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Westlake Legal Group > Posts tagged "International Trade and World Market"

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 

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 

Attack on Saudi Oil Facility Is Seen as Short-Term Disruption

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 send energy prices higher. But experts say that a severe shock to energy markets and the world economy is unlikely.

The attack on the Abqaiq processing facility, 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.

The attack also 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.

“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.”

ImageWestlake Legal Group merlin_159952797_41a4ceb5-81a4-47f6-a28f-15c277b3a2d8-articleLarge Attack on Saudi Oil Facility Is Seen as Short-Term Disruption 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

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 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 gave 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.

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

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.

“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.

“Our Department of Energy stands ready to tap into the Strategic Reserve if we must to stabilize the global energy supply,” Kellyanne Conway, the White House counselor, said on Fox News Sunday. Energy Secretary Rick Perry has already instructed his department to work with the International Energy Agency to coordinate possible releases from the reserves.

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.

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Fearing ‘Spy Trains,’ Congress May Ban a Chinese Maker of Subway Cars

CHICAGO — America’s next fight with China is unfolding at a glistening new factory in Chicago, which stands empty except for the shells of two subway cars and space for future business that is unlikely to come.

A Chinese state-owned company called CRRC Corporation, the world’s largest train maker, completed the $100 million facility this year in the hopes of winning contracts to build subway cars and other passenger trains for American cities like Chicago and Washington.

But growing fears about China’s economic ambitions and its potential to track and spy on Americans are about to quash those plans. Congress is soon expected to approve legislation that would effectively bar the company from competing for new contracts in the United States, citing national security and economic concerns. The White House has expressed its support for the effort.

Washington’s attempt to block a Chinese company from selling train cars inside America is the latest escalation in a trade war that has quickly expanded from a spat over tariffs and intellectual property to a broader fight over economic and national security.

ImageWestlake Legal Group merlin_158746944_447540eb-f00b-4b0f-a9aa-15dffae10f20-articleLarge Fearing ‘Spy Trains,’ Congress May Ban a Chinese Maker of Subway Cars United States International Relations United States Economy Transit Systems Subways International Trade and World Market Industrial Espionage Espionage and Intelligence Services Economic Conditions and Trends Defense and Military Forces crrc

Taylor Drzich, right, who helps assemble vehicles, during a training session at the Chicago plant. The company hopes to win contracts to build subway cars and other passenger trains for American cities.CreditAlyssa Schukar for The New York Times

President Trump and lawmakers from both parties are increasingly anxious about the economic and technological ambitions of China, which has built cutting-edge global industries, including those that produce advanced surveillance technology. Those fears have prompted Washington to take an expansive view of potential risks, moving beyond simply trying to curtail Chinese imports.

In addition to slapping tariffs on $360 billion worth of Chinese products, the administration has banned Chinese companies like Huawei, the telecom giant, from buying sensitive American technology. It is moving to curb the ability of firms to export technology like artificial intelligence and quantum computing from the United States to China. And Congress has given the administration expansive power to block Chinese investment on national security grounds.

Now lawmakers have added a provision to a military spending bill that would prevent the use of federal grants to buy subway trains from state-owned or state-controlled companies, a measure that would effectively block CRRC’s business.

The bill has gained bipartisan support from lawmakers who say companies like CRRC pose a threat to the United States. Part of the concern is economic: Flush with cash from its rapid growth, China has pumped money into building globally competitive businesses, often creating overcapacity in markets like steel, solar panels and trains.

Hanming Qin, center, overseeing an installation with Javinn Brown, left, and Hector Nava Jr. Congress is soon expected to approve legislation that would effectively bar the company from competing for new contracts in the United States, citing national security and economic concerns.CreditAlyssa Schukar for The New York Times

That has lowered prices for consumers — including American taxpayers who pay for subway cars. While a subway car has not been manufactured solely by an American company in decades, CRRC’s low prices have raised concerns among American freight train companies that the company could ultimately move into — and demolish — their business.

CRRC has consistently underbid its competitors, winning over urban transit agencies that are saddled with aging infrastructure and tight budgets. For the Chicago L, CRRC’s Chicago subsidiary bid $1.55 million per car, compared with a bid of $1.82 million per car by Bombardier, the Canadian manufacturer. And CRRC also proposed to build the Chicago facility and create 170 new jobs.

Legislators argue that Chinese state-owned companies are not pursuing profit, but the policy aims of the Chinese government to dominate key global industries like electric cars, robotics and rail.

