Harvard's turn in Trump's crosshairs
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Khaleej Times
3 hours ago
- Khaleej Times
Opec+ makes another large oil output hike in market share push
Opec+ agreed on Sunday to raise oil production by 547,000 barrels per day for September, the latest in a series of accelerated output hikes to regain market share, as concerns mount over potential supply disruptions linked to Russia. The move marks a full and early reversal of Opec+'s largest tranche of output cuts plus a separate increase in output for the UAE amounting to about 2.5 million bpd, or about 2.4 per cent of world demand. Eight Opec+ members held a brief virtual meeting, amid increasing US pressure on India to halt Russian oil purchases — part of Washington's efforts to bring Moscow to the negotiating table for a peace deal with Ukraine. President Donald Trump said he wants this by August 8. In a statement following the meeting, Opec+ cited a healthy economy and low stocks as reasons behind its decision. Oil prices have remained elevated even as Opec+ has raised output, with Brent crude closing near $70 a barrel on Friday, up from a 2025 low of near $58 in April, supported in part by rising seasonal demand. 'Given fairly strong oil prices at around $70, it does give Opec+ some confidence about market fundamentals,' said Amrita Sen, co-founder of Energy Aspects, adding that the market structure was also indicating tight stocks. The eight countries are scheduled to meet again on September 7, when they may consider reinstating another layer of output cuts totalling around 1.65 million bpd, two Opec+ sources said following Sunday's meeting. Those cuts are currently in place until the end of next year. Opec+ in full includes 10 non-Opec oil producing countries, most notably Russia and Kazakhstan. The group, which pumps about half of the world's oil, had been curtailing production for several years to support oil prices. It reversed course this year in a bid to regain market share, spurred in part by calls from Trump for Opec to ramp up production. The eight began raising output in April with a modest hike of 138,000 bpd, followed by larger-than-planned hikes of 411,000 bpd in May, June and July, 548,000 bpd in August and now 547,000 bpd for September. 'So far the market has been able to absorb very well those additional barrels also due to stockpiliing activity in China,' said Giovanni Staunovo of UBS. 'All eyes will now shift on the Trump decision on Russia this Friday.' As well as the voluntary cut of about 1.65 million bpd from the eight members, Opec+ still has a 2-million-bpd cut across all members, which also expires at the end of 2026. 'Opec+ has passed the first test,' said Jorge Leon of Rystad Energy and a former Opec official, as it has fully reversed its largest cut without crashing prices. 'But the next task will be even harder: deciding if and when to unwind the remaining 1.66 million barrels, all while navigating geopolitical tension and preserving cohesion.'
The National
3 hours ago
- The National
With Gaza in the global spotlight, expect Israel to turn the heat on Hezbollah
Israel finds itself in need of diverting global attention away from its atrocities in Gaza. Enter Hezbollah. The Israeli government appears to see renewed war with the Lebanese group as a chance to further its interests, pretexting the latter's refusal to surrender its weapons to the Lebanese state as it previously pledged. The timing is driven by several factors. The administration of US President Donald Trump has grown weary of waiting for Beirut to fulfil its promise of exclusive state control over arms, and it might be ready to endorse any Israeli decision, regardless of its severity. Another factor is Iran's unwillingness to enter a direct war with Israel on Hezbollah's behalf. Indeed, Tehran is both preoccupied with the fallout from the recent US and Israeli strikes and worried about another wave of attacks in the near future. Still, it refuses to abandon its strategy of using armed regional proxies as bargaining chips in potential negotiations with Washington. Tensions between the US and Iran are thus escalating – manifested through American sanctions, Iranian threats and Israeli war preparations. Iran's proxies in Lebanon and Yemen are on high alert, and the wider Iranian 'Axis of Resistance' is watching events closely, from Iraq to Gaza. Israel has zero tolerance regarding Hezbollah's arsenal. It has convinced the Trump administration that if the Lebanese government fails to implement its disarmament pledge, Israel has no choice but to press ahead with its war on the group. Meanwhile, the international conference on the two-state solution – co-chaired by Saudi Arabia and France at the UN – might have angered