sanctions

FILE PHOTO: A tugboat escorts French Navy frigate Vendemiaire on arrival for a goodwill visit at a port in Metro Manila
FILE PHOTO: Tugboat escorts French Navy frigate Vendemiaire on arrival for a 5-day goodwill visit at a port in Metro Manila, Philippines March 12, 2018. REUTERS/Romeo Ranoco/File Photo

April 24, 2019

By Idrees Ali and Phil Stewart

WASHINGTON (Reuters) – A French warship passed through the strategic Taiwan Strait this month, U.S. officials told Reuters, a rare voyage by a vessel of a European country that is likely to be welcomed by Washington but increase tensions with Beijing.

The passage is a sign that U.S. allies are increasingly asserting freedom of navigation in international waterways near China. It could open the door for other allies, such as Japan and Australia, to consider similar operations.

The French operation comes amid increasing tensions between the United States and China. Taiwan is one of a growing number of flashpoints in the U.S.-China relationship, which also include a trade war, U.S. sanctions and China’s increasingly muscular military posture in the South China Sea, where the United States also conducts freedom of navigation patrols.

Two officials, speaking on condition of anonymity, said a French military vessel carried out the transit in the narrow waterway between China and Taiwan on April 6.

One of the officials identified the warship as the French frigate Vendemiaire and said it was shadowed by the Chinese military. The official was not aware of any previous French military passage through the Taiwan Strait.

The officials said that as a result of the passage, China notified France it was no longer invited to a naval parade to mark the 70 years since the founding of China’s Navy. Warships from India, Australia and several other nations participated.

Colonel Patrik Steiger, the spokesman for France’s military chief of staff, declined to comment on an operational mission.

The U.S. officials did not speculate on the purpose of the passage or whether it was designed to assert freedom of navigation.

MOUNTING TENSIONS

The French strait passage comes against the backdrop of increasingly regular passages by U.S. warships through the strategic waterway. Last month the United States sent Navy and Coast Guard ships through the Taiwan Strait.

The passages upset China, which claims self-ruled Taiwan as part of its territory. Beijing has been ramping up pressure to assert its sovereignty over the island.

Chen Chung-chi, spokesman for Taiwan’s defense ministry, told Reuters by phone the strait is part of busy international waters and it is “a necessity” for vessels from all countries to transit through it. He said Taiwan’s defense ministry will continue to monitor movement of foreign vessels in the region.

There was no immediate comment from China’s foreign or defense ministries.

“This is an important development both because of the transit itself but also because it reflects a more geopolitical approach by France towards China and the broader Asia Pacific,” said Abraham Denmark, a former U.S. deputy assistant secretary of defense for East Asia.

The transit is a sign that countries like France are not only looking at China through the lens of trade but from a military standpoint as well, Denmark said.

Last month France and China signed deals worth billions of euros during a visit to Paris by Chinese President Xi Jinping. French President Emmanuel Macron wants to forge a united European front to confront Chinese advances in trade and technology.

“It is important to have other countries operating in Asia to demonstrate that this is just not a matter of competition between Washington and Beijing, that what China has been doing represents a broader challenge to a liberal international order,” Denmark, who is currently with the Woodrow Wilson Center think-tank in Washington, added.

Washington has no formal ties with Taiwan but is bound by law to help provide the democratically ruled island with the means to defend itself and is its main source of arms.

(Reporting by Idrees Ali and Phil Stewart in Washington; Additional reporting by Sophie Louet in Paris, Yimou Lee in Taipei and Ben Blanchard in Beijing; Editing by James Dalgleish)

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A Venezuelan military deserter of the National Guard, who doesn't want to be identified, is seen in the border city of Pacaraima
A Venezuelan military deserter of the National Guard, who doesn’t want to be identified, is seen in the border city of Pacaraima, Brazil April 11, 2019. REUTERS/Pilar Olivares

April 24, 2019

By Anthony Boadle

PACARAIMA, Brazil (Reuters) – Venezuelan military personnel are deserting to Colombia and Brazil in growing numbers, refusing to follow orders to repress protests against the government of President Nicolas Maduro, six of them told Reuters.

A lieutenant and five sergeants of the National Guard, the main force used by the Maduro government to suppress widespread demonstrations, said the bulk were going to Colombia, the most accessible border, but others like themselves had left for Brazil.

