This is true even for American consumers, although relatively few Russian exports reach the US coast.
For example, Russian oil and gas account for less than 4% of American fuel consumption. But the average price of regular gasoline has risen 8 cents a gallon to $ 3.61 since the day before Russia invaded Ukraine, and wholesale prices are rising even more. This means that in a few weeks the gas is expected to reach an average of $ 4 per gallon in the United States for the first time since 2008. It may soon surpass the record $ 4.11 per gallon set this year.
“This is a global market,” said Tom Klose, global head of energy analysis for the Oil Price Information Service, which tracks AAA gas data. “We need to compete more for the unblemished Russian oil that is available.”
Despite the sanctions, it is still legal to buy Russian oil and natural gas. But much of it remains unsold. Many traders are reluctant to buy it because of the difficulty of making transactions with sanctioned Russian banks.
Oil prices rose another 3% on Monday in response to new rules restricting the use of SWIFT by Russia, the main water pipeline for global finance that allows banks to send secure communications needed to move funds.
“The removal of some Russian banks from SWIFT could lead to disruptions in oil supplies as buyers and sellers try to figure out how to navigate the new rules,” said Andrew Lipow, an industry consultant, in a note to customers on Sunday. “In the end: No funding, no oil.”
Another concern for traders: how to safely bring tankers into Russian ports to take oil.
“No tankers means no oil,” Klose said.
Delivery
The price of one gallon of diesel reached $ 4 per gallon for the first time in nearly eight years over the weekend. Although few Americans drive diesel cars, most large trucks use it. And almost all goods sold in the United States at one time are transported by truck.
The transport industry itself has been facing challenges for years, mainly due to a shortage of drivers. Higher fuel costs will be passed on by transport companies in the form of fuel charges. So all companies will have to pay higher transportation costs. With inflation already high, they are likely to pass on these costs to consumers.
“Household and business inflation expectations have reached very high levels and could rise further if the Russian invasion of Ukraine leads to soaring energy prices or disrupts supply chains,” Goldman Sachs wrote in a note Monday. higher and more stable inflation than before. forecast.
Goods
Although the Russian economy is focused on its energy exports, they are not the only Russian products the West uses. The United States bought about $ 25 billion worth of goods from Russia last year, not including $ 4.8 billion in crude oil. This may sound like a lot, but oil-free purchases account for just over half of what U.S. customers bought from little Thailand last year.
Goods such as wheat and timber are Russia’s main exports, and these prices have also risen on world commodity markets. Russia is also a major exporter of such important metals as aluminum, palladium, nickel and titanium. Palladium is used in cars, cell phones and even dental fillings. Nickel is used to make steel and electric car batteries. Titanium is crucial for aerospace products, including commercial aircraft.
Uncertainty over the supply of these products and rising commodity prices could create “additional disruptions in global supply chains that are already suffering from the pandemic and semiconductor shortages,” Carsten Brzeski, the global chief of staff, said in a note Monday. macroeconomics. for ING Research. This can also lead to higher prices, as the shortage of computer chips is a major factor in the prices of new and used cars reaching record levels.
Still, the war could force the US Federal Reserve and other central banks to effectively withdraw their efforts to curb inflation through higher interest rates. Uncertainty about the overall economic impact may make regulators even more cautious.
Federal Reserve Governor Christopher Waller said in a speech last Thursday that based on the latest economic data, “strong arguments can be made” for a half percentage point increase in March, the first since 2000 that the Fed raised interest with so much per meeting. But he then warned: “Of course, the state of the world may be different after the attack in Ukraine, and this may mean that a more modest tightening is appropriate.” Waller added that the right decision is now more uncertain.
Japanese factories account for approximately one-third of Toyota’s annual production. Toyota plant in Japan.
photo: Joe White / Reuters
Updated February 28, 2022 at 11:23 PM ET
TOKYO – Toyota Motor Corp. TM -1.31% closed all 14 of its factories in Japan on Tuesday after a vendor suffered a computer virus attack, but the company said the factories would reopen on Wednesday.
The supplier Kojima Industries Corp. said he had problems with the server on Saturday night and found a virus and threatening message after restarting the server. After battling the problem over the weekend, Kojima said he came to the conclusion on Monday that he could not put his systems in place to work properly with customers on Tuesday.
