Wars in the modern era are not merely armed confrontations. They can also be fought in other areas. OPEC+ made the decision to lower oil production this week. A group of significant oil producers from OPEC+. The purpose of the cuts is obvious. OPEC+ favours rising prices. One powerhouse, in particular, will experience the pinch more than the others- The United States. Saudi Arabia has disapproved of oil prices in every region. Prices have decreased for Europe. In Asia, they are unaltered. How about US consumers? They may need to prepare for a hike, then. All oil grades are seeing price increases from Saudi Arabia for the US market. Why is there a difference? For US buyers, the solution is quite simple. Saudi Arabia and the United States are engaged in an open conflict. In July, US Vice President Joe Biden made an attempt to mend the rift. Do you remember the fist bump? It now appears to be working against him. The conflict between the two parties is about oil.

The famous fist bump between US president Joe Biden and Crown Prince MBS of Saudi Arabia

Aramco, the state-owned oil company of Saudi Arabia, has a new rate card. While prices in Asia remain stable, Europe will pay less, and US buyers will pay more. What amount more? For all oil grades, a barrel would cost twenty cents. In the US, gas costs have already begun to rise. The cost of gasoline reached almost $4 this week. The hike is also intended to send a geopolitical message to Americans. Saudi Arabia serves as OPEC and OPEC+'s de facto leader. Joe Biden went there for that reason. In order to maintain low prices, he wants oil companies to release more oil onto the market. In the end, Saudi Arabia and OPEC+ have taken the exact opposite course. Now, they'll provide less oil. The decision to raise pricing in the US is similar to adding salt to existing wounds. Right now, Joe Biden is being questioned hard. Was his trip to Saudi Arabia a complete waste of time? 

Aramco, the state-owned oil company of Saudi Arabia, has a new rate card. While prices in Asia remain stable, Europe will pay less, US buyers will pay more. What amount more? For all oil grades, a barrel would cost twenty cents more. In the US, gas costs have already begun to rise. The cost of gasoline reached almost $4 this week. The hike is also intended to send a geopolitical message to Americans. Saudi Arabia serves as OPEC and OPEC+'s de facto leader. Joe Biden went there recently to get a favorable price range. In order to maintain low prices, he wants oil companies to release more oil onto the market. In the end, Saudi Arabia and OPEC+ have taken the exact opposite course. Now, they'll provide less oil. also the decision to raise pricing in the US. Buyers is similar to adding salt to existing wounds. Right now, Joe Biden is being questioned hard. Was his trip to Saudi Arabia a complete waste of time, for example? Here is the president of the United States' response to the query.

The OPEC+ price hike will help Russia fill up their coffers

It makes a significant dent in the effort of the US, EU, and G-7 to set an oil price cap. When the most potent oil producers in the world are working nonstop to raise prices, a price cap mechanism won't be effective. Russia has been targeted by the west in areas where it is most vulnerable. On the energy front, Moscow's ability to sustain its oil export profits is the fundamental reason why Russia's economy is defiantly battling the sanctions system. Putin has been successful in opening up new markets for Russian oil and gas, allowing Moscow to continue to make money in spite of the loss of Western markets. The decision by OPEC to reduce daily supply by 2 million barrels immediately contributes to Russia's might. Moscow will be able to provide inexpensive oil to a few oil-guzzling countries when global oil prices rise as a result of the output restrictions. For countries like China and India, this strategy has already produced amazing results. Other countries would also want to make use of it. Individual countries' economic concerns may eventually take precedence over their commitment as a group to help Ukraine no matter what.

The White House expressed disappointment and criticised OPEC's decision as shortsighted in response to the oil cartel's decision to reduce oil production. According to a statement from the White House, Biden would speak with the US Congress on possible ways to lessen OPEC's influence over energy pricing. OPEC + holds a monopoly on approximately 50% of the world's oil supplies and 90% of the known oil reserves. Therefore, it is simpler to talk about OPEC's influence on energy prices than to really implement it. Then, as a result of climate activism and the early policies of the Biden administration, the United States is no longer able to pump domestic oil. It appears that OPEC has decided to support Russia. Do you concur? Please tell us in the comments.

