Saudi Arabia outlines what it will do for oil output
Samizdat | July 16, 2022
Saudi Arabia is ready to increase oil production to its maximum of 13 million barrels per day but does not have the capacity to pump out more, Crown Prince Mohammed bin Salman said during his address at the US-Arab summit in Jeddah on Saturday.
“The kingdom has announced an increase in its production capacity level to 13 million barrels per day, after which the kingdom will not have any additional capacity to increase production,” he was quoted as saying by UAE’s newspaper The National.
The crown prince also said that the global community should join forces to support the global economy, but noted that unrealistic policies regarding energy sources would only worsen the situation.
“Adopting unrealistic policies to reduce emissions by excluding main sources of energy will lead in coming years to unprecedented inflation and an increase in energy prices and rising unemployment, and a worsening of serious social and security problems,” he stated.
Mohammed bin Salman’s words come a day after his talks with Joe Biden, who was in Saudi Arabia on his first visit as US president, and urged the kingdom to increase oil production in order to reduce global reliance on supplies from Russia.
Commenting on his trip to the kingdom, Biden said Saudi Arabia’s “energy resources are vital for mitigating the impact on global supplies of Russia’s war in Ukraine.”
Saudi Arabia, one of the globe’s largest oil exporters and the leading producer within the Organization of the Petroleum Exporting Countries (OPEC), currently pumps out more than 12 million barrels of oil per day. The kingdom previously said it plans to reach production capacity of 13 million barrels per day by 2027. The Crown Prince did not reveal whether the timeframe for the boost in capacity has changed.
Following the start of Russia’s military operation in Ukraine, the US and other Western nations have stepped up sanctions on Moscow, calling, among other things, for a boycott on Russian energy supplies. The US stopped importing Russian oil earlier this year, and the EU placed a partial embargo on Russian fuel last month.
Washington is now planning to set a price cap on the Russian commodity, and the US Treasury Secretary Janet Yellen is currently in Asia attempting to garner support for the scheme. The US is especially eager to secure the participation of China and India in the price cap mechanism, as both countries have not only refused to sanction Russia over the Ukraine conflict, but have recently stepped up purchases of Russian oil.
US to Cut Gas Exports in July by 150,000 Tonnes Due to Accident at LNG Plant: Consultancy
Samizdat – 16.07.2022
The United States may reduce the export of liquefied natural gas (LNG) to Europe by 150,000 tonnes in July following the accident at the Texas-based Freeport LNG plant, an energy expert at the Russian company Vygon Consulting, Ivan Timonin, told Sputnik on Saturday.
Freeport LNG, the operator of one of the largest US LNG plants, announced that it would be closed after the explosion and fire occurred on June 8 at the plant for at least three months, while a full restoration of work is not expected until the end of the year. The US energy ministry said in July that the closure of the plant would reduce the country’s LNG export capacity by about 2 billion cubic feet per day or about 17% of total capacity. The ministry lowered its export forecast for the second half of the year to an average of 10.5 billion cubic feet per day, a decrease of 14% compared to the June forecast.
“In total, in the first half of 2022, 65 million tonnes of LNG were sent to Europe, of which 9 million tonnes – in June. Some decrease – within 150,000 tonnes – can be expected in July due to the disposal of the Freeport plant, which managed to send to Europe comparable volumes for the first half of last month,” Timonin said.
Timonin added that in the first half of 2022, Europe was the priority market for the US as about 70% of all LNG produced in the US was sent to the region. In comparison, the amount of exported LNG for the same period last year was 33%, Timonin said.
Hungary probed over fuel subsidies
Samizdat | July 16, 2022
The European Commission announced on Friday the launch of a so-called infringement procedure against Hungary for its locals-only cap of fuel prices.
According to the report, Hungary imposes different fuel prices for vehicles with foreign and local license plates.
“Vehicles with Hungarian number plates, including tractors and agricultural machinery with Hungarian documents, are entitled to lower official fuel prices by 60 to 70%. In contrast, all other vehicles with a foreign number plate cannot benefit from such reduced prices,” the statement reads.
Hungary restricted its 480 forint per liter ($1.20) price cap for gasoline and diesel to locals only in May following an influx of drivers from neighboring countries who were coming to take advantage of the European Union’s cheapest gas. The cap was originally introduced as a measure to help shield consumers from inflation, which is at its highest level in two decades. The price cap is currently in place until October.
The Commission requested that the Hungarian authorities comply with EU law provisions pertaining to “the free movement of goods and services including transport services, the freedom of establishment, the free movement of citizens and workers, the principle of non-discrimination as well as rules on notifications under the Single Market Transparency Directive.”