“When you can subsidize, when you can wholly own an enterprise like China does, you can create a wholly unlevel playing field,” said Senator Tammy Baldwin, a Wisconsin Democrat who is a co-sponsor of the legislation. “We’re used to that unlevel playing field existing between the U.S. and China, but now it’s happening in our own backyard.”

Perry Nobles, an electrician at CRRC’s Chicago factory since March, said he had seen nothing to indicate the company was creating “spy trains.”CreditAlyssa Schukar for The New York Times

Another more nefarious worry is also at play. Lawmakers — along with CRRC’s competitors — say they are concerned that subway cars made by a Chinese company might make it easier for Beijing to spy on Americans and could pose a sabotage threat to American infrastructure, though CRRC says it surrenders control of all technology in the cars to its buyers. Nonetheless, critics speculate that the Chinese firm could incorporate technology into the cars that would allow CRRC — and the Chinese government — to track the faces, movement, conversations or phone calls of passengers through the train’s cameras or Wi-Fi.

Scott Paul, the president of the Alliance for American Manufacturing, which represents manufacturers and the United Steelworkers, said the risks of giving a Chinese company the ability to monitor or control American infrastructure could not be understated given recent laws requiring Chinese companies to turn over data to Beijing upon request.

“I just think it would be irresponsible to assume the Chinese government to which this firm must answer would be a reliable security partner, given its well documented track record,” Mr. Paul said.

Whether those fears are justified remains uncertain. Proponents of the bill have not made clear how subway cars manufactured by a Chinese company would pose a greater espionage threat than everything else that China makes and sells in the United States, including laptops, phones and home appliances.

Moving an auxiliary power supply at the Chicago plant. Washington’s attempt to block the company from selling train cars inside America is the latest escalation in the trade war.CreditAlyssa Schukar for The New York Times

Dave Smolensky, a spokesman for CRRC, said the company was being unfairly targeted by companies that wanted to legislate a competitor out of business under the guise of national security. He said the firm was a victim to “an aggressive multimillion-dollar media disinformation campaign,” funded mostly by domestic freight train companies, intended to play on popular fears about China’s rise.

Employees at the Chicago factory also dismissed the concerns, saying they had not seen any evidence that they were working to construct “spy trains.”

“I haven’t seen any secret wires yet,” said Perry Nobles, an electrician for CRRC who was rigging wires in the interior of the trains. “With the world full of cellphones and computers, I’d think there’s an easier way to get information.”

Rising fears of China’s ambitions in Washington have prompted officials to adopt an unsparing view, with policymakers and national security officials warning domestic and foreign governments not to trust Chinese equipment.

Train chairs awaiting an assembled car. The trade war has quickly expanded from a spat over tariffs and intellectual property to a broader fight over economic and national security.CreditAlyssa Schukar for The New York Times

American officials have waged a global offensive against Huawei, telling other countries that allowing a Chinese company to build the world’s next generation of wireless networks would be akin to handing national secrets to a foreign agent.

Like CRRC, the fear surrounding Huawei is largely based on concerns about technological dominance by China’s authoritarian government. No one has yet disclosed finding a backdoor in Huawei’s products that would allow it to snoop — but officials say by the time one is discovered, it may be too late.

“The Chinese are working to put their systems in networks all across the world so they can steal your information and my information,” Secretary of State Mike Pompeo said in an interview in May. “This administration is prepared to take this on.”

As Senator John Cornyn, Republican of Texas, introduced the provision in March, he said, “China poses a clear and present danger to our national security and has already infiltrated our rail and bus manufacturing industries.”

Erik Weathersby, right, an electrical foreman, installing cables. Fears of the economic and technological ambitions of China have prompted Washington to take an expansive view of potential risks.CreditAlyssa Schukar for The New York Times

Representative Kevin McCarthy, a Republican whose California district is home to a Chinese bus maker, BYD, had opposed a version of the provision that would apply to buses as well as trains. House lawmakers dropped the bus provision, but the Senate bill would apply to both. Congress will take the issue up again in the coming weeks as part of the annual defense bill.

The legislation would not affect the thousands of American subway cars that CRRC previously won contracts to build, including an 846-car order for the Chicago L. But it would block the company from future contracts, such as those under consideration by the Chicago Metra and the Washington Metro.

