Biden looks for cheap oil: Alex Brummer says OPEC and Russia have been placed on defense after a landmark challenge


Biden looks for cheap oil: Alex Brummer says OPEC and Russia have been placed on defense after a landmark challenge


Joint action of major economies is relatively rare. So the decision to challenge big oil consumers – the US, China, India, Japan, South Korea and Britain – OPEC and Russia is a signal moment.

Previous coordinated measures have included the rebuilding of the global economy through the G20 following the financial crisis and the emergence of emergency interest rate cuts from the US, Britain and the European Central Bank at the beginning of COVID-19.

President Joe Biden’s decision to release 50 meters of barrels of oil from the US strategic reserve is a major step.

President Biden’s decision to pave the way for Kovid’s recovery by releasing 50m barrels of oil from the US strategic reserve is a major step.

That represents just two and a half days’ worth of US oil consumption. But we know that OPEC’s decision to add 400,000 barrels to its daily supply can make a real difference.

The decision of consuming countries cannot be reached lightly. In the US, citizens consider it a right to have access to cheap petrol.

There is something serious about all this. US economist Paul Krugman, writing in The New York Times, argues that the current surge in inflation is merely a supply shock.

This means that raising interest rates could mean the end of an emergency Covid-19 easy money, which does not cover the rising cost of living. So direct action on crude oil.

Fidget with free markets can have unfortunate consequences and OPEC and Russia may take retaliatory measures and cut their supplies.

The immediate response was to increase Brent’s raw price by 2 percent but futures prices eased. OPEC is using higher prices when there is opportunity.

It cannot be wise to deliberately repel the largest users in the world.

A change of direction

Coordination for the post-Kovid world is a big challenge for corporate Britain. Firms that received good firearms are now struggling during the online boom of the epidemic, such as White Goods and Electronics Group AO World.

The world’s largest cooking group, the £ 28 billion Compass, has been brought back to life by a bad hole from Lockdown.

In contrast, AO has a familiar bunch of complaints that drove its share price down.

Costs increased after chief executive John Roberts signed up 500 new drivers to the unskilled labor market.

And as anyone who’s ever tried to buy a First Choice Tumble Dryer knows, power supplies gum up in shipping lanes and ports as the world tries to cope with demand.

The consequences for AO (and other online businesses) are a nasty combination of high commodity prices and declining profit margins.

AO has been forced to reverse its previous earnings range, now from £ 10m to £ 20m. This is the kind of surprise that investors loathe. This raises questions about competence at the top.

Amid the disruption of work from home, closing of canteens and sports venues around the world (not to mention Marcus Rashford’s unnecessary focus on school lunch), Compass has decided to strengthen its balance sheet with £ 2 billion in May 2020.

With Twikers back in its full glory, students at universities and workplace eateries will begin to sound again – with the exception of Atom Bank – as Compass feels confident enough to restore dividends and suggest strong earnings expectations for 2022. Percent.

In general with AO and most business, it faces cost challenges and shrinking margins. As central banks tell us, if current inflation is temporary, margin normalization in the compass should be restored and hopefully not on the backs of school children and low-wage earners.

The Swedish quarrel

AstraZeneca is not attracting headlines in the UK, where chief executive Pascal Soriot triggered his line with the EU.

In Sweden, the Wallenberg family, the largest shareholder in the pharma group Sobi, has agreed to a £ 5.9 billion private equity buyout led by Advent.

A minority holder with an 8 percent stake is the main barrier to making the AZ deal. The assumption is that AZ’s objection is not about price but strategy.

AZ may have its eye on some of Sobie’s medicines or decide to stop it from turning into a rival Life Science cloth through Buyer Advent.

As Pfizer learned in 2014, AZ is a tough nut to crack.

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