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Goldman Sachs: 35% Chance of Recession This Year

Goldman Sachs: 35% Chance of Recession This Year

The war in Ukraine, rising inflation, increasing interest rates
= higher chance of recession this year

Europe’s dependency on Russian energy has increased the chances of the area entering a recession this year, as rising prices forces people to cut back on spending. The United States is more protected against the rise in oil and gas costs than other countries, but it is not immune.

Goldman Sachs has lowered its growth prediction for the United States in 2022. During the first three months of the year, it has seen little to no growth.

The likelihood of a recession in the United States during the next year has grown to as high as 35 percent, according to Goldman’s analysts, lead by Jan Hatzius.

“Rising commodity prices will almost certainly have a negative impact on consumer spending, as households — particularly lower-income households — are forced to spend a larger share of their income on food and gas,” they told clients on Thursday.

Morning Consult and Ipsos real-time data on consumer confidence “suggest a dramatic fall in consumer confidence since Russia invaded” Ukraine, they said.

It isn’t going to be the only cause of anxiety. Financial conditions have tightened as well, perhaps making it more difficult for enterprises to obtain funds. America’s worldwide supply lines and operations will be harmed as a result of Europe’s problems.

Sanctions imposed on Moscow as a result of the invasion of Ukraine are wreaking havoc on the Russian economy. According to the Institute of International Finance, it would contract by 15% this year, which would be twice as bad as the recession that followed the global financial crisis.

However, because Russia is a significant supplier of oil and gas, as well as important agricultural products and industrial metals, the consequences of its economic collapse and isolation would be felt worldwide. Europe is the most vulnerable, as it is heavily reliant on Russia for energy, but the rise in energy and food costs will be felt across the Atlantic as well.

A US recession is not a certain conclusion. Wells Fargo predicted a recession in Europe but not in the United States on Thursday. Treasury Secretary Janet Yellen said in an interview with CNBC on Thursday that the labor market is strong and that American households are in “excellent financial position.”

“Inflation is a concern that we need to address,” Yellen added, “but I don’t predict a recession in the United States.”

Goldman Sachs experts aren’t the only ones who see hazards increasing.

In a recent CNN Business piece, Mark Zandi, the chief economist of Moody’s Analytics, said, “There is a growing fear that increasing inflation could overcome the nation’s solid economic recovery, ending in a recession.”

The Federal Reserve will be under even more pressure as it considers its next step as a result of this. As part of its effort to bring inflation under control, the central bank plans to begin hiking interest rates this month. However, if it withdraws assistance for the economy too quickly, a recession may be more likely.

Despite the conflict in Ukraine, the European Central Bank announced on Thursday that it will restrict the money taps sooner than planned. Investors were taken aback by the hawkish tone.

“The US is likely to outperform Europe, which is likely to slip into recession, owing to the American economy’s greater internal resilience and agility,” the economist Mohamed El-Erian wrote in a column published this week. “However, the US Federal Reserve’s failure to respond to inflation in a timely manner last year — a historic policy mistake — will undermine policy flexibility.”

Investor Uncertainty

As the fight continues, investors will be wary of high inflation and weaker economic growth, as well as uncertainty about how much central banks can truly do to interfere.

Wells Fargo has decreased its S&P 500 year-end projection for 2022. It believes the index will continue to increase rapidly from present levels. However, the bank noted that war-related economic circumstances are expected to hurt corporate profitability, putting pressure on equities.

Following the invasion of Ukraine, Goldman Sachs (GS) and JPMorgan Chase (JPM) became the first big Western banks to pull out of Russia on Thursday. There will very certainly be more, at a cost of tens of billions of dollars.

Goldman is “winding down its operations in Russia in accordance with regulatory and licencing requirements,” according to the latest news. JPMorgan Chase followed suit with a similar announcement.

The withdrawals come as Western banks scrambled to assess their exposure to Russia following President Vladimir Putin’s invasion of Ukraine, which triggered harsh sanctions against the country’s financial system, including its central bank and key commercial lenders, VTB and Sberbank.

They also come after Western corporations have fled practically every other area of Russia’s economy, and ratings agencies have predicted a Russian debt default.

Remember that untangling Russia from the global financial system would be difficult, and the full scope of the consequences is still unknown.

According to the Bank for International Settlements, which banned Russia’s membership on Thursday, Russian firms owe more than $121 billion to international banks. Total claims against European banks amount to more than $84 billion. The countries with the most exposure include France, Italy, and Austria. $14.7 billion is owing to US banks.

