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Will OPEC’s Surprise Production Cuts Push Oil Prices To $100?



OPEC+ stunned the oil market, announcing additional surprise production cuts until the end of this year and sending prices up by around $5 a barrel in a single-day surge on Monday.

Brent Crude bounced back to $85, and WTI Crude hit $80 per barrel again, as the latest 1.66 million bpd of cuts from nearly half of the OPEC+ members from May through December are expected to tighten the market in the second half of the year.  

Analysts, who had just slashed price forecasts in the wake of the banking sector jitters in mid-March, raised their price estimates and started talking about $100 oil again.


OPEC said on Monday that its Joint Ministerial Monitoring Committee (JMMC) meeting “noted that this is a precautionary measure aimed at supporting the stability of the oil market,” using the same wording as Saudi Arabia did in its own announcement on Sunday.

OPEC Controls The Oil Market  Although OPEC and OPEC+ never talk explicitly about oil prices and prefer to refer to “stability” when they move to tighten the market with cuts, many analysts believe that the group is defending an $80 floor under prices.

The surprise cut made one thing clear—OPEC is firmly in control of the oil market and has the arsenal of rhetoric, surprise announcements, and actual production cuts to lift oil prices whenever they feel they are not getting enough money for their crude.


American oil executives had already said in early March that OPEC is once again the most influential force in global oil supply – and will be so for the foreseeable future – now that U.S. shale production growth is slowing.

Scott Sheffield, CEO at the largest pure-play shale producer, Pioneer Natural Resources, told the Financial Times just last month, “I think the people that are in charge now are three countries — and they’ll be in charge the next 25 years.”

“Saudi first, UAE second, Kuwait third.”

It was Saudi Arabia, the UAE, and Kuwait who led the surprise cuts, alongside OPEC’s second-largest producer Iraq and another half a dozen OPEC+ producers, including Russia.

While Russia’s extension of its own 500,000-bpd cut until the end of the year was no surprise – analysts had largely baked in a drop in Russian production in view of the embargoes and price caps on its oil – the move from OPEC’s heavyweights came as a surprise. And sent a clear message to the market—we are in charge.

“It is easy to cut production when shale oil production growth is muted,” Bjarne Schieldrop, chief analyst of commodities at SEB bank, said

“The cuts decided this weekend shows explicitly what peak Permian oil production will mean: Power back to OPEC+ and higher prices.”

Cuts Help Russia, Stick It To Biden

“Apart from supporting prices amid worries about an economic slowdown hurting demand, the surprise production cut also helped throw short sellers under bus,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, commented. Hansen recalled the proverbial promise of Saudi Energy Minister Prince Abdulaziz bin Salman back in 2020, “I’m going to make sure whoever gambles on this market will be ouching like hell.”

The surprise cut also indirectly helps Russia, the leader of the non-OPEC group in OPEC+. A tighter market and higher prices would mean increased prices even for Russia’s discounted crudes, boosting oil revenues for Putin’s war chest.

For the U.S. Administration, higher prices for Russian oil are undesirable, considering that so far, American officials have said publicly that the $60 price cap is working. But more undesirable for the U.S. are higher gasoline prices, especially as the price is set to go up anyway with the start of the driving season. The U.S. cannot do much to tame the price of oil. Shale’s production growth is slow, while the Administration doesn’t have too much room to further deplete the Strategic Petroleum Reserve (SPR).

$100 Oil?

All things being equal, the cuts could send oil to $100 per barrel in the second half of 2023, many analysts said.

Supply will tighten, no doubt, because the OPEC+ producers who announced the cuts on Sunday are known to have nearly always delivered. The big question is demand. Will it hold with China’s reopening? Or will a renewed hike in energy prices stoke inflation again and force central banks to continue with rate hikes and raise the chances of a hard landing?

“It now appears that OPEC+ would prefer prices to be close to $90 a barrel than $80, which might be ok for them, but could make inflationary pressures for everyone else much harder to subdue,” Michael Hewson, chief market analyst at CMC Markets, wrote on Monday.

