Organization of Petroleum Exporting Countries (OPEC) and its allies led bu Russia, are meeting today to review compliance with oil cuts aimed at supporting oil prices during the coronavirus outbreak.
OPEC+ meeting
The group is unlikely to change its policy of cutting production by 7.7 million barrels a day (BPD), according to sources from the energy cartel known.
An OPEC+ source told Reuters the meeting “will mostly focus on how members are complying with the policy,” rather than any significant change in the OPEC+ supply cut agreement.
Other sources said that the virtual meeting, which is scheduled to start at 14:00 GMT will examine the compliance of countries such as Iraq, Nigeria, and Kazakhstan with the agreement.
Overall compliance with cuts was 95% to 97% in July, according to an OPEC report released Monday.
Saudi Arabian King Salman bin Abdulaziz spoke with Nigerian President Muhammadu Buhari on Wednesday, emphasizing the importance of compliance by all participants, Saudi state news agency SPA reported.
Brent crude is trading at a 5-month high at over $45 a barrel. Helped in part by the OPEC + deal brent has more than doubled since dropping below $16, a 21-year low.
Eurozone inflation
Data released Wednesday from the European Union’s Statistical Office (Eurostat) showed that despite deflationary pressures amid the economic crisis caused by the COVID-19 pandemic, inflation in the Eurozone rose slightly on an annual basis in July.
Eurostat confirmed its forecast for a 0.4% increase in annual inflation in July, after a 0.3% increase in June.
The bureau also did not change its July 31 flash forecast on key indicators of inflation that exclude the most volatile prices.
Eurostat said inflation rose 1.3% in July from 1.1% in June, excluding food and energy prices, an important measure followed by the European Central Bank (ECB). An even narrower indicator that also excludes alcohol and tobacco jumped from 0.8% to 1.2% in June.
The increases surprised economists who expected inflation to slow down. While Germany temporarily lowered the sales tax rate in July, the block’s economy hit by the pandemic weakened due to low activity.
Despite the small increase, the July reading remained far from the European Central Bank’s (ECB) inflation rate target of “below, but close to 2%” in the medium term.
Dollar losses
As the minutes from the July monetary policy meeting of the US Federal Reserve are set to be released today at GMT1800, the dollar continues to weaken.
Pressure on the US dollar is mounting due to record increases in Wall Street stocks, a resurgence of trade tensions between Washington and Beijing on the technology front, and a deepening dispute between Congress and the White House in Washington over the new aid package.
The dollar index struggled above its lowest in the last 28 months on Wednesday.
The dollar fell as low as 92.15 against a basket of currencies in the European sessions, remaining at levels last seen in April 2018. The dollar has lost more than 5% since the end of June.
Taiwan Strait dispute
As the trade disputes and technology war between the two major economies of the world, China and the United States intensify, the military forces of the two countries continue to face each other in the South China Sea and the Taiwan Strait.
The US Navy transited on Tuesday its Arleigh Burke-class guided-missile warship USS Mustin through the Taiwan Strait. “The transit through the Taiwan Strait demonstrates the US commitment to a free and open Indo-Pacific,” said the US 7th Fleet.
In response, the Chinese military said on Wednesday that the latest US navy transit near Taiwan which China claims as its own territory was “extremely dangerous” and “not in both countries’ interests.”
The People’s Liberation Army said that its air and naval forces followed and watched the US ship throughout its journey.
The Taiwan defense ministry said the US warship was performing “an ordinary mission” and was crossing south through the Taiwan Strait.
