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Oil Hits $70 as Mideast Crisis Deepens Fear

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(Bloomberg) — Oil extended its dramatic surge above $70 a barrel as the fallout between the U.S. and Iran escalated after the assassination of one of the Islamic Republic’s most powerful generals.

Brent futures jumped by another 3% on Monday as the U.S. State Department warned of a “heightened risk” of missile attacks near military bases and energy facilities in Saudi Arabia. Prices got a further boost as President Donald Trump reiterated threats of retaliation should Iran “do anything” and vowed heavy sanctions against Iraq if American troops are forced to leave OPEC’s second-biggest producer.

The wild ride continues for oil as Washington and Tehran trade bellicose rhetoric, ratcheting up fears of a wider conflict that could disrupt supply from the world’s most important producing region. Crude was last this high when Saudi production facilities were attacked in September, knocking out about 5% of global output.

Trump said he’s prepared to strike “in a disproportionate manner” and attack more than 50 sites if Tehran retaliates against Soleimani’s killing. The Middle East nation said it has to “settle a score with the U.S.” and that it would no longer abide by limits on its enrichment of uranium. A vote by Iraq’s parliament to expel U.S. troops from the country deepened the fallout.

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“Oil will remain on tenterhooks, ready to jump higher with every headline indicating a turn for the worse,” said Vandana Hari, founder of Vanda Insights in Singapore. “The U.S. and Iran traded sequentially bigger threats over the weekend and Tehran has pulled out of the 2015 nuclear deal, marking a quick downward spiral in what could turn out to be the worst crisis in the Middle East since the Arab Spring.”

London’s Brent futures rose as much as 3.1%, or $2.14, to $70.74 on ICE Futures Europe and were at $70.45 at 12:09 p.m. in Singapore. The contract surged 3.6% on Friday. West Texas Intermediate advanced 2.4% to $64.53 on the New York Mercantile Exchange.

The deepening crisis continued to spill over into other markets. Asian equities from Japan to Australia fell while U.S. and European stock futures retreated. Gold surged to the highest in more than six years and Treasury yields ticked lower as investors sought havens from the turmoil.

Saudi Arabia, Iran and Iraq together pumped more than 16 million barrels of oil a day last month. Most of their exports leave the Persian Gulf through the Strait of Hormuz, a narrow waterway that Iran has repeatedly threatened to shut down if there’s a war.

The U.S. said there’s risk of attacks particularly in the eastern province of Saudi Arabia and near the Yemeni border and close to military bases as well as oil and gas facilities, the State Department said in a tweet.

In a separate event, an American service member and two contractors were killed in a Sunday attack on U.S. counter-terror forces in Kenya, with al-Qaeda-linked al-Shabaab militants claiming responsibility for the act. The raid came after a U.S. airstrike killed several members of the Somalia-based group, even as more troops are being dispatched to the Middle East.

Rising tensions between the U.S and Iran have already caused unprecedented disruptions to oil markets, but so far they’ve been short-lived. Last year, Washington blamed Tehran for sabotage attacks on supertankers and a missile and drone attack on Saudi Arabia’s Abqaiq crude-processing plant in September — the largest single supply halt in the industry’s history.

Trump’s tough talk followed Iran’s threat of a protracted response, and eclipsed a previous assertion that the U.S. hadn’t launched the attack near Baghdad airport on Thursday to “start a war.” The president is also sending more troops to the Middle East.

The Iranian leadership has signaled it will probably target U.S. military installations and bases in the Middle East and mobilize its network of militias across the region.

Beyond crude’s rise, there were other signals in the market that people were preparing for further disruption.

Volatility has risen to its highest level in a month and the cost of derivatives that insure against price spikes increased. Four million barrels of options contracts that would profit from a jump in Brent crude to $95 a barrel traded for both March and September. The cost of insuring tankers could rise again, after it surged in the wake of the Abqaiq attack in September.

Still, oil’s 23% rise last year could already have taken it to levels that may not leave much room for further increase, according to analysts.

Goldman Sachs Group Inc. said an actual disruption to global supplies is needed to keep prices are current levels. They were already trading above the bank’s fundamental fair value of $63 prior to the attack, buoyed by an “over-enthusiastic December risk-on rally” without evidence of an acceleration in global growth, the bank’s analysts wrote in an emailed note.