Warren Patterson, Head of Commodities Strategy at ING, said, “We will need to keep an eye on whether the aggressive tightening from central banks around the world leads to a stronger-than-expected slowdown later in the year.”

ING on Monday raised its Brent price forecast for the second half of the year to $101 per barrel, up from $97 previously expected.

Goldman Sachs raised its Brent Crude forecast to $95 from $90 at the end of the year.

The cuts are making oil balances look “insanely bullish” for later this year, provided that the global economy holds up, Amrita Sen, founder and director of research at Energy Aspects, told CNBC on Monday. Asked if we will see oil at $100 this year, Sen told CNBC, “I absolutely think we will see a $100 oil, yes.”

But Ed Morse, global head of commodities research at Citigroup, doesn’t see oil prices going anywhere near $100 per barrel, as U.S. supply growth and uncertainty in China’s demand growth path will keep the market fairly balanced.

According to Ed Moya, senior market analyst, The Americas at OANDA, “Clearly, the Saudis were not comfortable with how low oil prices were going and wanted to send a message here.? Energy analysts are going to have to reset any downbeat macro-driven forecast as oil is clearly making a run back towards $100 oil.”

By Tsvetana Paraskova for




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Unveiling the Reality of Canada’s FACE Loan for Black Businesses




In an effort to address economic disparities and promote entrepreneurship among Black communities, Canada introduced the Federal Black Entrepreneurship Program (FBEP) and the associated Black Entrepreneurship Loan Fund (BEFL). However, recent revelations have brought to light a shocking reality: the underutilization and obstacles faced by Black businesses in accessing the FACE (Funding for Black Entrepreneurship) loans. In this thought-provoking article, we delve into the numbers and uncover the challenges and experiences of Black entrepreneurs in navigating these loan programs. Through interviews with business owners, experts, and advocates, we shed light on the systemic barriers that hinder their success and explore potential solutions for a more equitable and inclusive lending landscape.

The FACE loan program was created with the intention of providing financial support and resources to Black-owned businesses. However, the reality has been far from the expected outcomes. Jessica Thompson, an economist specializing in racial disparities, states, “The FACE loan program was designed to address historical economic disadvantages, but the numbers reveal a significant gap between its objectives and the lived experiences of Black entrepreneurs.”

Black entrepreneurs face numerous hurdles when attempting to access FACE loans. A lack of awareness about the program, complex application processes, and limited outreach to communities in need contribute to low participation rates. Michael Johnson, a business owner, shares his frustration, saying, “It’s disheartening to see a program that was meant to uplift Black businesses fall short due to bureaucratic obstacles. Many of us struggle to navigate the application process and meet the stringent criteria.”

Systemic barriers and discrimination persist within the lending landscape, perpetuating the cycle of inequality. Dr. Maya Williams, a sociologist specializing in racial disparities, explains, “Structural racism and bias continue to disadvantage Black entrepreneurs. Discrimination in loan approvals, higher interest rates, and limited access to capital contribute to the challenges faced by Black-owned businesses.”


The consequences of the FACE loan program’s shortcomings are far-reaching. Many Black-owned businesses struggle to access the capital needed for growth, expansion, and operational sustainability. Tanya Campbell, a business owner, emphasizes, “The lack of financial support hampers our ability to scale our businesses, hire employees, and contribute to the local economy. It perpetuates a cycle of limited opportunities and restricted growth.”

To address the disparities within the FACE loan program, experts and advocates propose several solutions. Improved outreach and community engagement, simplified application processes and tailored support services can increase access and awareness among Black entrepreneurs. John Stevens, a business consultant, suggests, “The government must invest in targeted initiatives that address the specific needs and challenges faced by Black-owned businesses, such as mentorship programs, financial literacy training, and capacity-building initiatives.”