Iran. The Islamic Republic's ideology rejects the two-state solution, with its doctrine calling for Israel's destruction. Moreover, the conference's show of global support for the Palestinian Authority as the sole legitimate representative of the Palestinian people was also a collective cry against Hamas, a key player in Iran's axis. Just as Israel is indifferent to the civilian toll in Gaza, Iran appears unbothered by Palestinian suffering, particularly as long as Hamas remains faithful to the axis. Mr Trump was recently forced to acknowledge the human-made famine in Gaza, having previously denied this reality. While he didn't initially act against Israel, which is enacting a policy of starvation in the enclave, he spoke about it after parts of his Maga political base pressed him to intervene to end the humanitarian catastrophe. This was accompanied by a different kind of global political pressure as Mr Trump was challenged by European and non-European allies who participated in the two-state solution conference and endorsed its final communique charting a path towards a Palestinian state alongside Israel. There are concerns over possible vindictive responses from Mr Trump, particularly if he feels isolated on the international stage. There is unease over his administration sanctioning the PA's leadership, which the latter says is a form of punishment for seeking the establishment of a Palestinian state. It shouldn't surprise anyone if Israel seeks to crush everything that emerged from the UN conference. It views the PA as an obstacle to its ambitions of annexing the West Bank. It opposes the near-unanimous international view that Hamas should be dismantled, only because its policy is to fracture Palestinian unity and undermine the PA. The dilemma facing the US President over the current Israeli government's extremist policies is his growing global isolation on the Palestine issue. He may still choose to ignore increasing international momentum in favour of a Palestinian state, but it could come at a cost. Indeed, it was no small development for Saudi Arabia to insist to the international community that it won't normalise relations with Israel unless a Palestinian state is established. Riyadh's support for Palestinian statehood gained greater significance when it co-chaired the conference with France. The event brought surprising developments, including the UK's readiness to recognise the state of Palestine at next month's UN General Assembly unless Israel changes course from its current approach in Gaza. Yet a Palestinian state cannot come into being without American backing and Israeli compliance. The UN Security Council has already enshrined the two-state solution in resolutions 1397 and 1515, both supported by Washington. But the roadmap they laid out for Palestinian statehood by 2005 was never implemented and the Trump administration walked back American commitments to those resolutions. The events in New York could push Mr Trump further into the arms of Israeli extremism and its rejection of the two-state solution. Or he might find himself cornered and unable to punish the broad coalition of states that have challenged him. If so, his policy could shift under pressure. This would require a deft diplomatic effort to present Mr Trump with ways to align with the emerging consensus without feeling provoked. Countries have bilateral interests and won't risk undermining relations with Washington solely for the sake of the two-state solution. Having been increasingly scrutinised by the international community, Israel appears intent on shifting global focus away from Gaza. This is precisely because it intends to continue its policies there. And as long as European states fail to impose tangible punitive measures on Israel, and as long as Mr Trump supports its project of 'voluntary displacement', Israel will continue with its agenda. Israel's posture towards Lebanon and Iran, however, is another matter. There is little international sympathy for Iran's insistence that Hezbollah retain its arms in defiance of Lebanese sovereignty. Nor is there sympathy for Tehran's reckless endangerment of the Lebanese people's safety, security and agency. There is, likewise, little global sympathy for the Islamic Republic's stubborn adherence to its triad of strategic doctrines – nuclear capability, ballistic missiles and proxy warfare – without modifications. Thus, should it once again face US or Israeli military strikes, it is unlikely to find many sympathisers. Tehran is now trapped by American sanctions and the threat of more air strikes. Hezbollah, too, will find no one rushing to its rescue if it falls prey to Israel's attempts to shift global attention away from Gaza. Both entities will have only themselves to blame.