Toyota TM -1.31% said the problem at Kojima, a supplier of plastic parts for car interiors, has led to a one-day shutdown on Tuesday of all its factories in Japan. On Tuesday morning, he said production would resume on Wednesday morning.
“We deeply apologize for causing great concern to our customers,” Kojima said in a written statement.
Shutdown is the latest problem affecting Toyota’s production. The global shortage of semiconductors has forced factories to operate at full capacity for much of the past year.
The company said in February that it expects global production of Toyota and Lexus to total 8.5 million vehicles in the year ending March 2022, compared to a November forecast of nine million.
Japanese factories produce approximately one-third of Toyota’s annual production.
The Covid pandemic has strained global supply chains, causing backlogs, which have increased costs. Some companies are now looking for long-term solutions to prepare for future supply chain crises, even if these strategies cost a fortune. Photo illustration: Jacob Reynolds
Chinese Minister of Commerce Wang Wentao attends a press conference of the Information Service of the State Council in Beijing, China, February 24, 2021. REUTERS / Carlos Garcia Rawlins
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BEIJING, March 1 – A senior Chinese official warned on Tuesday that China’s economy faces many challenges at home and abroad this year, including “huge” pressures from uncertainty over world trade and still weak domestic consumption. .
Foreign trade, which helped move the world’s second-largest economy last year, will face uncertain external demand and a high statistical base from 2021, Trade Minister Wang Wentao said.
“This year the pressure on foreign trade will be huge and the situation will be very difficult,” Wang told a news conference.
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Labor shortages and high raw material costs have also increased pressure on China’s small and medium-sized companies’ ability to process orders abroad, he said.
Given global uncertainty, China must “do everything possible” this year to boost domestic consumption, Wang said.
Last year, China’s economy recovered from its best growth in a decade, fueled by stable exports and the resulting record trade surplus. But there have been signs that momentum is slowing in terms of declining consumption and declining domestic assets.
In December, retail sales rose 1.7% from a year earlier, lacking an average forecast of 3.7% and slowing compared to a profit of 3.9% in November.
Some recovery momentum was seen in consumption in February after downward pressure from the fourth quarter, Wang said.
Stability in all aspects of society is the slogan in China this year, when the Communist Party meets once every five years in Congress at the end of 2022. President Xi Jinping is expected to demand his third term as party leader.
China will seek to expand access to its markets and attract more foreign investment to the country’s industrial sector, including advanced manufacturing and strategic new industries, Wang said.
Foreign direct investment doubled in January-February, he said.
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Report from the Beijing editorial office; Edited by Christian Schmollinger and Kenneth Maxwell
The Mastercard logo appears on the credit card of this pictorial illustration August 30, 2017 REUTERS / Thomas White
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March 1 – US payment card companies Visa Inc (VN) and Mastercard Inc have blocked a number of Russian financial institutions from their network, in line with government sanctions imposed over Moscow’s invasion of Ukraine.
Visa said Monday that it is taking swift action to ensure compliance with applicable sanctions, adding that it will donate $ 2 million in humanitarian aid. Mastercard also promised to contribute $ 2 million.
“We will continue to work with regulators in the coming days to fully comply with our compliance obligations as they evolve,” Mastercard said in a separate statement late Monday.
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Government sanctions require Visa to suspend access to its network of entities listed as specially designated citizens, a source familiar with the matter told Reuters. The United States has added various Russian financial companies to the list, including the country’s central bank and VTB’s second-largest lender (VTBR.MM).
On Saturday, the United States, Britain, Europe and Canada announced new sanctions against Russia – including blocking access to certain creditors to the international payment system SWIFT. Read more
The Russians rushed to the ATMs and waited in long lines on Sunday and Monday amid fears that bank cards may cease to function or that banks will restrict cash withdrawals. Read more
Russia calls its actions in Ukraine a “special operation.”
Many Western banks, airlines and others have severed ties with Russia, calling the country’s actions unacceptable. European countries and Canada have closed their airspace to Russian aircraft. Read more
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Report by Maria Ponejat in Bengaluru; Edited by Christian Schmolinger, Kenneth Maxwell, Kirsten Donovan
The United States is still considering banning Russian flights
March 1 – More Western companies are expected to withdraw from Russia on Tuesday, as corporations and investors in various industries follow the example of energy companies BP and Shell, which abandoned billions of dollars after the invasion of Ukraine.