The Chicago facility is the company’s second in the United States. A factory in Massachusetts that employs more than 150 people is already building trains for Boston, Los Angeles and Philadelphia, prompting concerns that the company plans to expand rapidly in the United States as it has in other foreign markets.

Like many Chinese state enterprises, CRRC is guided by Beijing’s Made in China 2025 plan, which lays out an agenda to dominate key industries.

A training session at the Chicago plant. A provision to a military spending bill would prevent the use of federal grants to buy subways trains from state-owned or state-controlled companies.CreditAlyssa Schukar for The New York Times

In its 2018 annual report, Liu Hualong, the company’s chairman and party secretary, pledged to pursue the dual goals of “Party construction as well as developing into a world-leading company with global competitiveness.”

“We conscientiously followed the important instructions of General Secretary Xi Jinping,” the report said, referring to the Chinese president and Communist Party leader.

The last American firm to make passenger rail cars, the Pullman Company, produced its final car in 1981. Since then, major American cities have bought subway cars from Bombardier and Japanese manufacturers like Kawasaki, Hyundai and Hitachi.

But American manufacturers of freight rail cars, including the Greenbrier Companies and TrinityRail, which is based in Mr. Cornyn’s home state of Texas, say CRRC could use its footing in the United States to steal its business. Together with unions and others, they have mounted a lobbying campaign against CRRC under an umbrella group known as the Rail Security Alliance.

Roberto Rios inspecting trains during an installation training session.CreditAlyssa Schukar for The New York Times

The group says American taxpayer dollars should not be spent in China, where the empty rail cars are made before being shipped to the United States for further work at the company’s facilities in Illinois or Massachusetts.

“We think those dollars should stay here,” said Erik Olson, the vice president of the Rail Security Alliance.

CRRC sends over experts from its giant headquarters in Qingdao, China, to plants in other countries. In Chicago, the American employees call these Chinese citizens “shifu,” a polite term for a skilled worker meaning “master” or “teacher.”

On a sunny day in July, the company break room was split between shifus, wearing white jumpsuits and eating stuffed buns, and American workers, many of whom had joined the company in the last few months. The gleaming concrete factory floor was bare, save for a few dozen people installing wiring, air ducts and other components into the empty shells of two rail cars.

“We are a little concerned because it’s our livelihood,” said Mr. Nobles, who was hired in March from a previous factory job making frames for the Ford Explorer.

This summer, CRRC replaced the Chinese flag outside the factory with a Chicago flag. It has also retained two Washington lobbying firms, Squire Patton Boggs and Crossroads Strategies, to plead its case in Congress.

It may be too late. Senator Sherrod Brown, Democrat of Ohio, said he helped sponsor the bill to prevent the American transit system from being “controlled by a foreign country that is not particularly friendly to us.”

“They spell out in black and white they’re going to use foreign investment as a weapon, and we’re taking action to defend ourselves,” Mr. Brown said.

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The Concept Cars Gleam, but Executive Dread Clouds the Frankfurt Auto Show

FRANKFURT — Car executives are paid to be optimists, but behind the pomp and salesmanship at the Frankfurt International Motor Show this week lurked an unmistakable sense of angst.

The talk among industry insiders at the show, one of the auto industry’s biggest events, reflected the existential threats that carmakers face.

The European and global auto markets are in decline. Carmakers are betting their futures on electric vehicles whose marketability is untested. Manufacturers are under intense public and regulatory pressure because of the role that vehicles play in climate change. The global trade war has disrupted supply chains.

Even auto shows are under threat. Many manufacturers scaled back their presence in Frankfurt this year or skipped the show altogether. Companies like Toyota and Fiat Chrysler decided the benefits didn’t justify the millions of euros it takes to put on a display.

“It’s an unprecedented situation we are in,” said Wolf-Henning Scheider, chief executive of ZF Friedrichshafen, a German transmission maker that has an extensive network of factories in the United States, Europe and China.

ImageWestlake Legal Group merlin_160607595_7d94f124-21ce-4b9a-93e8-299d119337a0-articleLarge The Concept Cars Gleam, but Executive Dread Clouds the Frankfurt Auto Show Volkswagen AG Renault SA Mercedes-Benz International Trade and World Market Greenhouse Gas Emissions Fuel Efficiency Frankfurt Auto Show Frankfurt (Germany) Engines Electric and Hybrid Vehicles Driverless and Semiautonomous Vehicles Daimler AG Batteries Automobiles

BMW is showing an electric Mini.CreditFelix Schmitt for The New York Times

Volkswagen is producing its ID.3 electric sedan with wind and solar energy.CreditFelix Schmitt for The New York Times

Mr. Scheider noted that carmakers must invest vast sums in electric vehicles and autonomous driving at the same time they are coping with a trade war. “All these at the same time is new,” Mr. Scheider said in an interview.