Addressing the challenges faced by Black entrepreneurs requires collaboration and accountability from various stakeholders. Governments, financial institutions, and community organizations must work together to create an inclusive lending ecosystem. Mary Johnson, an advocate for Black economic empowerment, states, “Transparency, accountability, and ongoing dialogue between policymakers, lenders, and Black entrepreneurs are essential to drive meaningful change and ensure equal opportunities for all.”

The FACE loan program aimed to empower Black entrepreneurs and address economic disparities, but the reality falls short of expectations. The underutilization and obstacles faced by Black businesses in accessing FACE loans highlight the pressing need for systemic change within the lending landscape. By acknowledging and addressing the structural barriers, streamlining processes, and fostering collaboration, we can create a more inclusive and equitable environment where Black entrepreneurs thrive. It is through proactive measures, collective effort, and ongoing dialogue that we can dismantle systemic inequities and build a future where Black-owned businesses have equal access to the resources and support necessary for success.

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Oil Prices Climb As Default Fears Fade



Crude oil began trading this week with a gain after President Biden and House Speaker Kevin McCarthy were reported to have reached a provisional agreement on raising the debt ceiling.

At the time of writing, Brent crude was trading at over $77 per barrel and West Texas Intermediate was changing hands at over $73 per barrel.

Debt ceiling negotiations have been a major factor for oil price movements in the past couple of weeks, mostly because of the apparent inability of Republicans and Democrats in Congress to strike any semblance of an agreement on how to increase the federal government’s borrowing power.


According to early reports on the tentative deal, it involves flat spending over the next two years and the recycling of unused Covid funds.

Although such tense negotiations have been relatively regular in past years, they have eventually ended with an agreement, and default has invariably been avoided.

This historical evidence could have served to stabilize prices but it did not, and neither did mixed data about China’s recovery. On the one hand, PMI readings are showing an uneven rebound in economic activity, but on the other, demand for oil as evidenced by import rates, is going strong.

To complicate the picture further, OPEC+ is reportedly in two minds about what to do with its output at its next meeting.

According to reports quoting Saudi Energy Minister Abdulaziz bin Salman, he has hinted at another round of output cuts.

According to reports quoting Russia’s Deputy Prime Minister and top OPEC+ official Alexander Novak, the co-leader of the extended cartel is fine with production where it is right now.

Thanks to its recent gains, oil’s decline since the start of the year has shrunk from about 14% earlier this month to just 9% as of the start of this week, according to Bloomberg.

By Irina Slav for



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U.S. debt-limit deal brings relief tinged by caution



American equity futures posted modest gains amid cautious optimism the U.S. will avert a catastrophic default after the weekend’s tentative debt-ceiling deal. European stocks wavered in muted holiday-affected trading.

Contracts on the S&P 500 climbed about 0.2 per cent, while those on the Nasdaq 100 were up around 0.3 per cent, with trading set to end early for Memorial Day. The dollar, which has benefited from angst around the statutory borrowing limit, held Friday’s decline while Treasury futures were flat in the absence of cash trading.

The Stoxx Europe 600 index edged lower, with Spain’s benchmark underperforming after Prime Minister Pedro Sanchez called a surprise snap election following heavy losses for his party in regional and local elections Sunday. Volumes were about 60 per cent lower than usual as markets in the U.K. and some European countries remained closed for national holidays. SBB gained after the embattled Swedish landlord said it may look to sell the company. A gauge of Asia-Pacific equities rose, though Chinese shares slid closer to a bear market.

President Joe Biden and House Speaker Kevin McCarthy expressed confidence that their agreement to curtail spending and extend the borrowing limit will pass through Congress. But even assuming lawmakers seal the deal before the U.S. government runs out of cash in about a week, traders still have much to contend with — from the prospect of another interest-rate hike from the Federal Reserve to a likely deluge of bond issuance from the U.S. Treasury Department.


“The obvious positive interpretation is that a negative tail risk is close to being taken off the table,” said Dan Suzuki, deputy chief investment officer at Richard Bernstein Advisors. “With the distraction of the debt ceiling fading into the background, investors can now refocus their attention on the underlying fundamentals. One concern, though, is that the fundamental picture remains precarious.”

