Focus: Oil and inequality

Spanish National Police officers stand at a traffic checkpoint during a partial lockdown amid the outbreak of the coronavirus disease in Madrid. (File/Reuters)
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Updated 09 October 2020
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Focus: Oil and inequality

The week that was:
Global cases of coronavirus disease (COVID-19) infections rose above 35 million, with the Northern Hemisphere particularly affected. Europe has a patchwork of restrictions in place to curb the spread of the disease, which particularly affects cross-border (air)travel. The Spanish government is discussing putting Madrid under lockdown and cordoning it off.

Amid volatility, stock markets traded more or less flat on the week with a slight uptick. By Friday morning EST, the Dow had made up for its September losses.
China was the exception as the country came roaring back from the weeklong Golden Week vacation, when more than 63o million traveled across the country. The Shanghai composite was up 1.68 percent on Friday, and the Renminbi up the most in 4.5 years on hopes of Joe Biden winning the presidential race. The offshore Renminbi climbed 0.6 percent to Rmb6.6997 against the dollar, which was in line with a weakening dollar.
The US Federal Reserve’s Federal Open Market Committee Meeting Minutes reiterated that the guidance of interest rates remaining low, near zero, would hold through 2022 or 2023. There is broad agreement that the Federal Reserve could increase its bond purchases, if necessary, but that quantitative easing could not substitute fiscal stimulus, which upped the pressure on the Trump administration and Congress to find a compromise on a stimulus package.
US first time jobless claims stubbornly remain above 800,000 coming in at 840,000 for the week ending October 2

Morgan Stanley agreed to acquire Eaton Vance Corp. for $7 billion. The company’s Chairman and CEO James Gorman told Bloomberg that this was part of an integral strategy to originate, manage and distribute capital for its individual and institutional clients. He admitted to having paid top dollar but argued that the quality of the underlying assets and know-how in Eaton Vance was worth it.
The transaction has to be seen in the context of heightened deal activity in the asset- and wealth-management sector. The total value of transactions in the space reached $19.7 billion during 1H of 2020, which is up by 47 percent compared to the previous year according to Bloomberg.
The London Stock Exchange agreed to sell Borsa Italia to Euronext for $5 billion.
Focus:
West Texas Intermediate had its best week on Hurricane Delta approaching the Gulf of Mexico, shutting in around 92 percent of oil facilities in the region. Brent’s three-months’ time spread narrowed to a contango of $1.04 from $1.41 within one week, which indicates an easing of the oversupply.
Meanwhile S&P Global Platts puts the compliance of OPEC+ (an alliance of OPEC and its 10 allies led by Russia) at 99 percent for the month of September.
Earlier this week, OPEC published its World Oil Outlook. The organization forecasts oil demand to decrease by 9 percent in 2020 and not to return to 2019 levels before 2022, by which time the call on OPEC crude will have increased to 34.3 percent, or 1.4 million barrels per day (bpd) above last year’s forecast. OPEC production currently stands at 24.4 million bpd.
OPEC also expects North American tight oil to the tune of 14.5 million bpd to return to the markets by 2024. While this is significant, it is still below the 17 million bpd predicted in 2019.
OPEC sees demand growth to resume, induced by emerging markets led by India. Peak oil demand at 109.3 million bpd is predicted in 2040, which is later than several other oil analysts assume, their predictions of the effects of energy transition being more aggressive than OPEC’s.
OPEC also believes that demand growth will halve after 2025.
As some production from non-OPEC sources will fall away due to underinvestment, OPEC expects its production to increase to 43.9 million bpd by 2045.