Colombian immigration authorities said some 1,400 Venezuelan military had deserted for Colombia this year, while the Brazilian Army said over 60 members of Venezuela’s armed forces had emigrated to Brazil since Maduro closed the border on Feb. 23 to block an opposition effort to get humanitarian aid into the country.

“Most military people that are leaving are from the National Guard. They will continue coming. More want to leave,” said a National Guard lieutenant, speaking earlier this month. She had just crossed into Brazil on foot, arriving in the frontier town of Pacaraima after walking hours along indigenous trails through savannah.

Officials in both countries said the pace of desertion has sped up in recent months as political and economic turmoil in Venezuela has worsened.

The deserters, who asked to withhold their names due to fear of reprisals against their families, complained that top commanders in Venezuela lived well on large salaries and commissions from smuggling and other black market schemes while the lower ranks confronted conflicts in Venezuela’s streets for little pay.

“They already have their families living abroad. They live well, eat well, have good salaries and profits from corruption,” said the lieutenant.

The Venezuelan government’s Information Ministry, which handles all media inquiries, did not reply to requests for comment for this story.

In February, Maduro’s ambassador to the United Nations, Samuel Moncada, told a Security Council meeting the number of military desertions had been exaggerated. Foreign ministry spokesman William Castillo said at the time that just 109 of the 280,000-strong armed forces had deserted under Maduro.

A Venezuelan sergeant, who proudly donned his National Guard uniform for an interview in a hotel room in Pacaraima, said he could not provide for his two small sons on his $12-a-month salary.

“We risked our lives so much for the little we were paid,” he said. “I left because of this and the bad orders the commanding officers were giving us.”

The head of Venezuela’s opposition-led congress, Juan Guaido, backed by most Western nations, is trying to oust Maduro on the basis that the socialist president’s 2018 re-election was illegitimate.

But top armed forces commanders have remained loyal to Maduro because they earn well in dollars and have too much to lose by abandoning him, according to the National Guard deserters.

Maduro has placed military chiefs in high-level jobs running state companies so they do not turn against him, the sergeant said.

“Maduro knows that if he removes them from those posts, the military will turn their backs on him and could oust him in a coup,” he said.

Maduro has called Guaido a U.S. puppet trying to foment a coup, and blames the country’s economic problems on U.S. sanctions.

INMATES IN UNIFORM

Rebellion in the middle ranks of the National Guard has been contained by intimidation and threats of reprisals against officers’ families, the deserters told Reuters. They said phones of military personnel suspected of anti-Maduro sympathies were tapped to watch their behavior.

With desertions on the rise and dwindling support for Maduro, the government has used armed groups of civilians known as “colectivos” to terrorize Maduro opponents, the interviewees said. Rights groups in Venezuela have warned of rising violence meted out by the militant groups.

The government has also released jail inmates and put them in National Guard uniforms, to the disgust of soldiers with years of military career behind them, the six deserters said. It is unclear if the former inmates or militants are paid by the government.

A lack of food, water and medicines, along with extended blackouts, have added to a sense of anarchy, the deserters said.

The uniformed sergeant said he feared bloodshed at the hands of the “colectivos” trying to keep Maduro in power if the armed forces balked at government orders to repress protests.

“There won’t be enough soldiers left with hearts of stone to fire on the people,” he said. “We military know that among the crowds on the streets there are relatives of ours protesting for freedom and a better future for Venezuela.”

(Reporting by Anthony Boadle, Leonardo Benassatto and Pilar Olivares, Additional reporting by Helen Murphy in Bogota and Vivian Sequera in Caracas, Editing by Rosalba O’Brien)

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FILE PHOTO: Saudi Arabia's Energy Minister Khalid al-Falih talks during the 23rd World Energy Congress in Istanbul
FILE PHOTO: Saudi Arabia’s Energy Minister Khalid al-Falih talks during the 23rd World Energy Congress in Istanbul, Turkey, October 10, 2016. REUTERS/Murad Sezer

April 24, 2019

By Saeed Azhar and Stephen Kalin

RIYADH (Reuters) – Saudi Arabia’s energy minister said on Wednesday he saw no need to raise oil output immediately after the United States ends waivers granted to buyers of Iranian crude, but added that the kingdom would respond to customers’ needs if asked for more oil.