The Frankfurt show was as good a place as any to find out how auto executives plan to survive the tsunami. Here are some of the main takeaways.

Protests by environmental groups were especially intense this year, as carmakers increasingly take the blame for climate change. Volkswagen alone accounts for more than 1 percent of greenhouse gas emissions worldwide, according to the company’s own calculations.

This week Greenpeace activists stood on the roofs of S.U.V.s on display at the Frankfurt exhibition grounds with signs that chided, “Climate Killer.” The militant group Attac planned to blockade streets and bring traffic to a standstill on Saturday, the day the show opens to the public.

Carmakers are desperate to show that they get the message. Ola Källenius, chief executive of Daimler, said in Frankfurt that the company’s Mercedes-Benz factories will be carbon neutral next year.

Volkswagen is producing its ID.3 electric sedan with wind and solar energy, and offsetting any additional emissions by financing a project in the rainforests of Borneo. At an event this week to unveil the ID.3, guests were handed bamboo forks to eat hors d’oeuvres.

“We’re serious,” Herbert Diess, the Volkswagen chief executive, said during a debate with Tina Velo, a leader of Attac, who questioned the company’s commitment to the environment.

But carmakers still make most of their money from fuel-thirsty S.U.V.s. Nicolas Peter, chief financial officer of BMW, said the industry couldn’t solve its image problems with public relations alone.

“We have to do the right thing,” he told a small group of reporters on Tuesday.

Carmakers are operating on the assumption that tensions between China and the United States won’t be resolved soon. They are rethinking their supply chains and moving production closer to customers so that fewer goods have to cross borders and be exposed to tariffs.

That applies to software as well as hardware. Mr. Scheider of ZF said that, for security reasons, autonomous driving technology developed for the United States has to be kept out of China and vice versa. “That is a risk, that these two regions drift apart,” he said.

Forced to choose, many companies would have to pick China. It has become by far the biggest car market, and several executives said they expected it to keep growing despite a recent decline in sales. Mr. Scheider pointed out that rates of car ownership were still low outside the major cities.

“I’m pretty confident the Chinese market will grow continuously,” he said.

A slew of mainstream carmakers unveiled battery-powered cars in Frankfurt that will sell at prices within reach of middle-class households.

The most important new product at the show is easily the ID.3, a four-door hatchback that Volkswagen said would be the first in a line of affordable battery-powered vehicles, including an S.U.V. and a minivan.

Honda unveiled an electric vehicle known simply as the E, and BMW showed an electric version of its popular Mini. Including incentives available in the United States, Germany and other countries, the end price of these vehicles should be 30,000 euros ($33,000) or less. Because electric cars have fewer moving parts and require less maintenance, the cost of ownership may be lower than for a conventional car.

Ola Källenius, chief executive of Daimler. He said the company’s Mercedes-Benz factories would be carbon neutral next year.CreditFelix Schmitt for The New York Times

But no one knows yet whether these vehicles will be popular enough to justify the investment and allow carmakers to meet European Union fuel economy targets that take effect next year. Carmakers that fail to deliver average fuel economy of 57 miles per gallon face draconian fines.

Regret is written on the faces of auto executives’ faces when they say it, but the age of the internal combustion engine is slowly coming to an end.

“One is amazed at what can still be achieved with the internal combustion engine,” said Markus Schäfer, the head of research and development at Daimler. He added, however: “Of course the main focus is on electrification.”

Mr. Schäfer told a small group of reporters that Mercedes did not plan to develop any more internal combustion engines after it finished the rollout of a new four-cylinder motor, which is underway. “That is the last,” he said.

But battery-powered cars are likely to be less profitable for carmakers, which tend to operate on thin margins to begin with. Most make their own gasoline or diesel motors. They must buy batteries from suppliers like LG Chem of South Korea, Panasonic of Japan or CATL of China, which will keep a big chunk of the profits.

Batteries for electric cars have made rapid progress in the last decade, dropping in price and delivering more juice per pound than even a few years ago. The latest generation of the Renault Zoe can travel 395 kilometers, or 245 miles, on a charge, more than double the range of the first generation, which went on sale in 2012.

