๐ŸŒ Russia cuts its oil production


๐ŸŒ Russia cuts its oil production

Plus: The BOJ changes leadship

Hi there Intriguer.ย Happy St Valentine’s day! If youโ€™re not in the mood to celebrate romantic or platonic love, remember that according to one theory, we observe the passionate holiday in February because of the mating calendar of European birds. If that doesn’t cheer you up, ponder that the Indian government tried (and failed) to persuade its citizens to observe โ€˜Cow Hug Dayโ€™ instead of St Valentineโ€™s day.

Todayโ€™s edition is a 4.4 min read:

  • ๐Ÿ‡ท๐Ÿ‡บ Russia cuts oil output amid revenue drop.
  • ๐Ÿ‡ฏ๐Ÿ‡ต Japanโ€™s central bank changes leadership for the first time in a decade.
  • โž• Plus:ย Chinaโ€™s wolf warrior diplomacy isnโ€™t working, how the papers are covering the Lula-Biden summit, and Azerbaijan takes Armenia to court.

– VC & EP

๐Ÿ—บ๏ธ AROUND THE WORLD
  1. ๐Ÿ‡ฆ๐Ÿ‡ฒ Armenia: The Armenia-Turkey border reopened for the first time in 35 years on Sunday, as Armenian trucks entered Turkey to deliver aid to earthquake survivors. The border was last opened in 1988 when Turkey sent aid to Armenia after an earthquake.
  2. ๐Ÿ‡ฉ๐Ÿ‡ช Germany: German Chancellor Scholzโ€™s party, the Social Democrats, won only 18% of the vote in Berlinโ€™s state election on Sunday, its worst result in Berlin’s post-war era. This was a re-run of a botched 2021 election that was declared invalid.
  3. ๐Ÿ‡ฐ๐Ÿ‡ญ Cambodia: Prime Minister Hun Sen has forced one of Cambodiaโ€™s last independent news outlets, Voice of Democracy, to shutter. Hun Sen has ruled Cambodia since 1985, faces re-election in July (we like his odds), and often restricts speech before elections.
  4. ๐Ÿ‡ณ๐Ÿ‡ฎ Nicaragua: A Catholic bishop has been sentenced to 26 years in prison, days after refusing to be transferred with other political prisoners to the United States. Pope Francis has attempted to intervene with President Ortega on the bishopโ€™s behalf.
  5. ๐Ÿ‡ฎ๐Ÿ‡ฑ Israel: Hundreds of thousands of Israelis protested over the weekend and Monday against the Netanyahu government’s proposed judicial reforms. Israel’s President (a largely ceremonial role) said the reforms risk โ€œsocietal and constitutional collapse.โ€
๐Ÿ‡ท๐Ÿ‡บ RUSSIA | ENERGY

โ€œAnd for my next trickโ€ฆโ€

Energy prices likely to rise after Russia cuts oil production

Briefly: Russia announced on Friday (10 February) it would cut oil production by 500,000 barrels per day in March, or approximately 5% of its total output. Global oil prices rose from $84 to $86 a barrel on Friday morning following the announcement.

Russia claims the voluntary cuts – made without other OPECย oil producers – are a response to Western sanctions and the G7โ€™s oil price cap scheme. The G7 scheme came into effect in December and caps the price of most Russian crude at $60 per barrel. By cutting supply in response, Russia hopes to push back with its own upwards pressure on prices.

But the cuts might not be as voluntary as they seem.ย Due to Western sanctions, demand for Russian oil is likely still below supply. Without Western buyers, India and China have happily imported Russian oil by the barrelful at steep discounts.

As a result, Russia is earning less: oil revenues in January 2023 were halfย what they were a year earlier. So if the market is forcing Russia to cut production anyway, its announcement may simply be about appearing in control rather than at the mercy of Western sanctions.

Intrigueโ€™s take: Russiaโ€™s announcement tells us two important things:

  1. Western oil import bans and price caps seem to be working to disrupt the Russian economy where other sanctions have largely failed.
  2. If China’s energy demand continues to climb from its Covid-zero trough, we can all expect higher energy prices ahead.