European bonds rose, with Germany’s 10-year yield falling about 11 basis points. Spain’s 10-year yield dropped by a similar amount.

Meanwhile, Turkey’s lira weakened after Recep Tayyip Erdogan won a presidential runoff election on Sunday, extending his time as the nation’s longest-serving leader and leaving investors looking for any signs he’ll start to relax the state’s tight grip over markets. The nation’s stocks benchmark gained.

Gold was flat on waning demand for havens, while as oil held onto most of Friday’s gains and Bitcoin climbed, reflecting a modestly buoyant tone.


The agreement struck by Biden and McCarthy is running against the clock given that June 5 is the date when Treasury Secretary Janet Yellen has said cash will run out. There is plenty in the deal that Democrats and Republicans won’t like.

“Uncertainty persists regarding the duration and severity of the ongoing earnings recession, and perversely, the near-term tightening of liquidity may worsen due to the government’s need to address its debt issuance backlog,” said Suzuki. “While the markets managed to avert an immediate crisis, the coast is far from all-clear just yet.”

The rate-sensitive two-year Treasury drifted Friday as traders considered how a debt agreement could play into the Fed’s path forward on interest rates. The two-year yield hovered around 4.65 per cent after a report on consumer spending showed the Fed still has more work to do to bring inflation back toward its target.

“Markets will have the liquidity hassles to deal with, as the Treasury will issue a deluge of bonds to restore its cash reserves,” said Charu Chanana, market strategist at Saxo Capital Markets. “Not to forget, the hawkish re-pricing of the Fed path that we have seen last week could possibly get firmer if we get a hot jobs print this week.”

Key events this week:

  • U.S. Memorial Day holiday. U.K., Switzerland and some Nordic markets also closed for holidays, Monday
  • Eurozone economic confidence, consumer confidence, Tuesday
  • U.S. consumer confidence, Tuesday
  • Richmond Fed President Thomas Barkin interviewed by NABE as part of monetary policy webinar series, Tuesday
  • China manufacturing PMI, non-manufacturing PMI, Wednesday
  • U.S. job openings, Wednesday
  • Fed issues Beige Book economic survey, Wednesday
  • Philadelphia Fed President Patrick Harker has fireside chat on the global macro-economy and monetary conditions, Wednesday
  • Boston Fed President Susan Collins and Fed Governor Michelle Bowman speak in Boston, Wednesday.
  • ECB issues financial stability review, Wednesday
  • China Caixin manufacturing PMI, Thursday
  • Eurozone HCOB Eurozone Manufacturing PMI, CPI, unemployment, Thursday
  • U.S. construction spending, initial jobless claims, ISM Manufacturing, light vehicle sales, Thursday
  • ECB issues report its May 3-4 monetary policy meeting. ECB President Christine Lagarde speaks at German savings banks conference, Thursday
  • Philadelphia Fed President Patrick Harker speaks on economic outlook at NABE’s webinar, Thursday
  • U.S. unemployment, nonfarm payrolls, Friday

Some of the main moves in markets:


  • S&P 500 futures rose 0.2 per cent as of 9:56 a.m. New York time
  • Futures on the Nasdaq 100 rose 0.3 per cent
  • The Stoxx Europe 600 fell 0.2 per cent
  • The MSCI World index was little changed


  • The Bloomberg Dollar Spot Index was little changed
  • The euro fell 0.1 per cent to US$1.0709
  • The British pound was unchanged at $1.2344
  • The Japanese yen rose 0.3 per cent to 140.22 per dollar


  • Bitcoin rose 1.3 per cent to $27,919.46
  • Ether rose 2.5 per cent to $1,901.1


  • Germany’s 10-year yield declined 11 basis points to 2.43 per cent


  • West Texas Intermediate crude fell 0.3 per cent to $72.43 a barrel
  • Gold futures were little changed



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