Oil

Chancellor Kwasi Kwarteng – keen to sharpen the City’s competitive edge, we’re told – wants to remove the legislative cap, imported from Brussels in 2014, that limits bankers’ bonuses to 100 per cent of their base salary, or up to 200 per cent with shareholder approval. That raises interesting questions. Was the cap a good idea in the first place? If not, why wasn’t it binned as soon as we left the EU? Is now the ideal moment to do so? And are bankers still a breed of greedy bastards? The answer to the first question is certainly not. This column called the cap a ‘boneheaded’ measure that would merely

How outraged should we be that Saudi Aramco has reported a world-record quarterly profit of $48 billion, representing a giant bonus from the global oil price spike provoked by the war in Ukraine? Well, that’s how the cookie crumbles when you’re sitting on oil reserves so abundant and so easily accessible that your marginal cost of producing the next barrel is less than $10 when the market price has just doubled to $130 – as it did in March, before settling back to around $95 today. And you might think that this recent price retreat is likely to continue as oil demand begins to shrink with the onset of recession

It will drain Vladimir Putin of funds for his war machine. It will bring down inflation. And it might even be enough to stop the global economy from tipping into recession. As President Macron put forward his wheeze for solving the energy crisis this week, he no doubt had plenty of persuasive arguments. He appears to have brought the rest of the G7 on board for his plan for a global cap on the price of oil. There is just one problem. Like most price controls, it is not going to work. Indeed. It will only make the crisis worse. Of course, everyone can see where Macron is coming from.

Stock markets are tumbling, but given the tide of economic news, that’s hardly surprising. The S&P 500 index dived into bear market territory – 20 per cent down since January – after a rise in US inflation for May. Our own FTSE indices reacted badly to an unexpected 0.3 per cent drop in UK GDP for April. Interest rate rises predicted on both sides of the pond this week will make investors jumpier still. So expect further falls in markets that have been driven by weight of cheap money to stay unnaturally high despite an increasingly bleak backdrop. And wait for the turn. When might that be? When investors think

After the Jubilee dream of a lovely lost Britain, back to reality with a face-slap: the reality of the £8 pint of beer, the £8-plus gallon of diesel and the death throes of a Downing Street regime that has no discernible answers to the cost-of-living crisis. All of which takes me back to some questions I’ve been pondering for a while: whether the UK faces higher inflation and a deeper downturn than the rest of the western world, if so why, and who we should blame. By way of caveat, let’s recall the shifting pattern of Covid statistics over time: just because the UK topped April’s G7 inflation table –

When Putin’s tanks rolled into Ukraine on 24 February there was a conceit that this might be the first war which the West could fight – and win – by sanctions alone. The EU’s latest efforts to stop importing Russian oil show just what a folly this was. Donations of military equipment to Ukraine are certainly helping to keep Russian forces at bay, but economic sanctions? That is another story. Europe’s dependence on Russian oil and gas is the product of years of ill-conceived energy policy Sanctions may be helping to lower living standards among Russian citizens, but they are still a long, long way from cutting off the lifeblood

BP’s ‘underlying’ first-quarter profit of $6.2 billion, compared with $2.6 billion in the first quarter of 2021, was a direct reflection of the surge in global energy prices. Coming 48 hours before polling day, it also looked like a gift-wrapped on-time delivery for Sir Keir Starmer and his claim that a windfall tax on ‘excess’ profits of North Sea oil and gas extractors would knock £600 off the energy bills of ‘those who need it most’. Perhaps anticipating the BP announcement, Rishi Sunak last week seemed to trim his opposition to a windfall tax, telling Mumsnet ‘of course that’s something I would look at’ if energy companies fail to invest

When sanctions were imposed on Russia there was a big exception: Europe was still buying and paying for oil – leading to a bizarre situation. The West was doing everything it could to help Ukraine while still sending Putin hundreds of millions of dollars a day. But how much was that revenue worth to the Kremlin? As sanctions began to hit Russia, the price of Brent crude (the oil benchmark) soared to $130 a barrel, the highest since the 2008 financial crisis: an increase of over 90 per cent. It’s fallen since then but today it’s still sitting between $107 and $115 dollars a barrel – well above where it had been weeks

I’ll approach the hot topic of a ban on Russian oil by way of personal anecdote: I’ve never been a soldier or a spook but I have twice found myself ensconced in secure Nato conference rooms. The first occasion was a group visit to the military alliance’s Brussels headquarters 42 years ago, when an unsmiling American defence expert introduced us to the concept of ‘Mutually Assured Destruction’ – whose acronym was the key to the tense but relatively stable Cold War stand-off. In simple terms, it would have been utter madness for either side to fire the first nuclear missile. The odds on that happening by Kremlin order or error

Is Saudi Arabia shunning Washington? Mohammed bin Salman has reportedly been refusing to phone Joe Biden, who wants the kingdom to turn on its oil taps as the West desperately seeks alternatives to the Russian energy market.  Riyadh – the world’s largest oil exporter – has so far failed to accommodate Washington’s pleas. Ahead of the Russian invasion in mid-February, the US asked the Opec+ cartel – of which Saudi Arabia is the most important member – to produce more oil to slow the already rising prices. Opec+ stood firm, and said they would increase production by 400,000 barrels a day in April, a rise agreed before the threat of a

Are we heading for a 1970s-style inflationary spiral? Not according to Catherine Mann, former chief economist at Citigroup, who argues that we are now less exposed to fluctuations in oil prices than we were then. She also makes the case that businesses are more reluctant to put up prices and that the link between inflation and wages is weaker than it was in the years of high inflation when wages often rose three or four times a year and prices in the shops were jacked up more frequently than now. Her opinion matters because she is the latest recruit to the Bank of England’s Monetary Policy Committee, which is charged