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Analysis: Biden’s overture to Asian oil consumers serves warning to OPEC+

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November 18, 2021

By Timothy Gardner

WASHINGTON (Reuters) – The Biden administration’s push for a coordinated release of oil stockpiles serves as a warning to the OPEC+ production group that it should pump more oil to address concerns of high fuel prices in powerhouse economies like the United States, China and others.

For weeks, the White House and administration officials had urged the Organization of the Petroleum Exporting Countries and its allies including Russia to accelerate production increases to satisfy demand as the global economy rebounds from the depths of the pandemic.

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After those pleas were rebuffed, the Biden administration hatched a different plan to keep the pressuring OPEC+ ahead of its Dec. 2 meeting on oil output policy.

Administration officials, led by Senior Adviser on Energy Security Amos Hochstein, pulled in longtime allies Japan and South Korea as well as China and India to consider a joint release of emergency reserves, an administration source told Reuters on Wednesday.

Those countries and the United States are the world’s five largest oil importers, so the move could act as a powerful signal about consumer-nation unity on global energy prices. If stocks are released, it could drive prices lower, at least in the short-term, analysts said, which could hit OPEC+ revenue.

“The strategy here seems like not only a response to the alleged rebuffing of the presidential requests, but also a deliberate threat,” said Kevin Book, an analyst at the nonpartisan ClearView Energy Partners research group.

Just as Saudi Arabia and other OPEC nations years ago joined with Russia and other producers to form the more powerful OPEC+, Biden’s outreach to Asian nations suggests the possibility of a broader consumer group that could become “the IEA+”, Book said.

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OPEC+ has said it intends to stick to plans for a gradual increase in output of about 400,000 barrels per day each month. One OPEC+ source said the U.S. move was a desperate way to challenge the group, saying “cases of COVID are increasing and surely new containment measures will be imposed that will reduce the demand for oil.”

CONSUMER UNITY

When global supply issues demand a coordinated release of stocks, the United States historically has worked with the Paris-based International Energy Administration, a bloc of 30 industrialized energy-consuming nations.

Japan and South Korea are IEA members, while China and India are only associate members. China’s reserve bureau is working on a release of reserves, a spokeswoman said, without additional details.

India has been the most forceful about flexing its muscles as a major oil consumer, cutting shipments from Saudi Arabia by about a quarter after OPEC+ extended production cuts.

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This week, Oil Minister Hardeep Singh Puri said in Dubai that OPEC members could take advantage of high prices for awhile, but if they undermine the global economic recovery, “That can rebound and come to haunt you.”

The Biden administration source said U.S. officials turned to these Asian countries instead of European IEA members who are more worried about soaring natural gas prices and less concerned than Asian nations about crude oil prices.

“We understand that’s not where they would probably want to intervene in the market,” the source said.

Biden has had an up-and-down relationship with Saudi Arabia, OPEC’s de facto leader. On the campaign trail in 2019, Biden described the kingdom as a “pariah” and said he planned to take a firmer stand on Saudi’s human rights record and its war in Yemen.

The Biden administration has limited arms sales to Saudi Arabia to only defensive weapons. U.S. lawmakers have criticized Riyadh for its involvement in Yemen, a conflict considered one of the world’s worst humanitarian disasters.

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The White House, however, has not yet threatened to withdraw military support as former President Donald Trump did in 2020 when the Saudis flooded the market with millions of extra barrels of oil. While that move resulted in cheaper gasoline, it also drove crude prices as low as negative $40 and endangered jobs in the U.S. domestic oil industry.

With the Saudis now refusing to boost crude supplies, Biden did raise the idea of a combined release of emergency reserves directly with China’s President Xi Jinping, several administration sources said, as part of a broader discussion earlier this week.

“While we have some strong disagreements with China, obviously, we can work with them on this issue because there’s a lot of similarities to the impact on our respective economies of high oil prices,” the administration source said.