All experts agree on their conclusions. Russia benefits more from the output cuts than America. How?  Russia and the west may no longer have close connections, but as an oil producer, Russia continues to be a member of OPEC+. Price increases will result from reduced production. That will add money to Moscow and Riyadh's treasuries. Biden experiences a serious setback. The President of the United States is out of alternatives. He had so far released more oil from America's strategic reserves to offset the output reductions. However, even that stockpile is already rapidly depleting. There are no simple alternatives to Joe Biden, to put it simply. There is no doubt that the United States will retaliate. But Saudi Arabia wins the first round of this oil battle for the time being.

Early Bird

For the first time since 1990, China's economic growth is expected to lag behind that of the rest of Asia. The World Bank predicts that the Chinese economy would expand by 2% this year, which is less than half of the prior prediction.

The World Bank reduced its prediction for the entire Asia-Pacific region to 3.2%. It's interesting how we have grown accustomed to China taking the lead and to the country's robust growth rates. I believe that the Chinese economy is currently suffering several difficulties.

China generates 86% of the region's economic output, which consists of 23 nations. Any way you look at it, China's continued growth is essential to our world. And then there is the issue that is currently affecting the property industry, which makes up around 30% of all economic activity. As a result, China is currently confronting many challenges.

A forecast cut is never a good idea, but this timing is particularly unlucky. Thus, the forecast for a region that has long been regarded as the engine of world growth has been drastically reduced.

In what ways does this affect the world economy? Vietnam was the nation in the region with the quickest growth rate in the 1990s when we were discussing the tiger economies. I predict that growth from other economies will increase. As we often say, China continues to be a regional powerhouse, but I believe that the rest of the globe still depends on China. Its production is a crucial component of the supply chain.

And ultimately, for the world economy to recover, China must do so as well. The prospects, in my opinion, entirely depend on how Zero Covid behaves. 

The property sector is in serious trouble

For many would-be homeowners in China, the situation is bad. They spent their savings on their dream home, but now they have to consider the prospect that it won't ever be constructed. The majority of residences are now sold in China by paying a portion of the price of a new home. The plan is for builders to use this cash combined with loans from other financial institutions to construct the home. But instead of finishing their current projects, the majority of builders have continued to invest in new ones. And in the last two years, builders have run out of money and are burdened with enormous debt as simple credit access has dried up due to government rules. But homeowners are ultimately responsible for paying the cost. Many people are forced to live in incomplete properties they purchased because their savings have run out.

Desolate cities are not an uncommon sight in China

Stalled construction projects made up roughly 4% of the nation's housing market in the first half of 2022. The Chinese government proposed measures to support faltering real estate companies following recent large-scale demonstrations. We are discussing blocked projects, which make up 30% of China's overall GDP. These are significant figures, and 90% of all housing in China is purchased off the drawing board before it is even constructed. Therefore, you're talking about a huge issue, and it's hard to conceive that all of these incomplete structures, including unfinished homes, will ever be finished.

But what about the actual construction firms? Do they even have the funds to attempt to finish a project?

The quick response is no. And that's where a large portion of the issue lies. They pre-sold all of these apartments while pledging this much cash. They have promised to spend this much money on the construction of these apartments, but they are currently unable to follow through. As a result, we can see that the government has pledged to lend $30 billion to help fund the completion of these projects. But it's only a drop in the ocean, truly. Suppliers have not been paid. They haven't compensated everyone along the supply chain that goes into making a finished unit. There is money missing. Therefore, it is a complex issue that is affecting the entire real estate industry. Additionally, because the economy is weaker, they lack access to new funds. Due to the zero COVID policy, China's economy is currently growing more slowly than the rest of Asia. We now have all these new things at play for the first time in the past 30 years that weren't there when all of these plans were established.