Banks are also concerned about their Russian staff and what Moscow may do next.

Dmitry Peskov, a Kremlin spokesman, claimed Thursday that Russia’s economic condition is “totally unique,” and accused the West of starting an “economic war.”

Meanwhile, Putin has backed efforts to acquire assets left behind by Western corporations that have halted or abandoned operations in the country.

Meanwhile, In China…

The future of big Chinese firms traded on Wall Street has been put into question once again, sending prices plummeting.

The Securities and Exchange Commission of the United States said on Thursday that five Chinese businesses may be delisted from American stock exchanges for failing to fulfill auditing criteria.

Yum China Holdings, ACM Research, BeiGene Biotech, Zai Lab, and Hutchmed Pharmaceuticals were among the companies on the list.

Big tech stocks, on the other hand, were down. Investors are anxious that the US agency may add more businesses to the list.

Alibaba fell more than 5% in Hong Kong on Friday. On Thursday, its shares on the New York Stock Exchange fell roughly 8%. After finishing 16 percent down on Wall Street, JD.com dropped 11% in Hong Kong. Following a 6 percent decrease in the United States, Baidu was down about 5%.

Other corporations with dual listings in the US and Hong Kong saw their stock prices plummet as well.

Goldman Sachs: 35% Chance of Recession This Year

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Dow Bounces Back as Commodities Cool

Dow Bounces Back as Commodities Cool

Stocks rose sharply on Wednesday as lately soaring commodity prices eased,
despite the ongoing conflict in Ukraine.

The Dow Jones Industrial Average increased by 620 points, or 1.9%. The S&P 500 rose roughly 2%, while the Nasdaq Composite jumped 2.3 percent.

The rebound occurred after the market dropped for a fourth day on Tuesday, with the S&P 500 and Dow both dropping deeper into correction territory, and the Nasdaq Composite adding to its bear market losses.

This market shift is due to a drop in commodity prices, which has recently frightened stocks into beating a hasty retreat. During the battle in Ukraine, energy and agriculture items have soared, and some metals have seen significant advances.

In some cases the moves on some commodities (I’m looking at you Nickel) was so drastic that they halted trading. (When was the last time you saw that happening with commodities??)

The U.S. benchmark, West Texas Intermediate crude, was last down 4% to around $118, while Brent crude, the international standard, was down 3.5 percent to approximately $123.

Wheat futures fell 6.3 percent to $1,206 a bushel, while palladium continued to rise, jumping 3.8 percent to $3,082 per ounce. On Wednesday, silver, copper, and platinum all fell in price.

“Changes in commodity prices, particularly oil, continue to influence the equities market,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “Trading will remain erratic, rallying when prices fall, but the likelihood of very high oil and non-energy prices puts a shadow over the outlook for economic activity and the stock market.”

On Wednesday, consumer-related companies soared after falling on expectations that increasing gas costs would stifle consumer spending. Nike gained 6%, while Starbucks gained 3.8 percent.

On Wednesday, airlines and cruise lines were also up. Carnival Corporation is up more than 7%, and United Airlines is up 7.2 percent.

Investors rotated out of bonds after huddling in fixed income for safety during the Ukraine conflict, causing Treasury prices to fall and yields to rise. The yield on the benchmark 10-year note increased by 3.7 basis points to 1.91 percent. A basis point is equal to 0.001% of a percentage.

As yields increased, bank stocks soared. PNC Financial was up 4%, while Wells Fargo was up more than 5%. Goldman Sachs and JPMorgan Chase were both up 3%.

After President Joe Biden declared an embargo on Russian fossil imports, including oil, in reaction to the country’s invasion of Ukraine, energy markets fell on Wednesday after a solid day Tuesday.

Pepsico’s stock jumped more than 1% after the soft drink giant said that it will stop selling its products in Russia, while it will continue to offer snacks and basics like infant formula. Aside from that, shares of dating service Bumble’s stock rose 37% after the company announced a profit and growth forecast that exceeded Wall Street’s expectations.

After a day of choppy trading, the major averages all ended the day down. The Dow Jones Industrial Average threw up a 585-point gain to close the day 184 points down, deepening its decline. The S&P 500 index fell 0.7 percent, putting it in correction territory. After entering bear market territory on Monday, the Nasdaq Composite dropped 0.2 percent.

