web analytics
a

Facebook

Twitter

Copyright 2015 Libero Themes.
All Rights Reserved.

8:30 - 6:00

Our Office Hours Mon. - Fri.

703-406-7616

Call For Free 15/M Consultation

Facebook

Twitter

Search
Menu
Westlake Legal Group > International Trade and World Market

China Detains FedEx Pilot Amid Rising U.S.-China Tensions

Westlake Legal Group 20fedex-1-facebookJumbo China Detains FedEx Pilot Amid Rising U.S.-China Tensions Pilots International Trade and World Market firearms Fedex Corporation China Blacklisting Airlines and Airplanes

SHANGHAI — Authorities in southern China have detained an American pilot who works for FedEx, in the latest in a series of difficulties for American travelers and companies in China.

The pilot had been waiting to catch a commercial flight out of the city of Guangzhou, where FedEx has a huge hub. In a statement, FedEx said authorities had found an object in his luggage, though it did not specify what the object was.

The pilot was released on bail, FedEx said. “We are working with the appropriate authorities to gain a better understanding of the facts,” it said in a statement and declined to comment further.

The Wall Street Journal, which reported the detention on Thursday, said that the pilot had been carrying nonmetallic pellets used in air guns, and that he was a United States Air Force veteran named Todd A. Hohn who had been trying to catch a flight to his home in nearby Hong Kong.

The Air Line Pilots Association International, the union representing most American pilots, declined to discuss the case, as did Mr. Hohn’s lawyer. The municipal foreign affairs office in Guangzhou declined to comment and referred questions to the police, who did not answer telephone calls.

FedEx is one of a number of companies that have been caught between Washington and Beijing as the trade war has intensified. But it is not clear whether the pilot’s detention was related to the company’s problems in China.

As trade frictions and other disputes fester between the United States and China and as China itself becomes more authoritarian, more Americans have found themselves stuck in China and unable to leave. A Koch Industries executive was held in southern China and interrogated for days in June before being allowed to exit the country.

The State Department issued a travel advisory for China in January, warning Americans, particularly those with dual Chinese-American citizenship, that they may not be allowed to leave China if they go there.

A growing number of foreign companies, particularly American companies but also Canadian and European businesses, have responded by scrutinizing but not prohibiting travel to China by executives and employees.

But the quick release of the pilot, although without allowing him to leave the country, may indicate that China is not eager to turn him into a bilateral issue, said James Zimmerman, a partner in the Beijing office of Perkins Coie, a global law firm.

“The fact that he was released is a critically important message and a positive sign — Beijing probably ordered his release to minimize the significance of the issue, and this is an indication that Beijing doesn’t want this case to be a huge distraction.” Mr. Zimmerman said.

Mr. Zimmerman said that China does not have a bail system as it is generally understood in the West. China relies more on severe travel restrictions on people who are released from detention but remain under investigation.

The detention comes as the United States and China are trying to reach at least a partial truce in their 15-month trade war. Chinese officials have been eager to head off further tariffs that President Trump has planned to impose on Oct. 15 and Dec. 15, but are also loath to agree to the broad Chinese policy changes sought by the Trump administration.

It was unclear on Friday if Chinese authorities had deliberately targeted the pilot because he worked for FedEx. The detention came as Chinese airports have visibly increased security measures in recent months. The authorities have paid particular attention to travelers going to or from Hong Kong, a semiautonomous Chinese territory where large and increasingly violent protests have taken place every weekend this summer.

China has strict laws not just against the possession of weapons but also against the possession of any kind of ammunition.

FedEx has had a series of difficulties in China in recent months. China has accused FedEx of delaying shipments last May by Huawei, the Chinese telecommunications giant accused by American officials of working with Chinese intelligence — accusations that Huawei denies.

FedEx has also been working with Chinese authorities to investigate how one of its American clients was allowed to send a gun to a sporting goods store in southeastern China. The gun was also detected and stopped by Chinese authorities.

Chinese nationalists have called in recent weeks for FedEx to be included on a list of “unreliable entities” that the country’s Commerce Ministry has been drafting. The drafting has begun in response to the United States Commerce Department’s decision to begin putting Huawei on an “entities list” of foreign companies to which goods can only be exported from the United States with special licenses.

Cathay Pacific, a large airline based in Hong Kong, has separately come under heavy scrutiny by the Chinese government after some of its employees expressed support for pro-democracy protesters in Hong Kong. China threatened to revoke the airline’s access to its airspace unless Cathay reined in its employees.

Cathay Pacific and FedEx are two of the largest airlines hauling Chinese exports to the United States. Much of China’s electronics exports, particularly higher-value items like iPhones, travel by air.

In addition to scrutinizing travelers to and from Hong Kong very closely, the Chinese government has also begun checking foreigners visiting or living in the country for any possession or recent use of drugs, sometimes even weeks or months before the foreigners came to China. That has also produced a series of detentions.

Travel experts now strongly advise anyone going to China to carry prescription medicines in their original containers, and not to carry any prescription medicines that may be illegal in China, like prescription cannabis.