Khalid al-Falih said he was guided by oil market fundamentals not prices, and that the world’s top oil exporter remained focused on balancing the global oil market.

“Inventories are actually continuing to rise despite what is happening in Venezuela and despite the tightening of sanctions on Iran. I don’t see the need to do anything immediately,” Falih said in Riyadh.

The United States has decided not to renew exemptions from sanctions against Iran granted last year to buyers of Iranian oil, taking a tougher line than expected.

“Our intent is to remain within our voluntary (OPEC) production limit,” Falih said, adding that Riyadh would “be responsive to our customers, especially those who have been under waivers and those whose waivers have been withdrawn.”

“We think there will be an uptick in real demand but certainly we are not going to be pre-emptive and increase production,” the minister said.

He said Saudi Arabia’s oil production in May was pretty much set with very little variation from the last couple of months. June crude allocations would be decided early next month, he said.

The kingdom’s exports in April will be below 7 million barrels per day (bpd), while production is around 9.8 million bpd, Saudi officials have said. Under the OPEC-led deal on supply cuts, Saudi Arabia can pump up to 10.3 million bpd.

Falih said there would most likely be “some level of production management beyond June” by OPEC and its allies, but it was too early to predict the output targets now.

Oil prices rallied to their highest level since November after Washington announced all waivers on imports of sanctions-hit Iranian oil would end next week, pressuring importers to stop buying from Tehran and further tightening global supply.

Eight countries, including China and India, were granted waivers for six months, and several had expected those exemptions to be renewed.

Brent crude futures fell on Wednesday, trading at $74.18 per barrel at 0848 GMT, after the International Energy Agency said oil markets were “adequately supplied” and “global spare production capacity remains at comfortable levels.”

A senior U.S. administration official said on Monday that Trump was confident Saudi Arabia and the United Arab Emirates would fulfill pledges to compensate for any shortfall in the oil market following Washington’s decision to end the Iran waivers.

OPEC and industry sources told Reuters on Tuesday that Gulf OPEC producers could meet any oil supply shortage but would first wait to see whether there was actual demand.

The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, agreed to cut output by 1.2 million bpd. They meet on June 25-26 to decide whether to extend the pact.

A panel of energy ministers from major oil producers, known as the JMMC, meets on May 19 to discuss the oil market and make recommendations before the June meeting, OPEC sources said.

(Writing by Rania El Gamal; Editing by Dale Hudson and Edmund Blair)

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FILE PHOTO: Iranian Foreign Minister Mohammad Javad Zarif speaks during a news conference with Iraqi Foreign Minister Mohamed Ali Alhakim, in Baghdad
FILE PHOTO: Iranian Foreign Minister Mohammad Javad Zarif speaks during a news conference with Iraqi Foreign Minister Mohamed Ali Alhakim, in Baghdad, Iraq, March 10, 2019. REUTERS/Khalid Al-Mousily/File Photo

April 24, 2019

UNITED NATIONS (Reuters) – Iran will continue to find buyers for its oil and use the Strait of Hormuz to transport it, the country’s Foreign Minister Mohammad Javad Zarif said on Wednesday, warning that if the United States tries to stop Tehran then it should “be prepared for the consequences.”

“We believe that Iran will continue to sell its oil. We will continue to find buyers for our oil and we will continue to use the Strait of Hormuz as a safe transit passage for the sale of our oil,” Zarif also told event at the Asia Society in New York.

“If the United States takes the crazy measure of trying to prevent us from doing that then it should be prepared for the consequences,” he said.

(Reporting by Michelle Nichols and Lesley Wroughton; Editing by Chizu Nomiyama)

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FILE PHOTO: A view shows S-400 surface-to-air missile system after its deployment near Kaliningrad
FILE PHOTO: A view shows a new S-400 “Triumph” surface-to-air missile system after its deployment at a military base outside the town of Gvardeysk near Kaliningrad, Russia March 11, 2019. REUTERS/Vitaly Nevar/File Photo

April 24, 2019

MOSCOW (Reuters) – Russia will start delivering its S-400 missile defense systems to Turkey in July, the head of Russian state arms exporter Rosoboronexport said, according to Interfax news agency.

