US Business

G7 industrialised powers vowed Friday to move urgently towards implementing a price cap on Russian oil imports in a bid to cut off a major source of funding for Moscow’s war in Ukraine.

The G7 said it was working towards a “broad coalition” of support for the measure but officials in France urged caution, saying a final decision could only be taken once all 27 members of the European Union had given their assent.

Households on the continent have borne the brunt of rising energy prices, with governments under pressure to alleviate the pain of the resulting high inflation.

“Russia is benefitting economically from the uncertainty on energy markets caused by the war and is making big profits from the export of oil and we want to counter that decisively,” German Finance Minister Christian Lindner said in a press conference after the move was announced.

The aim of the price cap on oil exports was to “stop an important source of financing for the war of aggression and contain the rise in global energy prices”, he added.

Ahead of Friday’s decision, Kremlin spokesman Dmitry Peskov sounded a clear warning.

The adoption of a price cap “will lead to a significant destabilisation of the oil markets,” and force American and European consumers to pay the price, he said.

And Russia’s Deputy Prime Minister Alexander Novak had warned on Thursday that Moscow would “simply not supply oil and petroleum products to companies or states that impose restrictions,” according to Russian news agencies.

– ‘Powerful tool’ –

At a summit in June, the G7 leaders agreed to work towards implementing the ceiling on crude sales.

In their statement, finance ministers from the G7 said they would “urgently work on the finalisation and implementation” of the long-considered measure, without specifying the cap level.

The price cap was “one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States”, US Treasury Secretary Janet Yellen said in a statement Friday. 

She said the measure already was beginning to influence prices, with countries that have not yet committed to join the cap able to negotiate lower prices from Russia.

“We’re already seeing this initiative pay off because countries that are buying Russian oil are signing deals with Russia to sell oil at greatly discounted prices,” Yellen said on MSNBC.

She said the capped price “will be set at a level that will continue to make it profitable for Russia to produce,” rather than follow through on Moscow’s threat to shut-in their oil and keep it off world markets.

The G7 move would block Russia from getting any kind of service, including maritime insurance, on its petroleum shipments unless the product is sold at or below the cap, she explained.

And Yellen noted that G7 countries provide the vast majority of such services, including maritime insurance, 90 percent of which come from Britain and the EU. 

A senior US Treasury official told reporters that the cap would include three prices, one for crude oil and two for refined petroleum products.

The French finance ministry said technical work on the price cap was still in progress.

“It is clear that no final decision can be taken until we have consulted and obtained unanimous support from all 27 member states of the European Union,” it said.

“We support all measures that reduce the income that Russia derives from the sale of oil,” French Finance Minister Bruno Le Maire added.

EU Commissioner Paolo Gentiloni said the bloc aims to find a deal by December 5 for crude oil and February 5 for petroleum products.

– ‘Broad coalition’ –

The G7 also voiced ambition to extend the measure beyond the bloc, saying it was seeking to form a “broad coalition” of support for the oil price cap to “maximise” the effectiveness of the measure.

The ministers urged “all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap”.

The push to get as many countries as possible to go along with the cap is expected to be a key topic for discussion by leaders at the G20 summit in Bali on November 15 and 16.

The initial cap would be set “at a level based on a range of technical inputs” the G7 ministers said, adding that its effectiveness would be “closely monitored”.

Analysts warned, however, that the cap may yet fuel another rise in prices.

The cap would introduce new risks for the oil market by “potentially disrupting Russian energy supplies”, Capital Economics analyst Liam Perch said in June. “This could push global energy prices up further.”

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UK department store Selfridges said Friday that it wants almost half of its sales to be products given a new lease of life as part of the upmarket retailer’s efforts to improve sustainability.

Selfridges’ goal is for 45 percent of transactions to be for so-called “circular” goods and services — either second-hand, rented, repaired or recycled — by 2030, it said in a statement.

The “Reselfridges” initiative will form the “backbone” of its future business, the retailer added.