Although it is unclear if the Federal Reserve will be able to achieve a soft economic landing, Ross Mayfield, an investment strategy analyst at Baird, believes the United States will be able to escape a recession.

“The labour market, consumer, and aggregate business sector strength in the United States should function as the weight to keep us out of recession in the short term,” he told CNBC. “Overall, volatility is expected to endure; there is a broad range of outcomes in Ukraine; but, the fundamentals of the US economy remain sound, especially if the Fed can raise rates without disrupting demand.”

Morgan Stanley thinks that the recent nickel jump has increased the cost of an electric vehicle’s input by $1,000.

The Labor Department said Wednesday that job opportunities outweighed available employees by roughly 5 million in January.

According to the Job Openings and Labor Turnover Survey, total vacancies actually decreased somewhat, falling to 11.26 million after a significant upward adjustment in December’s statistics.

Finally a bit of a relief to the recent skyrocketing of commodity prices…maybe these price decreases will eventually trickle down to the consumer.

Here’s hoping…

 

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Dow Bounces Back as Commodities Cool

S&P Rebounds & Oil Increases as Investors Jump Back Into The Markets

S&P Rebounds & Oil Increases as Investors Jump Back Into The Markets

Following the S&P 500’s worst day since October 2020, stocks fluctuated dramatically on Tuesday, as investors remained cautious due to continuing geopolitical uncertainties and rising commodities prices.

After surging 586 points to its session high, the Dow Jones Industrial Average recently traded up 100 points. After soaring as high as 1.8 percent, the S&P 500 gained 0.2 percent. After sliding into bear market territory the previous day, the Nasdaq Composite gained around 0.5 percent.

Investors are still assessing rising commodity prices and sluggish economic development as a result of Russia’s invasion of Ukraine. Rising costs for oil, gasoline, natural gas, and precious metals such as nickel and palladium are raising fears of a global recession as inflation rises.

On Tuesday, WTI crude oil soared as much as 7% to $128 a barrel after President Joe Biden said that the US will restrict Russian oil imports. Oil prices soared to a 13-year high of $130 a barrel to start the week.

Due to rising oil prices, the energy industry was a bright spot on Tuesday. Chevron and Exxon both saw their stock prices rise by 5% and 2.5 percent, respectively. Plus, when oil prices continued to increase, investors’ attention switched to alternate energy sources, solar and other renewable energy companies rose. Enphase Energy and SunPower both increased by 14% and 21%, respectively.

Airlines and cruise lines made strides as well. Delta Air Lines increased by 6%, while American Airlines increased by more than 9%. Southwest Airlines and United Airlines were both up 7%. Norwegian Cruise Line’s stock also increased by more than 7%.

Tuesday’s “bounce was a small victory that the low may be in,” said Jim Paulsen, chief investment strategist for the Leuthold Group. “However, it may have to be tested again later today or later this week,” he added.

Brent crude, the international benchmark, hit a high of $139.13 per barrel overnight Sunday before settling at $123.21 per barrel, its highest level since July 2008. Brent was recently trading at $126, up 2%.

Consumers’ wallets are already feeling the effects of the crude price increase. According to AAA, the national average for a gallon of regular gas rose to $4.173 on Tuesday. The previous high was $4.114, which was set in July 2008 and was not adjusted for inflation.

Other commodity prices have also begun to rise again. On Tuesday, nickel prices briefly surpassed $100,000 per metric tonne, setting a new high.

Palladium futures, a critical metal in the electronics industry, gained another 5% to $3.04 an ounce, while platinum futures jumped over 3% to $1,149.70 an ounce.

“Perhaps there’s some relief that only the US is immediately shutting off Russian oil/gas, whilst the UK and EU are implementing their plans over several quarters. Furthermore, while the majority narrative on Russia/Ukraine is pessimistic, the components for a ceasefire are coming together,” stated Vital Knowledge founder Adam Crisafulli.

Treasury rates were also considerably higher, with the benchmark 10-year note rising almost 10 basis points to 1.85 percent as investors sold Treasuries amid rising inflation worries. Yields move in the opposite direction of price.

The move followed a sharp sell-off on Wall Street, with the S&P 500 dropping about 3% for its worst day since October 2020. The blue-chip Dow fell over 800 points for the sixth time in six sessions, while the Nasdaq Composite, which includes many of the market’s top tech firms, fell 3.6 percent, sliding into bear market territory, down 20% from its November peak.