“Everything has been already discussed and agreed,” Alexander Mikheev told Interfax.

The United States has threatened to impose sanctions if Turkey seals its S-400 deal with Russia. Ankara has said its purchase should not trigger sanctions as Turkey is not an adversary of Washington and remains committed to the NATO alliance.

(Reporting by Maxim Rodionov; Writing by Andrey Ostroukh)

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FILE PHOTO: Saudi Arabia's Crown Prince Mohammed bin Salman speaks during a meeting with Indian Prime Minister Narendra Modi at Hyderabad House in New Delhi
FILE PHOTO: Saudi Arabia’s Crown Prince Mohammed bin Salman speaks during a meeting with Indian Prime Minister Narendra Modi at Hyderabad House in New Delhi, India, February 20, 2019. REUTERS/Adnan Abidi/File Photo

April 24, 2019

By Stephen Kalin and Saeed Azhar

RIYADH (Reuters) – Global finance chiefs who boycotted a Saudi investment summit last year following the murder of journalist Jamal Khashoggi returned to Riyadh this week as the Gulf kingdom gets business back on track.

Dozens of Western politicians and business executives pulled out of Saudi Arabia’s showcase summit in October amid global uproar over Khashoggi’s killing at the hands of Saudi agents inside the kingdom’s Istanbul consulate three weeks earlier.

A Saudi court has charged 11 suspects in a secretive trial and Western allies imposed sanctions on individuals. But Riyadh still faces criticism with some Western governments saying Crown Prince Mohammed bin Salman ordered the murder. Saudi authorities have denied any connection to the country’s de facto ruler.

Big investors in Saudi Arabia appear to be focused on potential deals in the largest Arab economy and the world’s top oil exporter as it opens up under a transformation drive led by Prince Mohammed.

HSBC CEO John Flint and Blackrock CEO Larry Fink, who had stayed away from last year’s event, joined panels at the two-day financial forum that began on Wednesday, as did co-president of JPMorgan Chase & Co, Daniel Pinto.

“This is an economy that we have a lot of confidence in, I think the future is bright,” Flint told the gathering. “We are excited about the role that we can continue to play here.”

Fink told another panel: “The changes here in the kingdom in the last two years are pretty amazing.”

The CEO of the London Stock Exchange, who had pulled out of last year’s event, is also scheduled to speak at the financial conference. Also slated to attend is the chairman of Japan’s Mitsubishi UFJ Financial Group Inc, whose CEO decided to abstain from the October summit.

Riyadh has been trying for months to refocus attention on its reforms, sending a senior delegation to the World Economic Forum in Davos and unveiling an industrial plan to attract hundreds of billions of dollars in investments in January.

The summit is taking place days after Saudi security forces thwarted an attack on a state security building in central Riyadh province, which authorities blamed on Islamic State.

On Tuesday Saudi Arabia announced it had executed 37 people in connection with terrorism crimes, the majority of whom were Shi’ite Muslims. Amnesty International criticized the executions as a “gruesome indication of how the death penalty is being used as a political tool to crush dissent” in the kingdom.

Asked how Saudi Arabia was addressing national security issues, Finance Minister Mohammed al-Jadaan told the audience the Gulf region is “one of the safest worldwide”.

“These incidents will happen,” he said of the Riyadh province attack. “We are working with the world to make sure that we combat the financing of terrorism… and we work very closely with the West and the regional forces to make sure that we intercept and fight terrorism.”

MARKET CONFIDENCE

Earlier this month, state oil giant Saudi Aramco received more than $100 billion in orders for its first international bond issue, a record breaking vote of market confidence.

Energy Minister Khalid al-Falih told the forum that Aramco would be active in debt markets and that the $12 billion it raised in its debut bond issue was “only the beginning”.

The Saudi stock market has also seen an upsurge in foreign fund flows since the start of 2019 as the market enters global emerging market benchmarks. The index is up nearly 18 percent year-to-date, one of the best performing markets in the region.

The domestic financial sector is seeing a relative uptick in activity this year, fueled by an economic recovery from higher oil prices and government-led spending on big projects.

Jadaan told the forum that the ministry is launching a 12.5 billion riyal($3.33 billion)initiative to support private sector growth in the kingdom.

