FOCUS: OPEC+ MEETING AGAINST THE BACKDROP OF GRIM ECONOMIC NUMBERS

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Updated 09 April 2020
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FOCUS: OPEC+ MEETING AGAINST THE BACKDROP OF GRIM ECONOMIC NUMBERS

What happened:

The Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and several European countries have released worrisome economic forecasts:

The WTO estimates that global trade will contract by 32 percent in 2020, which is the biggest contraction since records began. The organisation sees global trade growing by 13 percent in 2021.

Germany’s GDP is expected to contract by 10 percent in the second quarter and 4.2 percent for the full year. The Banque de France estimates that every two weeks of lockdown will see France’s GDP shrink by 1.5 percent.

Spain is the worst hit by the crisis. Unicredit estimates a GDP contraction of 15.5 percent, pushing the budget deficit to GDP ratio to 12.5 percent for the year. (The Maastricht criteria stipulate this ratio should not exceed 3 percent).

These numbers make clear the need for the Eurozone’s finance ministers to reach an agreement when they resume talks. European Central Bank (ECB) president Christine La Garde warned that every month of shutdown would cost the Eurozone between two and three percentage points of its GDP. Lagarde pleaded with Eurozone finance ministers to come to an agreement on a fiscal rescue package.

Oil prices rallied on the expectation that OPEC+ ministers would agree on production cuts in a virtual meeting late Thursday. The question is whether any cut will be sufficient to have a sustained impact on prices in light of the enormity of reduction in demand.

 

Why it happened:

The failure of Eurozone finance ministers to reach agreement on a rescue package was reflected in Italian and Spanish government bonds adding to the yield differential across the spectrum.Leaving the mutualization of debt via the issuance of Coronabonds aside, the argument between ministers revolved around the conditionalities of financing via the European Stability Mechanism, which would allow countries to borrow on their books.

The highly indebted Southern countries oppose stringent conditionalities such as those imposed on Greece during the 2012 Eurozone crisis. Most countries have agreed that this was not the time for conditionalities, but the Netherlands insisted.  Germany’s finance minister assured German broadcaster ARD that he favored minimal conditionalities.

This issue might threaten the very existence of the EU.The trade figures were grim but not surprising for 2020. Whatever shape the recovery takes — V, U, or W — the current crisis will have a major impact on global trade. Some countries may become more protectionist when it comes to medical/protective equipment and medicines, as well as agricultural produce.

The lockdown and subsequent gradual restarting of economies will certainly affect the supply chain and, in parts, lead to a regionalization of it. We can expect a reconfiguration of the global supply chain in many sectors.

Where we go from here:

Most observers expected OPEC+ to reach an agreement on production cuts in Thursday’s virtual meeting. A headline number floated is 10 million bpd. Sources say Russia might agree to cut production, but it is unclear by how much. Russia’s unwillingness to cut was the stumbling block in last month’s inconclusive OPEC+ meeting and the opening shot to the Saudi Arabian-Russian fight for market share. The baseline for cuts has huge ramifications for KSA, which produced 9.7 million bpd during the first quarter and 12.3 million bpd in April. KSA and Russia are not willing to take the whole burden of the cut, bringing us to-non-OPEC+ participation — Canada, Norway, Brazil, Mexico and the US — which will be discussed if not at the OPEC+ meeting then at the G-20 meeting of energy ministers.

The Texas Railroad Commission is the only US authority that could, in theory, introduce some measure of production limitation in the US — export restrictions being another (unrealistic) option.Whatever happens in the meeting, uncertainty remains over how deep the cuts would have to be in order to have a sustained impact. This will remain a difficult question as long as there is no clear visibility of the total demand reduction.

Demand in India (the third-highest consumer of oil in the world) alone has plummeted by 70 percent since the COVID-19 outbreak.  The headline number of 10 million b/d has been baked into the current price expectation.

Anything below that would, in all probability, be bad for prices.The world is running out of storage for both product and crude — something that will eventually enforce production cuts.