So you have a situation where companies seem to be too indebted. There are almost 2 million incomplete residences in China, and they lack the money to finish their projects. Does the Communist Party consider this to be a possible issue?

On one hand, it acknowledges that actions taken by individuals, such as refusing to make mortgage payments, may have a destabilising effect. However, I think there is a perception that China has developed a sort of addiction to growth. It kind of thinks that because it has been expanding so rapidly for so long that there will be enough dynamism in the economy to keep things rolling. And that this issue will eventually sort of solve itself. that the task might not be completed this year. Maybe next year, though. There are examples of when this has happened before. When the housing bubble first started ten years ago, there were entire cities that were abandoned next to Newport facilities or anything; I went there and saw everything. There was even money in the ATMs, but no one was to be found anywhere in the city. Those cities did get crowded, but that was another time. At that time, the economy was averaging double-digit annual growth. There will therefore be an issue for them.

The Zero Covid Policy in China is a major issue

The decline in the real estate market brought on by Beijing's Zero Covid policy is mostly to blame for the slowdown. Comparing this to other nations that have quite severe COVID policies but appear to have handled it better without these shutdowns that China has had, which have wreaked havoc on the economy, is intriguing.

China's zero covid policy has shut down manufacturing hubs such as Shenzhen

Both Covid and the property courts continue to hold the economy hostage. People seldom ever purchase real estate. And as a result, in my opinion, any forecast predicated on the whims of covid control is essentially meaningless. Therefore, even after the significant meeting in October, I believe the best-case scenario should be that Covid control will persist for a while. And more crucially, I believe that would introduce uncertainty into the system and apply downward pressure. People find it exceedingly challenging to anchor their future expectations as a result.

Why does China continue to adhere to the zero Covid policy?

Policy-wise, it's difficult to say. Most likely a result of the fact that just 1% of Chinese people have Covid. People therefore may not be as immune as they ought to be at this point. It is so difficult to sort of being certain what type of effect the coronavirus had on the Chinese people, even though it has changed to a weaker version. The zero covid policy has also increased concerns about a possible Chinese recession. Chinese GDP growth is slowing down. It's pretty near to 0 in the first and second quarters, particularly the latter. Some industries are therefore obviously in a recession as a result of the lockout, weather issues, and power scarcity issues.

For instance, investment in the real estate sector is down more than 7% annually and is still slowing down. The retail industry is also experiencing a downturn. People are cutting back on their expenditures and working hard to save money. One of the greatest growth rates in recent years has been seen in bank deposits. The Chinese economy is plainly in a recession in some areas, but not in others. For instance, Chinese exports have been really strong, which, in my opinion, surprised the market as a whole. The Chinese manufacturing industry appears to be performing exceptionally well to produce goods for export.

As a result, the yen is now less strong against the dollar. However, as economic development is essentially declining, no one should be surprised by the yen's decline. Chinese foreign exchange reserves are not increasing. As a result, the Chinese yen is under strain. Additionally, the Chinese yen is under pressure as a result of the differences in monetary policy between China and the US. As a result, while the Fed is raising interest rates relatively quickly, the PPAC is more likely to pursue an expansionary monetary policy.

The majority of people feel uncomfortable with a lot of things, but for some reason they are unwilling, for instance, to loosen the covid control because it is unknown how it would affect the population. Therefore, foreign demand will continue to fluctuate if the Fed raises interest rates too quickly. The Chinese exports, which have been supporting the Chinese economy thus far this year, will come under much more pressure as a result.

The real estate market is currently experiencing something akin to a slow train crash. Going into August, both real estate investment and sales are declining. High-frequency data reveals a slowdown in real estate sales, particularly among the top 30 Chinese developers, in numerous Chinese cities. This has a significant impact on Chinese consumption as well as the property sector's upstream and downstream operations.