Israeli Generals Urge Political Command to Make Concessions to Lebanon in Maritime Conflict to Avoid Hezbollah War
Al-Manar – July 15, 2022
In light of the threats made by Hezbollah Secretary General Sayyed Hasan Nasrallah over the Zionist infringement on the Lebanese maritime borders, the Israeli media reflected calls on the government to eliminate Hezbollah pretexts to escalate the confrontation.
The US officials accompanying President Joe Biden during his visit to the occupied Palestinian territories stressed that they support the efforts exerted to reach a solution.
In this regard, the US National Security Council spokesman John Kirby said, “We listened to the ‘threats’, and we support reaching a solution.”
The US mediator, Amos Hochestein, told the Israeli media that he was still optimistic about achieving a solution, adding that his target concentrates on facilitating the negotiations.
Hochestein also revealed that he would visit Lebanon to meet the senior officials in the context of resuming the negotiations soon.
Meanwhile, the Zionist media reflected the Israeli circles frustration with Biden’s remarks which did not voice a clear support to ‘Israel’ pertaining the maritime border demarcation.
The Israeli army generals urged the Zionist government to avoid any escalation with Hezbollah by making concessions to Lebanon in the negotiations in order to avoid any military escalation with Hezbollah.
Sayyed Nasrallah warned on Wednesday the Israeli enemy and the United States that if Lebanon is prevented from extracting its maritime resources, none will be able to extract or sell gas and oil.
In a televised speech, Sayyed Nasrallah indicated that Hezbollah military forces are monitoring all the Zionist platforms across the occupied Palestinian coast, adding that the Resistance may resort to ground, maritime or air capabilities in order to attack the enemy and secure Lebanon’s rights.
According to Sayyed Nasrallah, the new equation is Karish, what’s beyond Karish and what’s far beyond Karish.
Iran’s petrochemical output capacity to rise by 54% in 2025
Press TV – July 14, 2022
Iran will increase its production capacity for petrochemical products by more than a half in the next three years as the country moves ahead with plans to increase added value in its petroleum sector.
A Thursday report by the official IRNA news agency said Iran will launch a total of 35 new petrochemical plants by 2025 to increase the output capacity in the sector by 54% to 140 million metric tons per annum (mtpa).
It said petrochemical output capacity in Iran had increased by 7% in the calendar year to March 2022 to reach nearly 91 million mtpa thanks to the completion of seven new petrochemical projects across the country.
Iran’s sales of petrochemicals, including exports to other countries, also rose by 4.4% in the calendar year to late March with government figures showing that exports proceeds from the sector reached nearly $12.5 billion over that period.
Iran has relied on petrochemicals as a major source of earning hard currency in recent years as the country has been facing a series of tough American sanctions targeting its direct exports of crude oil.
China has been the top customer of Iranian petrochemical shipments in recent years while exports to countries in the region have also surged since the United States imposed its sanctions on Iran in 2018.
The expansion of the Iranian petrochemical sector has also led to a significant rise in the number of jobs in the country. Estimates suggest the number of direct jobs in the sector is more than 920,000 compared with a total of 107,000 direct jobs registered in the upstream sector of the oil and gas industry in Iran.
Russia Continues To Earn More By Exporting Less Oil
By Tyler Durden | Zero Hedge | July 14, 2022
Russian export revenues in June rose by $700m to the $20 billion mark, despite that oil exports fell by 250k b/d m/m to 7.4m b/d, the lowest since August 2021, Bloomberg’s Sherry Su reports citing the IEA’s latest Oil Market Report.
Compared to a post-war peak level in April, total Russian oil exports in June were down 530k b/d, Or 7%, but export revenues were up by $2.3 billion, or 13%.
Crude oil exports were down by 250k b/d in June to just above 5m b/d, still slightly higher than the pre-war average level according to Su. Shipments to the EU fell below 3m b/d for the first time since November 2020, bringing the EU share of Russian oil exports to 40%, compared to 49% in January-February.
Crude oil loadings to EU destinations fell 190k b/d m/m to 1.8m b/d, partly because of lower offtake on the Druzhba pipeline due to maintenance at a Hungarian refinery in June. Meanwhile, product loadings to the European Union fell by 135k b/d to 1.13m b/d, the IEA said.
The fall in crude oil volumes came mostly from lower loadings on the Black Sea, as Rosneft’s 240k b/d Tuapse refinery reportedly came back online in June after a three-month shutdown.