US jobless claims for the week ending April 3 came in at 6.6 million -- considerably above the expected 5 million.

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairman and CEO of business consultancy Meyer Resources.Twitter: @MeyerResources


Israel’s defense chief threatens ceasefire collapse if Lebanese army not deployed south of Litani river

Updated 06 January 2025
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Israel’s defense chief threatens ceasefire collapse if Lebanese army not deployed south of Litani river

  • Under the agreement, Hezbollah is supposed to move its fighters, weapons and infrastructure away
  • Lebanese army soldiers and UN peacekeepers are to be the sole armed presence in southern Lebanon

Israel’s defense chief warned Sunday that the truce that ended more than a year of fighting with Lebanon’s Hezbollah is at risk. 

During the first phase of the ceasefire, Hezbollah is supposed to move its fighters, weapons and infrastructure away from southern Lebanon north of the Litani River, while Israeli troops that invaded southern Lebanon need to withdraw all within 60 days. 

Defense Minister Israel Katz said the agreement also requires Lebanese troops to eliminate any Hezbollah infrastructure in the buffer zone — “something that hasn’t happened yet.”

 

Lebanese army soldiers are to deploy in large numbers and alongside United Nations peacekeepers be the sole armed presence in southern Lebanon.

“If this condition is not met, there will be no agreement, and Israel will be forced to act on its own to ensure the safe return of the residents of (Israel’s) north to their homes,” he said.

Katz made the statement after Hezbollah’s current leader Naim Kassem warned in a televised address Saturday that its fighters could strike Israel if its troops don’t leave the south by the end of the month.

Top Hezbollah security official Wafiq Safa told a news conference Sunday that Lebanon's Parliament Speaker Nabih Berri, who negotiated the ceasefire deal with Washington, told Hezbollah that the government will meet with US envoy Amos Hochstein soon. 

“And in light of what happens, then there will be a position,” said Safa.

Hochstein had led the shuttle diplomacy efforts to reach the fragile truce.

 


India press watchdog demands journalist murder probe

Freelance journalist Mukesh Chandrakar. (Supplied)
Updated 06 January 2025
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India press watchdog demands journalist murder probe

  • Chandrakar’s body was found on January 3 after police tracked his mobile phone records following his family reporting him missing

NEW DELHI: India’s media watchdog has demanded a thorough investigation after a journalist’s battered body was found stuffed in a septic tank covered with concrete.
Freelance journalist Mukesh Chandrakar, 28, had reported widely on corruption and a decades-old Maoist insurgency in India’s central Chhattisgarh state, and ran a popular YouTube channel “Bastar Junction.”
The Press Council of India expressed “concern” over the suspected murder of Chandrakar, calling for a report on the “facts of the case” in a statement late Saturday.
Chandrakar’s body was found on January 3 after police tracked his mobile phone records following his family reporting him missing.
Three people have been arrested.
More than 10,000 people have died in the decades-long insurgency waged by Naxalite rebels, who say they are fighting for the rights of marginalized indigenous people in India’s resource-rich central regions.
Vishnu Deo Sai, chief minister of Chhattisgarh from the ruling Bharatiya Janata Party (BJP), called Chandrakar’s death “heartbreaking” and promised the “harshest punishment” for those found responsible.
India was ranked 159 last year on the World Press Freedom Index, run by Reporters Without Borders.
 

 


Erdogan expects support from Syria in Turkiye’s battle with PKK

Turkish President Tayyip Erdogan attends the G20 summit in Rio de Janeiro, Brazil, November 19, 2024. (REUTERS)
Updated 06 January 2025
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Erdogan expects support from Syria in Turkiye’s battle with PKK

  • “The new administration in Syria is showing an extremely determined stance in preserving the country’s territorial integrity and unitary structure,” he said