FedEx is a well-known company in China as well as in the United States. By coincidence, HBO showed in China on Thursday night the Tom Hanks movie “Cast Away,” the fictional story of a FedEx manager marooned on a Pacific island for years.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

The Saudis Are Keeping the Oil Flowing, but It’s Not Easy

Westlake Legal Group 19saudi-facebookJumbo The Saudis Are Keeping the Oil Flowing, but It’s Not Easy Saudi Aramco Saudi Arabia Oil (Petroleum) and Gasoline International Trade and World Market

On Tuesday evening, the top officials of the Saudi oil industry held a news conference and delivered a very upbeat message. Saudi Arabia’s production capacity, which had been crippled by last weekend’s aerial attack, would be “fully restored” by the end of September, according to Saudi Aramco, the national oil company.

If that pace of recovery seems almost miraculous, it is.

Saturday’s attacks cut Saudi output by more than half. Analysts say that while the kingdom has been able to restore some of that output, the effects of the onslaught on two key facilities are likely to linger for weeks or even months.

“We are certainly expecting some disruption and restriction to continue at least into November,” said Richard Mallinson, an analyst at Energy Aspects, a London-based market research firm.

Mr. Mallinson and other analysts say that while Aramco struggles to repair its damaged facilities, it is striving to calm the markets and create a sense of normality.

By one measure, the company is succeeding. In the short time since the attacks, Aramco has kept its exports at around 6.5 million barrels a day, close to normal levels, according to Kpler, a firm that tracks oil tanker traffic.

But oil prices, which fell sharply after Tuesday’s update from Saudi officials, have been creeping higher and rose by about 1.5 percent on Thursday to about $65 a barrel for Brent crude, amid growing skepticism about Saudi Arabia’s ability to quickly return output to normal.

Aramco is a very large, sophisticated company with a robust capacity to buy and sell petroleum products, and it has many ways of shifting oil around to conserve oil for exports and ensure that customers have supplies.

Analysts say, for instance, that the company is most likely taking oil out of storage and selling it in the export market, and diverting supplies that might have otherwise gone to domestic refineries to international customers. And it seems to be purchasing oil products that it usually exports in substantial quantities, like diesel fuel, not necessarily to supply the Saudi market but to send to international customers that it may not be otherwise able to supply.

Mr. Mallinson said Aramco appeared to be focusing on keeping customers in Europe happy while giving less priority to those in East Africa. Kpler said in a note to clients that several vessels scheduled to load at Saudi oil terminals had either taken on a different and probably less desirable grade of crude or been diverted away without loading. These changes may indicate a shortfall in the Arab light grade of crude usually processed in the Abqaiq facility that was attacked on Saturday.

Analysts say Aramco is probably motivated by two main considerations. The Saudis take enormous pride in being a reliable supplier of oil around the world and are trying to preserve that reputation at a very difficult time. This reliability, analysts say, affords something of a premium to Saudi oil, with Aramco less likely to bargain on price than competitors.

In addition, the Saudis appear to be scrambling to keep Aramco’s much-delayed but recently revived initial public offering alive and want to convince skeptical investors that the attacks have not damaged the company’s value. At Tuesday’s news conference, Aramco’s recently appointed chairman, Yasir al-Rumayyan, said that the I.P.O. was on track and expected in the next 12 months.

Whether Aramco will be able to maintain its near-normal output levels all depends on how quickly Saudi output can be restored.

“Existing production would not support on its own that level of exports,” said David Fyfe, chief economist of Argus Media, a firm that specializes in commodity pricing.

What seems clear is that the oil market, which many analysts thought was oversupplied before the attacks, is expected to become tighter. Inventories are being drawn down, and so-called spare capacity, the amount of oil that can be quickly added to the markets, has been slashed to low levels because most of this buffer was in Saudi Arabia.

If another shock comes — and it certainly could in the volatile Persian Gulf region — there will be less oil available to provide a cushion.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trade Conflicts Weigh on Confidence, Posing a Risk to Trump

Westlake Legal Group 19survey1-facebookJumbo Trade Conflicts Weigh on Confidence, Posing a Risk to Trump United States Politics and Government United States Economy Trump, Donald J Presidential Election of 2020 Polls and Public Opinion International Trade and World Market Customs (Tariff) Consumer Behavior

Economists and business leaders have been warning for months that President Trump’s trade war could damage the economy. The American public increasingly shares those concerns.

Consumers have been a bulwark of support for the economy, remaining confident even as hiring has slowed, the manufacturing sector has slumped and financial markets have grown volatile. But cracks are beginning to show. Several major measures of consumer sentiment have dipped in recent weeks, with many consumers citing tariffs as a reason for their pessimism.

Fifty-eight percent of Americans say the conflict with China will be bad for the United States, according to a survey this month for The New York Times by the online research platform SurveyMonkey. That’s up from 53 percent in June, the last time that question was asked. An even larger share of respondents, 63 percent, think Mr. Trump’s trade policies will be bad for the economy, at least in the short term, also up from an earlier survey.

There are signs the White House is taking notice. The administration is racing to secure limited trade deals with Japan and India before the end of the month that would open their markets to American farmers. And last week, the Trump administration said it would delay a round of tariff increases on China scheduled for next month. Mr. Trump described the decision as a “gesture of good will,” but some analysts saw a political motivation: Farmers, a key constituency for Mr. Trump, have grown increasingly frustrated with the administration’s trade policies.