The world-famous chain, with its flagship branch on London’s Oxford Street, said the move was part of a scheme to help it reach zero-carbon by 2040.

The scheme, for Selfridges’ four physical branches as well as its website, is part of the group’s broader “Project Earth” policy launched three years ago to improve sustainability.

“Our vision is to reinvent retail and create a more sustainable future, and Project Earth and our new targets underpin this,” said managing director Andrew Keith.

It comes as the global fashion and luxury goods sectors face growing criticism over their increasingly harmful impact on the environment.

The advent of ultra-fast online fashion retailers, which encourage throwaway wasteful fashion items, has brought this into sharp focus in recent years. 

Selfridges has for some time been seeking to promote environment-friendly fashion, for example with a rental service for second-hand clothing.

The group’s key UK department store rival, John Lewis, is also aiming to develop the second-hand goods market.

John Lewis wants to roll out a so-called “buy back” or trade-in scheme for all product categories by 2025, as it also looks to hook up to the circular economy.

Selfridges added Friday that it would also extend its promise to stock only products that meet strict environmental and ethical standards to 2030.

The store chain was sold by Canada’s Weston family late last year to Thai retail giant Central Group and Austrian property firm Signa for £4 billion.

US and European stock markets shot higher on Friday following data that showed US job creation slowed but remained positive last month, belying fears of a recession induced by interest rates and inflation.

Labor Department data showed US employment increased by 315,000 jobs last month, which was in line with what economists were expecting but at a much slower pace than the 526,000 hires in July.

US Federal Reserve Chairman Jerome Powell signalled last week that the US central bank would continue to aggressively raise interest rates in order to bring surging inflation under control, even if it creates some short-term economic pain.

The latest jobs data show the Fed’s two 0.75-percentage-point interest rate hikes are having an impact on the US economy without completely derailing it.

“The key takeaway is that the labor market remains in pretty solid shape,” said market analyst Patrick O’Hare at Briefing.com.

“It didn’t function with the same zest it showed in August, but, objectively, it is running at a pace that is wholly inconsistent with an economy on the cusp of a recession,” he added.

Recent healthy readings on US factory activity, unemployment claims and private jobs creation have also indicated the world’s top economy remained strong despite rising interest rates and four-decade-high inflation.

“Traders believe that the jobs’ report is moving back to normal and the economy can handle some interest rate increases,” said Naeem Aslam, chief market analyst at Avatrade.

Wall Street’s main indices climbed, with the Dow up 1.1 percent in late morning trading, while both the S&P 500 and Nasdaq Composite rose 1.2 percent.

In Europe, Frankfurt soared 3.3 percent, while Paris jumped 2.2 percent and London climbed 1.9 percent.

– ‘Goldilocks scenario’ –

Analyst Craig Erlam at OANDA trading platform said “there are aspects of the report that will please the Fed and support the case for easing off the brake.”

Markets have been expecting a third 0.75-percentage-point hike later this month, but Avatrade’s Aslam also pointed to the unemployment creeping higher to 3.7 percent.

“This is a goldilocks scenario for traders who now know that the Fed is unlikely to increase the rate aggressively,” he said.

“This factor has pushed the dollar index lower and gold prices moved higher on the back of this,” he added.

The dollar had rallied this week to highs not seen for decades including against the pound, euro and yen on expectations that the Fed would continue to raise interest rates aggressively.

The yen hit a new 24-year low against the dollar on Friday.

Elsewhere on Friday, oil prices rallied on fading expectations for an Iran nuclear deal anytime soon, with the market shrugging off a declaration by G7 nations they intend to quickly impose a price cap on Russian oil exports as they tighten sanctions on the Kremlin over the invasion of Ukraine.

