1. Drastic OPEC+ Cuts Signal Group Cohesion
- Having met in person for the first time in more than two years, OPEC+ agreed to cut oil production in November 2022 by 2 million b/d from current production targets, setting it on a collision course with the US.
- Because OPEC+ has already been underperforming by almost 4 million b/d, the real output curbs would amount to some 1.0-1.1 million b/d, according to the Saudi energy minister.
- The deal sent oil prices back to territory that most OPEC+ countries feel comfortable with, as ICE Brent is back at $95/barrel and WTI is increasingly flirting with the $90/barrel threshold.
- Angered that the OPEC+ move would lift gasoline prices right before the midterm elections, the Biden Administration threatened to initiate legal anti-trust action against the oil group.
2. Sliding Yuan Creates Headache Ahead of Party Congress
- As the 20th National Congress of the CCP is set to start on October 16, China’s monetary authorities have been desperately trying to keep the Chinese yuan from sliding even lower.
- Stronger even at the peak of COVID, the yuan tumbled some 7% from mid-August and hit a 14-year low of ¥7.25 per USD in late September, forcing the Chinese Central Bank to instigate a quick dollar sell-off.
- Whilst a weaker yuan makes Chinese exports more attractive, it also stokes further volatility in the country’s financial sector as foreign investors have…