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FirstFT: Chinese lockdowns dull price impact of EU’s Russian oil embargo plan

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The European Commission on Wednesday proposed one of the most sweeping changes to global energy flows in history. But the oil price barely responded.

Brent, the international benchmark, rose 3.8 per cent to around $109 after the commission proposed a phased-in ban on all imports of Russian crude and refined products into the EU.

Traders and analysts said the muted price response reflected the long-build up to the announcement, the phased-in approach, suppressed oil demand in China because of a resurgence of coronavirus and the price-calming impact of petroleum releases by the US and its allies. Brent has hovered at $100-$115 a barrel since the start of April.

“It’s a very small move on a momentous decision,” said Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB. “If it hadn’t been for the Chinese lockdowns and the [strategic petroleum reserve] releases then the oil market reaction would have been much stronger.”

Line chart of Brent ($ per barrel) showing Crude holds below recent highs

Do you support the EU’s plan to place an embargo on Russian oil? Tell me what you think at firstft@ft.com. Thanks for reading FirstFT Asia — Emily

Coronavirus digest

1. Policymakers boost interest rates around the world The Federal Reserve raised its benchmark policy rate by half a percentage point for the first time since 2000 and sent a strong signal that it intends to increase it by the same amount at the next two meetings. The move followed the Reserve Bank of India announcing a surprise 40 basis point interest rate increase, the first hike in nearly four years.

2. Russian missiles strike Ukrainian rail network for second day Russia’s invading armed forces have conducted a second wave of cruise missile strikes on railway infrastructure across Ukraine in as many days, Kyiv claimed on Wednesday evening. Missile strikes on Tuesday night caused havoc across the rail network, in one of the biggest long-distance bombardments of Moscow’s invasion.

Missile strikes hit the western city of Lviv
Missile strikes hit the western city of Lviv, where they damaged electricity substations powering the rail network © REUTERS

3. SEC launches probe of Didi’s $4.4bn US IPO The US Securities and Exchange Commission is investigating Chinese ride-hailing giant Didi Chuxing’s botched New York initial public offering, adding to the company’s regulatory woes after Beijing launched a national security probe into the group last year.

4. US moves towards imposing sanctions on Hikvision The Biden administration is laying the groundwork to place sanctions on the Chinese surveillance camera company it accuses of enabling human rights abuses. Although a decision has not yet been made, it would have ramifications for the more than 180 countries that use the company’s cameras.

5. India boosts coal output to beat the heat India is increasing coal production to record levels in an effort to overcome a fuel shortage that has led to blackouts during a searing heatwave. India is the world’s second-largest coal producer and consumer and depends on the fossil fuel for about 70 per cent of power generation. Sign up to our Energy Source newsletter for more industry analysis.

The day ahead

Johnson hosts Kishida Japan’s prime minister Fumio Kishida is set to meet UK prime minister Boris Johnson on Thursday, when the pair are expected to discuss sanctions on Russia and military co-operation efforts. (NHK World Japan)

Bank of England meets A 25 basis point increase is expected when the Monetary Policy Committee meets.

UK local elections Voters will go to the polls to select local authority representatives in England, Scotland and Wales, Northern Ireland.

What else we’re reading

Khan plots comeback in Pakistan The downfall of former prime minister Imran Khan was accelerated by widespread anger over Pakistan’s economy. Now, Khan has gone on the offensive, holding events across the country to demand new elections. His narrative of a foreign conspiracy has struck a chord among many voters despite a lack of evidence.

  • Opinion: Pakistan’s economy is on the brink. It is time for the rich to start paying their proper share of taxes, writes the former head of Citigroup’s emerging markets investments.

Alibaba targets bargain-hunting shoppers The ecommerce giant has become the go-to online emporium for consumer goods in China, mostly by focusing on shoppers in wealthy cities. But as growth slows from rising competition and regulatory pressures, the group has turned to the estimated 930mn consumers in less affluent cities to boost lagging sales.

Will Nato’s military build-up make Europe safer? Europe is arguably less safe today than at any point since 1945. The military build-up of Nato forces in response to Russia’s invasion of Ukraine has raised the question as to whether the continent is better protected, or simply intensified an already fraught situation.

Why Ping An is trying to turn the tables on HSBC Two decades ago, HSBC made a bold gamble to recapitalise an ailing Chinese insurance firm, paying $600mn for 10 per cent of Ping An. Their fortunes have now reversed: Ping An, HSBC’s largest shareholder, is calling for the biggest shake-up in the bank’s 157-year history, a split of its Asian and western operations.

Twitter isn’t the town square, it’s the theatre Anxieties about Elon Musk’s acquisition of the site are based on a too lofty view of it, writes Jemima Kelly. While the site might be the obsession of adult journalists, puerile billionaires and toddlerish presidents, it is not much cared about by the majority.

Food and drink

This method for cooked eastern coffee might change your coffee life forever.

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