(This story was refiled to correct title of Hochstein to Senior Adviser on Energy Security in fourth paragraph)

(Reporting by Timothy Gardner; additional reporting by Nidhi Verma in Delhi; editing by Richard Valdmanis, David Gaffen and David Gregorio)

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Amazon asks India antitrust body to revoke Reliance-Future deal approval

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November 28, 2021

By Aditya Kalra and Abhirup Roy

NEW DELHI (Reuters) – Amazon has asked India’s antitrust regulator to revoke its approval for Future Retail’s $3.4 billion sale of retail assets to Reliance, saying it was “illegally obtained”, violating an order suspending the deal, a letter seen by Reuters shows.

The approval for the deal was a “nullity in the eyes of law” as an arbitrator’s order was still in force, according to the letter sent by Amazon.com Inc to the Competition Commission of India (CCI) last week.

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The battle between two of the world’s richest men, Amazon founder Jeff Bezos and Reliance Industries Ltd boss Mukesh Ambani, marks a contest for preeminence in India’s booming, nearly trillion-dollar retail market.

The winner in the fight for Future Retail Ltd, India’s second-largest retailer and Amazon’s estranged local partner, will get pole position in the race to meet the daily needs of more than a billion people.

The CCI, Amazon, Future Group and Reliance did not respond to requests for comment.

Future has said the arbitrator’s suspension order was invalid but Indian courts have declined to overturn it.

If the regulator agrees with the previously unreported letter, it would be a major setback for oil-to-telecom conglomerate Reliance.

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Amazon won an injunction against the deal from a Singapore arbitrator last year, alleging Future had violated contracts that prevented it from selling the assets to entities including Reliance.

But the CCI later cleared the deal.

Future misled the CCI and continued to seek approval for the deal, Amazon said in the letter dated Wednesday, calling the injunction a “brazen attempt to subvert the rule of law”.

Amazon asked for a personal hearing from the CCI to make its case.

The letter comes as Amazon is also battling allegations that it misrepresented facts and concealed information while seeking antitrust clearance for a 2019 deal with Future Group.

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Amazon has so far successfully used this deal’s contracts to block Future’s deal with Reliance.

(Reporting by Aditya Kalra and Abhirup Roy in New Delhi; Additional reporting by Zeba Siddiqui; Editing by William Mallard)

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Exclusive-Visa complains to U.S. govt about India backing for local rival RuPay

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November 28, 2021

By Aditya Kalra

NEW DELHI (Reuters) – Visa Inc has complained to the U.S. government that India’s “informal and formal” promotion of domestic payments rival RuPay hurts the U.S. giant in a key market, memos seen by Reuters show.

In public Visa has downplayed concerns about the rise of RuPay, which has been supported by public lobbying from Prime Minister Narendra Modi that has included likening the use of local cards to national service.

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But U.S. government memos show Visa raised concerns about a “level playing field” in India during an Aug. 9 meeting between U.S. Trade Representative (USTR) Katherine Tai and company executives, including CEO Alfred Kelly.

Mastercard Inc has raised similar concerns privately with the USTR. Reuters reported in 2018 that the company had lodged a protest https://reut.rs/3cQA2La with the USTR that Modi was using nationalism to promote the local network.

“Visa remains concerned about India’s informal and formal policies that appear to favour the business of National Payments Corporation of India” (NPCI), the non-profit that runs RuPay, “over other domestic and foreign electronic payments companies,” said a USTR memo prepared for Tai ahead of the meeting.

Visa, USTR, Modi’s office and the NPCI did not respond to requests for comment.

Modi has promoted homegrown RuPay for years, posing a challenge to Visa and Mastercard in the fast-growing payments market. RuPay accounted for 63% of India’s 952 million debit and credit cards as of November 2020, according to the most recent regulatory data on the company, up from just 15% in 2017.

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Publicly, Kelly said in May that for years there was “a lot of concern” that the likes of RuPay could be “potentially problematic” for Visa, but he stressed that his company remained India’s market leader.

“That’s going to be something we’re going to continually deal with and have dealt with for years. So there’s nothing new there,” he told an industry event.

