Monday, July 24
CRUDE SOLUTIONS
Oil ministers gather in St Petersburg
Ministers from six oil-producing nations will gather in St Petersburg today to grapple with stubbornly low oil prices. The Joint Ministerial Monitoring Committee, including Russia, Saudi Arabia, Algeria, Kuwait, Oman, and Venezuela, will discuss how to best cap production and raise prices.
Fossil fuel producers have been struck by a global supply glut and a rise in competition from American shale gas. With US shale output having grown for the eighth consecutive month, that threat is only increasing.
Agreed to last year, OPEC’s current framework limits output from member states and 10 additional countries, but has failed to raise prices; today, oil trades at half of its peak three years ago.
To help, the committee has invited representatives from Nigeria and Libya, both of which were exempt from production due to political crises. Their exclusion hampered progress towards boosting oil prices after both revived production, each upping output by over 170,000 barrels per day in May.
Expect the committee to recommend staying the course while adding Nigeria and Libya. There are simply no attractive alternatives on offer; cut production too much and shale fills the void, let the glut go on and no one profits.
TALKS BEGET TALKS
Normandy Four leaders to discuss Ukraine crisis
The leaders of the Normandy Four countries—Russia, Germany, France, and Ukraine—will speak on the phone today.
To defuse the conflict in Eastern Ukraine, the four countries negotiated the Minsk Agreements in 2015. They have yet to be implemented, with Russia continuing to back separatists in the region. Violence continues, with the death of nine Ukrainian soldiers in battle with separatists Thursday termed the “deadliest one-day period in 2017” by the US State Department.
Today’s call will mark Emmanuel Macron’s debut in Normandy talks. The French president believes that a future ceasefire should proceed under the Minsk framework. This is contrary to sceptics including US Secretary of State Rex Tillerson, who does not wish to be “handcuffed” by the 2015 agreement. Tillerson is open to a new framework between Kiev and Moscow, undermining Minsk with questionable American support.
The phone call is unlikely to accelerate implementation of the ceasefire, but could result in plans for another summit—the last one was held in October 2016.
Yet the longer Minsk is not a reality, the more likely Mr Tillerson’s handcuffs will be unlocked.
TESTING THE WATERS
Russia and China hold joint naval exercise
The ‘coastal stage’ of the Sino-Russian Maritime Cooperation exercise in the Baltic Sea concludes today. It will be followed by an active sea stage with the focus on anti-submarine, anti-aircraft and anti-ship defence which will run until Friday.
The US has vowed to closely monitor the manoeuvre, which is the latest example of increasing military cooperation between Moscow and Beijing. In recent years, both countries have held several joint manoeuvres in the East and South China Seas, the Mediterranean and Sea of Japan.
The increased cooperation between the two countries showcases China’s ability to project power away from home, increasing its capacity to enforce its claims in the contested South and East China Seas. While China currently is not in a position to contest America’s naval supremacy, the tide may be gradually changing.
China will showcase its latest advanced guided-missile destroyer in the Baltics and has vowed to continue investing heavily in its maritime capabilities, especially the development of a blue-water navy. But the US—which commissioned its most advanced aircraft carrier to date on Saturday—is not set to pass the baton anytime soon.
Delve: Nuclear dimensions of the South China Sea
HAPPENING ELSEWHERE…
A British trade delegation will meet its US counterpart in Washington to set up a working group designed to explore options for a post-Brexit free trade agreement. The talks will be headed by UK Trade Secretary Liam Fox and his American equivalent, Robert Lighthizer. The talks come hours after the head of the British Chambers of Commerce warned that the UK shouldn’t rush into a “politically attractive” deal with the US, citing concerns that British businesses could get a raw deal. Adam Marshall noted that American trade negotiators are “the world’s toughest” and that Britain has “ceded policy and know-how to the European Commission for decades”.
Donald Trump’s senior adviser and son-in-law, Jared Kushner, will face the Senate Intelligence Committee in a closed-door session on Russia’s involvement in last year’s election. Mr Kushner is expected to answer all questions, which are likely to focus on his attendance at a meeting with a Russian lawyer last June, supposedly to receive compromising information on Hillary Clinton.
The UN Security Council will hold talks behind closed doors on the recent Israeli-Palestinian violence. Three Israelis and three Palestinians were killed on Friday amid unrest over new security measures in Jerusalem’s al-Aqsa mosque. Palestinian President Mahmoud Abbas has responded by suspending contact with Israel.
Large-scale anti-government marches are expected in Venezuela as the opposition seeks to force embattled President Nicolas Maduro to abandon a controversial vote scheduled for Sunday.
Kenya’s deputy opposition leader Mathew Lempurkel will face court on charges he made “inflammatory remarks calculated to stir up racist and ethnic hatred”, according to police chief Joseph Boinnet. Kenya will hold a presidential election next month; opposition candidate Raila Odinga was reportedly at the meeting where Mr Lempurkel made the remarks.
Google parent company Alphabet Inc. will report its earnings during April, May and June. Despite being fined $2.7 billion last month by the EU competitions watchdog, Alphabet is still expected to report strong earnings for the quarter, estimated to be north of $20 billion.