These figures have big ramifications for Gulf Cooperation Council economies and their budgets over the next two decades. Looking at the natural resources space, it is generally the low-cost producers who have the wherewithal amid falling demand, which is what the OPEC numbers seem to confirm.
The pandemic has taken its toll on equality both in the US and internationally. We should not underestimate the importance of waning equality on social stability, which in turn will have ramifications on post-pandemic economic recovery.
Latest Fed data showed that the wealthiest gained most from the pandemic, in a further sign of a K-shaped recovery, where the wealth profile of the affluent increases while the poor were not able to benefit from the rally in stock markets since the second quarter, leading to rising inequality. The 50 richest Americans now own more than half of the county’s wealth. The top 1 percent of Americans by wealth own 52 percent of shares.
World Bank President David Malpass warned that extreme poverty is slated to increase globally for the first time since the Asian financial crisis in the mid-1990s. The pandemic is pushing an additional 88-115 million people into extreme poverty globally in 2020, potentially rising to 150 million within 2021.
Malpass stressed that countries needed to prepare for a different, post-pandemic economy by allowing capital, labor, skills, and innovation to move into new businesses and sectors as well as reskilling and upskilling their people. That is easier said than done for the world’s poorest countries, which lack the institutional capability and funding to do so.
Where we go from here:
Next week the International Monetary Fund and World Bank will hold their autumn meetings, which will be important for triangulating the state of the global economy and the prospects for economic growth.
The Trump administration is exploring restrictions for Ant Group and Tencent on grounds that their access to banking and personal data in the US might constitute a national security risk.
US President Donald Trump is said to now favor a comprehensive stimulus bill and has instructed Secretary of the Treasury Steven Mnuchin to resume negotiations with Speaker of the House of Representatives Nancy Pelosi, who favors a comprehensive deal rather than a partial arrangement on airlines. She has so far not budged from her $2.2 trillion headline number.

— Cornelia Meyer is a Ph.D.-level economist with 30 years of experience in investment banking and industry. She is chairperson and CEO of business consultancy Meyer Resources. Twitter: @MeyerResources


Saudi authorities issue severe weather warning

Updated 2 min 44 sec ago
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Saudi authorities issue severe weather warning

  • Schools, universities in some regions switch to remote learning after storms, high winds forecast

RIYADH: Saudi authorities warned residents that most parts of the Kingdom will experience severe weather until Friday.

The National Center of Meteorology on Monday forecast moderate-to-heavy rain in the Madinah, Makkah, Jeddah, Baha and Najran regions, accompanied by high winds, hail and thunder.

Saudi Arabia’s General Directorate of Civil Defense also issued severe weather warnings accompanied by safety instructions as the country braces for heavy rainfall in coming days.

The Civil Defense said that most parts of the Kingdom will experience moderate-to-torrential thundershowers, accompanied by strong winds, until Friday.

Regions to be affected include Asir, Baha, Makkah, Madinah, Jazan, Qassim, Jouf, Hail, Tabuk, Northern Borders, Riyadh and the Eastern Province.

The General Directorate of Civil Defense has urged people to take precautions, remain indoors during stormy weather, and adhere to its instructions.

Schools in Jeddah, Makkah and Madinah regions switched to online classes through the Madrasati remote-learning platform on Monday after authorities warned of storms and possible floods this week.

The King Abdulaziz University in Jeddah, University of Jeddah, University of Taif, and Umm Al Qura University in Makkah were closed on Monday and postponed scheduled exams until further notice.

Taibah University in Madinah and Saudi Electronic University’s branch in Jeddah also suspended in-person classes on Monday, and switched to remote learning.

Jeddah Municipality implemented a field plan to deal with the weather conditions, and urged residents to show caution and stay away from flooded areas.

Bandar bin Saleh Al-Hadiya, director of the Ministry of Environment, Water and Agriculture branch in the Northern Border region, inspected dam safety in Arar ahead of the rainy situation.

Riyadh region was also hit by a heavy sandstorm accompanied by high winds on Sunday night, leaving the city skyline enveloped in dust.

On Monday, the NCM issued a red alert for dust storms in parts of the Riyadh region,  including the capital, and Al-Aflaj, Al-Sulail and Wadi Al-Dawasir governorates.


Columbia University begins suspending Israel-Hamas war protesters after ultimatum to disband camp

Protestors wave Palestinian flags on the West Lawn of Columbia University on April 29, 2024 in New York. (AFP)
Updated 24 min 18 sec ago
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Columbia University begins suspending Israel-Hamas war protesters after ultimatum to disband camp

  • At Columbia, student activists defied a 2 p.m. deadline to leave an encampment of around 120 tents on the school’s Manhattan campus
  • Israel has killed more than 34,000 Palestinians in Gaza, mostly women and children, according to the health ministry in the Hamas-run territory