China hasn't said how or when it could start to end the zero covid policy. China faces a dilemma because there is, generally speaking, a lack of herd immunity. Therefore, allowing covid to enter the country and opening the borders could have serious negative effects on public health. Furthermore, it is unclear whether China is prepared to handle this or how it intends to do it. However, there is mounting economic pressure on China to scale back or loosen up on zero Covid. And it's a policy that, according to detractors, is simply not long-term viable.

The 20th CCP Congress is unlikely to change things

Since 1921, thousands of members of the Communist Party of China have gathered every five years for a Congress. Untrained eyes may find a sea of officials in dark suits boring or repetitive. But it can reveal a lot about what the party has in store for China this year. The focus of the 20th episode is Xi Jinping, who many belief will defy expectations and win a historic third term as Supreme Leader.

The communist party of China is set to hold the 5 yearly Congress on October 16th

His position as China's most powerful leader since Mao Zedong will be effectively cemented by this. Xi will introduce his new leadership team and a significant restructuring of China's elite from below him. The party Congress is attracting a lot of interest worldwide. Only once every five years does it occur. The process is largely real but obscure.

General Secretary of the Communist Party, head of the Central Military Commission, and the president are Xi's three major positions. He is anticipated to keep each one. During his ten years in office, he is thought to have essentially silenced any significant challenge to his rule.

Some commentators have predicted that he will succeed Mao as chairman, a position that was abolished in 1982. However, there is no indication that he will do so. China's new leadership will determine the country's policy for the ensuing five years and beyond. For instance, the question of whether China would start to relax its strict zero covid policy.

Blistering temperatures and the invasion of Ukraine have fed fears of global shortages—but some regions are suffering much more than others.

The images are apocalyptic. Pleasure boats 

 in dried-up European rivers. Norwegian reservoirs 

 to drive hydropower. China’s largest inland lake 

And so are the warnings. The National Drought Group of the UK predicts that yields of some vegetable crops—carrots, onion, and potatoes—could be 

. The European Drought Observatory says that 

. China’s agricultural ministry has urged farmers to undertake emergency 

With fall harvests coming, it’s natural to be concerned about global food supplies. But people who track the production and trade of major crops say the world is not in an emergency—yet. Pick any location, and you may find signs of strain. But overall, the system still shows resilience. “It’s easy to lose track of the scale of global agriculture,” says Scott Irwin, a widely followed economist and chair of agricultural marketing at the University of Illinois Urbana-Champaign. “It’s just massive, and it’s extremely distributed geographically. If you have a problem in one area, at least historically, that will tend to get offset by better than average growing conditions someplace else.”

“The fact is,” he adds, “as of today, the world has adequate supplies of grain.”

That might seem counterintuitive, given soaring food prices and the lingering disruption of the Russian 

, where cargo ships that were trapped since February have finally been 

. But it captures the disconnect between how people experience food supplies locally, as irrigation water is directed 

, and how economists judge the health of a system founded on staple crops such as wheat, corn, and soybeans that can be shipped and stored.

, published in mid-August by the US Department of Agriculture, projects higher US and global production for wheat and soybeans and mixed results for corn and rice. Because those predictions are aggregates, they smooth out what producers are feeling locally—better weather in some areas, reduced yields in others—and also the reality that certain commodity crops are planted and harvested at different times of the year. Winter wheat, which is taken up in May or June, was already cut by the time summer heat waves arrived, but hot, dry conditions could have interfered with the pollination of corn, which goes into the ground in the spring.

“A couple of days ago, there were headlines saying South Dakota’s corn crop was unusually low this year—and they have a terrible drought—and that Nebraska was a little below normal,” says Daniel Sumner, an economist and director of the Agricultural Issues Center at the University of California, Davis. “But as of the middle of August, USDA was still projecting a normal national corn and soybean crop in the United States. And that’s because Indiana and Illinois and Iowa had relatively good crops, and are much more important in the national total, than Nebraska or South Dakota would be.”