Stories of struggling farmers are proving influential even with voters outside farm country.

“The trade war with China, I feel like, is just destroying farmers and agriculture industry,” said Ashley Connor, who sells beauty products from her home in Nashville.

Ms. Connor, a 39-year-old mother of two, is about to start a job with UPS. She is also considering working part time at an Amazon warehouse. But while plenty of jobs are available, few pay a living wage, at least for people like her who lack a college degree, she said. The trade fight, she added, is emblematic of Mr. Trump’s overall approach to the economy.

“He’s taking care of all his rich friends, and he’s kind of gutting every program for lower- and middle-class families,” she said. “I just don’t feel like the economy is set up for people like me.”

Consumer sentiment has proved resilient. One closely watched measure, from the University of Michigan, rebounded in September after falling sharply in August, although it is still down over the past year. Actual spending has stayed strong.

“There’s not one big crisis, just a general sense of unease,” said Laura Wronski, a research scientist for SurveyMonkey. “We have all these same underlying conditions of political uncertainty and uncertainty about the likelihood of a recession, but people are still, over all, optimistic about where things are.”

Aditya Bhave, an economist at Bank of America Merrill Lynch, said tariffs had done relatively little to dent consumer confidence so far. But he said that could change if the Trump administration followed through on threats to raise tariffs on consumer goods, and if the uncertainty around trade caused an economic slowdown or layoffs.

Those risks could be rising. In a report on Thursday, the Organization for Economic Cooperation and Development downgraded its economic outlook for the United States and the world as a whole, saying that “escalating trade policy tensions are taking an increasing toll on confidence and investment.” The Paris-based research and policy agency now expects United States economic output to grow 2.4 percent this year and 2 percent next year, more modest gains than estimated previously.

The administration has continued to defend its policies, arguing that Mr. Trump’s trade war will ultimately deliver benefits for the global economy by reforming China’s trading practices, and that naysayers are exaggerating the negative trends.

Speaking at the U.S. Chamber of Commerce on Tuesday, Larry Kudlow, the director of Mr. Trump’s National Economic Council, pointed to recent data showing that industrial production rebounded in August, and argued that the American economy had the potential to grow at 3 percent “or better.”

“The outlook for growth is good,” he said. “There’s certainly no recession.”

But business leaders who are bearing the costs of the trade war have been blunt.

On Wednesday, the Business Roundtable, an organization of corporate chief executives, said its members’ economic outlook had fallen sharply in the third quarter. More than half of the executives in the group’s survey reported that tariffs had caused a somewhat or very negative impact on their sales. Companies said they expected to hire fewer people and invest less in coming months.

“American businesses now have their foot poised above the brake, and they’re tapping the brake periodically,” Joshua Bolten, the organization’s president, said in a statement. “Uncertainty is preventing the full potential of the economy from being unleashed, limiting growth and investment here in the U.S.”

The trade war is particularly unpopular among people like Ms. Connor who disapprove of Mr. Trump’s broader performance in office. But the Times survey found concern even among those more sympathetic to the president. Two-thirds of independents say the fight with China will be bad for the United States, and support has also softened somewhat among Republicans. (Among those who strongly approve of Mr. Trump, however, only 11 percent say the conflict will be bad for the country.)

Travis Wolff, a recruiter for a trucking company in Lubbock, Tex., describes himself as a moderate who tends toward conservatism on economic issues. He didn’t vote for either major-party candidate in the last presidential election. While Mr. Trump has exceeded his expectations in office, Mr. Wolff said, he doesn’t like the president’s approach to trade.

“I don’t think tariffs are necessarily beneficial to either country,” he said. “It’s not like government is paying for that. We’re paying for that. We’re bearing the brunt of it.”

Mr. Wolff, 37, said the economy was doing well in his area now, thanks to the West Texas oil boom, but said he didn’t feel that Mr. Trump deserved much credit for that — and he thinks a recession is likely next year. He said he would consider voting for a Democrat in 2020, particularly if the nominee was one of the more moderate candidates, like former Vice President Joseph R. Biden Jr.

But Democratic presidential candidates have struggled to articulate to voters exactly what they would do differently from Mr. Trump on trade. While Senator Elizabeth Warren of Massachusetts and former Representative Beto O’Rourke of Texas have released detailed trade agendas, most of the other candidates have been vague on their plans, besides general criticism of Mr. Trump and a vow to work more closely with allies. In a debate last week, several candidates said they would not roll back Mr. Trump’s China tariffs immediately.

Bruce Friedman, a 67-year-old registered nurse in the Hudson Valley of New York, said tariffs were hurting farmers and consumers and were threatening the broader economy. He said Democrats should spend less time criticizing Mr. Trump and more time laying out their own plans.

“If they talked about trade and things like that, they might get ahead,” Mr. Friedman said. “That’s what they need to talk about, is how they’re going to help the working people, the middle class.”

But another survey respondent, Gustave Miracle, illustrated the delicate position facing Democrats. Mr. Miracle, a Catholic priest outside Boston, said he deeply opposed Mr. Trump’s immigration policies but appreciated his trade policies, which he saw as an effort to stand up for American workers.