Leading banks, airlines, carmakers and others have cut supplies, cut partnerships and called Russia’s actions unacceptable. Many others said they were considering action.
Late Monday Warner Bros. said it had withdrawn this week’s release of Batman from Russian screens, following a statement from Walt Disney Co. (DIS.N) that it would suspend the release of theatrical films in Russia. Read more
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Meanwhile, Mastercard said it had blocked a number of financial institutions from its payment network as a result of sanctions against Russia. Read more
The West has sought to punish Russia with a number of measures, including closing airspace to Russian planes, closing some Russian banks on the global financial network SWIFT and limiting Moscow’s ability to use its $ 630 billion in foreign reserves. Read more
“I would expect to see many similar announcements in the next few days,” said Sonia Koval, president of Zevin Asset Management in Boston, on Monday, adding that the sale by the Norwegian sovereign wealth fund would support the move.
Some U.S. state-owned investors have been vocal in setting expectations for corporations.
“We must send a very clear and unequivocal answer that California will not oppose Russian aggression,” California Treasurer Fiona Ma said in a statement Monday, declaring support for the sale of Russian assets from state pension funds, some of the most the largest in the United States. .
Shell (SHEL.L), BP and Norwegian Equinor (EQNR.OL) have said they will leave positions in energy-rich Russia, putting pressure on other Western companies with stakes in Russian oil and gas projects, such as ExxonMobil (XOM.N) and TotalEnergies (TTEF.PA).
The BP logo is seen at a BP gas station in Manhattan, New York, USA, November 24, 2021. REUTERS / Andrew Kelly
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Many companies are still considering options, such as freight forwarder Maersk, who said on Monday he was monitoring sanctions against Russia and preparing to enforce them. One scenario involved suspending cargo reservations.
Major car and truck manufacturers have cut off exports to Russia, including Volvo and GM (GM.N), although together the two companies sell only about 12,000 vehicles a year in Russia. Ford Motor (FN), which has a 50% stake in three Russian plants, has not commented on the substance of its plans, except to seek to manage the impact on its operations and keep workers safe.
Companies and asset managers who want to liquidate shares face barriers because many exchanges have stopped trading.
Some Western companies with large exposures to Russia have already noticed a decline in shares. Finnair, based in Russia’s neighbor Finland, has lost a fifth of its value after withdrawing its 2022 outlook amid the closure of airspace.
Airlines are preparing for prolonged blockades of east-west corridors after the European Union and Moscow issued airspace bans.
The White House has not decided to ban Russian flights, although White House spokesman Jen Psaki told reporters Monday: “There are many flights that US airlines fly over Russia to travel to Asia and other parts of the world. and we take a number of factors into account. “Read more
Senator Dick Durbin, the second-highest-ranking Democrat in the U.S. Senate, voiced support for the ban.
“Other countries have done it in Europe, and turning off the lights at the airport is not a bad idea for these boys,” he told reporters. Read more
The big technology companies are juggling calls for the closure of services in Russia with what they see as a mission to voice dissent and protest.
Meta Platforms Inc (FB.O), Facebook’s parent company, will restrict access to Russian state media RT and Sputnik on its platforms across the European Union, the company’s global affairs chief said Monday, in line with similar actions by major US companies. technology companies. Read more
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Additional reports from Nerijus Adomaitis in Oslo, Foo Yun Chee in Brussels, Jamie Freed in Sydney, Maria Ponnezhath and Bhargav Acharya in Bengaluru, David Shepardson in Washington, Ben Kleiman in Detroit, Dmitry Zhdannikov, Carolyn Konledov in Carolyn Konlev. in Los Angeles; Screenwriters by Carmel Crimins, Edmund Blair, Jane Merriman and Peter Henderson; Edited by Leslie Adler and Kenneth Maxwell
Oil futures rose on Tuesday morning after a volatile start to the week as the market weighed in on a coordinated international release of crude stocks against disruptions in Russian supplies as a result of Moscow’s invasion of Ukraine.
May Brent oil futures, which began trading fast on Tuesday, rose about 1% in 0141 GMT to $ 98.90. The figure reached a seven-year high of $ 105.79 since Russia’s invasion of Ukraine began last week.
