Daily Brief: America Says The Time For Talk Might Be Over, And The Oil Price Responds

Daily Brief: America Says The Time For Talk Might Be Over, And The Oil Price Responds

almost 2 years ago3 mins

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The price of oil hit a 14-year high on Monday, after the US threatened to cut all ties with the world’s third-biggest oil producer.

What does this mean?

The oil price already hit an eight-year high last week, when global refineries and banks refused to buy the slippery elixir from a warmonger like Russia. And the supply squeeze now looks set to get worse: the West is ramping up sanctions in a bid to put more pressure on Russia’s flailing economy and bring the conflict to an end. The US government, for one, said this weekend that it’s thinking about outright banning Russian oil imports. And since that would leave an even smaller supply of oil up for grabs, its announcement drove up the price of Brent crude – a key international oil benchmark – to an eye-watering $139 a barrel on Monday.

Oil price

Why should I care?

The bigger picture: Here comes stagflation.

The International Monetary Fund warned over the weekend that the effects of the war – including higher food and energy prices – could cripple the global economy going forward. It’s not the only one: JPMorgan’s economists just cut their outlook for global economic growth this year by 1%, while some analysts have expressed concern that America’s ban might tip us into “stagflation” – the dreaded mixture of slowing growth and rising inflation.

Zooming out: China’s nothing if not contrarian.

China has mostly kept out of the fray so far, and the West’s sanctions aren’t exactly a pressing concern: Russian and Ukrainian trade and investment only make up a small proportion of its economy. That might be why the country is still confident it can grow its economy by 5.5% this year. As for how, economists reckon it’ll invest heavily in its infrastructure, as well as cut interest rates to encourage borrowing and spending – even as other major economies raise theirs.

China targets growth

Keep reading for our next story...

Uber Upped Its Profit Outlook For This Quarter

Uber image

Uber upped its quarterly profit forecast on Monday, and the US ride-hailing service could get used to traveling in this sort of style.

What does this mean?

Uber was the first to admit at its earnings update last month that its hopes for this quarter weren’t too high, pointing out that Omicron could impact its ride-hailing business for some time. It needn’t have worried: workers have been heading back to the office, social lives have picked up, and airport bookings – some of Uber’s most profitable routes – were up 50% last month compared to the one before. In fact, the company only saw 10% fewer bookings last month than they did in February 2019. Meanwhile, pandemic habits are dying hard, with bookings for food delivery service UberEats reaching an all-time high in February. Uber’s not doubting itself anymore: it upped its profit forecast for this quarter, and investors sent its shares up 4%.

Uber covid
Source: Uber

Why should I care?

Zooming in: Do your wurst.

UberEats has made big strides during the pandemic: the service posted its first-ever profit last quarter, and its European segment has more than tripled in size since the outbreak. That might be why Uber announced last week that it’s planning to expand UberEats’ presence in Germany, and cater to around 70 of its cities – up from 14 today – by the end of the year.

Zooming out: A $1 billion-shaped hole.

Uber isn’t the only one doubling down on the potential of food delivery: rival service Just Eat announced last week that it made a loss of more than $1 billion for 2021, in part because it bought US food delivery company Grubhub last year for $7 billion. But it also said it’s expecting to “rapidly” swing back into profit as its big-ticket purchases start to pay off, and investors seemed to buy it: they initially sent Just Eat’s shares up 8%.



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