The price of Brent Crude oil dropped below $90, UK economic outlook, Qatar bans beer sales last minute
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Summary:
- A worsening demand forecast is driving Brent crude oil down.
- UK living standards are expected to drop by the most in six decades.
- 48 hours before the Word Cup begins, Qatar banned the sale of beer in supporter zones.
Brent Crude oil price drop below $90
A worsening demand forecast trumped supply-side worries as Brent crude futures traded below $90 per barrel on Friday and were expected to conclude the week more than 6 percent lower. In China, the world's top fuel importer, resurgent Covid outbreaks have crushed reopening hopes and muddied the demand outlook. There are still worries that major central banks' aggressive monetary tightening could push the world economy into a recession, which would harm demand for energy. President of the St. Louis Federal Reserve James Bullard recently warned that the federal funds rate might rise above what the market is currently pricing, to a range of 5 to 7 percent as authorities fight inflation. Though the European Union is poised to block Russian crude exports starting in December, and OPEC is anticipated to keep oil markets tight, traders remained wary of the supply outlook heading into the winter.
Brent crude oil has dipped below $90 for the first time since October. https://t.co/fCTebNF4GD pic.twitter.com/ZLv0beAm1n
— Yahoo Finance Plus (@yfinanceplus) November 17, 2022
UK chancellor Hunt “mini” budget
The contrast between Chancellor Jeremy Hunt's Autumn Statement and his predecessor Kwasi Kwarteng's "mini" Budget was so stark that it appeared as though a new political party had taken office. Britain has gone from having the biggest tax cuts in 50 years to the strictest combination of revenue-raising and spending restraints in more than a decade in the span of eight weeks. The market response indicates that despite being backloaded, the £55 billion in budget cuts were successful in calming investors. The dismal prognosis that required the measures, however, was even more striking than the actual actions. Living standards are expected to drop by the most in six decades, and the economy won't recover to its pre-pandemic level until the end of 2024. Despite the stabilization of its finances, Britain's persistent development issues persist.
In order to reassure investors that he was serious about budget contraction, the Conservative chancellor needed to take the right amount of action without frightening away his own backbenchers. Convincing investors that Hunt and the incoming PM Rishi Sunak are serious individuals came down to tone and presentation when restoring respect. Support for the Bank of England's efforts to fight inflation, as well as its independence and respect for the Office for Budget Responsibility, the government's watchdog, were correctly emphasized in the discourse.
In essence, it makes political and economic sense to postpone the majority of the tightening until 2025 and achieve almost half of it through tax increases.
A dismal outlook for the UK economy https://t.co/GeFI5zRmBp | opinion
— Financial Times (@FT) November 17, 2022
Qatar banning beer suddenly
Just 48 hours before the tournament starts, Qatar made a sudden U-turn on its alcohol policy and banned the sale of beer in supporter zones at World Cup stadiums. However, the Gulf state agreed to permit the sale of Budweiser, one of the World Cup's largest sponsors, in specific places outside the eight stadiums holding games. The Gulf state restricts the sale of alcohol to high-end hotels. But according to Fifa, after discussions between the host country authorities and Fifa, beer sales kiosks will no longer be present around stadium boundaries.
There was a last-minute change of heart due to worries that Qataris would feel uncomfortable in locations where people were drinking for up to three hours before matches, according to persons briefed on the organizers' thinking. Alcoholic beverages are now restricted to stadium hospitality sections and specific Doha locations, like the Fifa Fan Festival, where a cup of beer costs nearly GBP12. Beer without alcohol will still be offered in stadiums.
Fifa, which has a 30-year commercial agreement with Budweiser, finds the action insulting. Later on Friday, an announcement regarding the change in policy is anticipated. In a since-deleted tweet, Budweiser responded to the prohibition by writing, "Well, this is awkward".
Qatar bans beer from World Cup fan zones https://t.co/0xLKSQ6ibO
— Financial Times (@FT) November 18, 2022
Sources: twitter.com, ft.com, finance.yahoo.com
