World

Oil prices climbed Wednesday as OPEC and its Russia-led allies announced a major cut in output, while a stocks rally ran out of gas.

In Vienna, ministers from the 13-nation OPEC cartel and a group of 10 exporters led by Russia agreed to reduce production by two million barrels a day from November.

It is the biggest cut since the height of the Covid pandemic in 2020 and came despite concerns it could fuel inflation further and push central banks to hike interest rates even more.

Oil prices had slid in recent weeks back to the levels before the war in Ukraine on concerns of a global slowdown, but have surged in recent days on expectations of the production cut.

The main international crude contract, Brent, jumped two percent following the decision before finishing at $93.37 a barrel, up 1.7 percent.

“Oil futures are expected to continue their rally in the short and medium term, but continued concerns over a global recession and rising inflation are likely to limit the long-term upside,” said Srijan Katyal of the international brokerage ADSS.

Swissquote analyst Ipek Ozkardeskaya warned that the big cut could “backfire” on OPEC+ if investors fear it will push inflation higher and force central banks to hike interest rates so much that it triggers a recession.

“The higher the energy prices, the sharper the central banks must kill demand to pull the prices lower,” she said before the decision was announced.

– Rally loses steam –

Meanwhile, a stocks rally triggered by hopes the US Federal Reserve could let up in its campaign of aggressive interest rate hikes to tame inflation has petered out.

European stocks finished lower across the board while Wall Street’s main indices saw modest declines following a volatile session.

US economic reports Wednesday were solid, with private-sector hiring in September topping expectations and services industry activity moderating slightly, but still robust.

“Market participants are being forced to contend with the possibility that the Fed won’t acquiesce to the stock market’s hopeful wishes,” said analyst Patrick O’Hare at Briefing.com.

In currency trading, the pound took another beating as a speech by British Prime Minister Liz Truss failed to reassure investors about her controversial fiscal plans. 

“As Prime Minister Liz Truss took to the stage to try and shore up her support among her party and the country, the pound fell further back and government borrowing costs rose slightly,” said market analyst Susannah Streeter at Hargreaves Lansdown brokerage. 

“The speech will do little to quell dissent over worries that public services will bear the brunt of the tax cuts plans” she added.

– Key figures around 2030 GMT –

Brent North Sea crude:  UP 1.7 percent at $93.37 per barrel

West Texas Intermediate: UP 1.4 percent at $87.76 per barrel

New York – Dow: DOWN 0.1 percent at 30,273.87 (close)

New York – S&P 500: DOWN 0.2 percent at 3,783.28 (close)

New York – Nasdaq: DOWN 0.3 percent at 11,148.64 (close)

London – FTSE 100: DOWN 0.5 percent at 7,051.60 (close) 

Frankfurt – DAX: DOWN 1.2 percent at 12,516.22 (close)

Paris – CAC 40: DOWN 0.9 percent at 5,985.46 (close)

EURO STOXX 50: DOWN 1.1 percent at 3,447.72 (close)

Tokyo – Nikkei 225: UP 0.5 percent at 27,120.53 (close)

Hong Kong – Hang Seng Index: UP 5.9 percent at 18,087.97 (close)

Shanghai – Composite: Closed for a holiday

Pound/dollar: DOWN at $1.1326 from $1.1476 on Tuesday

Euro/dollar: DOWN at $0.9889 from $0.9986

Euro/pound: UP at 87.29 pence from 87.01 pence

Dollar/yen: UP at 144.59 yen from 144.13 yen

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A SpaceX rocket carrying a Russian crew member blasted off from Florida Wednesday on a voyage that carries significant symbolism as war rages in Ukraine.

Anna Kikina, the only female cosmonaut in service, is part of the Crew-5 mission, which also includes one Japanese and two American astronauts.

“Let’s do this,” said Nicole Mann, commander of the Crew Dragon capsule and the first Native American woman in space, shortly before liftoff from the Kennedy Space Center in Florida at noon.

Docking is scheduled for Thursday at 4:57 pm Eastern Time (2057 GMT).

Two weeks ago, an American astronaut took off on a Russian Soyuz rocket for the orbital platform.

The long-planned astronaut exchange program has been maintained despite soaring tensions between the United States and Russia since Moscow’s invasion of Ukraine in February.

Ensuring the operation of the ISS has become one of the few remaining areas of cooperation between the United States and Russia.

In a post-launch briefing, Sergei Krikalev, head of the human space program at Roscosmos, hailed the occasion as the start of a “new phase of our cooperation,” evoking the historic Apollo-Soyuz mission of 1975, a symbol of detente at the height of the Cold War. 