– Key figures at around 1530 GMT –

New York – Dow: UP 1.1 percent at 32,010.64 points

EURO STOXX 50: UP 2.5 percent at 3,544.38

London – FTSE 100: UP 1.9 percent at 7,281.19 (close)

Frankfurt – DAX: UP 3.3 percent at 13,050.27 (close)

Paris – CAC 40: UP 2.2 percent at 6,167.51 (close)

Tokyo – Nikkei 225: FLAT at 27,650.84 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 19,452.09 (close)

Shanghai – Composite: UP 0.1 percent at 3,186.48 (close)

Dollar/yen: UP at 140.07 yen from 139.44 yen on Thursday

Euro/dollar: UP at $1.0031 from $0.9946

Pound/dollar: UP at $1.1577 from $1.1545

Euro/pound: UP at 86.63 pence from 86.14 pence

West Texas Intermediate: UP 1.9 percent at $88.27 per barrel

Brent North Sea crude: UP 1.9 percent at $94.10

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American employers slowed the pace of hiring in August after the surprising surge in the prior month and the jobless rate edged up, according to government data released Friday, which could offer the central bank some relief that its inflation-fighting efforts are working.

The Federal Reserve is paying close attention to the progression of the hot job market, looking for signs of easing as it tries to cool the economy with steep interest rate hikes to tamp down inflation which has reached a 40-year high.

While the data showed wages continued to rise, the unemployment rate ticked up as more workers joined the labor force, a welcome development that could allow the Fed to opt for a smaller move later this month after two consecutive super-sized rate increases.

President Joe Biden, who has been riding a wave of legislative and economic victories, cheered the latest report.

“More great news: Our jobs market remains strong. Even more Americans are coming back to work,” Biden tweeted.

Even with the slowing pace, the job gains bring employment above the pre-pandemic level, the Labor Department said in the closely watched monthly report.

The US economy added 315,000 jobs last month, the report said, which was in line with what economists were expecting after 526,000 hires in July.

The unemployment rate moved back up to 3.7 percent, after dipping to 3.5 percent in the prior month, according to the data. And the labor force participation rate rose three-tenths to 62.4 percent.

But wages continued to climb in August, as average hourly earnings rose another 10 cents, or 0.3 percent, to $32.36 — slower from the pace in recent months. Over the past 12 months, worker pay has increased by 5.2 percent.

Continued upward pressure is a cause for concern since the Fed fears it could lead to a wage-price spiral and push inflation higher.

Surging inflation, exacerbated by high energy prices due to Russia’s war in Ukraine, as well as supply chain struggles and Covid-lockdowns in China, has prompted the Fed to raise the benchmark borrowing rate four times this year, including giant 0.75 percentage point increases in June and July.

However, the latest data “may tip the scale towards a 50-basis point rate hike” at the September 20-21 meeting, said Rubeela Farooqi of High Frequency Economics, although the next report on consumer price inflation also will be a key factor. 

Still, she said “these data are not going to change the Fed’s view that policy needs to move to a restrictive stance over coming months.”

Diane Swonk of KPMG agreed.

“The Fed is committed to reducing the demand for workers and increasing labor supply, via a much larger rise in the unemployment rate than we saw today,” she said in an analysis.

But other analysts see the central bankers on track for a third consecutive three-quarter point rate hike.

In July, there were still more than 11 million job openings, or two for every job seeker. 

– ‘Some pain’ –

US GDP contracted in the first two quarters of 2022, which is commonly viewed as a sign of a recession, but the robust job market defies that definition.

Companies have faced a labor shortage for months, prompting them to offer higher wages, which is in turn driving up prices. And there are signs firms are “hoarding” workers — holding onto seasonal employees for fear they might not be able to replace them later.

Fed officials have made it clear in repeated statements that they will continue to raise interest rates to cool the economy, even if monthly data show some signs of progress.

Fed Chair Jerome Powell hammered home this point last week at a conference in Jackson Hole, Wyoming, warning of “pain” ahead for American households and businesses.

New data this week from payroll firm ADP showed private firms ratcheted back hiring in the month to 132,000.