ANKARA: Turkish President Tayyip Erdogan said on Sunday that Syria’s new leadership is determined to root out separatists there, as Ankara said its military had “neutralized” 32 members of the outlawed Kurdistan Workers Party, or PKK, in the country.
A rebellion by groups close to Turkiye ousted Syrian president Bashar Assad last month. Since then, Turkiye-backed Syrian forces have occasionally clashed in the north with U.S-backed Kurdish forces that Ankara deems terrorists.
“With the revolution in Syria... the hopes of the separatist terrorist organization hit a wall,” Erdogan told his party’s provincial congress in Trabzon.
“The new administration in Syria is showing an extremely determined stance in preserving the country’s territorial integrity and unitary structure,” he said.
“The end of the terrorist organization is near. There is no option left other than to surrender their weapons, abandon terrorism, and dissolve the organization. They will face Turkiye’s iron fist,” Erdogan added.
The defense ministry separately announced the armed forces’ operation in northern Syria that it said had “neutralized” — a term that usually means killed — the 32 PKK members. It said Turkiye’s military had also “neutralized” four PKK members in northern Iraq, where the militants are based.

 


Heaviest snowfall in a decade possible as wintry blast roils parts of US

Updated 06 January 2025
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Heaviest snowfall in a decade possible as wintry blast roils parts of US

  • Studies show a fast-warming Arctic is partly to blame for the increasing frequency of the polar vortex extending its icy grip

A blast of snow, ice, wind and plunging temperatures stirred up dangerous travel conditions in parts of the central US on Sunday, as a disruptive winter storm brought the possibility of the “heaviest snowfall in a decade” to some areas.
Snow and ice blanketed major roadways in nearly all of Kansas, western Nebraska and parts of Indiana, where the state’s National Guard was activated to help any motorists who were stuck. At least 8 inches of snow were expected, particularly north of Interstate 70, as the National Weather Service issued winter storm warnings for Kansas and Missouri, where blizzard conditions brought wind gusts of up to 45 miles per hour (72.42 kilometers per hour). The warning extended to New Jersey for Monday and into early Tuesday.
“For locations in this region that receive the highest snow totals, it may be the heaviest snowfall in at least a decade,” the weather service said early Sunday.
About 63 million people in the US were under some kind of winter weather advisory, watch or warning on Sunday, according to Bob Oravec with the National Weather Service.
Gary Wright wore a parka as he chipped away at a thick coating of ice on his SUV Sunday in a slippery apartment parking lot in mid-Missouri. He said he will work remotely for the University of Missouri-Columbia on Monday, but wanted to scrape off his vehicle as an excuse to spend a little time in the snow. He’s also in the market for boots for his two older dogs, who “won’t budge at all” when their paws hit the cold ground.

 