Investors remained on the lookout for new developments in the escalating global tensions. Ukraine claims that Moscow is attempting to exploit the cease-fire agreement by allowing only Ukrainian citizens to flee to Russia and Belarus.

Shell has apologized for buying cheap Russian oil and said that it will sell all of its hydrocarbon interests in Russia. Russia has warned that if Western nations impose an embargo on petroleum exports, prices may rise to $300 per barrel. Shell’s stock increased by 3% on Tuesday.

With rising inflation and the war in the Ukraine, costs and tensions continue to escalate.

 

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S&P Rebounds & Oil Increases as Investors Jump Back Into The Markets

Job Creation Smashes Expectations

Job Creation Smashes Expectations

Americans return to work,
destroying expectations and indicating the economy is growing stronger.

In February, the US economy added 678,000 jobs, beating experts’ projections.

It was the most productive month for employment creation since July. According to the Bureau of Labor Statistics, the country still needs to add 2.1 million jobs to get back to previous levels in February 2020 level in order to regain all of the jobs lost during the epidemic.

The consensus forecast for the report — 400,000 jobs – was once again off the mark. During the pandemic, the labour market’s erratic changes from month to month made forecasting virtually impossible.

The jobless rate fell to 3.8 percent, which was better than predicted and marked a new post-pandemic low.

The leisure and hospitality industry, which was impacted the most by Covid-related losses, added 179,000 jobs back. But to get back to pre-pandemic levels, the sector will require additional 1.5 million employment.

The majority of the jobs produced in February were in restaurants and bars, as Americans began to mingle more once the Omicron surge receded.

Job growth was particularly robust in professional services, health care, and construction.

Wages were unchanged in February, following a period of rapid wage rise as firms competed for talent and fought to keep current employees despite the persistent labour shortage.

Last month, average hourly wages were $31.58 per hour, barely one penny more than in January, bucking the recent trend.

That’s excellent news for those concerned that growing wages may exacerbate already-high inflation, such as the Federal Reserve.

The robust data released on Friday, which included a new Covid-era low for the unemployment rate, means the Fed’s expected interest rate hike later this month is all but guaranteed.

(We’ve heard that before.)

But a stronger than expected jobs report shows that people are returning to work and that the economy is strengthening.

Job Creation Smashes Expectations

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Energy Prices Spike: Natural Gas +60%, Oil The Highest Since 2014

Energy Prices Spike: Natural Gas +60%, Oil The Highest Since 2014

As the Russian military rolls closer to Kyiv,
crude and natural gas spike to eye watering levels as the world fears a supply shock.

On Wednesday, as Russia’s increasing military assault in Ukraine raised fears of a supply shock, global crude oil prices soared to more than $110 per barrel and natural gas prices soared to a new high in Europe.

Brent oil futures, the worldwide benchmark, increased by over 9% to $113.65 per barrel, the highest since 2014. Oil futures in the United States rose more than 8% to $112.25 a barrel. Wholesale natural gas prices in Europe soared by 60% to a record high of €194 ($215) per megawatt hour.

This is more than double what it was on Friday.

Louise Dickson, senior oil market analyst at Rystad Energy, stated, “The market fear is here. The first higher price reaction following the commencement of the crisis in Ukraine six days ago is just becoming stronger.”

Western sanctions imposed in the aftermath of the invasion of Ukraine have not directly affected Russia’s energy resources. However, if Russia continues its offensive, the US and Europe may be forced to play this major card.

On Wednesday, White House press secretary Jen Psaki told CNN, “It’s still on the table, it’s not off the table.”

President Joe Biden, on the other hand, does not want to “topple the global oil markets or the global marketplace, or harm the American people more with increased energy and gas costs,” according to her.

Moscow is already finding it more difficult to sell supplies of Russian crude oil to merchants and refineries concerned about getting caught in the crossfire of financial-system penalties. Tanker operators are apprehensive of the threat to ships in the Black Sea, and large international oil firms are abandoning operations there.

brent crude oil price

According to Commerzbank analysts, Russia’s hallmark Urals oil grade was selling at a $18 per barrel discount to Brent crude on Wednesday as customers ignored Russian supplies. According to the researchers, the discount hasn’t been this large since the Soviet Union’s demise.

“Oil price differentials indicate a clear reticence to buy Russian crude,” said Shin Kim, head of oil supply and production research at S&P Global Commodity Insights. “There remains to be [a] danger of new sanctions that might indirectly or directly damage oil purchases or supplies.”

