Aurelia Butler

HOUSTON (Reuters) -Russia’s decision to cut crude oil production by 500,000 barrels per day reflects its inability to sell all of its oil, Ben Harris, a U.S. Treasury Department Assistant Secretary, said on Thursday. Russia’s Deputy Prime Minister Alexander Novak last week said it would voluntarily cut production beginning next month following the start of Western price caps on Russian oil and oil products on Feb. 5. The move to cut around 5% of output temporarily pushed up global prices.”They cut back on production because they just couldn’t sell it (the oil), not because they wanted to weaponize oil and refined products,” Harris said in remarks at the Argus Americas Crude Summit.The cut follows embargoes and sanctions, including an unprecedented $60 a barrel price cap on its crude, by Western countries to punish Moscow for its invasion of Ukraine. Poland, Latvia, Lithuania and Estonia have pushed for lowering the crude oil cap. Russia’s monthly budget revenues from oil and gas fell 46% in January to their lowest level since August 2020 under the impact of Western sanctions on its most lucrative export, according to finance ministry data. The cap sought to maintain market stability and to drive down Russian revenue, both of which have been achieved, Harris said.There have been no American companies involved in trading Russian oil above the price cap, he said. ‘WAIT AND SEE’It is unclear whether Russia will shut in crude because of the logistical difficulties of placing crude at the cap, or if the production cut lasts, Michael Cohen, BP’s chief U.S. economist, said during the conference. Colin Parfitt, vice president of midstream for Chevron Corp (NYSE:CVX), also said it was not yet clear whether the output cut is major. The market is in a “wait-and-see” approach to the announcement, Parfitt told Reuters on the sidelines of the conference. Russia is still selling discounted barrels of crude to purchasers including China and India. Purchasing those Russian barrels is “extremely lucrative” for a large part of the world, said Mercuria President Daniel Jaeggi at the conference.However, Goldman Sachs (NYSE:GS) said in a note earlier this week that Moscow’s trade partners have increasingly paid more for Russian crude than quoted prices suggest, cushioning Russia from the impact of Western sanctions. Phillips 66 (NYSE:PSX)’s Chief Executive Mark Lashier said the company’s base assumption is that Russia’s crude and oil products will find their way into the marketplace. More

Speaking before lawmakers, Reserve Bank of Australia (RBA) Governor Philip Lowe said how much further interest rates needed to increase would depend on developments in the global economy, how household spending evolved and the outlook for inflation and the labour market.”Based on the currently available information, the Board expects that further increases will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary,” Lowe said.”We will do what is necessary to make sure that inflation returns to the target range.”The central bank last week hiked interest rates by a quarter point to a decade-high of 3.35%, bringing its tightening since last May to 325 basis points. It also compounded the blow by flagging yet further increases would be needed to contain inflation, which is running at three-decade highs.Markets responded by raising the expected top for rates to around 4.1%, from 3.6% a month before, implying three more rate hikes are waiting in the wings. Lowe said it was still possible that the Australian economy was headed for a soft landing, especially if inflation and wage expectations remained contained. “But it is also possible that we are knocked off that narrow path,” he said. The fact that the Board met every month gave it frequent opportunities to evaluate how risks evolved and to respond flexibly, he added. More

OTTAWA (Reuters) -Bank of Canada Governor Tiff Macklem said on Thursday that the economy remains overheated and the jobs market is too tight, as he kept the door open to future interest rate hikes.On Jan. 25, the Bank hiked its key interest rate to 4.5%, the highest level in 15 years, and became the first major central bank to say it would hold off on further increases as long as prices eased as forecast.The bank forecasts inflation to slow to about 3% by the middle of the year from 6.3% in December, and to come down to its 2% target next year.Macklem reiterated the bank’s policy stance, but acknowledged the impact of last week’s strong January jobs report.”The labor market is just too tight. It does need to get better balanced,” Macklem said during testimony to the House of Commons finance committee. Canada added a massive 150,000 jobs in January, ten times expectations.The bank last month forecast the economy would stall and could tip into recession during the first three quarters of this year, but the jobs report showed demand is still strong.”The Canadian economy remains overheated and clearly in excess demand and this continues to put upward pressure on many domestic prices,” Macklem said.”The tightness in the labor market needs to ease, wage growth needs to moderate and service price inflation needs to cool” or else more interest rate hikes will be needed, he added.In a separate speech later in the day, Deputy Governor Paul Beaudry said the bank is committed to bring inflation back to target and will do so even if its policy-setting path diverges from central banks in other countries.The U.S. Federal Reserve has yet to pause and two Fed officials on Thursday said higher rates would be needed to tame inflation. At its last policy meeting, the Fed lifted its benchmark overnight interest rate by a quarter of a percentage point to the 4.50% to 4.75% range. Macklem was pressed to comment on the potential effects of the upcoming 2023/24 federal budget. “If government spending contributes more to aggregate demand at a time when we’re trying to cool the economy, then that wouldn’t be helpful,” he told the committee.Finance Minister Chrystia Freeland has said repeatedly that she will take a “fiscally prudent approach” to the budget, due out in March or April, so as not to make the central bank’s inflation-fighting job more difficult. More

WASHINGTON (Reuters) – The top Republicans on U.S. congressional foreign affairs and armed services committees pressed Democratic President Joe Biden on Thursday to include $2 billion in military assistance grants for Taiwan in his upcoming budget request.Representatives Michael McCaul and Mike Rogers (NYSE:ROG), chairmen of the House of Representatives Foreign Affairs and Armed Services committees, and Senators Jim Risch and Roger Wicker, ranking Republicans on the Senate Foreign Relations and Armed Services committees, asked Biden to include up to $2 billion in Foreign Military Financing (FMF) grants for Taiwan in his proposed budget for the fiscal year ending in September 2024.Congressional aides said they expect Biden to release the budget on March 9.In a letter to Biden, the four lawmakers called China’s build-up of its military capabilities and the recent incursion into U.S. airspace of a high-altitude surveillance balloon “a grave threat” to U.S. interests.They stressed the need to support Taiwan, an independently ruled island that China views as a breakaway province.”To stop these trends, the United States must act with urgency to defend itself and ensure our allies and partners have the capabilities they need to defend against the (Chinese Communist Party),” the letter said.Congress late last year overwhelmingly approved legislation authorizing $10 billion – or $2 billion per year for five years – of annual FMF grants for Taiwan. However, a spending bill passed at the end of the year did not include the money to fund the program.The White House did not immediately respond to a request for comment on the letter. More