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Oil tanker SCF Primorye, owned by Russian state shipping company Sovcomflot, transits the Bosphorus in Istanbul, Turkey, April 29, 2024.
Hard Numbers: Russia’s oil slump, South Africa mine rescue, Somaliland opposition wins election, Japan buys out workers
3.28 million: Russian exports of crude oil fell to an average of 3.28 million barrels per day in the four weeks leading up to Nov. 17, with shipments from western ports mostly serving Turkey and India falling by nearly 30%. Russia has been trying to restrict flows of oil in coordination with OPEC standards to buoy prices and has pledged further production cuts between March and September of next year.
350: South African authorities are mulling whether to try rescuing at least 350 illegal miners who are hiding in underground shafts at the Stilfontein mine to the southwest of Johannesburg. The miners have remained underground to avoid arrest amid a crackdown on artisanal mining, which is often controlled by gangs. A court order on Monday instructed police to allow those within the mine to leave. Locals say there may be as many as 4,000 miners in the shaft, and authorities are not sure it is safe to send a mission. Some miners have emerged looking frail and malnourished.
63.92: The opposition leader of Somaliland, Abdirahman Mohamed Abdullahu — better known as “Irro” — won the presidency of the quasi-independent state with 63.92% of the vote, a clear mandate over incumbent Muse Bihi. Irro is promising to boost economic opportunities in Somaliland, especially for women, and hopes to persuade incoming US President Donald Trump to recognize his government independently of Somalia.
9,219: Over four dozen of Japan’s largest companies have paid out 9,219 employees with early retirement and voluntary severance in 2024, roughly triple last year’s numbers. Japanese corporations are historically very reluctant to fire workers, but the yen’s weakness and sluggish growth are forcing companies to streamline with buyouts.Saudi Arabian flag with stock graph and an oil pump jack miniature model are seen in this illustration.
Saudis face reality on oil prices
Since November 2022, Saudi Arabia has led the grouping of OPEC members plus Russia in maintaining oil supply cuts to try to keep prices as close as possible to an unofficial target of $100 per barrel for Brent crude. Not coincidentally, the IMF estimates Saudi Arabia need $100 barrels to balance its budget as Crown Prince Mohammed bin Salman funds hugely expensive development projects as part of his Vision 2030 economic reform plan. Saudi Arabia is currently producing 8.9 million barrels a day, its lowest level in more than a decade.
The lower price will be good news for incumbent politicians facing public anger over broader inflation. That’s also true for Democratic presidential nominee Kamala Harris, whom Donald Trump has blamed for higher prices for US consumers. The Saudi decision will keep gasoline prices in check through the US election.
Canada's Minister of Immigration, Refugees and Citizenship Marc Miller.
Hard numbers: Ottawa pledges fresh immigration crackdown, Gold and ‘Black Gold’ deliver a surplus, US makes big power grid pledge, China cracks down on opioid precursors
5: Canada says it will clamp down further on temporary immigrants, part of its strategy to reduce their share of the population to 5% over the next three years, as frustrations grow about the pace of immigration. Last year, temporary workers made up 6.2% of the population. So far this year, the level has climbed to 6.8%. In recent years, the Liberal government of Justin Trudeau encouraged the arrival of more temporary workers to help employers fill pandemic-related vacancies. But the country’s broader housing affordability crisis has fueled concern about the pace of immigration. A recent Leger poll showed 60% of Canadians said there were “too many immigrants.”
461 million: Gold and “black gold” helped deliver some sparkling economic news for Canada this week. Defying analyst predictions, the country registered a trade surplus in June, exporting $461 million more worth of goods than it imported. It was the first time that had happened in four months. Analysts pointed in part to surging exports of gold as well as oil, which finally began flowing from the Trans-Mountain Pipeline after years of delays.
2.2 billion: The White House has earmarked 2.2 billion to strengthen the US power grid and speed up the green transition. The money, to be matched by nearly $10 billion in private financing, will flow to eight projects across 18 US states. A major focus is to create additional transmission capacity and regional connections so wind farms and other alternative energy sources can make a bigger contribution to power generation.