“In less than a decade, we already have done huge progress,” Gilles Normand, senior vice president for electric vehicles at Renault, said in an interview. “You can easily imagine what’s going to come in the next 10 years.”

The BMW Vision iNext luxury electric automobile, left, and a Vision M Next concept car.CreditFelix Schmitt for The New York Times

Thierry Bolloré, the chief executive of Renault, said that the company was working on a €10,000 ($12,000) electric car. “We have a clear estimate that this is reachable, absolutely, and still make money,” Mr. Bolloré said during a news conference Tuesday.

Others are more pessimistic. The prevailing lithium-ion technology will probably reach its limits in five years, Mr. Schäfer of Daimler said. Further progress will rest on new technologies such as solid state batteries, which will weigh less and be easier to cool but are not yet ready for mass production. “We need a quantum leap in the technology,” Mr. Schäfer said.

Some companies will adapt to new technologies, but some won’t be able to invest enough to stay competitive.

Mergers would be a way out for weaker companies, but those have proved difficult. Mr. Bolloré of Renault said in Frankfurt that there was no effort to revive the aborted deal with Fiat Chrysler.

“We are not talking to each other,” he told reporters. “The offer was on the table. It’s no longer on the table. That’s it.” Mr. Bolloré added that he regretted the merger hadn’t worked out.

The coming shakeout may be most brutal among suppliers, particularly smaller companies far down the industry food chain that supply specialized parts for combustion engines.

“Every downturn, there is a consolidation that takes place,” said Derek Jenkins, a former Mazda and Volkswagen executive who is senior vice president of design at Lucid, a California company that plans to begin producing a luxury electric car at the end of 2020. Lucid, backed by Saudi investors, is an example of the start-ups challenging the established carmakers.

“Brands disappear,” Mr. Jenkins said in an interview. “That will happen in the next downturn cycle.”

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China Drops Some U.S. Pork and Soybean Tariffs as Trade Tensions Ease

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BEIJING — China will exempt some American soybeans, pork and other agricultural products from additional tariffs, state media reported on Friday, in the latest move by Beijing to ease trade tensions with the United States.

China Central Television, the nation’s official broadcaster, and other official outlets reported the move without disclosing details about the tariff exemptions. But in a brief report issued late Friday afternoon, CCTV cited President Trump’s move on Thursday to delay Washington’s new tariffs by two weeks so that they would take effect after trade talks scheduled for early October.

Depending on the amount of agricultural products exempted, China’s move could be warmly welcomed by Mr. Trump. Some farmers in the United States have been hit hard by tariffs imposed by Beijing on American goods, a retaliation against the White House’s mounting tariffs on Chinese goods. The 2020 presidential election is approaching, and the farming vote is critical in some of the states that supported Mr. Trump in 2016.

The move could also help China with its own problems. Food inflation has been rising as Chinese authorities battle an epidemic of swine fever, which has forced China to cull more than a million pigs. Pork is a staple of the Chinese diet.

The announcement followed signals that China was moving toward resuming purchases of American agricultural products. On Thursday an American soybean industry association said that China had purchased between 600,000 to 1 million metric tons of soybeans for shipment in October.

On Wednesday, in another move toward easing tensions, China published a short list of products to be spared from retaliatory tariffs on American-made goods, including cancer drugs, lubricants and pesticides. But those items are less central to the trade fight. Chinese purchases of American agricultural products make up a significant chunk of its imports from the United States.

Trade tensions between China and the United States had worsened in recent months, following the collapse of talks in May. But senior officials of both governments are set to meet in Washington early next month amid rising economic worries in both countries

At a news conference on Thursday, a spokesman for China’s Ministry of Commerce indicated that the government was considering making concessions in order to pave the way for more trade talks.

Chinese companies were beginning to make inquiries about purchases of American soybeans and pork, said the spokesman, Gao Feng.

“We hope the two sides would move in the same direction, take practical actions and provide a sound environment for the trade talks, and it would be good for the two countries, and for the world,” Mr. Gao said.

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With Trade Talks Looming, U.S. and China Move to Relax Tensions

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WASHINGTON — The trade war between the United States and China showed signs of easing on Thursday, as China reportedly made its first large purchase in months of American soybeans after President Trump agreed to briefly delay his next round of tariffs.