“I appreciated the fact that there was a lot of talk about the blue collar in America,” he said of Mr. Trump’s 2016 campaign.

Mr. Miracle, 45, said he doubted that Mr. Trump’s policies would bring manufacturing jobs back to the United States. But he said they were worth trying.

“It’s moral to have that fight, to stand for the American laborer, for the American average citizen,” he said.

About the survey: The data in this article came from an online survey of 2,740 adults conducted by the polling firm SurveyMonkey from Sept. 2 to Sept. 8. The company selected respondents at random from the nearly three million people who take surveys on its platform each day. Responses were weighted to match the demographic profile of the population of the United States. The survey has a modeled error estimate (similar to a margin of error in a standard telephone poll) of plus or minus three percentage points, so differences of less than that amount are statistically insignificant.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How an Oil Price Surge Could Hurt the U.S. Economy

For months, American consumers have kept the economy humming. While businesses pulled back, shoppers continued to spend.

But a prolonged surge in gasoline prices after the attacks on oil production facilities in Saudi Arabia could undermine that phenomenon and increase the risk of a recession.

“It’s clearly not a positive, and it adds a negative to the outlook,” said Steve Blitz, chief United States economist at T.S. Lombard, an independent research firm. “It’s another straw on the camel’s back.”

Monday’s nearly 15 percent spike in oil prices to $62.90 a barrel isn’t big enough to bring on a recession — it only returns crude prices to where they were this spring. And the economy expanded from 2011 to 2014 even when prices were above $100 a barrel.

Monday’s jump is expected to add roughly 20 cents to gas prices, which now average $2.56 a gallon nationally, said Tom Kloza, global head of energy analysis for the Oil Price Information Service. Those higher prices should be in place by the end of the month, he said.

He estimates that the typical American family uses 90 gallons of gasoline every month, which means they would spend an extra $18 a month as a result of the attacks on Saudi Arabia.

[Read more: Oil markets are on edge after the attack on Saudi facilities.]

But a shock in the form of a rapid $20 or $30 a barrel jump in oil prices would have a bigger economic impact.

“At that level, the consumer takes a significant hit,” said Ethan Harris, head of global economics and research at Bank of America Merrill Lynch.

A $25 a barrel increase in oil prices, the kind of move analysts cite as a potential threat to the economy, would add 50 cents to the cost of each gallon of gas. That would mean an extra $45 in monthly spending for the typical family.

The Federal Reserve will be keeping a close eye on energy prices as policymakers meet in Washington on Tuesday and Wednesday. Most observers expect the Fed to reduce interest rates a quarter-point.

ImageWestlake Legal Group 17oilecon2-articleLarge How an Oil Price Surge Could Hurt the U.S. Economy United States Economy Recession and Depression Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline International Trade and World Market

Robert Hubbard filling his tank at a Berkeley, Calif., service station on Monday.CreditJim Wilson/The New York Times

Worries about growth have been building over the last six weeks. If consumer spending faded, the economy wouldn’t have much to fall back on.

An important measure of manufacturing published this month showed that factory activity had contracted two months in a row. And in the second quarter, business and residential investment fell.

The financial markets have been shaky, and short-term bond yields have exceeded returns on longer-termed notes, a sign a recession could lie ahead.

Through all of that, consumers have appeared to be in fine shape. Retail sales rose 0.4 percent in August, after a 0.8 percent jump in July, the government reported Friday. Demand for automobiles, sporting goods and building materials all showed strength.

And the University of Michigan reported Friday that its preliminary September reading for consumer confidence stood at 92, a bit better than expected and an improvement from August.

[Saudi Arabia’s new energy minister is taking over in a crisis.]

Changes in energy prices can cause broader economic swings, including when prices drop sharply. A plunge in oil prices from $106 a barrel in June 2014 to $30 in February 2016 dealt a blow to manufacturing as demand for oil-related products fell and, in turn, slowed overall economic growth.

The effect of higher oil prices on businesses is complicated because oil’s role in the economy has changed since the energy shocks of the 1970s. Buoyed by oil production from shale deposits in Texas, New Mexico and other states, America has slashed imports and has become a major exporter of oil and gas.

Higher prices would help not only oil companies but also steel producers, which have become major suppliers of metal pipe and other goods to the energy industry. They’d most likely see a pickup in demand as drilling activity increased, offsetting some of the damage a spike would cause to consumer spending.

But other businesses, particularly those in the transportation sector, could suffer. Companies, including airlines and delivery firms that rely on cheap fuel to make money distributing packages for online retailers, could be big losers if oil prices soar.

“Shale has shifted the paradigm,” said Gregory Daco, chief United States economist at Oxford Economics. “On the one hand, with higher prices there is a hit to consumers. But there’s an incentive for oil and gas companies to invest and produce more to reap the benefits.”

The biggest risk to consumers — and the economy itself — would be a significant military conflict between the United States and Iran. Businesses, already cautious about spending, would pull back further. Consumers would likewise retreat.

“When these things happen, people stay home and watch the news,” said Mr. Blitz of T.S. Lombard. “You’d see a dip in spending at the mall.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

How an Oil Price Surge Could Hurt Consumer Spending, and the Economy

For months, American consumers have kept the economy humming. While businesses pulled back, shoppers continued to spend.