3: China has committed to tightening regulatory controls on three chemicals used to make fentanyl, the White House said earlier this week. This is the third such move that Beijing has made since the two countries resumed counter-narcotics cooperation last fall. Illicit fentanyl overdoses — known more broadly as “the opioid crisis” — have become a leading cause of death for American adults under the age of 45 in recent years. China is known to have subsidized the production and marketing of fentanyl precursors.The Rainbow Bridge over the Niagara River links the borders of Niagara Falls in Ontario, Canada, to Niagara Falls in New York.
Hard Numbers: Migrants head for US-Canada border, Canada flies fresh F-16 funds to Ukraine, Big Oil plans for a Big Crash, Toronto cans scan plan
191,603: While the immigration crisis at the southern US border has commanded significant attention in recent months, the northern border with Canada is becoming more popular with asylum-seekers, undocumented migrants, and human traffickers. In 2023, officials recorded 191,603 encounters with people crossing into the United States via Canada without papers, more than 40% higher than the year before but still less than one-tenth the volume along the US-Mexico frontier.
60 million: Canada pledged to send Ukraine $60 million in support for F-16 jet maintenance and ammunition. The move, part of a larger $500 million pledge made last spring, comes as congressional infighting, public fatigue, and election jockeying continue to hold up tens of billions of dollars worth of fresh support for Kyiv from the US.
30: Given where gas prices are these days you wouldn’t think it, but global oil giants like Shell, Exxon, Chevron, and Total are carefully preparing for the possibility of another oil price crash, beefing up their production at newer oil fields that are profitable even if oil prices plummet to $30 a barrel. As of this writing, that was less than half the price of a barrel, which is hovering around $75.
6: The Ontario government has canceled a pilot program in which people’s IDs would have been scanned at the entrances to six Toronto-area liquor stores. The program was meant as an experiment to find ways to boost security at liquor stores, but it immediately generated privacy concerns, since the data would have been held in government systems for 14 days.
A pipe yard servicing government-owned oil pipeline operator Trans Mountain in Kamloops, British Columbia, Canada.
Will Trans Mountain Pipeline expansion pay off?
“It’s been quite a journey,” he says of the many weekends, nights, and early mornings he spent visiting Indigenous communities to secure their consent. By the time he retired in April 2022, more than 60 communities were on board. Barring disaster, the $23 billion project will be completed this year, and Canada will have access to tidewater for an additional half a million barrels of crude a day.
Ottawa stepped in to buy the project when Kinder Morgan pulled out in 2018, and the construction costs have increased sixfold, leading some to call it a “catastrophic boondoggle.”
Justin Trudeau’s government believed the project would add tens of billions of dollars in national revenues by allowing more Canadian oil to reach Asian markets and command a world price. Western Canadian Select crude has typically traded at a discount of up to $16 per barrel, compared to North American benchmark prices, because it all goes to the United States.
The expansion of TMX will end that stranglehold, and most analysts expect the discount to fall to closer to $10 a barrel. The upshot could be more expensive diesel in the US Midwest.
Will Ottawa get its investment back? Pipelines generally trade at around 10-12 times cash flow, which in this case could see Ottawa raise more than $20 billion. But the government, or its successor, may decide to take a lower price to ensure a material Indigenous ownership stake.
“It was not a terrible decision at all, and it was one that only the government could have seen through,” Anderson says, noting the political, regulatory, and legal risks.
Canada produced a record 4.19 million barrels of oil a day in December. The prospect of higher prices, thanks to the Trans Mountain expansion, is likely to see new records set in the future.
FILE PHOTO: Guyanese Military members line up before Britain's Prince Harry laughs arrives for an official visit of Georgetown, Guyana December 2, 2016.
Venezuela and Guyana border dispute
As if Europe’s colonial-era mapmakers haven’t already bequeathed us enough wars. Now the long-running border dispute between Venezuela and its eastern neighbor Guyana is heating up again.
Guyana says Venezuela is sending troops to the frontier, while Caracas says Venezuelan voters will get to decide unilaterally whether to annex Guyanese territory.
At issue: The western two-thirds of Guyana, known as Essequibo, is a jungle terrain inhabited by 250,000 people. The dispute began with a 19th century map that gave the region to Guyana — at the time a British colonial possession — rather than to Venezuela, which maintained earlier Spanish claims to the area. Several international efforts to resolve the dispute since then have failed, and the issue is currently before the International Court of Justice.