Even if those differences average out nationally—possibly even globally, when you balance Southern Hemisphere production against the US and Western Europe, or the Americas against Central Europe and Asia—there’s a persistent sense that things are, well, wiggly. Some of the changes in productivity come from farmers’ decisions, like choosing to plant more in order to make up for a dry year, or less to mitigate the fertilizer price hikes created by Russia withholding exports. But some are unquestionably due to unpredictable weather patterns generated by climate change, which are affecting farmers’ routines as well as harming crops already in the fields.

“We’re seeing longer periods of dryness before the next rain event occurs, and that next rain event is more likely to be in the form of heavy rainfall that will end up running off” because the 

, says Beth Hall, director of the Indiana State Climate Office at Purdue University. “The success of crops this year in the US, in the broader Midwest region, was all about when farmers were able to plant their fields. Those that were planted earlier had roots deep enough that when it was dry, they could tap into some low moisture.” But if fields were muddy from rain and farmers couldn’t get into them, she adds, they planted later—and root systems were shorter and unable to keep new plants heavy before the next downpour came around.

Of course, farmers have always fretted about the weather. The challenge for crop experts right now is determining whether droughts and other disturbances—and the crop shortfalls they may cause—add up to a predictable trend. That’s especially important because, while productivity might not look bad overall, there isn’t much 

 thanks to scattered droughts last year and the supply shock of Ukraine’s breadbasket being temporarily locked out of the global food system.

“The key thing about stocks is that, if you have a drought, you can use them to keep prices reasonable—because when they get very low, prices get volatile,” says Joseph Glauber, a senior research fellow at the nonprofit International Food Policy Research Institute and former chief economist at the USDA. “I think people were hoping that stock levels would be rebuilt, essentially that we’d have really large crops this year. But there are these drought and weather disruptions around the world, though all the shoes haven’t fallen yet.”

No one who works in crop economics has forgotten that high grain prices more than a decade ago were the spark of civil unrest around the world: riots in Haiti, South America, and South Asia in 2008 and 2009, and the Arab Spring in 2010. And no one thinks things are that bad, yet. “It’s very easy to underestimate how flexible production can be,” Sumner says. “The current droughts don’t yet look nearly as severe as we’ve seen at least a half a dozen times in my career.”

And future shortages are likely to be unevenly distributed. In some parts of the world, droughts have already lasted long enough to profoundly disrupt food production. The people bearing the brunt of that disruption lack the income or power that could help alleviate their suffering. Historically, the Horn of Africa—Ethiopia, Somalia, and Kenya—experiences rainy seasons twice a year, from October to December and again from March to May, and the precipitation is crucial for feeding both humans and livestock. The four most recent rainy seasons all failed. The latest one, which should have ended last May, was the driest on record. A third of the area’s livestock have died. The 

, a project of the US Agency for International Development plus international nonprofits, estimates that 

In the past, governments in other parts of the world sent food aid. This year, thanks to droughts and supply shocks, that response isn’t arriving at the usual volume or speed. Wheat from Ukraine, for instance, would have been an aid staple, but the first shipment from there 

. “In normal cases, we can move food from one region to another to make up for losses; the international community, the UN World Food Programme, is able to move food into crisis situations,” says Christine Stewart, director of the Institute for Global Nutrition at the University of California, Davis. “The problem is that right now we have so many overlapping crises that the backup system is under an immense amount of stress.”

The Horn of Africa is an extreme case, but it may also be a glimpse of the future. The global food system exists to allow surpluses to be traded to areas where crops are short. It works, for now. But as weather becomes less predictable and droughts more common, production may become less reliable—and the movement of food to the most vulnerable might grind to a halt.

OPEC+ output cut signals a rift between the US and Saudi Arabia

China's economy is collapsing and Xi is being stubborn

How Drought and War Are Really Affecting the Global Food Supply