NEW YORK: Colleges around the US implored pro-Palestinian student protesters to clear out tent encampments with rising levels of urgency Monday as police arrested more demonstrators at the University of Texas and Columbia University said it was beginning to suspend students who defied an ultimatum to disband the encampment there.
Dozens of law enforcement officers, many in riot gear, confronted protesters who returned to the University of Texas at Austin on Monday. They quickly arrested six demonstrators and took others into custody one by one. Officers used pepper spray after a group of protesters blocked the path of a police van carrying demonstrators who were arrested. The crowd backed away but continued to block the exit from campus. Officers then used two flash bang explosives to clear a path so the van could leave.
Republican Gov. Greg Abbott reposted on social media video of troopers arriving on the 50,000-student campus. “No encampments will be allowed,” Abbott said. Just last week, hundreds of police pushed into protesters at the university, arresting 34 people.
At Columbia, student activists defied a 2 p.m. deadline to leave an encampment of around 120 tents on the school’s Manhattan campus. Instead, hundreds of protesters marched around the quad, clapping, chanting and weaving around piles of temporary flooring and green carpeting meant for graduation ceremonies that are supposed to begin next week.
A handful of counter-demonstrators waved Israeli flags, and one held a sign reading, “Where are the anti-Hamas chants?”
The university didn’t call police to roust the demonstrators. But three hours after the deadline passed, school spokesperson Ben Chang said Columbia had begun suspending students. He didn’t indicate how many students were involved. He also didn’t say how the suspensions would be carried out or whether suspended students would be ejected from the campus.
Chang said that while the university appreciated the free speech rights of students, the encampment was a “noisy distraction” that was interfering with teaching and preparation for for final exams. The protests also made some Jewish students deeply uncomfortable, he said.
Protest organizers said they were not aware of any suspensions as of Monday evening.
The notice sent to protesters earlier Monday said if they left by the deadline and signed a form committing to abide by university policies through June 2025, they could finish the semester in good standing. If not, the letter said, they would be suspended, pending further investigation.
Early protests at Columbia sparked similar pro-Palestinian protest encampments at schools across the US Students and others have been sparring over the Israel-Hamas war and its mounting death toll. Many students are demanding their universities cut financial ties with Israel. The number of arrests at campuses nationwide is approaching 1,000. The protests have even spread to Europe, with French police removing dozens of students from the Sorbonne university after pro-Palestinian protesters occupied the main courtyard.
College classes are wrapping up for the semester, and campuses are preparing for graduation ceremonies, giving schools an extra incentive to clear encampments. The University of Southern California canceled its main graduation ceremony.
But students dug in their heels at some high-profile universities, with standoffs also continuing at Harvard, the University of Pennsylvania, Yale and others.
Protesters at Yale set up a new camp with dozens of tents Sunday, nearly a week after police arrested nearly 50 and cleared a similar one nearby. They were notified by a Yale official that they could face discipline, including suspension, and possible arrest if they continued.
Yale said in a statement Monday that while it supports peaceful protests and freedom of speech, it does not tolerate policy violations such as the encampment. School officials said that the protest is near residential colleges where many students are studying for final exams, and that permission must be granted for groups to hold events and put up structures on campus.
In a rare case, Northwestern University said it reached an agreement with students and faculty who represent the majority of protesters on its campus near Chicago. It allows peaceful demonstrations through the June 1 end of spring classes, requires removal of all tents except one for aid, and restricts the demonstration area to allow only students, faculty and staff unless the university approves otherwise.
At Brown University in Rhode Island, school President Christina H. Paxton offered protest leaders the chance to meet with officials to discuss their arguments for divestment from Israel-linked companies in exchange for ending an encampment.
In the letter to student protesters at Columbia, school officials noted that exams are beginning and graduation is upcoming.
“We urge you to remove the encampment so that we do not deprive your fellow students, their families and friends of this momentous occasion,” the letter said.
The demonstrations have led Columbia to hold remote classes. The school said in an email to students that bringing back police “at this time” would be counterproductive. The university said it will offer an alternative venue for the protests after exams and graduation.
Columbia’s handling of the protests has prompted federal complaints.
A class-action lawsuit on behalf of Jewish students alleges a breach of contract by Columbia, claiming the university failed to maintain a safe learning environment, despite policies and promises. It also challenges the move away from in-person classes and seeks quick court action requiring Columbia to provide security for the students.
Meanwhile, a legal group representing pro-Palestinian students is urging the US Department of Education’s civil rights office to investigate Columbia’s compliance with the Civil Rights Act of 1964 for how they have been treated.
A university spokesperson declined to comment on the complaints.
The plight of students who have been arrested has become a central part of protests, with the students and a growing number of faculty demanding amnesty for protesters. At issue is whether the suspensions and legal records will follow students through their adult lives.
Demonstrators on other campuses, meanwhile, said they would stand firm. Jacob Ginn, a second-year University of North Carolina sociology graduate student, said he had been protesting at the encampment for four days, including negotiations with administrators Friday.
“We are prepared for everything and we will remain here until the university meets our demands and we will remain steadfast and strong in the face of any brutality and repression that they try to attack us with,” Ginn said in reference to a potential police sweep of the encampment.
 