Also worth noting:ย 

  • Russiaโ€™s central bank said on Friday it was considering raising interest rates to combat inflation.
  • Indian imports of Russian crude increased a whopping 1400% during 2022, from 68,000 barrels per day in March to 959,000 barrels per day in November.
๐Ÿ“ฐ GLOBAL PERSPECTIVES

How different newspapers covered:ย Last Fridayโ€™s (10 February) meeting between US President Joe Biden and Brazilian President Lula da Silva.

Links: NYT, Folha, Perfil.ย 

Sponsored byย The Gist

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๐Ÿ‡ฏ๐Ÿ‡ต JAPAN | ECONOMICS

A surprise reveal at the Bank of Japan

Japanโ€™s new central bank chief breaks with tradition

Briefly: Prime Minister Fumio Kishida has broken with tradition and nominated surprise candidateย Kazuo Ueda as the next head of the Bank of Japan (BOJ). Ueda is a bit of an outsider (as economics professors can sometimes be), and is seen as a politically neutral candidate, breaking with the tradition of selecting central bank chiefs from Japanโ€™s political and economic establishment.

Uedaโ€™s predecessor has been at the helm of the countryโ€™s central bank for a decade and is known for supporting monetary policy as loose as menโ€™s jeans in the 90s. For now, Ueda has cautioned marketsย not to expect a sudden increaseย in interest rates.

Intrigueโ€™s take: Uedaโ€™s surprise nomination comes at a delicate time for Japan. Inflation is pressuring the BOJ to abandon its hyper-low interest rates, but the transition will have to be handled with extreme care to avoid negative shocks. No wonder Prime Minister Kishida reportedly struggled to find candidates willing to take the job: it’s a classic ‘hospital pass‘.

Also worth noting:ย 

  • Japanโ€™s core inflation rose to 4% this past December, the highest figure in 41 years.
  • Approval for Prime Minister Kishidaโ€™s Cabinet has fallen to an all-time low of 26.5%.
๐Ÿ“š REPORT OF THE DAY

More trade, more influence. Credits: China Index 2022.

Chinese carrots > Chinese sticks

China’s foreign policy with aggressive characteristics,ย commonly known by the catchy name of โ€˜wolf warrior diplomacyโ€™, isnโ€™t particularly effective, according to the recently published โ€˜China Index 2022โ€™ report.

Instead, the report finds that deepening trade ties is a far more successful strategy to bolster Beijingโ€™s influence in a foreign country. Who wouldโ€™ve thought?

Additional findings of interest:

  1. China’s influence is highest in East and Southeast Asia.
  2. A higher incidence of corruption is associated with lower coercive pressure from China, which could suggest Beijing prefers exploiting pre-existing networks to establish its influence, rather than using more coercive tactics.
๐Ÿ‘€ EXTRA INTRIGUE

Weโ€™re very online, so you donโ€™t have to be.ย 

๐Ÿ—ณ๏ธ POLL TIME!

If Intrigue were to launch a new thematic newsletter, what would you want it to focus on?

Login or Subscribe to participate in polls.

Yesterday’s poll:ย Do you think the US offered Nicaragua something in exchange for the freeing of political prisoners?

๐ŸŸฉ๐ŸŸฉ๐ŸŸฉ๐ŸŸฉ๐ŸŸฉ๐ŸŸฉ ๐Ÿ”Ž Yes, for sure (let us know what you think the US offered!) (73%)

๐ŸŸจ๐ŸŸจโฌœ๏ธโฌœ๏ธโฌœ๏ธโฌœ๏ธ โ›” No, the US said the decision was taken “unilaterally” by Nicaragua. (27%)

Your two cents:ย 

  • ๐Ÿ”Žย R.D. “Likely a more lucrative financial package. Something with better terms than what China is offering through the Belt&Road.”
  • ๐Ÿ”Ž D.K: “Superbowl tickets”
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