FirstFT: Oil hits $90 a barrel for first time this year

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Yesterday oil prices rose above $90 a barrel for the first time this year as two of the world’s largest oil producers moved to boost prices despite much of the world grappling with higher energy costs.

Saudi Arabia, which leads the expanded Opec+ cartel with Russia, has cut an additional 1mn barrels a day from the global market since July, in what was originally billed as a temporary measure.

But having already extended the cut until the end of this month, Saudi Arabia’s state media reported the kingdom would keep its 1mn b/d reduction in place until the end of December, citing the ministry of energy.

Russia has added its own voluntary export cuts in recent months, with deputy prime minister Alexander Novak saying yesterday that its 300,000 b/d export reduction would stay in place until the end of the year. Here’s more on the moves, which threaten to reignite global inflation concerns.

Here’s what else I’m watching today:

• Economic data: S&P Global has its construction purchasing managers’ index for the UK and services PMI for the US.

• Central banks: The Bank of Canada announces its interest rate decision, while the US Federal Reserve publishes its Beige Book on economic conditions.

• War in Ukraine: The appointment of former businessman Rustem Umerov as Ukraine’s new defence minister is set to be ratified by parliament.

• Results: Ashmore, Barratt Developments, Darktrace and Oxford Nanopore Technologies report.

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Five more top stories

1. Exclusive: Vitol’s UK electricity generation company almost tripled profits last year to £644mn, according to accounts disclosed to the FT by VPI, which now owns five power stations across Britain. The number is adjusted to exclude changes in the value of contracts for energy bought in advance to manage supply commitments. Here’s why profits have soared at the company.

2. Exclusive: Universal Music has struck a deal with a French streaming service to boost royalties for artists by 10 per cent, directing more money to professional musicians and away from what chief Lucian Grainge has called a “sea of noise” that includes amateurs, bots and white-noise soundtracks. Here’s how this deal could reshape streaming economics.

3. Big Tech companies are being forced to overhaul their businesses in the face of new EU laws aimed at creating more competition in the sector. Tech giants including Microsoft, Meta and Google will have to comply with the new Digital Markets Act, which includes rules on sharing data, making services interoperable with rival apps and linking to competitors. Here are some of the services affected by the new regulations.

• European Commission: Belgium’s Didier Reynders will temporarily become the EU’s competition chief, one of the bloc’s most powerful roles, as incumbent commissioner Margrethe Vestager takes a leave of absence.

4. The largest local authority in Europe has declared itself in effect bankrupt after facing “unprecedented financial challenges”. The UK’s Labour-run Birmingham city council, which serves more than a million people, said it had issued a section 114 notice, becoming the latest local government body in England under severe financial stress. Here’s where it is placing the blame for its predicament.

• Cost of living: Working-age UK households will see no improvement in living standards before the next general election expected in 2024, according to analysis published by a leading think-tank.

• UK politics: MPs said the government had been “slow to take action” over an estimated £1.1bn of losses owing to fraud and error in Covid-19 grants, clawing back less than 2 per cent.

5. The EU must wean itself off fossil fuels to avoid “being held hostage” by Moscow, Belgium’s energy minister has said, urging the bloc to curb imports of liquefied natural gas from Russia. A recent report showed her country was the third-biggest importer of the Russian fuel. Here’s more from the FT’s interview with Tinne Van der Straeten.

• Opinion: Electrifying Europe’s economy must be made easier, cheaper and quicker if the region is to have a sustainable future, writes EU energy commissioner Kadri Simson.

The Big Read

More than 100 countries are exploring the idea of a central bank digital currency, ranging from China’s “e-yuan” to the UK’s proposed “digital pound”. But as plans for digital cash gain momentum, so have the conspiracy theories. A growing throng of culture warriors have decried CBDCs as a tool designed by global elites and the World Economic Forum to destroy freedom or impose unwelcome environmental and social agendas.

We’re also reading . . . 

Chart of the day

Investors are warning hedge funds that they will face redemptions and further pressure to cut fees unless they can improve performance, highlighting the strain on the industry from a dramatic rise in global borrowing costs.

Take a break from the news

Descend into the murky depths in Under the Waves. Chris Allnutt reviews the new underwater exploration game that sees an offshore maintenance worker confront personal trauma and corporate malpractice.

Additional contributions from Gordon Smith and Emily Goldberg