Global economy LIVE | OPEC+ ministers agree to cut production as gas prices tick up in US

Ratings agency Fitch lowered the outlook for its credit rating for British government debt to “negative” from “stable” on Wednesday, days after a similar move from rival Standard & Poor’s.

Kuwait's acting oil minister Mohammed Al-Fares on Wednesday said the OPEC+ decision to cut production by 2 million barrels per day will have positive ramifications on oil markets, the state news agency reported.

"The decision places a big responsibility on us to follow up on market developments in case supply or output increases," Al-Fares told the agency.

The World Trade Organisation on Wednesday dramatically lowered its global trade forecast for 2023, as Russia’s war in Ukraine and other shocks take their toll on the world economy.

Presenting a revision of their annual trade forecast, WTO economists said they expected the volume of global merchandise trade to grow 3.5 percent this year, which is slightly higher than their expectations in April.
 

The head of French energy major TotalEnergies said Wednesday that a possible price cap on Russian oil over the Ukraine war would benefit Russian President Vladimir Putin.

The group's chairman and CEO Patrick Pouyanne made the remarks at the Energy Intelligence Forum industry gathering in central London. 

"Honestly, I am not sure that a price cap on Russian oil is a good idea," Pouyanne told delegates when questioned about recent G7 moves towards such a policy.

"I think it's a bad idea because it's a way to give the leadership back to (Russian President) Vladimir Putin and I would never do that."

France has tapped its strategic fuel reserves to resupply petrol stations that have run dry, the government said on Wednesday.

This comes amid strikes by workers at refineries and depots that have stunted production and blocked deliveries. 

Government spokesman Olivier Veran acknowledged "tensions" but said there was no shortage of fuel stocks on a national level. He urged consumers not to panic-buy.

In the hardest-hit Hauts-de-France region, authorities banned the sale of petrol and diesel in jerry cans and other portable containers.

"We are obviously monitoring very, very closely the situation together with the operators and, here and there, when it was necessary, we have used our strategic stocks to enable the stations to be supplied," Veran told reporters.

According to an industry survey, manufacturing growth slowed in September in its weakest pace in more than two years amid a decline in orders as well as easing price pressures. 

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European Commission chief Ursula von der Leyen has told MEPs sitting in France that European Union is "ready to discuss" price cap on gas.

"We are ready to discuss a cap on the price of gas that is used to generate electricity," Von der Leyen told MEPs sitting in Strasbourg, France.

"This cap would also be a first step on the way to a structural reform and overall reform of our electricity market."

She added, "We also have to look at gas prices beyond the electricity market".
 

Russia has said that it was ready to supply gas to Europe through undamaged section of Nord Stream 2 pipeline.

"If the necessary legal decisions are made by European colleagues regarding [Nord Stream 2's] certification ... I think Russia in a short period of time could provide appropriate supplies through this gas pipeline," Russian deputy prime minister Alexander Novak said on state television. 

In what can be a big statement after OPEC+ decision to cut production, the White House has said that the grouping was 'aligning with Russia'

US President Joe Biden expressed is displeasure over OPEC+ decision to cut oil production and said that he was 'disappointed', said White House.

"The president is disappointed by the shortsighted decision by OPEC+," National Security Advisor Jake Sullivan and top economic advisor Brian Deese said in a statement.

The supply cut will hit countries "already reeling" from high prices while "the global economy is dealing with the continued negative impact" of Russia's attack on Ukraine, the statement said.
 

Following a speech by British Prime Minister Liz Truss on Wednesday that omitted specifics regarding contentious budget ideas, the pound dropped 2 per cent versus the dollar. 

A shift in investor risk aversion also helped the safe-haven dollar, which caused the pound to fall as low as $1.1241, or 2.01 per cent.

OPEC+ ministers converged to meet in Vienna on Wednesday and immediately agreed to cut oil proudction, marking the steepest decline since the pandemic began. 

Oil prices have fallen to approximately $90 from $120 three months ago due to concerns of a worldwide economic slowdown, rising US interest rates. The reduction might cause them to rise again. 

According to a source with knowledge of the situation, the United States had urged OPEC not to move on with the cuts, claiming that the fundamentals did not support them. 

According to sources, it is still unclear if the cuts will include existing underproduction by the group or new voluntary reductions by members like Saudi Arabia. 

Image: Saudi Arabia's Minister of Energy Prince Abdulaziz bin Salman Al-Saud and OPEC Secretary-General Haitham al-Ghais shake hands at the Organisation of the Petroleum Exporting Countries (OPEC) headquarters in Vienna, Austria October 5, 2022. Credit: Reuters. 

The IMF on Wednesday stated that the promise to reduce greenhouse gases by 25 per cent by the end of the decade may cause a growth slowdown globally. The monetary body added that it will fuel inflation. However, it also added that the cost of inaction, perhaps, might be higher. 

UK Prime Minister Liz Truss on Wednesday pledged to steer Britain through "stormy days", in a speech that was interrupted by Greenpeace protesters. This was Truss' first address at Conservative Party conference after she became PM.