But Venezuelan strongman Nicolas Maduro rejects the court’s jurisdiction. He plans instead to put the question of annexation to Venezuelan voters in a plebiscite on Dec. 3.
Why now? Because there’s oil there, lots of it, following massive discoveries by ExxonMobil over the past decade. Maduro has his eye on those reserves, which would bring Guyana’s 800,000 citizens one of the swiftest windfalls of oil wealth in history.
But he may also be playing domestic politics. He recently tried to tar the Venezuelan opposition as national traitors for supposedly advancing a US-backed plan to scuttle the vote — an assertion the opposition vociferously denied.
Los Yanquis are in the area. Any forceful attempts to seize Guyanese territory could spark a crisis that quickly draws in the United States — since 2020, Washington has run joint naval patrols with Guyana.
Industrial engineer and former lawmaker Maria Corina Machado holds up a Venezuelan flag as she reacts to the vote count after Venezuelans voted in a primary to choose a unity opposition candidate to face Venezuela's President Nicolas Maduro in his probable re-election bid in 2024, in Caracas, Venezuela October 23, 2023.
Oil exports or no, Maduro won’t let Machado win
Just two weeks after sealing a historic election pact with the opposition, the Venezuelan government announced Monday that it would suspend “all effects” of opposition primaries, thereby jeopardizing a six-month pause of US sanctions on Caracas’ oil.
The decision comes just days after strongman President Nicolás Maduro called the contests a “fraud” — but he’s really afraid of the winner, popular opposition leader María Corina Machado. The election deal was supposed to lift a ban on her and other opposition figures holding office until 2030, but state harassment evidently continues. Fortunately for the ordinary Venezuelans brave enough to go out and vote in an opposition primary, organizers say they destroyed the voter sheets, making state retribution more difficult.
So, will the US keep buying Venezuelan oil? Washington said it would swiftly shut off the taps if Caracas doesn’t follow through with its democratic commitments, but as we wrote earlier, leverage is limited. If Maduro’s options are keeping oil revenue and losing power, or accepting sanctions he’s survived for a decade to stay in control, which do you think he will choose?
Risa Grais-Targow, Eurasia Group’s director for Latin America, says the US will likely find discretion to be the better part of valor under these circumstances. Before snapping back sanctions, she continues, “the US will still wait and see if Maduro takes steps toward allowing candidates to participate in the general election, even if the ruling yesterday seems to go in the other direction.”A woman and her sons stand on the edge of Maracaibo lake in front of oil rigs in Maracaibo February 15, 2008.
Oil, gas, gold for (pseudo-) democracy?
The United States has temporarily lifted sanctions against Venezuela’s oil, natural gas, and gold sectors after Venezuela’s strongman President Nicolás Maduro agreed to a deal with the US-backed opposition on scheduling elections with international observers and allowing opposition candidates to run.
This gives the South American country a lucrative opportunity to export oil to US markets, which will put coveted US dollars directly into Caracas’ coffers. Boosting the Venezuelan economy can’t hurt Maduro, fair elections or not, and could lead to lower US gas prices, which would save Biden some political pain ahead of his reelection bid.
The six-month scheme is a major reversal for Washington, which applied “maximum pressure” against the Venezuelan regime during the Donald Trump years. That approach seems to have largely failed: Sanctions have crippled Venezuela’s economy but failed to oust Maduro, and after an initial flurry of fanfare, the US-backed, self-declared interim leader Juan Guaidó’s movement is all but dead.
The White House says it will slam the hammer back down if Caracas doesn’t follow through with its promises. But Washington also wants to see political prisoners released, and Caracas seemed to nod at that expectation by releasing five detainees after the sanctions paused.
But this is far from Maduro’s swansong. There’s no set timeline to arrange for official candidate lists and hold votes, no agreed-upon rules for how the election and campaign will be conducted, and most importantly, no real incentive for Maduro to allow a truly fair contest. He’s made it this far under sanctions, after all, so why should he dread their re-imposition?
And if he can make some money while dragging the process out, pues que chevere (well, that’s great!).