“The oil market always assumes the worst, so a lot of the general risk is already priced in,” said Jaafar Altaie, managing director of Abu Dhabi-based consultant Manaar Group. “Prices at $70 a barrel already assume the worst-case scenario and we see them holding there, in a range from $60-$70, for the first quarter.”

The greatest risk to supply would be an attack on Iraq’s southern fields, he said. Iran would likely continue to target tankers and energy infrastructure in the region as it’s accused of having done in recent months, Christof Ruehl, a researcher on energy and policy at both Columbia and Harvard universities, said on Bloomberg television Sunday.

“They’re walking a tight rope” and face retaliation if they react too forcefully, Ruehl said.

–With assistance from Alex Longley and Dan Murtaugh.

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Economy grows more than expected, keeping the Bank of Canada 'on its toes' – Financial Post

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January GDP strongest monthly growth in a year

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The Canadian economy surprised to the upside in January, posting its strongest monthly growth in a year, which could keep the Bank of Canada “on its toes,” say economists.

Real gross domestic product (GDP), which measures the value of goods and services produced during a specific time frame, edged up by 0.6 per cent in January, according to Statistics Canada, beating analysts’ expectations of 0.4 per cent. The agency also expects a 0.4 per cent rise in GDP during February.

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“To put that two-month flurry of growth into perspective, the combined one per cent gain is as much as the economy grew in the entire 12 months of 2023,” Bank of Montreal chief economist Douglas Porter said in a note. “After a prolonged lull through much of last year … the economy looks to have caught some strong tailwinds early this year.”

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The rise in GDP was due to broad-based growth in 18 of the 20 sectors measured by Statistics Canada.

The public sector, which includes education, health care and social assistance and public administration, increased 1.9 per cent in January, following two consecutive monthly declines. Education, which grew by six per cent, was the largest contributor to the country’s growth as activity rebounded from strikes by public sector workers in Quebec late last year.

Manufacturing fully recouped December’s decline in growth with a 0.9 per cent rise in January. A sudden drop in temperature in mid-January in parts of Canada contributed to increased activity in the utilities sector, which rose by 3.2 per cent, its highest growth rate since January 2022.

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The real estate and rental sector grew for a third consecutive month — by 0.4 per cent — on higher resale activity. The Greater Toronto Area, Hamilton-Burlington and most markets in Ontario’s Greater Golden Horseshoe contributed to the growth.

The information and cultural services sector, which includes the motion picture and sound recording industry, also grew for the third consecutive month, as activity continued to ramp up following the end of a strike by the Screen Actors Guild – American Federation of Television and Radio Artists in November.

These “robust” figures could pose a difficult challenge for the Bank of Canada, Toronto-Dominion Bank economist Marc Ercolao said in a note.

While the central bank has received “solid evidence” in the past two months that inflation is cooperating, “strong GDP data prints” such as today’s will “keep them on their toes,” said Ercolao, who expects the first interest rate cut to take place in July.

On the labour front, Statistics Canada said there were 632,100 job vacancies in January, down 34,800, or 5.2 per cent, from November. Vacancies in the manufacturing sector declined by 10.2 per cent to 37,500, the lowest level since September 2017.

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Monthly payroll increases were recorded in 13 of 20 sectors, led by retail trade, manufacturing and finance. But these gains were offset by a 0.3 per cent decline in construction.

The number of employees receiving pay and benefits from their employers, as measured by payroll employment, rose for the first time in the retail trade after four consecutive monthly declines.

Despite the strong start to the year, some economists expressed caution, especially regarding February’s GDP estimate.

Claire Fan, an economist at the Royal Bank of Canada, said the “substantially stronger-than-expected” numbers are partially driven by one-off factors such as the ending of the Quebec teachers’ strike, so growth isn’t likely to be sustained in the coming months.

“We’ve learned to take the advance estimates (February) with a grain of salt as they have been highly revision prone,” she said, while retaining RBC’s assessment of a weak economic backdrop.

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BMO’s Porter said Canada experienced something similar last year when GDP stalled after a strong start to the year.

“There could be a serious issue with seasonality here, especially in light of much milder winters recently,” he said.

Despite the increase in GDP, most economists have stuck to their previous predictions that June will be when the Bank of Canada issues its initial interest rate cut.