But a prolonged surge in gasoline prices after the attacks on oil production facilities in Saudi Arabia could undermine that phenomenon and increase the risk of a recession.

“It’s clearly not a positive, and it adds a negative to the outlook,” said Steve Blitz, chief United States economist at T.S. Lombard, an independent research firm. “It’s another straw on the camel’s back.”

Monday’s nearly 15 percent spike in oil prices to $62.90 a barrel isn’t big enough to bring on a recession — it only returns crude prices to where they were this spring. And the economy expanded from 2011 to 2014 even when prices were above $100 a barrel.

Monday’s jump is expected to add roughly 20 cents to gas prices, which now average $2.56 a gallon nationally, said Tom Kloza, global head of energy analysis for the Oil Price Information Service. Those higher prices should be in place by the end of the month, he said.

He estimates that the typical American family uses 90 gallons of gasoline every month, which means they would spend an extra $18 a month as a result of the attacks on Saudi Arabia.

Oil markets are on edge following the attack on Saudi facilties.

But a shock in the form of a rapid $20 or $30 a barrel jump in oil prices would have a bigger economic impact.

“At that level, the consumer takes a significant hit,” said Ethan Harris, head of global economics and research at Bank of America Merrill Lynch.

A $25 a barrel increase in oil prices, the kind of move analysts cite as a potential threat to the economy, would add 50 cents to the cost of each gallon of gas. That would mean an extra $45 in monthly spending for the typical family.

The Federal Reserve will be keeping a close eye on energy prices as policymakers meet in Washington on Tuesday and Wednesday. Most observers expect the Fed to reduce interest rates a quarter-point.

ImageWestlake Legal Group 17oilecon2-articleLarge How an Oil Price Surge Could Hurt Consumer Spending, and the Economy United States Economy Recession and Depression Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline International Trade and World Market

Robert Hubbard filling his tank at a Berkeley, Calif., service station on Monday.CreditJim Wilson/The New York Times

Worries about growth have been building over the last six weeks. If consumer spending faded, the economy wouldn’t have much to fall back on.

An important measure of manufacturing published this month showed that factory activity had contracted two months in a row. And in the second quarter, business and residential investment fell.

The financial markets have been shaky, and short-term bond yields have exceeded returns on longer-termed notes, a sign a recession could lie ahead.

Through all of that, consumers have appeared to be in fine shape. Retail sales rose 0.4 percent in August, after a 0.8 percent jump in July, the government reported Friday. Demand for automobiles, sporting goods and building materials all showed strength.

And the University of Michigan reported Friday that its preliminary September reading for consumer confidence stood at 92, a bit better than expected and an improvement from August.

Saudi Arabia’s new energy minister is taking over in a crisis.

Changes in energy prices can cause broader economic swings, including when prices drop sharply. A plunge in oil prices from $106 a barrel in June 2014 to $30 in February 2016 dealt a blow to manufacturing as demand for oil-related products fell and, in turn, slowed overall economic growth.

The effect of higher oil prices on businesses is complicated because oil’s role in the economy has changed since the energy shocks of the 1970s. Buoyed by oil production from shale deposits in Texas, New Mexico and other states, America has slashed imports and has become a major exporter of oil and gas.

Higher prices would help not only oil companies but also steel producers, which have become major suppliers of metal pipe and other goods to the energy industry. They’d most likely see a pickup in demand as drilling activity increased, offsetting some of the damage a spike would cause to consumer spending.

But other businesses, particularly those in the transportation sector, could suffer. Companies, including airlines and delivery firms that rely on cheap fuel to make money distributing packages for online retailers, could be big losers if oil prices soar.

“Shale has shifted the paradigm,” said Gregory Daco, chief United States economist at Oxford Economics. “On the one hand, with higher prices there is a hit to consumers. But there’s an incentive for oil and gas companies to invest and produce more to reap the benefits.”

The biggest risk to consumers — and the economy itself — would be a significant military conflict between the United States and Iran. Businesses, already cautious about spending, would pull back further. Consumers would likewise retreat.

“When these things happen, people stay home and watch the news,” said Mr. Blitz of T.S. Lombard. “You’d see a dip in spending at the mall.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

An Oil Price Surge Could Hurt Consumer Spending, and the Economy

For months, American consumers have kept the economy humming. While businesses pulled back, shoppers continued to spend.

But a prolonged surge in gasoline prices after the attacks on oil production facilities in Saudi Arabia could undermine that phenomenon and increase the risk of a recession.

“It’s clearly not a positive, and it adds a negative to the outlook,” said Steve Blitz, chief United States economist at T.S. Lombard, an independent research firm. “It’s another straw on the camel’s back.”

Monday’s nearly 15 percent spike in oil prices to $62.90 a barrel isn’t big enough to bring on a recession — it only returns crude prices to where they were this spring. And the economy expanded from 2011 to 2014 even when prices were above $100 a barrel.

Monday’s jump is expected to add roughly 20 cents to gas prices, which now average $2.56 a gallon nationally, said Tom Kloza, global head of energy analysis for the Oil Price Information Service. Those higher prices should be in place by the end of the month, he said.

He estimates that the typical American family uses 90 gallons of gasoline every month, which means they would spend an extra $18 a month as a result of the attacks on Saudi Arabia.