While some foreign investors are pushing ahead, other firms continue to keep Saudi Arabia at arm’s length, fearing a potential backlash at home over Khashoggi’s murder, the Yemen war and Riyadh’s detention of women’s rights activists.

Virgin Group last year suspended talks with the kingdom’s Public Investment Fund (PIF) over a planned $1 billion investment. Hollywood talent agency Endeavor and PIF “parted ways” after talks on the fund investing $400 million, a source familiar with the matter has said.

(Editing by William Maclean)

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Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang
FILE PHOTO: Pumpjacks are seen against the setting sun at the Daqing oil field in Heilongjiang province, China December 7, 2018. Picture taken December 7, 2018. REUTERS/Stringer

April 24, 2019

By Henning Gloystein

SINGAPORE (Reuters) – Oil prices inched lower on Wednesday on signs that global markets remain adequately supplied despite a jump to 2019 highs this week on Washington’s push for tighter sanctions against Iran.

Brent crude futures were at $74.24 per barrel at 0058 GMT, down 27 cents, or 0.4 percent, from their last close.

U.S. West Texas Intermediate (WTI) crude futures were at $66.02 per barrel, down 28 cents, or 0.4 percent, from their previous settlement.

Crude futures rose to 2019 highs earlier in the week after the United States said on Monday it would end all exemptions for sanctions against Iran, demanding countries halt oil imports from Tehran from May or face punitive action from Washington.

U.S. sanctions against oil exporter Iran were introduced in November 2018, but Washington allowed its largest buyers limited imports of crude for another half-year as an adjustment period.

With Iranian oil exports likely declining sharply from May as most countries bow to U.S. pressure, global crude markets are expected to tighten in the short-run, Goldman Sachs and Barclays bank said this week.

Despite this, analysts said global oil markets remained adequately supplied thanks to ample spare capacity from the Middle East dominated Organization of the Petroleum Exporting Countries (OPEC), Russian and also the United States.

The International Energy Agency (IEA), a watchdog for oil consuming countries, said in a statement on Tuesday that markets are “adequately supplied” and that “global spare production capacity remains at comfortable levels.”

The biggest source of new oil supply comes from the United States, where crude oil production has already risen by more than 2 million barrels per day (bpd) since early 2018 to a record of more than 12 million bpd early this year, making America the world’s biggest oil producer ahead of Russia and Saudi Arabia.

“Total oil supplies from the United States are expected to grow by 1.6 million bpd this year,” the IEA said.

Commercial inventories in the United States are also high.

U.S. crude oil inventories rose by 6.9 million barrels in the week to April 19 to 459.6 million, data from industry group the American Petroleum Institute showed on Tuesday.

(GRAPHIC: U.S. crude oil production & exports link: https://tmsnrt.rs/2ULQiTd).

(Reporting by Henning Gloystein; editing by Richard Pullin)

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FILE PHOTO: A combination of file photos North Korean leader Kim Jong Un and Russia's President Vladimir Putin
FILE PHOTO: A combination of file photos shows North Korean leader Kim Jong Un attending a wreath laying ceremony at Ho Chi Minh Mausoleum in Hanoi, Vietnam March 2, 2019 and Russia’s President Vladimir Putin looking during a joint news conference with South African President Jacob Zuma after their meeting at the Bocharov Ruchei residence in the Black Sea resort of Sochi, Krasnodar region, Russia, May 16, 2013. REUTERS/Jorge Silva/Pool/Maxim Shipenkov/Pool/File Photo

April 24, 2019

By Josh Smith

SEOUL (Reuters) – North Korean leader Kim Jong Un is set to meet Russian President Vladimir Putin for the first time this week at a symbolic summit hoping to project himself as a serious world player but likely to come away without a relief from crushing sanctions he seeks.

After his second summit with U.S. President Donald Trump ended without an agreement two months ago, Kim’s meeting with Putin serves as a reminder to Washington that he has other options in the region backing his leadership.

But while Kim is likely to seek more assistance from one of his country’s two main backers, Russia will be limited in what it can provide and the summit will focus more on demonstrating camaraderie than new investment or aid, analysts said.

“When Kim meets Putin, he is going to ask for economic assistance and unilateral sanctions relaxation. Moscow is unlikely to grant his wishes,” said Artyom Lukin, a professor at Far Eastern Federal University in Vladivostok.

