Q1 Small Business Index found a record 54% of owners cited inflation as their top concern for the first three months of the year, marking the fifth consecutive quarter respondents pointed to cost increases as the number one stressor.
Respondents’ confidence in the national economy also declined in the first quarter, with only one in five (20%) small business owners saying the economy was in good health. That’s down from 27% in the previous quarter.
The survey results indicate a greater reluctance among owners to expand in the short term. Only 38% said they plan to boost investment in their business over the next year, a drop from 47% in the fourth quarter of 2022.
NEW: Oil prices surge after surprise production cuts by OPEC.
Are you ready for Inflation 2.0?https://t.co/eMRiuuuocS
— Collin Rugg (@CollinRugg) April 3, 2023
The trajectory certainly looks like it is setting up to be the Carter Era on steroids AND opioids.
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The only US state that still imports Middle Eastern crude is California because they refuse to build a pipeline to Texas. The USA will have plenty of homegrown oil. But, we will pay more due to the global pricing of oil.
China will be the big loser since they are at the tail end of the oil supply line. They import 85% of their energy needs and 50% of their food and agriculture needs.
Apparently they are taking care of that food supply thing by buying up our farmland at breakneck pace… soon we will be buy our own crops back from China… if they feel like selling it to us
Pretty soon there won’t be a unified country called China. It will just be an ethnicity.
The country will probably fracture in a northern Maoist country and the southern city states aligning with the West.
Walmart has that option now.
China has insulated itself from rising oil prices by cutting deals with Saudi Arabia, Russia and others to pay in yuan. If the price goes up, they can do what we’ve been doing for the last 50 years — print more money.
America has two things that stand out regarding oil production:
-we have plenty of oil and gas here at home.
-we have way too many Democrats in elected office everywhere.
The other less acknowledged issue is the beginning of a geopolitical realignment. The BRICS nations and some major OPEC producers are cozying up and implementing a non US Dollar denominated basis for trade. Early days on this but it is at minimum a demonstration that these Nations are willing to set up the process needed to work outside the current system of US economic hegemony.
The end of the Dollar as a Global Reserve Currency does not mean there will be a different Reserve Currency. It means there will be no Reserve Currency. And, Global Trade will devolve into unilateral or multilateral bartering.
The SCO is laying the groundwork for a new reserve currency that will replace the dollar. Unlike the greenback, it will be commodity-backed. Not militarily-backed.
Ultimately maybe but under that scenario comes the US losing the substantial advantages of remaining the issuer of the World’s Reserve Currency. That’s an often overlooked advantage to our own debt finance and trade. In addition it would likely result in the consequent loss of power for the IMF (in the US govt pocket) and the advantages of the US dominating the current settlement systems of international trade and finance.
Whatever comes next beyond the point of the dollar losing World Reserve Currency status will absolutely not be a bed of roses for the USA in some fantasy free trade utopia envisioned by some.
While oil may be a fungible commodity, OPEC’s move is a massive red flag. Back on day 2 or 3, 2020, The Hologram shuts down Keystone, Step One to wrecking our energy independence. Everything in between until yesterday was a continuation of that EO, explicitly designed to cripple America and make us dependent on foreign countries. To me that’s treason.
“What is our recourse?” is the question I am being forced to constantly ask…especially when these cretins will [fake] indict a former President to silence his ability to run for office.
“The Hologram” — that’s good.
The cretins intend to win. We intend to think up bad sounding adjectives to call them as if adjectives are artillery. They are just harmless projectiles appealing to no one, least of all Democrats.
Wow it’s almost like we have a f*cking retard as POTUS, surrounded by a bunch of America-hating progressive c*nts who are hell-bent on destroying this country.
The US economy is in a “coffin corner.” Anything the government tries to do will only make things worse.
Their present failure will be the prelude to demanding a change to what they want. Orwellian present-past=future.
In the astute words of Bill Paxton..”:Game OVER man!”
This is what you end up with when you put a retarded pedophile in charge.