FirstFT: Oil prices surge

Oil prices are rising today, reigniting tensions between Saudi Arabia and the US and stoking concerns about a resurgence of global inflation.

Riyadh led members of the Opec+ group of oil-producing countries yesterday in announcing an unexpected cut to production by more than 1mn barrels a day. The decision was announced on the eve of an Opec+ meeting today and caught energy markets by surprise.

International oil benchmark Brent crude rose as much as 8.4 per cent to a high of $86.44 a barrel in early Asian trading, while US marker West Texas Intermediate climbed as much as 8 per cent to $81.69 a barrel.

Brent and WTI later pared their gains to be up 5.4 per cent at $84.17 and 5.4 per cent higher at $79.78 respectively by mid-morning European time.

The announcement follows the decision in October by Opec+ to cut production by 2mn b/d, a move the US likened to siding with Russia and its invasion of Ukraine.

People familiar with Saudi Arabia’s thinking said Riyadh was irritated last week that the Biden administration publicly ruled out new crude purchases to replenish a strategic stockpile that had been drained last year as the White House battled rising inflation.

US energy secretary Jennifer Granholm said it would take “years” to replenish the country’s strategic stockpiles.

Analysts at Deutsche Bank said the move by Opec+ would potentially push up prices in the global economy this year.

Economists at Goldman Sachs today raised their year-end forecast for Brent crude by $5 to $95 a barrel. The bank also boosted its oil price forecast for the end of 2024 to $100 a barrel.

Inflation had begun to ease in the US and Europe as energy prices have fallen following last year’s price rise after Russia’s full-scale invasion of Ukraine. An aggressive series of interest rate rises by the Federal Reserve and European Central Bank had also helped to lower demand and reduce inflationary pressures.

Here’s what else I’m keeping tabs on today:

  • Economic data: S&P Global publishes its manufacturing purchasing managers’ indices for Canada, the EU, France, Germany, Italy, Russia, UK and US.

  • Monetary policy: Lisa Cook, a member of the Federal Reserve board of governors, participates in a moderated conversation on the US economic outlook and monetary policy hosted by the University of Michigan economics department.

  • Nasa: The US space agency will introduce the four astronauts at the Johnson Space Center in Houston for its Artemis II lunar fly-by mission.

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Five more top stories

1. EXCLUSIVE: Russia’s security services are confiscating the passports of senior officials and state company executives to prevent overseas travel, the Financial Times has been told. The move highlights the paranoia over leaks and defections within President Vladimir Putin’s regime.

  • More on Russia: Authorities have detained a woman on suspicion of orchestrating an explosion in a St Petersburg café yesterday that killed a prominent pro-war blogger.

2. The largest US regional banks began this year with less cash on hand than at any time since the 2008 financial crisis, leaving them ill-prepared for a rush of deposit withdrawals that led to the collapse of Silicon Valley Bank and Signature Bank. Read the full story.

3. Switzerland’s federal prosecutor has opened an investigation into the state-backed takeover of Credit Suisse by its larger rival UBS. The Bern-based prosecutor is looking into potential breaches of Swiss criminal law by government officials, regulators and executives at the two banks.

4. Donald Trump’s lawyers will move to dismiss the charges against him as the former president said he planned to deliver a speech after his arraignment tomorrow. Here’s the latest on the case involving alleged hush money paid to a porn actress.

5. Tesla rolled out a record number of cars in the first quarter, the company announced yesterday, following Elon Musk’s decision to cut prices of his electric vehicles. Tesla shares rose in pre-market trading after closing at $207.46 on Friday.

The Big Read

Montage of a map of Africa, the Chinese flag, and a hand holding lithium
China is investing heavily in mines in Africa © FT montage via AFP/Getty Images/Dreamstime

Known as “white gold”, lithium’s high electrochemical potential makes it critical to electric vehicle batteries. China already dominates processing of the metal for use in such batteries and is now investing heavily in mines in Africa, leaving western operators rushing to keep up in a market expected to see a near fivefold increase in demand by 2030.

We’re also reading . . . 

Chart of the day

Ports in the rest of Asia will need significant investment to match the capacity of Chinese harbours, casting doubt on claims by western companies that they plan to switch production from China to south-east Asian countries. China has 76 port terminals able to support large ships carrying more than 14,000 20ft containers while south and south-east Asian countries have just 31 between them.

Bar chart of Port capability to handle vessels over 14,000 TEU capacity showing China’s competitors lack the ports infrastructure to match it

Take a break from the news

Perfectionism, the theory goes, holds people back instead of propelling them forward. Research suggests that perfectionists are intensely self-critical and unwilling to take risks for fear of failure or criticism, which can be devastating to their fragile self-image. But not everyone believes perfectionism is a scourge.

Additional contributions by Tee Zhuo and Annie Jonas