“We think that these numbers suggest a shift to a more moderate pace of hiring,” ADP chief economist Nela Richardson said.

But ADP data showed workers who left their jobs to find a new position saw a pay increase of more than 16 percent, compared to 7.6 percent gains for all workers over the past year.

Greenpeace UK said Friday it had dropped 18 large boulders on the seabed in a marine conservation zone off the coast of southwest England to prevent “destructive” industrial fishing.

The environmental campaigners sailed to the western part of the Channel between the UK and France, loaded with the boulders of Portland limestone, each weighing between 500 and 1,400 kilograms (1,100 and 3,100 pounds). 

The giant rocks were dropped on Thursday from its Arctic Sunrise research vessel in an area of the South West Deeps (East) Conservation Zone, which lies some 190 kilometres (120 miles) off Land’s End, the most westerly point of mainland England.

“We are placing large limestone boulders on the seabed to create a protective underwater barrier which will put the area off limits to destructive fishing,” Anna Diski, UK oceans campaigner, told AFP on board.

The action would make it “impossible for them to drag the heavy fishing gear along the seabed, destroying the habitat and disturbing the carbon”, she added.

Artists created a giant ammonite sculpture — inspired by the fossil often found in Portland limestone — out of one of the boulders, which was also placed on the seabed.

The names of the action’s celebrity backers and supportive politicians were also inscribed on the rocks.

“Right now, there’s an industrial fishing frenzy happening in UK waters, and what’s our government doing about it?” asked Greenpeace UK’s head of oceans, Will McCallum.

“Greenpeace UK has created this underwater boulder barrier as a last resort to protect the oceans. We’d much rather the government just did their job.” 

McCallum said it was “outrageous” that bottom-trawlers are allowed to operate on the seabed in protected areas.

“They destroy huge swathes of the marine ecosystem and make a mockery of our so-called ‘protection’,” he added.

– ‘Get serious!’ –

The action comes after the latest round of UN talks to try to secure protection for marine life in international waters broke up without agreement.

Greenpeace said the 4,600-square-kilometre (1,776-square-mile) South West Deeps is “one of the most heavily fished so-called Marine Protected Areas in the UK”.

It cited figures from the Global Fishing Watch monitoring agency that said that 110 vessels — more than half of them from France — fished for 18,928 hours in the area in the 18 months to July.

Of that, industrial vessels with bottom-towed fishing gear spent 3,376 hours fishing in the zone. 

Bottom-trawling is only banned in four out of the UK’s 76 offshore Marine Protected Areas, and the government is consulting over possible bans in a further 13. 

“The problem is that the majority of the UK’s MPAs don’t have any actual protection at all,” said Jasmine Watkiss, one of those on board the Arctic Sunrise.

“The government needs to get serious about ocean protection before it’s too late.

“The next prime minister should ban industrial fishing in all of the UK’s Marine Protected Areas by tweaking commercial fishing licences,” she added.

UK regulator the Marine Management Organisation (MMO) said it had launched an investigation into Greenpeace for the “potentially illegal” deposit of construction material.

But it assessed that dropping the rocks “will have minimal impact” on fishing activity in the area.

“The MMO remains open to discussions with Greenpeace to ensure we can achieve our joint goal of marine nature recovery.” 

Neil Whitney, a fisherman from East Sussex in southern England, said bottom-trawling was “like ploughing a combine harvester through a national park”. 

“They’re able to take out entire ecosystems, and if they cause a fishery to collapse, they just move on to the next one,” he added.

“Industrial fishing, like fly-shooters (vessels which tow lead-weighted ropes along the seabed) and supertrawlers (trawlers over 100 metres long), are killing our marine environment, and small-scale UK fishermen like me are losing out big time.”

He said it was “absurd” that bottom-trawling was legal in MPAs. “MPAs are supposed to be the areas where fish stocks can recover, so that we fish for generations to come.”