Despite efforts by the West to calm markets, the enormous price increases risk stoking already high global inflation. The United States and 30 other International Energy Agency members approved the release of 60 million barrels of emergency oil reserves on Tuesday, enough to replace about two weeks of Russian oil supplies.

“In the end, this will not be enough to calm the market. It’s a band-aid approach, to be sure.” RBC Capital Markets managing director of global energy strategy Michael Tran said.

Fuel will become more costly throughout the world as a result of the massive price hikes, raising the cost of travel and commuting. They will also raise inflation and may slow economic development, making choices by global central banks to combat increasing prices more difficult.

Investors fear that as a result of the crisis in Ukraine — a critical pipeline route, more Western sanctions that might target Russia’s economy, or retaliation by Moscow — Russian energy exports could be reduced or terminated.

“Buyer interest in Russian oil is dwindling,” according to Commerzbank analysts. “An interruption of Russian oil shipments looks to be increasingly priced in,” they noted.

According to Alex Froley, a market analyst with Independent Commodity Intelligence Services, Russian natural gas is still flowing to Europe. However, he stated that there is “a lot of ambiguity and fear about how things may evolve.”

According to Froley, the United Kingdom has blocked Russian-owned and controlled ships from entering British ports, potentially disrupting liquefied natural gas supplies from Russia, which account for between 3% and 4% of the country’s gas supply.

“Traders may be apprehensive if continental Europe follows suit and imposes a similar embargo on Russian ships,” he warned.

OPEC Sitting On Their Hands

On Wednesday, the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia, decided to adhere to their plan of gradually adding oil to the market, despite demand from developed nations to do more to lower prices.

In a statement, the Saudi-led group OPEC said it will boost supply by 400,000 barrels per day in April, a small fraction of Russia’s 10 million barrels per day crude oil output.

“Recent oil market fundamentals and consensus on its forecast pointed to a well-balanced market, and current volatility is triggered by current geopolitical developments rather than changes in market fundamentals,” OPEC stated.

More Iranian barrels might be put on the market as a result of nuclear talks between Iran and the US, but this would not help the situation in the short term.

Toxic Investment: The Exodus From Russia

Many of the world’s largest oil firms are pulling out of Russia or deferring new investments in exploration and development projects.
ExxonMobil said on Tuesday that it was abandoning its last project in Russia, Sakhalin-1, which was characterized as “one of Russia’s largest single international direct investments.”

The project was operated by an Exxon affiliate, and the company’s decision to exit Russia after more than 25 years would mark the end of the company’s involvement in the country.

BP, Shell, and Norway’s Equinor all said this week that they plan to quit their Russian operations, which would cost them billions of dollars. TotalEnergies, a French energy company, has ceased fresh investment.

Energy Prices Spike Natural Gas 60 Oil The Highest Since 2014

 

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Retaliation: Will Russia Strike Back & Weaponize Oil?

Retaliation: Will Russia Strike Back & Weaponize Oil?

Russia is on the verge of a full-fledged financial crisis
– but will it strike back against sanctions?

Sanctions imposed by the West have driven the ruble to new lows, shut down Moscow’s stock exchange, and rendered Russian assets poisonous on the global arena.

The White House has even targeted Vladimir Putin’s financial fortress, blocking access to at least a portion of Russia’s $630 billion rainy-day reserve, which was created to cushion the economic impact of this catastrophe.

The key issue now is how Putin, who is now facing Western sanctions on his own riches, will respond in what is quickly developing into economic warfare.

There are rising fears that Putin would react by using crude oil as well as natural gas as a weapon against the West.

In a study released Monday, Louise Dickson, senior oil market analyst at Rystad Energy, said, “Russia’s energy supplies are very much at danger, either owing to being withheld by Russia as a weapon or taken off the market due to sanctions.”

Oil production was already falling short of demand throughout the world.

If Russia, the world’s second-largest oil supplier, deliberately held back supplies, oil prices would undoubtedly increase, causing a devastating blow to consumers throughout the world.

JPMorgan has predicted that if Russia’s exports are halved, oil prices will rise to $150 per barrel. That would represent an almost 41% gain from the current high of about $106 per barrel.

oil production

This jump would also result in a significant increase in petrol costs. According to AAA, the national average cost regular gasoline in the United States is currently $3.61 a gallon. This is an increase of 8 cents in a week and 25 cents in a month.