‘NOT SO SUBTLE PRESSURE’

Modi, in a 2018 speech, portrayed the use of RuPay as patriotic, saying that since “everyone cannot go to the border to protect the country, we can use RuPay card to serve the nation.”

When Visa raised its concerns during the USTR gathering on Aug. 9, it cited the Indian leader’s “speech where he basically called on India to use RuPay as a show of service to the country,” according to an email U.S. officials exchanged on the meeting’s readout.

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Finance Minister Nirmala Sitharaman said last year that “RuPay is the only card” banks should promote. The government has also promoted a RuPay-based card for public transportation payments.

While RuPay dominates the number of cards in India, most transactions still go through Visa and Mastercard as most RuPay cards were simply issued by banks under Modi’s financial inclusion programme, industry sources say.

Visa told the U.S. government it was concerned India’s “push to use transit cards linked to RuPay” and “the not so subtle pressure on banks to issue” RuPay cards, the USTR email showed.

Mastercard and Visa count India as a key growth market, but have been jolted by a 2018 central bank directive for them to store payments data “only in India” for “unfettered supervisory access”.

Mastercard faces an indefinite ban on issuing new cards in India after the central bank said it was not complying with the 2018 rules. A USTR official privately called the Mastercard ban “draconian”, Reuters reported in September.

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(Reporting by Aditya Kalra in New Delhi; Editing by William Mallard)

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‘Flash mob’ thieves target U.S. retail stores on Black Friday

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November 28, 2021

By Steve Gorman

LOS ANGELES (Reuters) – Black Friday shoppers weren’t the only ones out hunting for bargains on the day after Thanksgiving. Thieves were busy as well.

Police in Los Angeles and cities elsewhere across the country spent much of their holiday weekend patrols looking for suspects in a spate of “flash mob” robberies on Friday, part of a surging U.S. crime trend in which groups of thieves swarm a store, ransack the shelves and flee.

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Authorities also have used the term “smash-and-grab” to describe the trend.

At least two such robberies were reported on Saturday by the Los Angeles Police Department (LAPD) and the Los Angeles County Sheriff’s Department. A local television station, KCAL-TV, counted a total of six smash-and-grab heists on the city’s west side alone on Friday.

In one incident, a group of eight men entered a Home Depot outlet at a shopping mall in Lakewood, south of downtown Los Angeles, walked directly to the tool aisle and snatched a bunch of hammers, sledgehammers and crowbars valued at about $400 before making their getaway, the sheriff’s office said.

According to L.A. television station KTTV, the Home Depot robbery on Friday night involved up to 20 suspects who pulled up to the store in as many as 10 cars and donned ski masks before raiding the tool aisle.

“We tried to stop them,” store employee Luis Romo told KTTV. “We closed the front entrance, and they put their sledgehammers up and whoever got in the way, they were going to hurt them.”

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The Los Angeles City News Service said four suspects in that robbery were arrested on Saturday by Beverly Hills police.

In a similar incident Friday afternoon, a group of 10 men or more invaded a store in the city’s Fairfax district and started grabbing merchandise without paying for it, pushing employees out of the way before fleeing the scene, according to LAPD.

Police are investigating possible ties between that incident and a flurry of other robberies and retail thefts on Friday and earlier in the week, including two smash-and-grabs reported on Wednesday, an LAPD spokesperson said.

The rash of retail crime prompted the LAPD to place its officers on a citywide tactical alert on Friday afternoon.

Mass robberies also were reported on Friday at two Best Buy electronics stores in the Minneapolis-St. Paul area, one of them involving as many as 30 suspects, while a spree of pre-dawn retail burglaries were under investigation in Chicago.

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In one of the biggest flash-mob robberies reported on the West Coast in recent days, police in the San Francisco suburb of Walnut Creek were seeking about 80 suspects who swarmed and ransacked a department store last Saturday.

(Reporting by Steve Gorman in Los Angeles; Editing by Paul Simao)

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