The polar vortex of ultra-cold air usually spins around the North Pole. People in the US, Europe and Asia experience its intense cold when the vortex escapes and stretches south.
Studies show a fast-warming Arctic is partly to blame for the increasing frequency of the polar vortex extending its icy grip.
Snow and ice in the forecast, and even possible tornadoes
In Indiana, snow fully covered portions of Interstate 64, Interstate 69 and US Route 41, prompting Indiana State Police to plead with motorists to stay off the roads as plows worked to keep up with the pace of the precipitation.
“It’s snowing so hard, the snow plows go through and then within a half hour the roadways are completely covered again,” Sgt. Todd Ringle said.
A section of I-70 was closed in central Kansas by Saturday afternoon. Roughly 10 inches (25 centimeters) of snow had fallen in parts of the state, with snow and sleet totals predicted to top 14 inches for parts of Kansas and northern Missouri.
In Kentucky, Louisville recorded 7.7 inches (19.5 cm) of snow on Sunday, a new record for the date that shattered the previous mark of 3 inches (7.6 cm) set in 1910. Lexington, Kentucky, also set a snowfall record, with 5 inches (12.7 cm).
Parts of upstate New York saw 3 feet (0.9 meters) or more of snow from a lake effect event expected to last until late Sunday afternoon.
The storm was forecast to move into the Ohio Valley and reach the Mid-Atlantic states later Sunday and into Monday, with a hard freeze expected as far south as Florida.
Damaging winds brought down trees across the Deep South. The weather service issued tornado warnings Sunday in Arkansas, Louisiana and Mississippi.
Car wrecks proliferate as storm hits
The weather service warned that road travel could be “very difficult to impossible.”
By Sunday, hundreds of car accidents had been reported in Virginia, Indiana, Kansas and Kentucky, where a state trooper was treated for non-life-threatening injuries after his patrol car was hit on Interstate 65. At least 600 motorists were stranded in Missouri, that state’s highway patrol said.
Highways in northeastern Kansas were closed due to “impassable” conditions, according to the state’s Transportation Department. The closures included roughly 220 miles (354 kilometers) of the state’s main artery, Interstate 70, from the Missouri border into central Kansas.
Kentucky Gov. Andy Beshear, who declared a state emergency ahead of the storm, said state buildings would be closed Monday.
“We see far too many wrecks out there for people that do not have to be on the roads, so I want to ask: Stay inside. Stay safe with your family,” the governor said.
Virginia State Police reported at least 135 crashes as the storm entered the state Sunday. A handful of injuries were reported, but no fatalities.
Air and rail travel also snarled
The storms also caused havoc for the nation’s railways, leading to numerous cancelations. More than 20 cancelations were planned on Sunday, 40 for Monday and at least two for Tuesday.
“If local authorities are telling people not to travel, it’s counterintuitive to try to run a full slate of services when people are being told to stay home,” Amtrak spokesperson Marc Magliari said.
The Midwest was hit especially hard. A train between Chicago and New York and several regional trains between Chicago and St. Louis were among those canceled Sunday.
Nearly 200 flights in and out of St. Louis Lambert International Airport were canceled, according to tracking platform FlightAware.
Temperatures dip, though no records break
Starting Monday, the eastern two-thirds of the country will experience dangerous, bone-chilling cold and wind chills, forecasters said. Temperatures could be 12 to 25 degrees (7 to 14 degrees Celsius) below normal.
In Chicago on Sunday, temperatures hovered in the teens (minus 7 to 10 Celsius) and around zero in Minneapolis, while dropping to 11 below in International Falls, Minnesota, on the Canadian border.
The Northeastern states are more likely to experience several days of cold following what has mostly been a mild start to winter, said Jon Palmer, a meteorologist with the National Weather Service in Gray, Maine. A plume of cold air coming down from Canada is likely to result in a cold but dry week, he said.
The cold air will likely grip the eastern half of the country as far south as Georgia, Palmer said, with parts of the East Coast experiencing freezing temperatures and lows dipping into the single digits in some areas.
Wind might also pick up as the week gets going, making for potentially dangerous conditions for people exposed to the elements for long periods of time, Palmer said.
Disruptions extend southward
The National Weather Service predicted 8 to 12 inches (about 20 to 30 centimeters) of snow for the Annapolis, Maryland, area, with temperatures remaining below freezing throughout the weekend.
In a statement on X, Virginia Gov. Glenn Youngkin declared a state of emergency Friday ahead of the storm and encouraged residents to vote before the state’s special elections on Tuesday.
Similar declarations were issued in Kansas, Kentucky, Maryland, West Virginia and in central Illinois cities.
Classes canceled
School closings were likely to be widespread Monday. Districts in Indiana, Maryland, Virginia and Kentucky were already announcing cancelations and delays on Sunday afternoon.
Kentucky’s Jefferson County Public Schools canceled classes, extracurricular activities and athletics Monday for its nearly 100,000 students. The day would have been students’ first one back after winter break.
“This is a traditional snow day with no online learning,” the district announced.