Krikalev, a former cosmonaut respected by his American colleagues, has been on something of a charm offensive after the last head of Roscosmos, Dmitry Rogozin, earlier this year threatened to withdraw cooperation and let the ISS crash over US or European territory.

While Russia has announced plans for its own station, analysts believe it would be difficult to build in the next few years, and withdrawing from ISS would effectively ground Moscow’s civilian space program.

– Fifth female cosmonaut, first female Native American – 

Kikina, 38 and an engineer by training, is the fifth Russian female professional cosmonaut to go into space.

“I hope in the near future we have more women in the cosmonaut corps,” the Novosibirsk native told AFP in August.

The Soviet Union put the first woman in space, Valentina Tereshkova, in 1963, nearly 20 years before the first American woman, Sally Ride. Since then, the United States has flown dozens more women.

It is also the first spaceflight for American astronauts Mann and Josh Cassada, but the fifth for Japan’s Koichi Wakata.

Mann is the first indigenous woman to go to space with NASA. According to her NASA biography she is registered with the Wailacki of the Round Valley Indian Tribes.

She holds a master’s degree in mechanical engineering from Stanford, served as a test pilot in the F/A-18 Hornet and Super Hornet, and flew 47 combat missions in Iraq and Afghanistan.

– ISS future unclear – 

Kikina is the first Russian to fly with Elon Musk’s SpaceX which, along with Boeing, has a “taxi service” contract with NASA.

Musk himself waded into the conflict by proposing on Twitter a peace deal that involved re-running, under UN supervision, annexation referendums in Moscow-occupied regions of Ukraine and acknowledging Russian sovereignty over the Crimean peninsula. 

The post enraged Ukrainians, including the country’s envoy to Germany, who responded with an expletive. 

Tensions between Moscow and Washington have increased considerably in the space field after the announcement of American sanctions against the Russian aerospace industry, in response to the invasion of Ukraine.

Russia announced this summer that it wanted to leave the ISS “after 2024” in favor of creating its own station, albeit without setting a precise date.

Krikalev declared Monday he hoped to extend that date. 

On Wednesday he went further still, telling reporters: “We are thinking about building (a) new space station. We start preliminary design of it. 

“And there is no final decision yet but we are going to keep flying International Space Station as long as our new infrastructure will build.”

The United States, for its part, wants to continue operating until at least 2030, then transition to commercially run stations.

As things stand, the ISS cannot function without joint cooperation, as the US side is responsible for power and life support and the Russian side for propulsion and maintaining orbit.

One advertisement on Facebook promises zero-cost dental care for elderly Americans hit hard by rising medical bills. Another, on Instagram, offers free groceries in exchange for an email and phone number.

But the ads are misleading, at best.

So bad is the problem of deceptive Medicare marketing that a US congressional committee has asked 15 states to investigate. Big insurance companies, worried about their reputations and potential fines, have started to take note.

“If there’s money to be made in finding customers for a particular product or service, chances are there will be a firm trying to get people to click on links on Facebook,” said John Breyault, an expert on fraud and scams at the National Consumers League.

Between 2020 and 2021, complaints from the tens of millions of Americans aged 65 and older who qualify for federal health insurance more than doubled, according to the Centers for Medicare and Medicaid Services (CMS).

Many complaints mention firms that hawk Medicare Advantage plans, which are provided by private companies.

The online offers examined by AFP allude to genuine benefits in some of those plans. “Flex cards,” for example, are offered to some chronically ill beneficiaries to help pay for out-of-pocket expenses.

“With inflation taking a bigger bite out of people’s pocketbooks for things like groceries and gas and other day-to-day expenses, an ad promising you help with that could be particularly enticing,” Breyault said.

Claims of free dental care and grocery cards have circulated widely on social media since January 2022, when enrollment for Medicare Advantage began.

But the benefits are only available to a comparatively small audience. And as older, typically unwaged citizens are hit by rising prices, watchdogs say they could be misled into changing their plans during traditional Medicare enrollment in October.

– ‘Money at stake’ –

Over the past nine months, dozens of Facebook pages have promoted free grocery cards and dental care in hundreds of English- and Spanish-language posts — some of which were boosted as ads and later removed for violating platform policies, an AFP analysis shows.

One Facebook page called Senior Savings Club promoted a webpage promising a “spending card for free groceries” in dozens of posts, according to the Facebook Ad Library, a public archive of paid advertisements on Meta platforms.

The site’s terms and conditions link to another website owned by Assurance IQ, a subsidiary of US insurance firm Prudential Financial. Bill Launder, a spokesperson for the Fortune 500 company, said a marketing firm created the video ad.

“Prudential, through its business unit Assurance IQ, terminated that affiliate marketing relationship due to concerns about misleading marketing practices,” he told AFP.