Total product exports out of Russia were relatively unchanged in June. Diesel exports increased slightly m/m to 825k b/d, 300k b/d lower than the pre-war average. Diesel Loadings to EU countries ticked up to 650 kb/d, returning to January-February average levels.
Starving Italians storm town hall
Free West Media | July 15, 2022
Are these the kind of conditions that we will soon see more often in Europe? In an Italian city, angry citizens stormed the city hall because they had no more money to afford groceries. The mayor refused to receive the angry crowd.
Italian citizens stormed La Spezia City Hall after the mayor refused to receive them: “I have no money to buy bread, what will my daughter eat tonight?” cried a disappointed mother at the official residence of the city. The incident is said to have taken place in the Italian city on Wednesday.
The mayor Pierluigi Peracchini decided to ignore the problems that his constituents have been facing. He is said to have even denied the citizens access to the town hall for a discussion. Rather, as video recordings show, police officers from the local municipality prevented the angry people from penetrating further into the building.
Mayor Peracchini (58) ran for the Coraggio Italia party, a centre-right party. In Italy, the ruthless hammer of inflation has been brought down on citizens. Just recently, shocking video footage of a never-ending line of people circulating outside a food bank in Milan surfaced on Twitter.
Draghi government implode
Many blame Italy’s prime minister, ex-ECB boss Mario Draghi (74). In German-speaking countries, Draghi is however often referred to as a “blessing” (Neue Zürcher Zeitung), a “moderniser” or “Super Mario” (Frankfurter Allgemeine Zeitung). Italians, on the other hand, who have been on the receiving end of his policies, have strongly criticized the social and economic direction of the Prime Minister, who has been in office since February 2021.
In the meantime, Draghi is facing the collapse of his government, because the Five Star Movement [Cinque Stelle] is planning to withdraw from the multi-party coalition over Italian arms deliveries to Ukraine.
In Rome this week, workers, taxi drivers, farmers, fishermen, street vendors and truckers are on the hunt for politicians and masses of angry people have besieged parliament for the second consecutive day.
The Uber Files scandal – leading to the liberalization of taxi licenses imposed by Mario Draghi – has stirred up citizens in particular. At the seat of government, a crowd was seen chanting on Friday: “Come down or we will go up!” A heavy police presence has been noted in the Italian capital.
After the fall of Boris Johnson
After the demise of Boris Johnson the implosion of the Draghi government in Italy is not formally connected to the situation in Ukraine, but it was most certainly this that ruined his tenure. The economic consequences of this war for Italy were such that the ruling coalition could not agree on measures to support the Italian economy due to the economic crisis generated by the war.
Draghi’s resignation, coupled with Johnson’s resignation, now makes it clear that European politicians do not have the opportunity to cover the growing economic crisis and falling living standards with cries of “Putin is to blame”. According to Italian pundit Lorenzo Vita, the premier was “recognized in the EU, NATO and major international circuits” as an important leader, but certainly not at home.
The likely defeat of the Democrats in the midterm congressional elections in the US, for the same reasons, will most probably confirm this trend.
The refusal of the President of Italy to accept Draghi’s resignation in the conditions of the collapse of the coalition does not change much – Italy will most likely move towards new elections.
‘EU may cut financial aid to Ukraine’
Samizdat – July 15, 2022
The funds promised to Ukraine by the EU have been delayed due to concerns over the bloc’s own economic troubles and infighting in Brussels, Bloomberg reported on Friday, citing people familiar with the discussions.
Back in March, the European Commission proposed a €9 billion ($9 billion) loan to Ukraine that would be backed by the guarantees of EU members’ governments. However, so far the bloc has managed to agree only on a first tranche worth €1 billion, which was unveiled on Tuesday.
According to Bloomberg, the hang up is because Germany tried to convince the EU to provide non-refundable grants through the International Monetary Fund rather than loans to Kiev.
A German official was quoted as saying that Berlin does not want to bear the brunt of guaranteeing Ukrainian loans and has asked other members to chip in more.
Separately, a €1.5 billion loan by the European Investment Bank was said to have been blocked within the EU because more guarantees are needed to secure the sum.
The news comes as the EU is grappling with soaring inflation. Germany has been particularly concerned that sanctions and tensions with Russia could compel Moscow to cut off the flow of Russian gas, which could cripple the German economy.
The German government has repeatedly warned that such a scenario would increase unemployment and poverty. Fuel shortages would be “catastrophic” for some industries, Economy Minister Robert Habeck told the magazine Der Spiegel last month.