A trade deal between the two sides is not imminent, and deep divisions remain. But after weeks of escalating tariffs that have pushed the bilateral relationship to its rockiest point in decades, both countries appeared eager this week to try to calm tensions before a new round of talks next month.

Mr. Trump said on Thursday that China would resume purchases of American farm goods, and Beijing confirmed that Chinese companies were making inquiries about buying products including pork and soybeans.

The president’s announcement, made on Twitter on Thursday morning, followed a day of cooling tensions, in which China announced that it would grant some limited exemptions to its tariffs for American products, and Mr. Trump responded by promising to delay his next tariff increase by two weeks to Oct. 15.

“It is expected that China will be buying large amounts of our agricultural products!” the president said in his announcement.

Jim Sutter, the chief executive of the U.S. Soybean Export Council, said he learned on Thursday that China had made a large soybean purchase. Mr. Sutter said that between 12 and 20 cargo ships containing 600,000 to 1 million metric tons of soybeans were being purchased from export terminals in the Pacific Northwest for October shipments to China.

“We’re quite happy to see this apparent thaw in the relationship,” Mr. Sutter said. “We wish we could get trade back to normal.”

China’s Ministry of Commerce said some Chinese companies were beginning to make inquiries about resuming purchases of American agricultural products. “Soybeans and pork are all within the scope of inquiry,” said Gao Feng, a spokesman for the ministry. “I hope that China and the United States will move in the same direction and create favorable conditions for consultations.”

American and Chinese negotiators plan to meet in person in early October, before Mr. Trump increases tariffs on $250 billion worth of goods to 30 percent from 25 percent. Expectations for quickly resolving the significant differences between the two sides remain modest. But the recent de-escalation increases the likelihood that the next round of tariffs might be averted, perhaps eventually opening a path to an agreement that would smooth relations between the countries.

Markets, which have gyrated with every twist and turn in the trade war, rose on the potential that the two sides could ultimately reach a deal. U.S. stock indexes climbed before paring back some of their gains. The S&P 500 index was up 0.29 percent at the close of the day, while the Dow Jones industrial average gained 0.17 percent.

Relations between the countries have worsened since May, when China backed away from a nearly complete deal that would have required it to codify the agreement into Chinese law, which Beijing said would infringe on its sovereignty. Since then, Mr. Trump has placed tariffs on an additional $112 billion of Chinese products and threatened further tariff increases in October and December.

China has responded to the escalation by increasing tariffs on $75 billion of American goods. Chinese state-owned companies have also suspended their purchases of American soybeans, pork and other products, a severe hit to American farmers who have already lost markets because of the trade clash.

Although Mr. Trump’s advisers publicly insist that the trade war is having no effect on the American economy, many of them are eager to calm tensions. They have been reviewing ways to avoid planned tariff increases that would result in the United States taxing nearly every Chinese toy, sneaker and computer by the end of this year.

The president pushed back on reports Thursday that he was vying for an interim deal with China that would resolve only some issues. “I’d rather get the whole deal done,” he said, before adding, “It’s something we would consider, I guess.”

The administration has been weighing whether a deal with China would be a boon or liability to the president’s re-election. His advisers have been working for months to secure an agreement strong enough to dodge criticism from both Democrats and Republicans that Mr. Trump is folding to America’s biggest economic competitor.

Some White House officials, including the president’s son-in-law, Jared Kushner, have argued that the president does not need to seal a deal with China to win over voters. Mr. Kushner and others argue that if the administration can deliver other trade successes, like passing the revised North American trade agreement and announcing a trade deal with Japan, that will be enough to help rally the base, according to people familiar with their thinking.

But economic advisers like Steven Mnuchin and Larry Kudlow have been more attuned to the whipsawing financial markets and some flagging economic indicators and have advocated trying to reach a deal with China.

Discussions between the two countries have revolved around China strengthening its protections for American intellectual property, opening up its markets to competition from American firms and making large purchases of American products, like natural gas and soybeans.

The Trump administration has also pressed China to make more structural changes, for example rolling back the influence of state-owned enterprises in its economy. China has balked at making any concessions it sees as compromising its ability to manage its economy, or signing a deal it perceives as uneven. China has demanded that Mr. Trump remove the tariffs placed on $360 billion of Chinese products, as well as grant leniency for Huawei, the Chinese telecom giant the United States has cut off from purchasing American supplies.