Oil markets are on edge following the attack on Saudi facilties.

But a shock in the form of a rapid $20 or $30 a barrel jump in oil prices would have a bigger economic impact.

“At that level, the consumer takes a significant hit,” said Ethan Harris, head of global economics and research at Bank of America Merrill Lynch.

A $25 a barrel increase in oil prices, the kind of move analysts cite as a potential threat to the economy, would add 50 cents to the cost of each gallon of gas. That would mean an extra $45 in monthly spending for the typical family.

The Federal Reserve will be keeping a close eye on energy prices as policymakers meet in Washington on Tuesday and Wednesday. Most observers expect the Fed to reduce interest rates a quarter-point.

ImageWestlake Legal Group 17oilecon2-articleLarge An Oil Price Surge Could Hurt Consumer Spending, and the Economy United States Economy Recession and Depression Prices (Fares, Fees and Rates) Oil (Petroleum) and Gasoline International Trade and World Market

Robert Hubbard filling his tank at a Berkeley, Calif., service station on Monday.CreditJim Wilson/The New York Times

Worries about growth have been building over the last six weeks. If consumer spending faded, the economy wouldn’t have much to fall back on.

An important measure of manufacturing published this month showed that factory activity had contracted two months in a row. And in the second quarter, business and residential investment fell.

The financial markets have been shaky, and short-term bond yields have exceeded returns on longer-termed notes, a sign a recession could lie ahead.

Through all of that, consumers have appeared to be in fine shape. Retail sales rose 0.4 percent in August, after a 0.8 percent jump in July, the government reported Friday. Demand for automobiles, sporting goods and building materials all showed strength.

And the University of Michigan reported Friday that its preliminary September reading for consumer confidence stood at 92, a bit better than expected and an improvement from August.

Saudi Arabia’s new energy minister is taking over in a crisis.

Changes in energy prices can cause broader economic swings, including when prices drop sharply. A plunge in oil prices from $106 a barrel in June 2014 to $30 in February 2016 dealt a blow to manufacturing as demand for oil-related products fell and, in turn, slowed overall economic growth.

The effect of higher oil prices on businesses is complicated because oil’s role in the economy has changed since the energy shocks of the 1970s. Buoyed by oil production from shale deposits in Texas, New Mexico and other states, America has slashed imports and has become a major exporter of oil and gas.

Higher prices would help not only oil companies but also steel producers, which have become major suppliers of metal pipe and other goods to the energy industry. They’d most likely see a pickup in demand as drilling activity increased, offsetting some of the damage a spike would cause to consumer spending.

But other businesses, particularly those in the transportation sector, could suffer. Companies, including airlines and delivery firms that rely on cheap fuel to make money distributing packages for online retailers, could be big losers if oil prices soar.

“Shale has shifted the paradigm,” said Gregory Daco, chief United States economist at Oxford Economics. “On the one hand, with higher prices there is a hit to consumers. But there’s an incentive for oil and gas companies to invest and produce more to reap the benefits.”

The biggest risk to consumers — and the economy itself — would be a significant military conflict between the United States and Iran. Businesses, already cautious about spending, would pull back further. Consumers would likewise retreat.

“When these things happen, people stay home and watch the news,” said Mr. Blitz of T.S. Lombard. “You’d see a dip in spending at the mall.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump Says U.S. and Japan Have Reached Initial Trade Agreement

Westlake Legal Group 16dc-japantrade2-facebookJumbo Trump Says U.S. and Japan Have Reached Initial Trade Agreement United States Politics and Government Trump, Donald J Trans-Pacific Partnership Japan International Trade and World Market Customs (Tariff) Agriculture and Farming Abe, Shinzo

WASHINGTON — President Trump said on Monday that his administration had reached an initial trade agreement with Japan and would announce a deal in the coming weeks.

The trade pact, while limited, is expected to increase access for American agricultural products like beef and chicken to the Japanese market. That would provide some relief to farmers who have been hurt by Mr. Trump’s trade war with China.

Exact details of the deal have not been released. But people briefed on the negotiations said the pact would lower Japanese tariffs on beef and other American farm products in return for cutting American tariffs on industrial goods like machinery. Unlike most trade deals, the pact is expected to be limited to a few industries.

It is not clear how much protection the deal would offer Japan against Mr. Trump’s threats to place tariffs on its cars, a penalty Japan is eager to avoid. And the deal also appeared unlikely to exempt Japan from Mr. Trump’s 25 percent tariff on steel, according to people familiar with the discussions.

In a letter notifying Congress of its plans Monday, the administration said it would enter into a trade agreement with Japan regarding tariffs, as well an agreement on the rules governing digital trade.

Mr. Trump teased a breakthrough in trade talks with Japan during the Group of 7 meeting in France last month, saying that the two countries were “very close” to a major deal.

“We’re working on a very big deal with Japan, and we’re very close to getting it,” he told reporters after he met with Prime Minister Shinzo Abe of Japan. “It will be one of the biggest deals we’ve ever made with Japan.”

Mr. Abe said the two sides had successfully “reached consensus with regard to the core elements related to agricultural and industrial trade,” but noted that the precise language of the pact was still under discussion.