Khaleej Times
5 hours ago
- Khaleej Times
Never mind Wall Street records, investors rethink US market supremacy
A rebound on Wall Street and in the dollar has not allayed investor concerns about the ability of U.S. assets to outperform overseas markets, with a fresh tariff salvo once again denting market optimism after a string of trade deals struck by the Trump administration perked up sentiment for equities to set record highs. The sliding dollar, down about 8% this year against a basket of major currencies, and the ballooning fiscal deficit are shaking the conviction that U.S. financial markets will deliver world-beating returns. For more than a decade, the concept of "American exceptionalism" - the conviction that the United States' democratic system plus its huge and liquid capital markets offer unique rewards - has been little challenged by investors. But ongoing uncertainty surrounding tariffs is rattling confidence. While the deals struck by Donald Trump with the European Union, Japan and South Korea have delivered some relief, the U.S. president late on Thursday slapped dozens of trading partners with steep tariffs. A market shakeout earlier this year caused by Trump's first tariff announcements triggered a re-evaluation. The U.S. market's standing appears "a little bit bruised," said Lori Heinel, global chief investment officer at State Street Investment Management. "The overhang of the (government) debt makes it less attractive to have dollar-based assets," she added. In a survey conducted in late May and June, market research consultancy CoreData found that many institutional investors and consultants, collectively overseeing $4.9 trillion in assets, are scaling back exposure to the U.S. Among respondents, 47% are cutting their strategic, long-term allocations to U.S. markets. While investors have become more upbeat on the outlook for Europe, as well as for China and other emerging markets, bullishness toward U.S. markets now lags those regions. That, said Michael Morley, head of CoreData US, marks 'a massive reversal' from attitudes two years ago. The latest wave of tariffs on exports from dozens of trading partners, including Canada, Brazil, India and Taiwan, sent global markets tumbling on Friday. The announced duties were "somewhat worse than expected," analysts at Societe Generale said in a note. "Markets responded more negatively to the August 1 announcement than to other news in the past two months, but the reaction was far less severe than on April 2," they said. TARIFF IMPACT OVERDUE? Investors began reconsidering their allocations following Trump's "Liberation Day" tariff announcement on April 2, reassessing the allure of "brand USA" and fretting about a new recession. The Trump administration then paused tariff rollouts and subsequently began announcing deals that cap tariffs at lower levels than initially proposed. Stocks rebounded, with the SP 500 soaring 27.2% from its April 8 close to its July 31 close, setting a series of new records. CoreData, however, found that 49% of institutions believe that markets now are too complacent about the impact of U.S. tariffs. U.S. consumer prices increased by the most in five months in June, according to Consumer Price Index data, suggesting that tariffs are boosting inflation. Other data points to a moderation in economic activity, and second-quarter growth was mainly strong because imports were weak. Global asset manager Man Group, which manages roughly $193 billion, is wary of overweighting U.S. assets. 'This is an opportunity for investors to take some profits, rebalance and go to neutral on the U.S.," said Kristina Hooper, chief market strategist at Man Group. Beyond tariffs The dollar's status as the global reserve currency may be in question as the U.S. forfeits the role of free trade facilitator, said Thierry Wizman, global FX and rates strategist at Macquarie Group, adding the firm expects to sell the dollar on any rally. After suffering its worst first-half performance since 1973 this year, the dollar posted its first monthly gains for 2025 in July, as investors regained confidence in the wake of trade deals. Also contributing to the reassessment of U.S. market supremacy is the risk of monetary policy being politicized. Trump has repeatedly called for lower interest rates and threatened to remove Federal Reserve Chair Jerome Powell. A recently approved tax and spending bill, meanwhile, will add trillions to the government's debt, exacerbating longstanding deficit concerns. Investors are likely to respond by seeking higher compensation for the risk of owning long-dated Treasury securities "There's very, very real risk that yields go significantly higher because of the deficit," said Man Group's Hooper. For many, the buoyant U.S. stock market and optimism surrounding the U.S. tech sector have made it hard to turn bearish. "The bottom line is that the U.S. has some of the most innovative and profitable companies in the world, and the deepest capital markets," said Kelly Kowalski, head of investment strategy at MassMutual. Anxiety about the demise of U.S. pre-eminence is "overblown," she said. Concerns over weaker foreign demand for U.S. debt have eased in recent weeks. After selling a net $40.8 billion of Treasuries in April, foreigners resumed buying to the tune of $146 billion in May, the latest government data showed. Also, while European stocks handily beat their U.S. counterparts in March, that gap has narrowed with every new trade deal announced. As of the end of July, Europe's STOXX 600 was roughly neck and neck with the SP 500. "The big factor in the room has nothing to do with policies, but technology," said Richard Lightburn, deputy chief investment officer at macro hedge fund MKP Capital Management. "It still feels like early innings for AI adoption and integration." Anthony Saglimbene, chief market strategist at Ameriprise Financial, continues to recommend a slight overweight to U.S. stocks relative to other global markets. "Call it 'exceptionalism' or just 'clarity.' The macro environment in the U.S. is comparatively more stable."