Michael Pillsbury, a China scholar at the Hudson Institute who is advising the Trump administration in its negotiations, said the Chinese had been paving the way to better relations by toning down their formerly strident criticism of Mr. Trump and announcing several changes, including proposing more free trade zones around China that would feature open financial markets and better access for American companies.

“One swallow does not make a summer,” Mr. Pillsbury said, quoting a proverb. “But these gestures are now more and more numerous.”

Mr. Trump’s economic officials have also said the delay in tariffs could smooth relations.

Mr. Mnuchin, the Treasury secretary, said on Thursday that Mr. Trump was making a “good gesture” by agreeing to move the deadline by two weeks so that it did not conflict with China’s celebration on Oct. 1 of its founding 70 years ago.

“The president delayed it because of a request from the vice premier,” Mr. Mnuchin said on CNBC. “The optics of us raising the tariffs on Oct. 1, which is their 70th anniversary, caused them grave concern on the symbolism.”

Mr. Mnuchin would not comment on the whether the United States and China were discussing an agreement smaller in scope than they originally hoped. But asked about thorny issues, he made clear that the unrest in Hong Kong would not be part of the trade talks.

“Hong Kong is definitely not on the table,” he said. “That’s an issue for the secretary of state to deal with. That’s not a trade issue.”

Mr. Mnuchin did not address whether Huawei would be discussed. He said the critical issues in the negotiations remained the protection of American intellectual property, an end to China forcing American companies into joint ventures, currency manipulation and increased purchases of American agricultural products.

“We expect and we want them to buy agriculture,” he said. “We view that as a personal attack on our farmers.”

Some White House officials played down the significance of Mr. Trump’s reprieve on Thursday.

“It’s a small thing in the scheme of things,” Peter Navarro, Mr. Trump’s trade adviser, said on CNN, noting that the delay was for only two weeks. “The Chinese are paying the tariffs anyway.”

Mr. Navarro accused the Chinese of economic aggression and stealing American intellectual property. He also pushed back against Republican lawmakers, such as Senator Patrick J. Toomey of Pennsylvania, who have been voicing their frustration about the tariffs.

“He’s waving the white flag, not the American flag,” Mr. Navarro said of Mr. Toomey.

Mr. Navarro also seemed skeptical that China would actually step up its purchases of American agricultural products.

“Let’s see if the Chinese fulfill their commitments,” he said. “The problem we’ve always had with the Chinese is that they don’t necessarily honor their commitments.”

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

Trade Talks Looming, U.S. and China Lower Their Guard, a Little

Westlake Legal Group 12DC-CHINATRADE-promo-facebookJumbo Trade Talks Looming, U.S. and China Lower Their Guard, a Little United States Politics and Government United States International Relations United States Economy Trump, Donald J Soybeans International Trade and World Market Huawei Technologies Co Ltd Customs (Tariff) China Agriculture and Farming

WASHINGTON — President Trump said on Thursday that China would resume purchases of American farm goods and Beijing confirmed that Chinese companies were making inquiries about buying agricultural products, the latest sign that both sides are trying to ease tensions that have pushed the bilateral relationship to its rockiest point in decades.

The president’s announcement, made on Twitter on Thursday morning, followed a day of cooling trade tensions, in which China announced that it would grant some limited exemptions to its tariffs for American products, and Mr. Trump responded by promising to delay his next tariff increase by two weeks to Oct. 15.

“It is expected that China will be buying large amounts of our agricultural products!” the president said on Twitter on Thursday.

China’s Ministry of Commerce said some Chinese companies were beginning to make inquiries about resuming purchases of American agricultural products. “Soybeans and pork are all within the scope of inquiry,” said Gao Feng, a spokesman for the ministry. “I hope that China and the United States will move in the same direction and create favorable conditions for consultations.”

American and Chinese negotiators now plan to meet in person in early October, before Mr. Trump’s deadline to increase tariffs on $250 billion worth of goods to 30 percent from 25 percent. Expectations for quickly resolving the significant differences between the two sides remain modest. But the recent de-escalation increases the likelihood that the next round of tariffs might be averted, perhaps eventually opening a path to an agreement that would smooth relations between the countries.

Markets, which have gyrated with every twist and turn in the trade war, rose on the potential that the two sides could de-escalate a trade war that has gone on far longer than most investors had expected. The S&P 500 index rose 0.45 percent by noon, while the Dow Jones industrial average gained 0.42 percent.