 


Russia says Ukraine launches ‘counterattack’ in Kursk region

Updated 06 January 2025
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Russia says Ukraine launches ‘counterattack’ in Kursk region

  • Moscow said the counter-attack was directed toward the village of Berdin, about 15 kilometers northeast of Sudzha
  • Ukraine's army confirmed that fighting was under way in the Kursk region, without elaborating

MOSCOW: Russia said Sunday that Ukraine had launched a “counterattack” in the western border region of Kursk, where Kyiv’s forces began a shock ground offensive last August.
It was not immediately clear how much Ukraine had advanced in the region, but pro-Kremlin military bloggers reported earlier that a powerful new offensive was under way.
The assault comes at a critical juncture in the nearly three-year conflict, with both sides seeking to strengthen their negotiating hand ahead of US President-elect Donald Trump’s return to the White House on January 20.
“At about 9 a.m. Moscow time (0600 GMT), in order to halt the advance of Russian troops in the Kursk direction, the enemy launched a counterattack,” the Russian defense ministry said.
The Ukrainian army did not comment on the operation, simply saying in its daily report that fighting was under way in the Kursk region without elaborating.
Ukraine used two tanks, a dozen armored vehicles and a demolition unit in the assault, which was directed toward the village of Berdin — about 15 kilometers (nine miles) northeast of Sudzha, Moscow said.
“The operation to destroy the Ukrainian army formations continues,” it added.
Pro-Kremlin military bloggers acknowledged the Russian army had come under pressure but said Moscow was fighting back.
“The main events of the next attempted offensive by the Ukrainian army are clearly still ahead of us,” influential pro-Russian Telegram channel Rybar said.
Images purportedly showing a column of Ukrainian armored vehicles driving through the snow were shared by pro-Russia military blogger Dva Mayora on Telegram.

Ukrainian officials gave little detail on the new offensive, with a prominent lawmaker urging silence.
“I can’t understand why it is necessary to officially report on the Kursk region. Maybe better to do it afterwards when the operation is over?” Ukrainian MP Oleksiy Goncharenko said.
Other officials expressed their glee at the operation, which comes almost three years since Moscow launched its full-scale military assault on Ukraine.
“Russia is getting what it deserves,” Ukrainian presidential chief of staff Andriy Yermak said.
The head of Ukraine’s Center for Countering Disinformation, Andriy Kovalenko, said on Telegram that defense forces were “working” in the area, without elaborating.
“In the Kursk region, the Russians are very worried because they were attacked from several directions, and it was a surprise for them,” he said.
Kyiv seized dozens of villages in the Kursk region shortly after its incursion started on August 6, 2024, but its advances stalled after Moscow rushed reinforcements to the area, including thousands of troops from its ally North Korea.
A Ukrainian army source told AFP last November that Kyiv still controlled 800 square kilometers (around 300 square miles) of the Russian border region, down from previous claims it controlled almost 1,400 square kilometers.

Ukrainian President Volodymyr Zelensky said last year the Kursk operation has boosted Kyiv’s “exchange fund” — its negotiating position on swapping prisoners of war — and diverted tens of thousands of Russian troops away from the eastern front.
He said Saturday evening that “up to a battalion of North Korean infantry soldiers and Russian airborne troops” had been lost in battles in the Kursk region on that day and the day before.
And in an interview with US podcaster Lex Fridman released Sunday, he underlined the key role Trump would play.
“Trump and I will come to an agreement and... offer strong security guarantees, together with Europe, and then we can talk to the Russians,” Zelensky said, according to the published translation of the interview held in Kyiv over the New Year.
“We and Trump come first, and Europe will support Ukraine’s position,” he added. Trump, he said, “has enough power to pressure him, to pressure Putin.”

But Kyiv has so far been unable to halt Moscow’s advances in Ukraine, which were seven times higher in 2024 than the year prior, according to an AFP analysis of data from the Institute for the Study of War.
Both Russia and Ukraine have exchanged regular attacks since the year began.
Russia said Sunday it had downed dozens of Ukrainian drones overnight in a barrage that damaged homes and triggered air alerts, while Kyiv said Moscow fired 103 drones into its territory.
Four Russian airports briefly suspended traffic early Sunday for “safety” reasons, a spokesperson for Russia’s civil aviation authority Rosaviatsia said.
Elsewhere on the front line, Ukrainian authorities in the eastern Donetsk region reported Sunday that five people had been wounded in Russian shelling.