• Email: nkarim@postmedia.com

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Former crypto mogul Sam Bankman-Fried sentenced to 25 years in prison

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Bankman-Fried, 32, sentenced for fraud on customers of the FTX cryptocurrency exchange he founded.

Former crypto tycoon Sam Bankman-Fried has been sentenced to 25 years in United States federal prison for stealing $8bn from customers of the now-bankrupt FTX cryptocurrency exchange he founded.

US District Judge Lewis Kaplan handed down the sentence at a Manhattan court hearing on Thursday after rejecting Bankman-Fried’s claim that FTX customers did not actually lose money and accusing him of lying during his trial testimony.

A jury found Bankman-Fried, 32, guilty on November 2 on seven fraud and conspiracy counts stemming from FTX’s 2022 collapse in what prosecutors have called one of the biggest financial frauds in US history.

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“He knew it was wrong,” Kaplan said of Bankman-Fried before handing down the sentence. “He knew it was criminal. He regrets that he made a very bad bet about the likelihood of getting caught. But he is not going to admit a thing, as is his right.”

Bankman-Fried stood with his hands clasped before him as Kaplan read the sentence.

Kaplan said the sentence reflected “that there is a risk that this man will be in position to do something very bad in the future. And it’s not a trivial risk at all.”

Prior to sentencing, Bankman-Fried stood and apologised. “A lot of people feel really let down. And they were very let down. And I’m sorry about that. I’m sorry about what happened at every stage,” he said.

“My useful life is probably over. It’s been over for a while now, from before my arrest.”

Sam Bankman Fried
Sam Bankman-Fried, centre left, is escorted out of Magistrate Court following a hearing in Nassau, Bahamas, Dec. 19, 2022 [File: Rebecca Blackwell/AP Photo]

Al Jazeera’s Kristen Saloomey, reporting from New York, said that Bankman-Fried could have received up to 110 years behind bars for his crimes and that the 25-year sentence was less than the 40-50 years that prosecutors were seeking.

“Given the scale of this crime, one of the largest frauds in history, the judge took a very strong stance but also showed some flexibility… perhaps based on the arguments made by Bankman-Fried’s lawyers and his family that he had always intended to do good”, she said.

Bankman-Fried had billed himself as a proponent of effective altruism – finding the best way to help other people, in particular by donating all or part of one’s wealth to charity rather than, say, volunteering at a soup kitchen.

When the cryptocurrency world lurched into crisis in the spring of 2022, he bought shares in the troubled platform BlockFi and another troubled company, Voyager.

However, prosecutors have said the responsible image he cultivated concealed his years-long embezzlement of customer funds.

“The defendant victimised tens of thousands of people and companies, across several continents, over a period of multiple years. He stole money from customers who entrusted it to him” prosecutors said in a court filing.

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Gas prices in the Thompson Okanagan jumped by 7 cents a litre, days before the next carbon tax increase – Vernon News – Castanet.net

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Some area gas stations are not waiting until April 1 to crank up the price of gas.

On April Fools Day, the federal Liberals will be increasing the controversial carbon tax, which will directly impact the price at the pump.

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However, overnight, several Thompson Okanagan gas stations have already increased the price, selling the liquid gold for 174.9.

In January, gas was selling for a ‘mere’ 143.9 cents a litre. The latest hike is a whopping 31-cent-a-litre increase in just three months.

And the price of petrol is guaranteed to go up again when the carbon tax increase is implemented on Monday.

Kelowna drivers are also paying more at the pump today, with the majority of stations raising the price to 174.9.

As of 9:30 Thursday morning, the Co-op stations on Rutland and Sexsmith roads were at 168.9 as was the Costco gas station.

Several Vernon stations are holding at 167.9.

In Penticton, motorists are also paying more, with the price at the majority of stations hitting the 174.9 mark.

Kamloops drivers are also taking a hit to the wallet with gas in the Thompson community also selling for 174.9.

The Kamloops Costco was the cheapest in the city at 161.9 cents a litre.

Enderby continues to have some of the cheapest gas in the region at 165.9, however the Esso in Tappen has them all beat at 157.9.

Gas in Vancouver has crested the $2 a litre mark, sitting at 202.9 cents a litre.

And as usual, Calgary motorists are paying significantly less than their BC counterparts, filling up for 154.9 cents a litre.

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