Speaking to reporters at the event, the United States trade representative, Robert Lighthizer, said the deal would open up $7 billion of new access to Japanese markets.

The administration has been racing to conclude the deal before Mr. Trump travels to New York next week, where he will meet again with Mr. Abe at the United Nations General Assembly.

A deal with Japan would give Mr. Trump a big talking point as he heads into his re-election campaign. Within days of assuming the presidency, Mr. Trump pulled the United States out of a multilateral trade deal — the Trans-Pacific Partnership — that would have given America greater access to Japan’s market and lower tariffs, along with the markets of countries like Australia, Singapore and Vietnam. The pact was welcomed by farmers but disliked by many Republicans and Democrats, and Mr. Trump said he would use America’s leverage to cement a better trade deal with Japan.

Since Mr. Trump pulled the United States out of the T.P.P., Japan and the pact’s 10 other remaining members have proceeded with ratifying the deal, and Japan has entered into a major trade agreement with the European Union.

While Japan initially resisted a bilateral trade deal with the United States and instead insisted that it rejoin the T.P.P., Mr. Abe ultimately agreed to one-on-one trade talks.

The Trump administration’s deal is likely to address a much narrower range of issues than the T.P.P. would have. American and Japanese officials have been eager to announce an “early harvest” deal that would buoy their partnership, as well as Mr. Trump’s chances at re-election, and then continue on to further negotiations on other industries.

The agreements on agriculture are unlikely to go beyond those Japan would have given to the United States under the terms of the T.P.P. Tokyo agreed to lower tariffs on a wide range of agricultural goods, including those from the United States, when it joined the T.P.P., and it has consistently said it would not offer the United States terms better than those enjoyed by the group’s member countries.

The new deal will not touch on many other areas of trade addressed in that agreement. Instead, negotiators envision tackling issues such as pharmaceuticals, energy and services in future talks.

“We have other issues that we’re concerned about and we’d like to see addressed,” said Christopher LaFleur, the chairman of the American Chamber of Commerce in Japan. The current deal is “fine for the moment, fine in terms of seeing some early results,” he said, adding, “We very much hope though that the negotiators will stick with it.”

At the G7 in France, Mr. Trump also said Mr. Abe had agreed to buy hundreds of million dollars of surplus corn that would have been sold to China, but has instead piled up in American silos as a result of the trade war with Beijing.

In Japan, ranchers and farmers have greeted the announcement with puzzlement. The country is already a major buyer of American feed corn and has sufficient stocks of the grain.

“Even if we import it, there’s no path for using it,” said Akio Shibata of Japan’s National Resource Research Institute.

For Mr. Abe, the deal is a sort of quid quo pro, according to a person familiar with the leader’s thinking, who asked for anonymity to discuss the sensitive issue. In the spring, Mr. Trump agreed to delay trade negotiations with Japan while Mr. Abe campaigned for a critical parliamentary election in July. The announcement on corn, the person said, was seen as returning the favor by giving Mr. Trump a political lift among voters in farm states, such as Iowa.

“If Mr. Trump doesn’t have farmers’ votes, he can’t win,” said Kazuhito Yamashita, an expert on trade at Japan’s Canon Institute for Global Studies. “That’s why they made this agreement.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Short-Term Impact on Oil Prices Seen After Attack on Saudi Facilities

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Short-Term Impact on Oil Prices Seen After Attack on Saudi Facilities Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely

HOUSTON — The drone attack on one of Saudi Arabia’s most important oil facilities could cripple a portion of Saudi petroleum exports for days or even weeks, and oil futures prices briefly spiked 20 percent when markets opened on Monday in Asia. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility and another plant, deep in Saudi territory, displayed the vulnerability of the kingdom to tensions in the Persian Gulf region. The country produces about 10 percent of the world’s oil supplies. The disruption could slash Saudi Arabia’s daily oil exports of 7.4 million barrels by as much as three-quarters, taking roughly 5 percent of global supplies off the market, unless the facility is quickly repaired.

President Trump suggested on Sunday that he could release supplies from the Strategic Petroleum Reserve, an attempt to calm oil markets. In response, Brent crude oil futures that had briefly jumped about 20 percent, or more than $11 a barrel, when the futures market opened on Monday in Asia eased over the next several hours to an increase of 8.6 percent, or just over $5 a barrel.

The attack raised the possibility of further disruptions in Saudi Arabia’s oil production if there were additional attacks on its fields and pipelines.

The planned initial public offering of the kingdom’s national oil company, Saudi Aramco, could also be hurt if international investors doubt Saudi Arabia’s ability to defend its vital energy infrastructure.

But as luck would have it, the attack came as global oil stockpiles were higher than usual, several producing countries have ample spare capacity and American oil facilities have so far been spared from a damaging hurricane season. Meanwhile, a slowing global economy has moderated energy demand.

