Oil prices plunge. Crude oil prices reached a 17-month low on Friday. Brent crude ended the week at $53.82 a barrel while West Texas Intermediate stood at $45.59 a barrel, putting WTI on track for the worst quarter in four years. And it seems the U.S. oil industry is increasingly concerned about the effects low prices will have on the sector. According to a former president of Shell, oil companies will be forced to stop drilling if prices dip below $40, since drilling is only profitable if oil is priced at $50-$60 a barrel. Economists from Houston’s Institute for Regional Forecasting and the Texas Alliance of Energy Producers also warned that growth in the Texas energy sector will stagnate if prices remain at current levels. Some have also expressed concern over possible layoffs in the industry, but ultimately, the effects of low oil prices will reach far beyond the industry itself.
Questions about Central Europe’s business model. The region has long been a key supplier in the German supply chain, but according to a senior fellow with the German Council on Foreign Relations, labor shortages threaten to force investors to look elsewhere. In Hungary, 93 percent of industrial companies said labor shortages would restrict their output in the fourth quarter. The figure is somewhat lower in Poland (51 percent), the Czech Republic (46 percent) and Slovakia (37 percent), but still high. Labor shortages could make it harder for these countries to attract foreign investment in the future and may have played a role in the Hungarian government’s support for a new law that allows companies to demand more overtime from their employees. The law has been the subject of mass protests in the country for days.
Russian military movements in Crimea. According to local media, a convoy consisting of armored personnel carriers, artillery cannons and a field kitchen was spotted near the town of Pervomaiske in northern Crimea. Increased Russian military hardware near a manufacturing plant owned by Crimean Titan was also reported. This comes as Russian submarines conducted a series of drills in the Black Sea near the Crimean coast and more than a dozen SU-27 and SU-30 fighter jets reportedly landed at Russia’s Belbek air base in Crimea. In response, the U.S. pledged an additional $10 million to help defend Ukraine, and the U.K. said it will send a naval training delegation there in January. At this point, the Russian moves appear to be more posturing than anything else, since Moscow doesn’t want a direct military confrontation with the U.S. over Ukraine, but they are nonetheless notable, especially when compared to Moscow’s actions before the 2008 war in Georgia.
- Public and private banks in Iran have been ordered to provide more details on their clients to the Central Bank, reportedly to help combat money laundering and terrorism financing.
- The Japan Maritime Self-Defense Force, the United Kingdom’s Royal Navy and the U.S. Navy conducted joint maritime exercises south of Japan for the first time ever.
- The EU budget commissioner accused France of not doing enough to reduce public debt and called for the launch of EU deficit procedures against France.
- South Korea’s Foreign Ministry plans to create a new bureau focused on economic ties with China.
- U.S. Secretary of State Mike Pompeo told Iraq’s prime minister that the U.S. plans to continue to work with Iraqi Security Forces to combat terrorism.
- China launched its first low-orbit broadband communications satellite. It’s intended to be the first step in establishing a space-based communications network.