Other marketing companies also appear to be publishing Facebook ads and posts laced with misleading claims.

A Facebook account sharing a webpage that advertises “no-cost vision and dental benefits” — which Medicare does not usually provide — is run by WeCall Media. The North Carolina company says on its website that it generates leads for clients such as Assurance and State Farm, another insurance firm.

David Lipschutz, associate director of the Center for Medicare Advocacy, said there are “very heavy incentives” for companies to push Medicare Advantage plans over other kinds of federal health insurance because agents can make more commission.

“There’s a lot of money to be made and a lot of money at stake,” he said.

AFP contacted WeCall for comment, but no response was forthcoming.

– ‘Do your research’ –

In comments on dozens of posts reviewed by AFP, Facebook users said they never received the promised grocery cards or dental care — and chasing those offers can have unintended consequences.

In a May 2022 letter to US congressional leaders, the National Association of Insurance Commissioners said states had seen an uptick in consumer complaints about “inappropriate or confusing marketing practices” that lead people to enroll in plans “without adequately understanding the coverage.”

“It is possible for some people to get some of the stuff that’s being advertised,” Lipschutz said. “But what’s completely left out is that you have to join plan X in order to do it, which could completely disrupt your health coverage.”

To avoid getting duped, Amy Nofziger, director of fraud victim support with AARP, once known as the American Association of Retired Persons, suggested people “tread lightly and do your research.”

“A lot of ads that are on social media are not vetted the way that people think they are,” she said.

President Joe Biden got a diplomatic slap in the face Wednesday with the OPEC+ cartel’s decision to ignore both his efforts at isolating Russia and desperate attempts to hold down fuel prices ahead of midterm elections.

“The president is disappointed by the shortsighted decision by OPEC+,” National Security Advisor Jake Sullivan and top economic advisor Brian Deese said in a statement.

That sounded like understatement.

Biden has been trying for months to walk an economic and geopolitical tightrope in which he lowers fuel costs for Americans while simultaneously cutting major energy exporter Russia from revenues needed to finance its war on Ukraine.

And with just five weeks before midterm elections where the Democrats hope to cling on to control of Congress, Biden was having some success. Average gasoline costs have fallen by more than $1 a gallon from politically damaging highs earlier this year, while the US-led Western coalition confronting Russia remains solid going into winter.

So the decision by Saudi-led OPEC and a set of Russian-dominated allies, collectively known as OPEC+, was a shock.

Saudi Arabia is one of the closest US allies and the biggest single purchaser of top-end US weaponry. Biden himself spent considerable political capital in July by visiting the kingdom and meeting with de facto leader Crown Prince Mohammed bin Salman, the man US intelligence has identified as approving the 2018 murder of Washington Post journalist Jamal Khashoggi.

White House Press Secretary Karine Jean-Pierre reflected the administration’s frustration, saying “it’s clear that OPEC+ is aligning with Russia with today’s announcement.”

Senator Chris Murphy, an ally of Biden, was blunter.

“I thought the whole point of selling arms to the Gulf States despite their human rights abuses, nonsensical Yemen War, working against US interests in Libya, Sudan etc, was that when an international crisis came, the Gulf could choose America over Russia/China,” he tweeted.

– Price rise looms –

Higher fuel prices have already inflicted severe damage on Biden’s standing this year. Unlike other areas of inflation, fuel prices are literally emblazoned on large signs at gas stations, while motorists in many cases have no option other than to pay up.

As president, however, there are limits on what Biden can do to fight the trend.

The White House said Biden was ordering another dip into the country’s Strategic Petroleum Reserve, with 10 million barrels set to be put on the market next month in an attempt to dampen prices rises.

However, those reserves are fast emptying out after record withdrawals ordered by the administration, starting back in March. The reserves are now at their lowest level since July 1984 and it is not clear when the administration plans to purchase a refill.

The next releases will continue “as appropriate to protect American consumers and promote energy security, and (Biden) is directing the secretary of energy to explore any additional responsible actions to continue increasing domestic production in the immediate term,” a White House statement said.

In addition, the administration will “consult with Congress on additional tools and authorities to reduce OPEC’s control over energy prices,” the statement said.

But Andy Lipow, from Lipow Oil Associates, said Wednesday’s decision by OPEC+ demonstrates “the waning influence of the US on OPEC to maintain an adequate supply of oil.”

“The US can’t release strategic petroleum reserves forever, and eventually it will run out and OPEC knows it,” he said.

The only solution, in his view, is to get “more oil out of the ground.” 

That, however, runs against Biden’s climate crisis priorities and a major effort to move the country away from oil and gas.

“Today’s announcement is a reminder of why it is so critical that the United States reduce its reliance on foreign sources of fossil fuels,” the White House said.