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Oil Prices Spike After Attack on Saudi Facilities but Lasting Disruption Seen Unlikely Saudi Aramco Production Organization of the Petroleum Exporting Countries Oil (Petroleum) and Gasoline natural gas International Trade and World Market International Energy Agency Initial Public Offerings Energy Department Energy and Power Embargoes and Sanctions Drilling and Boring

A gas station in West Palm Beach, Fla. in August. The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents below a year ago.CreditSaul Martinez for The New York Times

“We do not expect an immediate disruption on global oil trade, since many nations, including the U.S., have ample crude oil in storage,” said Manish Raj, chief financial officer of Velandera Energy Partners, a Louisiana oil exploration and production company. “The Saudis themselves have enough storage to meet their export obligation for the next 60 days. Therefore, we expect no supply-demand imbalance in the near term.”

The main uncertainty is how long will it take for the Saudis to repair the Abqaiq facility, which separates gas from oil from several important oil fields. While the fire was put out quickly, the Saudis may not know the answer for days since the facility is large and has complex equipment that still needs to be tested.

Should the damage be fixed quickly, Eurasia Group, a risk consulting firm, estimates that oil prices could rise a modest $2 to $3 a barrel, which would still leave the global benchmark Brent crude below $65 a barrel, relatively low by recent historical standards. The firm estimated that a more long-lasting disruption could mean an increase of $10 a barrel, though that would still leave prices several dollars below where they were a year ago.

Other analysts took a dimmer view, even as Saudi Aramco said on Sunday that repairs were already underway. The initial reaction of oil traders was panicky.

“The problem is that the attack is so significant, “ said Bill Farren-Price a director at RS Energy Group, a market research firm. “It demonstrates that one of the best regional oil companies has difficulties defending itself from this new style of threat. That theme is going to endure. “

There are doubts the Saudis will be able to maintain their usual exports and satisfy domestic consumption.

“Export volumes will be severely impacted,” Clay Seigle, an analyst at Genscape, a market research firm, said in an email. “The market will be left with a thinner cushion against additional supply disruptions, and traders will bid prices higher as a result.”

Brazil’s state-run Petrobras oil company in Brasilia. The United States has been ramping up oil production as have other countries, including Norway and Brazil.CreditUeslei Marcelino/Reuters

How the other countries in the Saudi-led OPEC will respond is not yet clear. In a phone conversation, an official with the Organization of the Petroleum Exporting Countries said that the Saudis had so far not shared information about the extent of the damage and when output might be restored. He also said that OPEC had not yet begun discussions on potentially loosening supplies. “We have to see how the market reacts tomorrow,” the official said.

The average price for a gallon of regular gasoline in the United States was $2.57 on Sunday, 28 cents lower than a year ago. That decline has been a boon to consumers, giving them extra spending power that has helped retailers and restaurants. An increase in prices to last year’s levels is possible over the next few weeks unless the Saudi facility is quickly fixed, energy analysts said.

Only a decade ago, the attack would probably have sent oil prices soaring. But that was before American oil production climbed with the shale drilling frenzy. The United States now produces roughly 12.1 million barrels a day, double what it produced in 2012 and 1.4 million barrels more than only a year ago.

The United States imports about 630,000 barrels of Saudi oil a day, down about half from 2017.

American oil companies have recently been cutting back on production, but higher oil prices would encourage them to produce more. At the same time, several pipelines to the Gulf Coast are nearing completion and that could stimulate significant export growth over the next six to 10 months.

Other oil-producing countries are also ramping up production, including Norway and Brazil, while Iraq, Nigeria and Russia have been producing a total of 650,000 barrels of oil above the levels agreed to with their OPEC partners.

The United States and other developed countries have nearly 3 billion barrels in stockpiles, according to the International Energy Agency, enough to take care of about two months of demand. That is about 50 million barrels above a year ago, despite American sanctions on Iran and Venezuela that have constricted their exports.

The stockpiles of the industrialized countries are at their highest level since September 2017, and are nearly 20 million barrels above the average of the last five years, according to the energy agency.

Participants on Thursday at an OPEC meetng in Abu Dhabi, where producers appeared ready to call for even tighter adherence to the production cuts they have maintained for almost three years. But that was before the attack this weekend.CreditKarim Sahib/Agence France-Presse — Getty Images

“For now, markets are well-supplied with ample commercial stocks, “ the agency said in a statement on Saturday, adding that it was “monitoring” the Saudi situation.

Saudi Arabia has roughly 27 days of supply stockpiled, according to S&P Global Platts, a provider of energy information. That stockpile is stored not only in the kingdom but also Egypt, Japan and the Netherlands for added security.

The developed countries and China have sizable strategic reserves as well in cases of emergency, although stockpiles have been declining in the United States and Europe in recent weeks.

Until this weekend, OPEC has been more concerned about oversupply than shortages. As recently as Thursday, oil officials from OPEC, Russia and other producers met in Abu Dhabi and appeared to call for even tighter adherence to the production cuts they have maintained for almost three years. Those cuts were aimed at propping up prices and keeping the market from being swamped by oil.

The United States alone has as much as 713 million barrels in its strategic reserve, and administration officials are already talking about releasing some oil on the market to tamp down any gasoline price increase.

President Trump said in a tweet on Sunday evening that he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed.”.

Such releases have had a powerful psychological effect on oil markets since the reserve was established after the oil embargoes of the 1970s. It has been drawn only occasionally, including during the first Persian Gulf war in 1991, Hurricane Katrina in 2005 and during the Arab Spring in 2011, when Libyan exports were halted.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com