Hungarian Prime Minister Viktor Orban raised a similar point on Friday, saying that by imposing sanctions “the European economy has shot itself in the lungs, and it is gasping for air.”
According to Bloomberg, around a third of the 27 member states warned at a meeting of EU finance ministers on Tuesday that additional support was needed for “the most vulnerable groups inside the bloc affected by the ongoing crisis to prevent disaffection toward Kiev.”
An EU official was quoted as saying that Paolo Gentiloni, the bloc’s economy commissioner, told colleagues at a closed-door meeting that national governments needed to “avoid the risk of fatigue among Europeans.”
Western countries, including EU nations, imposed sweeping sanctions on Russia after it sent troops to Ukraine in late February. Last month, the Group of Seven (G7), which includes EU economic powerhouse Germany, pledged to support Kiev “for as long as it takes.”
US Gets 14 Straight Months of Roaring Inflation Since Biden Regime Dubbed Issue ‘Transitory’
Samizdat – 15.07.2022
Data put out by the Labor Department this week showed that the Consumer Price Index hit 9.1 percent in June, its sharpest monthly increase since 1981 and the height of the ‘malaise days’ of the late Carter and early Reagan years. On Thursday, Treasury Secretary Janet Yellen admitted that inflation was “unacceptably high,” but blamed Russia.
The United States has lived through 14 straight months of higher and higher inflation since President Biden and his economic advisors deemed the issue a “temporary” and “transitory” issue that would quickly be brought under control.
“I really doubt that we’re going to see an inflationary cycle, although I will say that all the economists in the administration are watching that very closely. As my colleagues have said… we expect somewhat higher inflation over the next several months for a variety of essentially technical reasons… but that’s a transitory thing, not something that’s associated with a buildup in wage pressures,” Yellen said in a press conference on May 7, 2021.
Two months later, in mid-July 2021, President Biden assured Americans that recent price increases were “temporary,” and not connected in any way, shape or form to his administration’s spending plans. “As our economy has come roaring back, we’ve seen some price increases. Some folks have raised worries that this could be a sign of persistent inflation, but that’s not our view. Our experts believe and the data shows that most of the price increases we’ve seen were expected and are expected to be temporary,” Biden insisted.
What followed has been a steady ladder-shaped month-by-month increase in the Consumer Price Index (CPI) – the national inflation measure based on the price of a weighted basket of consumer goods and services purchased by households. Inflation crept up 5.4 percent year-on-year (YOY) in July of 2021, 6.2 percent YOY in October, 7.5 percent YOY in January, 8.3 percent YOY in April and YOY 9.1 percent in June.
source: tradingeconomics.com
On Thursday, Treasury Secretary Janet Yellen expressed support for the Federal Reserve’s decision to double interest rates to bring down the “unacceptably high” level of inflation, and assured that the issue was the administration’s “top priority.”
Yellen echoed Mr. Biden’s claims that America’s economic problems were partly Russia’s fault, calling the inflation rate one of the “spillover effects” caused by “Putin’s war” in Ukraine. Yellen added that broken supply chains were part of the problem, and called on G20 economies to “make our economies and our supply chains stronger and more resilient and avoid the sort of costly disruptions that have driven up inflation in America and globally.”
Last month, Fed Chairman Jerome Powell broke with the Biden administration’s “Putin’s price hike” talking point, telling lawmakers at a Senate Banking Committee hearing that “inflation was high before – certainly before the war in Ukraine broke out,” and that the phenomenon is caused by a number of factors, including supply chain disruptions, regulations that constrain supply, and “excessive fiscal spending.”
June’s inflation rate hike constituted the sharpest jump since 1981 – the height of the ‘malaise days’ of raging inflation, low growth, and soaring energy costs. The problem was ultimately resolved by temporarily increasing the interest rate to double digits, easing restrictions on adding to the federal debt, steep government spending cuts and a consumer credit boom.
Record US defence spending approved
Samizdat | July 15, 2022
The US House of Representatives has authorized $840 billion in defense spending in 2023, boosting President Joe Biden’s proposed record military budget by $37 billion.
The annual National Defense Authorization Act (NDAA), which sets military expenditure, was passed on Thursday by a vote of 329-101.
The bill offers $1 billion in aid to Ukraine, including a program to train Ukrainian pilots to fly F-15, F-16 and other US aircraft. The Ukrainians should familiarize themselves with US-made planes “while the administration continues to consider sending such equipment,” said a statement on Congressman Adam Kinzinger’s website last month.