Even though the US consumes relatively little Russian oil — imports from Russia totaled barely 90,000 barrels per day in December — this is still a global and linked economy.

Supply shocks in one section of the world can have a global influence on pricing.

“It’s a wild card whether Russia would really impede those flows to attempt to inflict pain through commodities,” said Ryan Fitzmaurice, Rabobank’s energy strategist. “If there are genuine supply problems, it will be the catalyst for significant price rises.”

To be clear, there is no indication that Russia is cutting off the world’s oil supply at this time.

And, in the aim of reducing market damage, the West has gone to great lengths to exempt Russia’s energy sector from sanctions. Putin may determine that this is one weapon that should be avoided.

Russia Needs the Cash Generated from Oil Sales

It wasn’t long ago that it was thought that Putin would use oil as a weapon.

Such a plan runs the danger of further enraging the rest of the globe. Worse, restricting oil exports would jeopardize Russia’s petro-central economy. Between 2011 and 2020, oil and natural gas accounted for around 43% of the Russian government’s yearly income.

Inflation will be worse than expected this year, according to Goldman Sachs.

The Russia-Ukraine issue, on the other hand, has swiftly intensified, resulting in the biggest schism with the West since the Cold War.

Putin’s harsh posture and words have astonished onlookers, leaving some to doubt his mental soundness and raise fears about how he would respond to the new sanctions.

Putin raised eyebrows by putting his nuclear troops on high alert over the weekend. On Monday, he slammed sanctions imposed by the “empire of lies,” as he put it.

Putin is also under pressure from the oligarchs who back him up. In recent days, Russian billionaires Mikhail Fridman and Oleg Deripaska defied the Kremlin and called for an end to the conflict.

Natasha Kaneva was encouraged by the fact that Russia had a long history of supplying oil reliably, even during the Cold War, and saw minimal risk of the nation weaponizing its oil exports. However, Kaneva, JPMorgan’s head of global commodities research, is no longer so sure.

“I grew quite anxious after listening to Putin’s address,” Kaneva told CNN last week, referring to the Russian president’s hour-long speech on February 21 in which he laid out a laundry list of grievances with the West. “It was a turning point for me. Everything seemed to have altered.”

Investors, according to the JPMorgan executive, are underestimating the danger that Putin will weaponize oil supply.

“There is no need for any market disturbance,” Kaneva added. “There are no shock absorbers in our vehicle. The price will react in a nonlinear manner.”

Putin is well aware of all of this.

The fact that high fuel prices are profoundly unpopular in the US, leading to the worst inflation in nearly 40 years, isn’t helping matters.

“Putin might strive to inflict severe pain on Western nations,” RBC Capital Markets’ Helima Croft said in a note to clients on Sunday, “and commodities prices may feel the effect of his countermeasures.”

Mike Sommers, CEO of the American Petroleum Institute, an oil-and-gas trade group, did not exclude the possibility of Russia restricting oil shipments.

In a phone interview with CNN last week, Sommers said, “I do believe it’s an ongoing issue, particularly as the West responds to Russia’s aggressive conduct. If he decides to shut off supply, we will be concerned. In this tumultuous political context, no matter what he does, the United States will continue to create.”

The White House Tells Putin NOT to Weaponize Oil

(But does telling someone NOT to do something make them more likely to do that very thing?)

Putin does not need to fully shut down the taps to punish the West. Oil markets are so tight that even a little reduction in Russian supplies might have a significant influence on pricing.

“Even if Russia decreased supplies by 10% to 20%, the price reaction would compensate Russia for the supply loss,” Fitzmaurice of Rabobank said.

The White House advised Putin against taking any dramatic measures to protect his country’s oil exports even before the invasion began.

“It would be a tremendous mistake if Putin decided to weaponize his energy supply,” Daleep Singh, the US deputy national security advisor, said on CNBC.

As a consumer of energy, Russia is “very reliant” on the West, according to a Biden Administration official.

“For President Putin, this is a long-term weakness. If he weaponizes energy supplies, it would simply hasten Europe and the West’s diversification away from Russian energy,” Singh said, calling it a “huge miscalculation.”

A huge miscalculation it may be, but with European & Western economies still incredibly reliant on oil, any price increases will cause immediate and far-reaching economic pain.

And with Putin backed into a corner, who knows where this will lead.

But there looks to be no relief in sight when it comes to rising costs and supply chain issues.

Retaliation Will Russia Strike Back & Weaponize Oil

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