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G7 industrialised powers vowed Friday to “urgently” move towards implementing a price cap on Russian oil imports in a bid to cut a major source of funding for Moscow’s war in Ukraine.

The G7 said it was working towards a “broad coalition” of support for the measure but officials in France urged caution, saying a “final” decision could only be taken once all 27 members of the European Union had given their assent.

Households on the continent have borne the brunt of rising energy prices, with governments under pressure to alleviate the pain of the resulting high inflation.

“Russia is benefitting economically from the uncertainty on energy markets caused by the war and is making big profits from the export of oil and we want to counter that decisively,” German Finance Minister Christian Lindner said in a press conference after the move was announced.

The aim of the price cap on oil exports was to “stop an important source of financing for the war of aggression and contain the rise in global energy prices”, he added.

Ahead of Friday’s decision, Kremlin spokesman Dmitry Peskov sounded a clear warning.

The adoption of a price cap “will lead to a significant destabilisation of the oil markets,” he said.

Moscow would “simply not supply oil and petroleum products to companies or states that impose restrictions,” Russia’s Deputy Prime Minister Alexander Novak had warned on Thursday, according to Russian news agencies.

“Interference in the market mechanisms of such an important industry … will only destabilise the oil industry, the oil market. And for this, European and American consumers will be the first to pay,” he said.

– ‘Powerful tool’ –

At a summit in June, the G7 leaders agreed to work towards implementing the ceiling on crude sales.

In their statement, finance ministers from the G7 said they would “urgently work on the finalisation and implementation” of the long-considered measure, without specifying the cap level.

The price cap was “one of the most powerful tools we have to fight inflation and protect workers and businesses in the United States”, US Secretary of the Treasury Janet Yellen said in a statement Friday. 

However, the French finance ministry said technical work on the price cap was still “in progress”.

“It is clear that no final decision can be taken until we have consulted and obtained unanimous support from all 27 member states of the European Union,” it said.

“We support all measures that reduce the income that Russia derives from the sale of oil,” French Finance Minister Bruno Le Maire added.

EU Commissioner Paolo Gentiloni said the bloc aims to find a deal by December 5 for crude oil and February 5 for petroleum products.

– ‘Broad coalition’ –

The G7 also voiced ambition to extend the measure beyond the bloc, saying it was seeking to form a “broad coalition” of support for the oil price cap to “maximise” the effectiveness of the measure.

The ministers urged “all countries that still seek to import Russian oil and petroleum products to commit to doing so only at prices at or below the price cap”.

The push to get as many countries as possible to go along with the cap is expected to be a key topic for discussion by leaders at the G20 summit in Bali on November 15 and 16.

The initial cap would be set “at a level based on a range of technical inputs” the G7 ministers said, adding that its effectiveness would be “closely monitored”.

Analysts warned, however, that the cap may yet fuel another rise in prices.

The cap would introduce new risks for the oil market by “potentially disrupting Russian energy supplies”, Capital Economics analyst Liam Perch said in June. “This could push global energy prices up further.”

“The cap may also be effective at reducing the Russian government’s tax revenues,” he said, speculating that a cap just below $80 (80 euros) per barrel could “push Russia’s budget into a deficit”. 

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Russia’s Gazprom looked set to resume gas supplies to Europe via Nord Stream 1 this weekend, data from the pipeline operator showed Friday, after a halt that fuelled an energy crisis.

The resumption Saturday of deliveries after the three-day stoppage — which Gazprom said was needed for repairs — would bring some short-term relief.

But it will do little to ease fears about further supply disruptions as winter approaches.

Delivery orders, published on the Nord Stream website, indicated that supplies should resume at 2:00 am Saturday (0000 GMT) at 20 percent of their usual capacity — the same level as before the latest maintenance works. 

The stoppage began on Wednesday, and reduced gas deliveries via the key pipeline that runs from Russia to northern Germany to zero. 

Gazprom had said the work on a compressor unit was necessary but Germany’s Federal Network Agency said the decision was “technically incomprehensible”.