That school’s campus is seen to be the summit venue, according to South Korean media which reported the presence of Kim’s top aides there making preparations for the event.

“Being a veto-holding U.N. Security Council member, Moscow can hardly afford to undermine its authority even for the sake of friendship with Kim,” Lukin said.

SANCTIONS RELIEF

While Russia says it fully enforces the sanctions that it voted to impose, it has joined China in calling for loosening punishment for North Korea in recognition of steps taken in limiting its weapons testing.

“Steps by the DPRK toward gradual disarmament should be followed by the easing of sanctions,” Russian Foreign Minister Sergei Lavrov said at a Security Council meeting late last year, using the initials of the North’s official name, the Democratic People’s Republic of Korea.

Washington has accused Russia of “cheating” on sanctions and said it has evidence of “consistent and wide-ranging Russian violations”.

In February, Reuters reported a Russian tanker violated international trade sanctions by transferring fuel to a North Korean vessel at sea at least four times between October 2017 and May 2018.

One Russian lawmaker told Interfax news agency last week that North Korea had asked Moscow to allow its laborers to continue to work in Russia despite sanctions requiring their expulsion by the end of this year.

“One particularly sore area for Kim is the issue of North Korean laborers working in Russia,” said Anthony Rinna, a specialist in Korea-Russia relations at Sino-NK, a website that analyses the region.

“Kim will probably be seeking some wiggle-room from Russia, although Moscow will be hard-pressed to accommodate Kim given its desire to portray a responsible image in the world.”

The United States has said it believed Pyongyang was earning more than $500 million a year from nearly 100,000 workers abroad, including 30,000 in Russia.

According to unpublished reports by Moscow to the United Nations Security Council, Russia sent home nearly two-thirds of its North Korean workers during 2018.

The report, reviewed by Reuters, said in 2018 the number of North Koreans with work permits in Russia fell to about 11,500.

LONG TIES

Russia-North Korea relations withered after the Soviet demise, with the loss of support from Moscow often cited as one factor that lead to a 1990s famine that killed hundreds of thousands of North Koreans.

Kim Jong Un’s father, Kim Jong Il, worked to renew ties after Putin first became president in 1999. He visited Russia three times before his sudden death in 2011.

Russia could agreed on some limited projects like a vehicle bridge connecting the two countries across the Tumangan River, or provide more humanitarian aid, Lukin said.

Earlier this year, Russia sent more than 2,000 tons of wheat to North Korea through the World Food Programme. Russian lawmakers have suggested Moscow could send as much as 50,000 tons of wheat to North Korea.

According to the United Nations, Russia has continued to sell significant amounts of oil to North Korea, though still officially under sanctions caps.

North Korea’s state media said in March officials met in Moscow to sign an agreement “to boost high-level contact and exchange in the political field (and) actively promote cooperation in the fields of economy and humanitarianism.”

While Moscow is unlikely to risk its authority at the United Nations by overtly breaching sanctions, Putin could promise not to support any additional sanctions, Lukin said.

“Kim can expect a friendly reception here and probably some chance of getting political and economic support from Putin.”

(Reporting by Josh Smith, additional reporting by Vladimir Soldatkin in Moscow.; Editing by Jack Kim and Lincoln Feast.)

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FILE PHOTO: Traffic is pictured at twilight along 42nd St. in Manhattan
FILE PHOTO: Traffic is pictured at twilight along 42nd St. in the Manhattan borough of New York, U.S., March 27, 2019. REUTERS/Carlo Allegri

April 23, 2019

By Richard Leong and Trevor Hunnicutt

(Reuters) – American middle class consumers are enjoying the strongest wage growth in a decade, but higher gasoline prices are eating a good chunk of that increase for many, and it looks like pump prices are headed higher.

Gasoline pump prices have already jumped about 25% this year, the fastest rate in three years. Trump administration sanctions against Iranian crude oil exports had something to do with that, and this week’s move to tighten sanctions could soon send prices even higher.

Crude oil prices hit their highest in about six months on Tuesday.

Some analysts expect the national average pump price, currently near $2.85 a gallon, will climb above $3 a gallon for the first time since 2014. Few goods prices aggravate U.S. consumers as much as high gasoline prices.

