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Lufthansa Warns Brexit to Hit U.K. Airlines as EU Gets Tough

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  • Lufthansa Warns Brexit to Hit U.K. Airlines as EU Gets Tough

Deutsche Lufthansa AG Chief Executive Officer Carsten Spohr expects France and Germany to take a hard line against the U.K. aviation industry in Brexit negotiations, threatening to disrupt flight connections across Europe.

“Brexit means Brexit – our industry won’t be exempt,” said Spohr, who has accompanied Chancellor Angela Merkel on state visits and discussed the matter with German, French and EU officials. “The basic approach is for every industry to say ‘hey, let’s pretend that nothing has happened.’ That’s something the governments, and also the EU Commission, won’t go along with. You can be sure about that from what I hear.’’

Flights between EU nations are regulated by the Single European Sky treaty and the U.K. will likely need a new agreement once it leaves the bloc. In addition, British carriers that fly from one European state to another will probably require an operating license based somewhere on the continent. The U.K. is set to leave the common market two years after the divorce process is officially triggered on Wednesday.

It’ll be “virtually impossible” for governments to reach a comprehensive agreement in the time available for talks, said Spohr, the CEO of Germany’s largest airline. That means there’ll be a transition period with likely disruptions as the sector adjusts to new rules, he said.

A German transport ministry representative recently told a group of parliamentarians at a closed meeting that Britain would likely lose its membership in the Single European Sky agreement, and that a new deal would then need to be negotiated, according to a person who attended the discussion who asked not to be identified because the gathering was not open to the public.

No Shortcuts

U.K. airlines including EasyJet Plc and British Airways owner IAG SA have warned that a hard Brexit scenario would hit their business. While IAG already has several European operating certificates via its continental arms, Luton, England-based EasyJet is still in the process of establishing an air operating certificate in an EU state.

Ireland’s Ryanair Holdings Plc has said it needs at least 12 months to adjust its routes and ticket sales once the new rules are decided. As an EU carrier, Dublin-based Ryanair would also require a license to operate its handful of U.K. domestic flights. The company, which draws about 40 percent of its customers from Britain, has said it may have to forego its intra-U.K. routes after Brexit.

EasyJet shares fell as much as 1.5 percent to 997 pence in London trading, while IAG dropped 0.8 percent to 530 pence. Ryanair slid 0.9 percent to 14.37 euros.

Spohr is expecting Merkel and French President Francois Hollande to oppose special treatment for the industry, in spite of calls from the likes of British Transport Minister Chris Grayling to prioritize the airline sector in Brexit negotiations.

“The U.K. airlines say they want a shortcut,” said Spohr, who accompanied Merkel on a trip to China in June. “But that’s something Mr. Hollande and Mrs. Merkel won’t do.”

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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