Details of the expected volumes can still change and need to be confirmed by actual deliveries.

A German economy ministry spokeswoman said while the pipeline operator had confirmed some initial orders, “we must nevertheless advise caution, and observe the situation closely”.

Europe is facing soaring energy prices after Russia slashed gas deliveries to the region amid soaring tensions following its February invasion of Ukraine. 

Germany, which is particularly dependent on Russian gas, has accused Moscow of using energy as a “weapon”.

As winter approaches, European consumers are bracing for huge power bills, with some countries like France warning that rationing is a possibility.

The Russian energy giant had already carried out 10 days of long-scheduled maintenance works in July. While it restored gas flows following the works, it drastically reduced supplies just days later, claiming a technical issue on a turbine.

The Kremlin warned Friday that Nord Stream may face future technical difficulties after the ongoing maintenance work, blaming sanctions for a shortage of spare parts.

“There are no technical reserves, only one turbine is working,” Kremlin spokesman Dmitry Peskov told reporters.

“So the reliability of the operation, of the whole system, is at risk,” he said, adding that it was “not through the fault” of Gazprom.

Europe’s stock markets rose Friday before key US jobs data, after diving the previous day on fears of an inflation-induced recession.

Frankfurt won 1.5 percent, London gained 0.7 percent and Paris added 0.6 percent after a subdued Asian session.

All three markets tanked Thursday as record-high eurozone inflation fuelled fears that the European Central Bank will ramp up interest rates again next week, even as the region faces rocketing winter energy prices over Russia’s war on Ukraine.

Elsewhere on Friday, oil prices rallied Friday on fading expectations for an Iran nuclear deal anytime soon, but remain under pressure from issues including the strong dollar, China’s renewed Covid lockdowns, and worries about a demand-sapping recession.

– Data ‘commands attention’ –

All eyes are now on a key US non-farm payrolls (NFP) report slated for publication later Friday, for clues on the Federal Reserve’s interest rate outlook.

“This economic reading commands the most attention,” noted AvaTrade analyst Naeem Aslam.

“As always, the Fed will watch this data very closely and it is highly likely to influence their monetary policy decision.”

With US rates expected to keep rising, the dollar has rallied to highs not seen for decades including against the pound and euro.

Bets are now increasing on a third successive 75-basis-point increase at the Fed’s September meeting. 

The dollar eased Friday but held above 140 yen — one day after breaching the key level for the first time since 1998.

“Profit-taking was the name of the game as euro/dollar climbed back above parity, although dollar/yen continued to press ahead,” noted City Index analyst Fawad Razaqzada.

Recent healthy readings on US factory activity, unemployment claims and private jobs creation indicated the world’s top economy remained strong despite rising interest rates and four-decade-high inflation.

Wall Street ended Thursday with a late rally, with the Dow and S&P 500 snapping a four-day retreat, though the Nasdaq extended its losing streak.

– Key figures at around 1100 GMT –

London – FTSE 100: UP 0.7 percent at 7,200.60 points

Frankfurt – DAX: UP 1.5 percent at 12,820.41

Paris – CAC 40: UP 0.6 percent at 6,071.24

EURO STOXX 50: UP 0.8 percent at 3,484.42

Tokyo – Nikkei 225: FLAT at 27,650.84 (close)

Hong Kong – Hang Seng Index: DOWN 0.7 percent at 19,452.09 (close)

Shanghai – Composite: UP 0.1 percent at 3,186.48 (close)

New York – Dow: UP 0.5 percent at 31,656.42 (close)

Dollar/yen: UP at 140.32 yen from 139.44 yen on Thursday

Euro/dollar: UP at $1.0008 from $0.9946

Pound/dollar: UP at $1.1564 from $1.1545

Euro/pound: UP at 86.51 pence from 86.14 pence

West Texas Intermediate: UP 2.3 percent at $88.62 per barrel

Brent North Sea crude: UP 2.1 percent at $94.27

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