Mr. Trump’s tariff threats against China have weighed heavily on markets, as the trade war’s effect on the economy has become more obvious in recent months. A manufacturing index published this month showed American factory activity contracting for the first time in three years, while an index of consumer sentiment reflected the biggest decline since 2012, where one in three consumers spontaneously mentioned tariffs.

The signs of easing follow a familiar pattern for Mr. Trump, who has routinely vacillated between punishing China and trying to cool tensions when markets and economic data start to wobble.

Relations between the countries have worsened since May, when China backed away from a nearly complete deal that would have required it to codify the agreement into Chinese law, which Beijing said would infringe on its sovereignty. Since then, Mr. Trump has placed tariffs on an additional $112 billion of Chinese products and threatened further tariff increases in October and December.

China has responded to the escalation by increasing tariffs on $75 billion of American goods. Chinese state-owned companies have also suspended their purchases of American soybeans, pork and other products, a severe hit to American farmers who have already lost markets because of the trade clash.

Mr. Trump and his advisers have weighed whether striking a deal with China would be a boon or liability to the president heading into his re-election. They have been working for months to secure a trade deal that is strong enough to dodge criticism from both Democrats and Republicans that Mr. Trump is folding to America’s biggest economic competitor.

The details of the trade agreement the United States is discussing with China are tightly held. But they have revolved around China strengthening its protections for American intellectual property, opening up its markets to competition from American firms and making large purchases of American products, like natural gas and soybeans.

The Trump administration has also pressed China to make more structural changes, for example rolling back the influence of state-owned enterprises in its economy. But China has balked at making any concessions it sees as compromising its ability to manage its economy, or signing a deal it perceives as uneven. For their part, the Chinese have demanded the rollback of the tariffs Mr. Trump has placed on $360 billion of Chinese products, as well as leniency for Huawei, the Chinese telecom giant the United States has cut off from purchasing American supplies.

Mr. Trump’s closest advisers said the delay in tariffs would pave the way for smoother relations.

Treasury Secretary Steven Mnuchin said on Thursday that Mr. Trump was making a “good gesture” by agreeing to move the deadline by two weeks so that it did not conflict with China’s celebration on Oct. 1 of its founding 70 years ago.

“The president delayed it because of a request from the vice premier,” Mr. Mnuchin said on CNBC. “The optics of us raising the tariffs on Oct. 1, which is their 70th anniversary, caused them grave concern on the symbolism.”

Mr. Mnuchin would not comment on the whether the United States and China are discussing an agreement that is smaller in scope than they originally hoped. But asked about thorny issues, he made clear that the unrest in Hong Kong would not be part of the trade talks.

“Hong Kong is definitely not on the table,” he said. “That’s an issue for the secretary of state to deal with. That’s not a trade issue.”

Mr. Mnuchin did not address whether Huawei would be discussed. He said the critical issues in the negotiations remained the protection of American intellectual property, an end to China forcing American companies into joint ventures, currency manipulation and increased purchases of American agricultural products.

“We expect and we want them to buy agriculture,” he said. “We view that as a personal attack on our farmers.”

Some White House officials played down the significance of Mr. Trump’s reprieve on Thursday.

“It’s a small thing in the scheme of things,” Peter Navarro, Mr. Trump’s trade adviser, said on CNN, noting that the delay was for only two weeks. “The Chinese are paying the tariffs anyway.”

Mr. Navarro accused the Chinese of economic aggression and stealing American intellectual property. He also pushed back against Republican lawmakers, such as Senator Patrick J. Toomey of Pennsylvania, who have been voicing their frustration about the tariffs.

“He’s waving the white flag, not the American flag,” Mr. Navarro said of Mr. Toomey.

Mr. Navarro also seemed skeptical that China would actually step up its purchases of American agricultural products.

“Let’s see if the Chinese fulfill their commitments,” he said. “The problem we’ve always had with the Chinese is that they don’t necessarily honor their commitments.”

Business leaders are hoping for a quick resolution to the trade fight.

Jennifer Safavian, the executive vice president of government affairs at the Retail Industry Leaders Association, which represents companies including Walmart, Best Buy and Target, said they were hopeful that the delay in American tariffs would lead to productive talks.

“A resolution is sorely needed that puts an end to the tariff increases,” Ms. Safavian said. “Negotiating a path forward that puts an end to the erratic tariff increases and provides some dose of certainty to businesses should be the goal for the October trade discussions.”

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