Oil prices plunge on economic fears, dollar strength
Brent crude futures were down 61 cents, or 0.74%, to $82.07 a barrel
Oil prices fell in a volatile market on Tuesday as the U.S. dollar stayed strong and economic uncertainty offset the bullish impact of a price cap placed on Russian oil and the prospects of a demand boost in China.
Brent crude futures were down 61 cents, or 0.74%, to $82.07 a barrel at 1447 GMT. West Texas Intermediate crude (WTI) fell 51 cents, or 0.66%, to $76.42.
Earlier in the session, both contracts fell by more than $1, while Brent rose by more than $1 in Asian trading.
Crude futures on Monday recorded their biggest daily drop in two weeks after U.S. services industry data indicated a strong U.S. economy and drove expectations of higher interest rates than recently forecast.
The U.S. dollar index edged lower on Tuesday but was still buoyed by bets of higher interest rates, following the biggest rally in two weeks on Monday.
A stronger greenback makes dollar-denominated oil more expensive for buyers holding other currencies, reducing demand for the commodity.
"Inflationary headwinds could still cause global economic turbulence in coming months," said Tamas Varga of oil broker PVM, but added that "China's gradual COVID opening is a tentatively positive development".
In China, more cities are easing COVID-19-related curbs, prompting expectations of increased demand in the world's top oil importer.
The country is set to announce a further relaxation of some of the world's toughest COVID curbs as early as Wednesday, sources said.
The market was weighing the production impact of a price cap of $60 per barrel on Russian crude imposed by the Group of Seven (G7), the European Union and Australia, contributing to market volatility.
The price cap adds to the disruption caused by the EU's embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and Britain.
The embargo is likely to tighten market supply as the EU has to source crude from elsewhere, Commerzbank analyst Carsten Fritsch said in a note.
Russia has declared its intention not to sell oil to anyone who signs up to the price cap.
The threat of losing insurance will limit Russia's access to the tanker market and could reduce crude exports by 500,000 barrels per day from February levels, said analysts from Rystad Energy in a note.
Russia's January-November oil and gas condensate production rose 2.2% from a year earlier to 488 million tonnes, according to Deputy Prime Minister Alexander Novak, who expects a slight output decline following the latest sanctions.
Islamabad police register case of Arshad Sharif's murder on SC's orders
The federal government is complainant in the case
ISLAMABAD: The Islamabad police on Tuesday lodged a first information report (FIR) against the gruesome murder of Arshad Sharif after almost a month's delay on the orders of the Supreme Court of Pakistan.
Sharif was brutally killed in Kenya.
The case has been registered against three people -- Waqar Ahmed, Khurram Ahmed, and Tariq Ahmed Wasi -- at the Islamabad's Ramna Police Station on the complaint of the federal government.
The development comes hours after the court ordered the government to register an FIR of the journalist's murder and submit the report of the fact-finding committee as well.
Chief Justice Umar Ata Bandial — heading a five-member bench including Justice Ijaz Ul Ahsan, Justice Jamal Khan Mandokhail, Justice Mazahar Ali Akbar Naqvi, and Justice Muhammad Ali Mazhar — issued the directives earlier today during the hearing of the suo motu notice of the journalist's killing.
“The journalist community in the country and the public at large are deeply distressed and concerned about the death of the senior journalist and are seeking the court's scrutiny of the matter,” the apex court said as it announced the suo motu action.
The Pakistan Tehreek-e-Insaf (PTI) and other political parties have constantly been asking the Supreme Court to look into Sharif's death.
Prime Minister Shehbaz has also written to the CJP for the formation of a judicial commission to investigate Sharif's killing. A demand was also made by the slain journalist's mother.
Sharif was killed on the night of October 23 in Kenya by the Kenyan GSU officers in mysterious circumstances as he was being driven to Nairobi.
The Kenyan police have claimed that the journalist was shot in a case of mistaken identity, however, the details that emerged later contradicted the claims.
China's Xi to visit Saudi Arabia from Wednesday, attend summit with GCC rulers
China purchases roughly a quarter of Saudi oil exports
Chinese President Xi Jinping will make a three-day visit to Saudi Arabia this week, meeting the king and de facto ruler of the world’s biggest oil exporter, Saudi state media reported on Tuesday.
Xi, head of the world’s number-two economy, will also attend a summit with rulers from the six-member Gulf Cooperation Council and talks with leaders from elsewhere in the Middle East, strengthening China’s growing ties with the region.
The Chinese leader will arrive on Wednesday, the official Saudi Press Agency said, for only his third trip abroad since the coronavirus pandemic began and his first to Saudi Arabia since 2016.
His bilateral summit, chaired by King Salman and attended by Crown Prince Mohammed bin Salman, the kingdom’s de facto ruler, comes after Xi secured a historic third term in November.
Xi’s visit reflects “much deeper relations developed in recent years” between the two countries, said Ali Shihabi, a Saudi analyst close to the government.
“As the largest importer of Saudi oil, China is a critically important partner and military relations have been developing strongly,” he said, adding that he expected “a number of agreements to be signed”.
The visit also coincides with heightened tensions between Saudi Arabia and the United States over issues ranging from energy policy to regional security and human rights.
The latest blow to that decades-old partnership came in October when the OPEC+ oil bloc agreed to cut production by two million barrels a day, a move the White House said amounted to “aligning with Russia” on the war in Ukraine.
On Sunday, OPEC+ opted to keep those cuts in place.
Shihabi said the timing was “a coincidence and not directed at the US”.
In from the cold
Xi last visited Saudi Arabia in 2016, the year before Prince Mohammed became first in line to the throne, on a trip that also featured stops in Egypt and Saudi rival Iran.
Prince Mohammed visited China and met with Xi on an Asia tour in 2019, the year before the coronavirus pandemic took hold.
This week’s meeting will cap a year in which Saudi Arabia, and specifically Prince Mohammed, have come in from the cold following the fierce international outcry that erupted over the 2018 killing of Saudi journalist Jamal Khashoggi inside the kingdom’s Istanbul consulate.
This year, Prince Mohammed has already welcomed Britain’s then-prime minister Boris Johnson, French President Emmanuel Macron and US President Joe Biden, who greeted the crown prince with a fist bump in Jeddah, reversing a 2019 pledge to make Saudi Arabia “a pariah”.
China purchases roughly a quarter of Saudi oil exports.
The oil market was thrown into turmoil with Russia’s invasion of Ukraine in February.
The G7 and EU on Friday agreed a $60-per-barrel price cap on Russian oil in an attempt to deny the Kremlin revenues to keep up the war, stoking further uncertainty.
“Oil will probably be higher up the agenda than it was when Biden visited,” said Torbjorn Soltvedt of the risk intelligence firm Verisk Maplecroft.
“These are the two most important players in the oil market — Saudi on the supply side and then China on the demand side.”
Beyond energy, analysts say leaders from the two countries are expected to discuss potential deals that could see Chinese firms become more deeply involved in mega-projects that are central to Prince Mohammed’s vision of diversifying the Saudi economy away from oil.
Those projects include a futuristic $500 billion megacity known as NEOM and a so-called cognitive city that will depend heavily on facial recognition and surveillance technology.
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