 


US President holds separate calls with leaders from Qatar, Egypt over Gaza ceasefire talks

US President Joe Biden speaks on the phone. (AFP file photo)
Updated 38 min 37 sec ago
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US President holds separate calls with leaders from Qatar, Egypt over Gaza ceasefire talks

  • The danger of a military escalation in Rafah was also stressed, in how it would add catastrophe to an already worsening humanitarian crisis that would impact stability and security in the region, the statement said

CAIRO: Egyptian President Abdel Fattah El-Sisi received a phone call on Monday from US President Joe Biden to discuss the latest developments in negotiations over a ceasefire in Gaza and the dangers of a military escalation in Rafah, a statement from Egypt’s presidency said.
The spokesman for the Egyptian Presidency said the call also touched on the exchange of Israeli hostages for Palestinian prisoners, a main sticking point in any comprehensive ceasefire deal between Hamas and Israel.
A Hamas delegation is currently in Cairo to deliberate on Israel’s response to a ceasefire deal.
The danger of a military escalation in Rafah was also stressed, in how it would add catastrophe to an already worsening humanitarian crisis that would impact stability and security in the region, the statement said.
“President El-Sisi stressed the necessity of full and adequate access to humanitarian aid, reviewing the intensive Egyptian efforts in this regard.
The two presidents also stressed the necessity of working to prevent the expansion of the conflict and reaffirmed the importance of the two-state solution as the means to achieve security, peace, and stability in the region,” the Egyptian presidency statement said.
Biden also held a phone call late on Monday with Qatar’s Emir Sheikh Tamim bin Hamad Al Thani, whose country has also played a role as mediator to the conflict.
“During the call, they discussed developments in the situation in the Gaza Strip and the occupied Palestinian territories, and efforts of the two countries to reach an immediate and permanent ceasefire agreement in Gaza,” Qatar’s Emiri Diwan said in a statement.

 


US says five Israeli military units committed abuses in West Bank

Updated 30 April 2024
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US says five Israeli military units committed abuses in West Bank

  • Israel has killed more than 34,000 Palestinians, according to Gaza’s Health Ministry
  • Press reports have identified a battalion called the Netzah Yehuda, composed mainly of ultra-Orthodox Jews, as being accused of abuses. It is about 1,000-strong and since 2022 has been stationed in the West Bank, which Israel has occupied since 1967

WASHINGTON: The United States has concluded that five Israeli security force units committed serious human rights violations against Palestinians in the West Bank before the Hamas attack in October, the State Department said Monday.
Israel has taken remedial measures with four of these units, making US sanctions less likely. Consultations are under way with Israel over the fifth unit, State Department deputy spokesman Vedant Patel told reporters.
He declined to identify the units, give details of the abuse, or say what measures the Israeli government had taken against them.
A US official speaking on condition of anonymity said the fifth unit is part of the army.

Children react as they flee following Israeli bombardment in Nuseirat in the central Gaza Strip on April 29, 2024, amid the ongoing conflict in the Palestinian territory between Israel and the militant group Hamas.  (AFP)

Press reports have identified a battalion called the Netzah Yehuda, composed mainly of ultra-Orthodox Jews, as being accused of abuses.
It is about 1,000-strong and since 2022 has been stationed in the West Bank, which Israel has occupied since 1967.
“After a careful process, we found five Israeli units responsible for individual incidents of gross violations of human rights,” Patel said.
All the incidents took place before the October 7 Hamas attack and were not in Gaza, he added.
“Four of these units have effectively remediated these violations, which is what we expect partners to do, and is consistent with what we expect all countries whom we have a secure relationship with,” said Patel.

Israeli military attacks Al-Shifa hospital complex in Gaza. (Reuters file photo)

Israel has provided “additional information” about the fifth unit, he added.
US law bars the government from funding or arming foreign security forces against which there are credible allegations of human rights abuses.
The United States provides military aid to allies around the world, including Israel.
The Israeli army has been fighting the militant Palestinian group Hamas in the Gaza Strip for almost seven months and is trading fire almost every day with Hezbollah along the border with Lebanon. Both groups are backed by Iran.
Prime Minister Benjamin Netanyahu reacted angrily to recent news reports that the United States might slap sanctions against a unit of the Israeli military because of human rights abuses, saying the army should not be punished with the country at war.
Patel said the United States is continuing its evaluation of the fifth army unit and has not decided whether to deny it US military assistance.
This case comes with the administration of President Joe Biden under pressure to demand accountability from Israel over how it is waging war against Hamas, with such a high civilian death toll.
In an election year, more people are calling for the United States to make its billions of dollars in annual military aid to Israel contingent on more concern for Palestinian civilians. Pro-Palestinian protests are also sweeping US college campuses.
Hamas’ October attack in Israel resulted in the deaths of about 1,170 people in Israel, mostly civilians, according to an AFP tally based on Israeli official figures.
Israel’s retaliatory offensive has killed at least 34,488 people in Gaza, mostly women and children, according to the health ministry in the Hamas-run territory.
 