Truss' first month in office has been chaotic, especially after her announcement of a new economic policy that created panic among investors. A U-turn on such a major policy in very first month in power sent Truss' approval ratings below those of Boris Johnson, the former UK PM who Truss succeeded. 

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The World Trade Organization on Wednesday dramatically lowered its global trade forecast for 2023, as Russia's war in Ukraine and other shocks take their toll on the world economy.

"Today the global economy faces multi-prong crises. Monetary tightening is weighing on growth across much of the world," WTO Director-General Ngozi Okonjo-Iweala told reporters in Geneva.

Amid Lebanon's financial meltdown, a former Lebanese ambassador held a sit-in at his bank outside the capital city of Beirut on Tuesday.

Georges Siam, Lebanon’s former Ambassador to Qatar, Turkey, Brazil and the UAE and currently the honorary consul of Ireland in Lebanon, staged the sit-in demanding that the bank let him withdraw the usual amount of money from his account.

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Apple suppliers have been directed by the company to move some AirPods and Beats headphone production to India for the first time, Nikkei Asia reported. iPhone assembler Foxconn is reportedly preparing to make Beats headphones in the South Asian country, and hopes to eventually produce AirPods there as well, two people with direct knowledge of the matter said.

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The services sector posted a small expansion in September indicating a recovery in demand amid declining Covid cases and the prospect of easing restrictions on foreign tourism.

Earlier this week, PM Fumio Kishida vpwed to raise inbound tourism spending to more than 5 trillion yen ($34.52 billion) a year, hoping to cash in by the yen's recent 24-year low against the dollar.

The final au Jibun Bank Japan Services purchasing managers' index (PMI) soared to 52.2, making a return to growth after contraction of 49.5 in August.

Many financial institutions have predicted that the world is headed for another recession.

As rising inflation and unemployment leads to a hike in interest rates, companies across the world have announced a freeze in hiring and planning to downsize their staff.

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As the global economy faces the looming danger of recession, China's economy is also slowing down. The nation narrowly avoided contraction in the April to June quarter. With figures for the next quarter i.e., July to September expected next week, it is predicted that Beijing's goal of a 5.5 per cent annual growth rate will remain unmet. Officials too have downplayed the need to meet the target.

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Philippines annual inflation soared to quickest to 6.9 per cent in September, paving the way for the central bank to hike interest rates.

The September inflation rate, which the fastest in four years, was mainly due to high food and utility prices and brought the average rate in the nine months to September to 5.1%, the statistics agency said on Wednesday, well outside the central bank's 2% to 4% target.

According to Reuters, the Bangko Sentral ng Pilipinas (BSP) is spected to raise its rate hikes, more than the earlier combined of 225 basis points this year.

The central bank will hold meeting between November and December.

Amid recession fears, job opening in the US fell the most in two-and-a-half years in August, suggesting that labour demand is moderating

According to the Labor Department, there were 1.7 job openings for every unemployed person in August.

It comes at a time when the economy grapples with higher interest rates aimed at dampening demand and taming inflation.

The Labor Department in its report 'Job Openings and Labor Turnover' Survey on Tuesday noted that the labor market was starting to cool as even as vacancies remained above 10 million for the 14th straight month.

 According to Reuters, OPEC+ members would meeting on Wednesday to discuss the possibility for deep oil output cuts.

The move falls contratry to the prevailing market conditionwhere a tight market is seeking more supply and amid pressure from the United States and other consuming countries to pump more.

The potential OPEC+ supply reduction is believed to lead to to recovery in oil prices that have dropped to about $90 from $120 three months ago due to fears of a global economic recession, rising US interest rates and a stronger dollar.

Sources told Reuters this week that OPEC+, which includes Saudi Arabia and Russia, is working on cuts in excess of 1 million barrels per day, while another source pegged it up to 2 million barrels per day.

Hong Kong stocks gain more than four per cent on Wednesday's open trade. The gain is in line with a global rally fuelled by easing concerns about central bank interest rate hikes.

The Hang Seng Index soared by 4.29 per cent, or 732.46 points to 18,811.97.

Mainland Chinese markets have been closed all week for a national holiday.

Major tech firms were like the e-commerce titan Alibaba was among the biggest winners with more than five percent and Tencent up more than three percent.

In South Korea, the Kospi advanced 0.47 per cent and the Kosdaq gave up early gains to fall 0.63%. Australia’s S&P/ASX 200was up 1.63. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 2.18 per cent 

On Wednesday, Tokyo stock market saw some positive signs as shares opened higher in line with global rallies in the backdrop of soft economic indicators indicating that it may slow the speed of rate hikes by the US central bank. 

The benchmark Nikkei 225 index added 0.79 per cent, or 212.41 points, to 27,204.62 in early trade, while the broader Topix index rose 0.90 percent, or 17.07 points, to 1,923.96.

This came after the Dow gained 2.8 per cent while the Nasdaq soared 3.3 percent after US indicators such as manufacturing growth indicated a conducive economic environment. 

The positive trend has raised hopes among investors who believe that it may help ease inflation and may encourage US Fed to revisit their aggressive rate-hike campaign to fight inflation.