“It’s an important part of consumers’ psyche,” Mark Zandi, chief economist at Moody’s Analytics, said of a further rise in energy prices. “They live with it everyday.”

Zandi and other analysts said higher gasoline prices would irritate U.S. motorists heading into the summer driving season, but they do not think a moderate fuel price hike would force people to cut spending in other areas.

For now, consumer spending has remained resilient, with wages growing in a tight job market. Average hourly earnings in the private sector are rising at roughly 3.2% year over year, the strongest in a decade.

Those bigger paychecks helped pay for costlier gasoline after the Organization of the Petroleum Exporting Countries (OPEC) and allied producers including Russia reduced output to prop up prices. Retail prices for regular gasoline have risen around 55 cents a gallon so far this year from $2.30 at end of 2018, according to AAA, an automotive advocacy group.

“So far it hasn’t been a particularly large headwind for U.S. consumers,” said Matt Luzzetti, senior economist at Deutsche Bank AG.

The Trump administration called for buyers of Iranian oil to stop purchases by May 1 or face sanctions, ending six months of waivers that allowed Iran’s eight biggest buyers to keep importing limited volumes.

Analysts noted that U.S. domestic crude production is surging and said higher output from OPEC and Russia could help offset losing about 1 million barrels per day of Iranian oil from world markets. But sources on Tuesday said Gulf OPEC members were ready to raise output only if they saw sufficient demand.

(GRAPHIC: U.S. wages, gasoline link: https://tmsnrt.rs/2IC9wbu)

PINCHED CONSUMERS

Some U.S. consumers are already paying $3 a gallon at the pump, and will feel the squeeze if prices rise further. In February, filling a 25.5 gallon tank of a sports utility vehicle with regular gasoline would have cost around $57 on average. That has risen to nearly $73, based on government data.

For a $15-an-hour employee working 35 hours a week, filling up once a week now costs 14% of gross pay, up from less than 11% just 10 weeks ago.

“I’m hyper-aware of the gas pricing,” said Brittany Trotter, a part-time driver for Lyft Inc based in Washington, D.C. She said rising fuel costs have cut her profits and stretched her budget.

Even before the latest Iran news, drivers expected rising prices at the pump to cut their income. A survey in March showed consumers expected prices to rise 4.7% over the next year, the largest figure in nine months, according to the Federal Reserve Bank of New York. The consumers surveyed expected their wages to rise 2.6% over the year, though earnings growth expectations slipped for people with a high school diploma or less education.

(GRAPHIC: U.S. gasoline demand, prices, GDP link: https://tmsnrt.rs/2Dtnnga).

(GRAPHIC: Iran seaborne crude oil & condensate exports link: https://tmsnrt.rs/2DE8CHt).

(GRAPHIC: Russian, U.S. & Saudi crude oil production link: https://tmsnrt.rs/2EUHeFO).

(Additional reporting by Dan Burns; Graphic by Stephen Culp, Richard Leong; Editing by David Gregorio)

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FILE PHOTO: A combination of file photos North Korean leader Kim Jong Un and Russia's President Vladimir Putin
FILE PHOTO: A combination of file photos shows North Korean leader Kim Jong Un attending a wreath laying ceremony at Ho Chi Minh Mausoleum in Hanoi, Vietnam March 2, 2019 and Russia’s President Vladimir Putin looking during a joint news conference with South African President Jacob Zuma after their meeting at the Bocharov Ruchei residence in the Black Sea resort of Sochi, Krasnodar region, Russia, May 16, 2013. REUTERS/Jorge Silva/Pool/Maxim Shipenkov/Pool/File Photo

April 23, 2019

MOSCOW (Reuters) – North Korean leader Kim Jong Un will meet Russian President Vladimir Putin in the Russian eastern city of Vladivostok on Thursday, Kremlin aide Yuri Ushakov told reporters on Tuesday.

The leaders will discuss political and diplomatic efforts to settle the nuclear issue on the Korean peninsula, and Kim’s visit is key in this process, Ushakov said.

He said Russia’s bilateral trade with North Korea fell by more than 56 percent last year because of sanctions against Pyongyang but Moscow thinks it is important that North Korea and the United States are interested in maintaining their contact.

(Reporting by Vladimir Soldatkin; Writing by Maria Tsvetkova; Editing by Peter Graff)

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