 


What did people eat before agriculture? New study offers insight

A human tooth discovered at Taforalt Cave in Morocco in an undated photograph. (REUTERS)
Updated 30 April 2024
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What did people eat before agriculture? New study offers insight

  • Analysis of forms — or isotopes — of elements including carbon, nitrogen, zinc, sulfur and strontium in these remains indicated the type and amount of plants and meat they ate

WASHINGTON: The advent of agriculture roughly 11,500 years ago in the Middle East was a milestone for humankind — a revolution in diet and lifestyle that moved beyond the way hunter-gatherers had existed since Homo sapiens arose more than 300,000 years ago in Africa.
While the scarcity of well-preserved human remains from the period preceding this turning point has made the diet of pre-agricultural people a bit of a mystery, new research is now providing insight into this question. Scientists reconstructed the dietary practices of one such culture from North Africa, surprisingly documenting a heavily plant-based diet.
The researchers examined chemical signatures in bones and teeth from the remains of seven people, as well as various isolated teeth, from about 15,000 years ago found in a cave outside the village of Taforalt in northeastern Morocco. The people were part of what is called the Iberomaurusian culture.
Analysis of forms — or isotopes — of elements including carbon, nitrogen, zinc, sulfur and strontium in these remains indicated the type and amount of plants and meat they ate. Found at the site were remains from different edible wild plants including sweet acorns, pine nuts, pistachio, oats and legumes called pulses. The main prey, based on bones discovered at the cave, was a species called Barbary sheep.
“The prevailing notion has been that hunter-gatherers’ diets were primarily composed of animal proteins. However, the evidence from Taforalt demonstrates that plants constituted a big part of the hunter-gatherers’ menu,” said Zineb Moubtahij, a doctoral student in archaeology at the Max Planck Institute for Evolutionary Anthropology in Germany and lead author of the study published on Monday in the journal Nature Ecology & Evolution.
“It is important as it suggests that possibly several populations in the world already started to include substantial amount of plants in their diet” in the period before agriculture was developed, added archeogeochemist and study co-author Klervia Jaouen of the French research agency CNRS.
The Iberomaurusians were hunter-gatherers who inhabited parts of Morocco and Libya from around 25,000 to 11,000 years ago. Evidence indicates the cave served as a living space and burial site.
These people used the cave for significant portions of each year, suggesting a lifestyle more sedentary than simply roaming the landscape searching for resources, the researchers said. They exploited wild plants that ripened at different seasons of the year, while their dental cavities illustrated a reliance on starchy botanical species.
Edible plants may have been stored by the hunter-gatherers year-round to guard against seasonal shortages of prey and ensure a regular food supply, the researchers said.
These people ate only wild plants, the researchers found. The Iberomaurusians never developed agriculture, which came relatively late to North Africa.
“Interestingly, our findings showed minimal evidence of seafood or freshwater food consumption among these ancient groups. Additionally, it seems that these humans may have introduced wild plants into the diets of their infants at an earlier stage than previously believed,” Moubtahij said.
“Specifically, we focused on the transition from breastfeeding to solid foods in infants. Breast milk has a unique isotopic signature, distinct from the isotopic composition of solid foods typically consumed by adults.”
Two infants were among the seven people whose remains were studied. By comparing the chemical composition of an infant’s tooth, formed during the breastfeeding period, with the composition of bone tissue, which reflects the diet shortly before death, the researchers discerned changes in the baby’s diet over time. The evidence indicated the introduction of solid foods at around the age of 12 months, with babies weaned earlier than expected for a pre-agricultural society.
North Africa is a key region for studying Homo sapiens evolution and dispersal out of Africa.
“Understanding why some hunter-gatherer groups transitioned to agriculture while others did not can provide valuable insights into the drivers of agricultural innovation and the factors that influenced human societies’ decisions to adopt new subsistence strategies,” Moubtahij said.