The bill also bans the supply of the F-16s to Turkey unless the US president guarantees to Congress that Ankara has not “violated the sovereignty of Greece, including through territorial overflights” for 120 days prior to the transfer.
Last month, the Senate Armed Services Committee proposed its own version of the budget, attaching an additional $45 billion to Biden’s original plan.
Both chambers will vote for a compromise budget later this year. Jack Reed, the chair of the Senate Armed Services Committee, told Politico magazine on Wednesday that he expects the debate on the matter in September.
The boost to defense spending comes during Russia’s military campaign in Ukraine, and continuing tensions with China over Taiwan and the larger Asia-Pacific.
The US has committed around $5.6 billion in security aid to Kiev after Russia launched its military campaign in late February. The heavy weapons delivered by Washington include M142 HIMARS multiple rocket launchers, M777 howitzers. It has also supplied radars, helicopters, and drones.
The Kremlin has stated that “flooding” Ukraine with foreign weapons would only exacerbate the conflict.
Moscow and Kiev agree to create a “coordination center” on grain exports in Istanbul
Samizdat | July 13, 2022
Russia and Ukraine have agreed to establish a joint coordination center on grain exports in Istanbul that will include representatives from all parties, Turkish Defense Minister Hulusi Akar told local media following the four-way talks that also involved Turkey and the UN.
On Wednesday, negotiators from Russia, Ukraine, Turkey and the UN met in the Turkish city to discuss the situation regarding the held-up Ukrainian exports.
Ahead of the meeting, Ukraine’s Foreign Minister Dmitry Kuleba said that Kiev and Moscow had been close to breaking the impasse on the issue.
“An agreement has been reached on technical issues such as joint controls at the destination points and … the safety of navigation on the transfer routes,” Akar told journalists. Russian and Ukrainian delegations “should meet again in Turkey next week,” he said, adding that the parties would “review all the details once again” during that meeting.
Ukraine is one of the world’s leading grain exporters. Yet, it has been unable to export its grain by sea due to the ongoing conflict with Russia. Kiev and Western nations have accused Moscow of preventing Ukrainian grain shipments from leaving the nation’s Black Sea ports. Russia has denied such accusations and, in turn, blamed Kiev for the crisis, arguing that its forces mined the Black Sea waters, thus creating a threat to the cargo ships.
The West has also accused Moscow of attempting to cause a global food crisis by supposedly blocking shipments of Ukrainian grain and “using hunger as a weapon.”
Last month, President Vladimir Putin said that Russia was not impeding exports and criticized the West for its “cynical attitude” towards the food supply of developing nations, which have been the most affected by the soaring prices. Moscow is ready to provide free passage to international waters for ships carrying grain, he added.
Russia’s oil earnings continue to soar – IEA
Samizdat | July 13, 2022
Russia’s oil export revenue surged above $20 billion in June thanks to rising energy prices and despite lower shipments abroad, the International Energy Agency (IEA) said in its monthly oil market report on Wednesday.
The agency’s statistics showed an increase of $700 million in June from the previous month, even as Russia’s daily exports of crude oil and products fell by 250,000 barrels to 7.4 million barrels, the lowest since August.
The country’s drop in exports last month was led by crude oil, which fell to just above 5 million barrels per day, according to the IEA. Daily flows to the EU fell below 3 million barrels, which is the lowest since November.
Meanwhile, global oil prices have been surging on strong demand and tight supply. The Brent benchmark averaged more than $117 a barrel last month, while Russia’s Urals rose 10.7% from May to average $87.25 a barrel.
Oil and gas revenue accounted for nearly half of Russia’s federal budget in 2021, according to IEA estimates.
Moscow said earlier it expects up to 1 trillion rubles (over $17 billion) in additional oil and gas revenues this year.
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From the Archives
Mutually Assured Delusion (MAD)
By Judith Curry | Climate Etc. | November 5, 2013
Groupthink: A pattern of thought charaterized by self-deception, forced manufacture of consent, and conformity to group values and ethics.
Groupthink: Collective Delusions in Organizations and Markets, by Roland Benabou, published in the Review of Economic Studies. Benabou also has a talk (ppt slides) on this subject.
First, a definition of groupthink (from the ppt slides):
Janis (1972)’s eight symptoms [of groupthink]:
- illusion of invulnerability
- collective rationalization
- belief in inherent morality
- stereotyped views of out-groups
- direct pressure on dissenters
- self-censorship
- illusion of unanimity
- self-appointed mind guards
Sound like any groups that we know? … continue
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