April West Texas Intermediate (WTI) crude futures rose about 0.8 percent to $ 96.53. This contract peaked at $ 99.10 a barrel the day before and settled more than 4%.
THE UKRAINE-RUSSIA CONFLICT MAY POINT OUT THE PRICES OF PEFTA AT 130 STARA, EXPERT SAYS
Concerns about supply disruptions have come as major oil and gas companies, including BP and Shell, have announced plans to exit Russian operations and joint ventures. Russian oil buyers are also facing difficulties with payments and the availability of ships as Western sanctions are imposed in response to the invasion of Ukraine.
The market calmed as the United States and its allies discussed a coordinated release of raw materials in an effort to mitigate supply disruptions. The release could reach between 60 and 70 million barrels, media reported.
Oil futures rose on Tuesday morning after a volatile start to the week as the market weighed in on a coordinated international release of crude stocks against disruptions in Russian supplies as a result of Moscow’s invasion of Ukraine. (Photo by Mario Tama / Getty Images)
“This likely release is limiting the rise in oil prices for now,” analysts at the Commonwealth Bank of Australia said in a note.
The International Energy Agency (IEA) will hold an emergency ministerial meeting on Tuesday to discuss the role its members can play in stabilizing oil markets.
Russia, which calls its operations in Ukraine a “special operation”, exports about 4-5 million barrels a day of crude oil and 2-3 million barrels a day of refined products.
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The Organization of the Petroleum Exporting Countries (OPEC) and other producers – including Russia – will also meet on Wednesday and are expected to maintain a gradual increase in supplies.
Shell is retiring from the giant Sakhalin LNG project
Relocation to lead to a depreciation of $ 3 billion
“We are shocked by the loss of life in Ukraine,” said the executive director
LONDON, March 1 – Shell (SHEL.L) will leave all of its operations in Russia, including a large liquefied natural gas plant, it said on Monday, becoming the last major Western energy company to leave the oil-rich country after the operation. of the Moscow invasion of Ukraine.
The decision comes a day after rival BP abandoned its stake in Russian oil giant Rosneft (ROSN.MM) in a move that could cost the British company more than $ 25 billion. Norwegian Equinor (EQNR.OL) also plans to leave Russia. Read more
Shell said in a statement that it would leave Sakhalin 2, the leading liquefied natural gas plant, in which it owns a 27.5% stake and which is 50% owned and operated by Russian gas giant Gazprom.
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Shell said the decision to leave the Russian joint ventures would lead to devaluation. Shell had about $ 3 billion in non-current assets in these plants in Russia at the end of 2021, it said.
“We are shocked by the loss of human life in Ukraine, which we regret as a result of a senseless act of military aggression that threatens European security,” Shell CEO Ben van Beurden said in a statement.
Rival BP CEO Bernard Looney convened an emergency meeting with his management team on Thursday, just hours after the first Russian bombs fell on the Ukrainian capital Kyiv last week, two BP sources told Reuters. Russia calls its actions in Ukraine a “special operation.”
During the unannounced meeting, Looney made it clear that the company’s investment in Rosneft had become insolvent, sources said.
“There was only one decision we could make,” said one BP insider. “The way out was the only viable way.”
Looney held two more board meetings over the weekend, after which board members voted to leave Rosneft immediately, sources said.
Looney also spoke with British Business Secretary Quasi Quarteng on Friday when Quarteng expressed concern about BP’s interests in Russia. Kwarteng welcomed BP’s decision to leave on Twitter on Sunday.
SHELL
Kwarteng had a similar announcement for Shell on Monday.
The Royal Dutch Shell logo is visible at the Shell petrol station in London, 31 January 2008. REUTERS / Toby Melville
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“Shell has made the right call for liberation from Russia,” he said on Twitter, adding that he spoke with van Beurden earlier Monday.
The Sakhalin 2 project, located off Russia’s northeast coast, is huge, producing about 11.5 million tonnes of LNG a year, which is exported to major markets, including China and Japan.
For Shell, the world’s largest liquefied natural gas retailer, leaving the project is a blow to its plans to supply gas to emerging markets in the coming decades.
Shell said Russia’s exit would not affect its plans to switch to low-carbon and renewable energy.
