Day: February 11, 2022

S&P Global Ratings expects the US Federal Reserve to raise interest rates six times this year starting in March, according to a report released Thursday.

 

The global rating agency forecasts another five rate hikes in total during 2023 and 2024 and anticipates the central bank to begin shrinking its balance sheet early in 2023.

 

The agency said it also expects that the American economy will continue to grow even as the Fed tightens its monetary policy.

 

“We also assume that higher rates will not destabilize the economy due to heightened market volatility,” the report said.

 

It estimates the US economy to grow 3.9% this year, despite the Fed rate hikes, adding it sees only a 10%-15% chance of a recession.

 

Markets and investors are expecting the central bank to make faster and higher rate hikes this year in order to tame record-high inflation.

 

Consumer prices in the US rose 7.5% year-on-year in January, marking the largest 12-month increase since February 1982, the Department of Labor said earlier

 

Source: Anadolu Agency

Russia on Thursday accused NATO of destabilizing post-Soviet states and a number of Western countries of militarizing Ukraine to fuel the ongoing escalation between the country and the West.

 

Following a phone call between Russian Foreign Minister Sergey Lavrov his Italian counterpart Luigi Di Maio, the Russian Foreign Ministry released a statement.

 

Lavrov argued that the de-stabilizing nature of NATO’s actions in the post-Soviet states and militarization of Ukraine led to the ongoing escalation, according to the statement.

 

For de-escalation, Kyiv should be demanded to comply with the Minsk agreements and agreements reached within the framework of the Normandy format and the Trilateral Contact Group, he told Di Maio.

 

The statement added that Russian efforts to provide long-term legal guarantees of security in Europe based on the implementation of the generally recognized principle of the indivisibility of security were also discussed by the two ministers.

 

Russia recently amassed more than 100,000 troops near Ukraine, prompting fears that the Kremlin could be planning another military offensive against its former Soviet neighbor.

 

Moscow has denied that it is preparing to invade and said its troops are there for exercises.

 

The Kremlin also issued a list of security demands from the West, including a rolling back of troop deployments to some ex-Soviet states and guarantees that Ukraine and Georgia will not join NATO.

 

Source: Anadolu Agency

The International Energy Agency (IEA) revised up its global oil demand estimates for 2022 by around 900,000 barrels per day (bpd) compared to last month’s assessment.

 

Global oil demand is estimated to reach 100.6 million bpd, increasing by 3.2 million bpd in the 2022 year on year, according to the IEA’s latest oil market report on Friday.

 

“The milder-than-expected negative impact of the Omicron variant on demand has been largely offset by additional consumption stemming from a cold snap in the US and a continued switch to oil from gas in some industrial sectors,” the agency explained.

 

It noted that the absolute level of demand increased significantly from last month’s report, due to changes to the IEA’s baseline estimates for Saudi Arabia and China, which have been revised higher on new and more complete data.

 

World oil demand in 2019 is now estimated at 100.3 million bpd, an upward revision of 770,000 bpd relative to the IEA’s previous data.

 

The agency projects that the fast spread of the omicron variant and accelerated vaccination programs are expected to increase population immunity by the end of the first quarter, while restrictions to mobility are anticipated to be more limited in the second half of the year, supporting a strong recovery in transportation demand.

 

The growth this year will be driven by the Asia Pacific region with 37.5 million bpd of demand, followed by the Americas with 31.03 million bpd and Europe with 14.4 million bpd.

 

Global supply rises in January

 

The IEA said global oil supply increased by 560,000 bpd in January to 98.7 million bpd, “with non-OPEC+ producers delivering 70% of the increase while the OPEC+ alliance continued to pump far below target levels.”

 

The Agency stressed that the group’s persistent supply shortfall, largely due to technical issues and other capacity constraints, has resulted in a loss to the market of around 800,000 bpd since the start of 2021.

 

The prevailing lower output levels versus stated monthly increases by the bloc have led to unintended consequences, with sharp draws in global inventories and supply shortfalls compounding tight oil markets, the Agency said.

 

The report noted that in January non-OPEC+ oil supply rose by 410,000 bpd, led by higher output from Canada, Ecuador, Brazil, and China. Total oil production from OPEC+ rose by a more modest 150,000 bpd after a recovery in Nigeria while higher Middle East and Russian flows were partly offset by lower output in Venezuela and Libya.

 

By the end of this year, the amount of oil lost could approach 1 billion barrels unless members with substantial spare capacity, concentrated in the Middle East, pump more to make up for those who cannot, the Agency warned, adding that “there is no sign of that happening yet.”

 

Iran production to ramp up if sanctions are lifted

 

As for Iran, which is in talks to revive the Joint Comprehensive Plan of Action (JCPOA) nuclear deal, crude production could rise towards a sustainable capacity of 3.8 million bpd, up roughly 1.3 million bpd from current levels by the end of this year, according to the IEA.

 

Iran also has about 80 million barrels of crude oil and condensate stored on tankers, the Agency said, adding that it will move to clear that overhang as quickly as possible.

 

In addition to Chinese exports, the IEA also expects Iran to re-establish supply contracts with key customers in India, Korea, Japan, Turkiye and Europe.

 

Source: Anadolu Agency