The company also plans to end its involvement in the Baltic Nord Stream 2 gas pipeline, which connects Russia with Germany, which it helped finance as part of a consortium of companies. Germany halted the project last week. Read more
Shell will also leave Salym Petroleum Development, another joint venture with Gazprom.
Together, Salim and Sakhalin II contributed $ 700 million to Shell’s net revenue in 2021.
“It’s the right decision for the Shell board to leave its Russian companies,” said Adam Matthews, chief investment officer for the British Church’s pension council, which is investing in Shell, in a LinkedIn post.
“Following BP’s decision, the focus is on those who have not yet taken such a step,” Matthews said.
Japan’s Mitsui & Co (8031.T) and Mitsubishi Corp (8058.T), which hold 12.5% and 10%, respectively, in Sakhalin 2, said separately that they were investigating Shell’s announcement. They said they would discuss the situation with the Japanese government and project partners without giving further details.
Norwegian Equinor, a majority owner of the Norwegian state, said earlier on Monday that it would start giving up its joint ventures in Russia. This came after the country’s sovereign wealth fund, the world’s largest, said on Sunday it would sell its Russian assets.
Other Western companies, including global bank HSBC and the world’s largest aircraft leasing company, AerCap, have said they plan to leave Russia as Western governments tighten economic sanctions against Moscow. Read more
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Report by Ron Busso in London, Shanima A in Bengaluru and Yuka Obayashi in Tokyo; Edited by Jonathan Oatis, Simon Webb, Richard Pullin and Kenneth Maxwell
Veteran investor Mark Mobius said the recent rise in bitcoin may be due to Russians buying cryptocurrency.
“I wouldn’t be a buyer, but if I were Russian, I would be a buyer,” Mobius told CNBC’s Capital Connection on Tuesday.
“I would say that’s why bitcoin has shown strength now – because the Russians have a way to make money, to make a fortune,” said Mobius, founder of Mobius Capital Partners.
Bitcoin prices rose 10% on Monday as sanctions were imposed on Russian institutions, including banks, in response to the country’s invasion of Ukraine.
Since the invasion began on Thursday, transactions on centralized bitcoin exchanges in both the Russian ruble and the Ukrainian hryvnia have risen to their highest levels in months, according to crypto data company Kaiko.
Bitcoin traded around $ 43,327 in the early hours of Tuesday morning Eastern Time.
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The United States has responded to Moscow’s unprovoked attack on Ukraine with several rounds of sanctions against Russian banks, its central bank, the country’s public debt, Vladimir Putin and Foreign Minister Sergei Lavrov.
Over the weekend, the United States, European allies and Canada agreed to exclude key Russian banks from the SWIFT interbank messaging system, which connects more than 11,000 banks and financial institutions in more than 200 countries and territories.
The White House is also pursuing the personal wealth of Russian billionaires, recently announcing the creation of a task force to focus on their lucrative assets, including yachts and mansions.
If it weren’t for bitcoin, Mobius said, the Russians would have “really problems with all the road closures so they can transfer money.”
Ari Redboard of blockchain intelligence company TRM Labs also told CNBC on Tuesday that Russia would turn to cryptocurrencies in a bid to evade sanctions.
However, crypto cannot be used “on a scale close to resolving the sanctions issue,” said Redboard, the company’s head of legal and government affairs.
“There’s just no liquidity out there that can really affect what Russia is facing right now,” he said.
Redboard also said that most of the liquidity is in large crypto exchanges, which have “stable compliance controls” to monitor transactions that would report suspicious activity.
Where to invest against the background of geopolitical tensions
Mobius called on investors to diversify their portfolios and buy gold as geopolitical tensions spill over into markets.
“Gold is a place where you have to be, as I’ve mentioned for a long, long time, it’s very important to have a little physical gold,” he said.
Gold, a traditional safe haven in times of uncertainty, rose more than 6% in February. Spot gold last traded at around $ 1,908 an ounce.
Mobius also advised European investors to start diversifying from Europe to the United States and some Asian markets. “This is a very good lesson in diversification,” he said.
The pan-European Stoxx 600 lost 4.6% in the last month, and the German DAX index fell 5.6% over the same period, according to FactSet.
– Abigail Ng, Tanaya Machel and Brian Schwartz of CNBC contributed to this report.
