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NATO launches "Eastern Sentry" to strengthen eastern flank following Russian drone incursion
NATO Secretary General Mark Rutte announced that NATO launched on Friday an operation called Eastern Sentry in response to Russian drones entering Polish airspace this week. Rutte said at a NATO press conference in Brussels that "we must make it clear to the world our determination and our capability to defend our territories." He said this while standing next to NATO's top commander U.S. Air Force general Alexus Grynkewich. Rutte stated that NATO was still assessing possible intentions behind the incursion. This led to Polish and NATO allies shooting down drones, the first such action NATO has taken since Russia's invasion of Ukraine in 2022. He said that the Russian action was "reckless" and "inacceptable", regardless of whether it was intentional. Russia claimed that its forces were attacking Ukraine when the drones entered the country and they had no intention of hitting any targets in Poland. Warsaw rejected this explanation and said the incursion had been a deliberate attack. FLEXIBLE RESPONSE ALONG EASTERN FLANC Grynkewich stated that Eastern Sentry is designed to be a flexible, integrated operation for bolstering defences along NATO’s entire Eastern flank. This extends from the Baltic States in the north all the way down to Romania and Bulgaria. He said, "Poland's citizens and those from the Alliance in general should feel assured of our swift response this week as well as our important announcement today." NATO has already deployed thousands of troops in Eastern Europe. The number of additional troops involved in this new operation was not specified. The announcement listed a modest amount of new military assets, including two F-16 fighters and a Danish frigate, three Rafale jet fighters from France, and four Eurofighter aircraft from Germany. Grynkewich, however, said that the new operation also aimed to adopt a more flexible strategy to defend the eastern flank in general rather than having static forces dedicated to a specific area. He said: "We will adjust our posture across the eastern flank in a way that keeps the enemy off-guard, while also responding to specific threats when we see them emerge." Reporting by Andrew Gray, Bart Meijer; Writing by Charlotte Van Campenhout, John Irish, Editing by GV de Clercq Alexandra Hudson, Aidan Lewis
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EU countries delay deal on new climate goal, diplomats say
Three EU diplomats said on Friday that the European Union has shelved its plans to adopt a new target for climate change next week after France and Germany resisted plans to reach a quick agreement. The countries are discussing a legally binding target of reducing net EU greenhouse gas emission by 90% from 1990 levels by 2040. A portion of this will be covered by purchasing foreign carbon credits. According to the European Commission, this will provide investors with certainty and help Europe reach net zero emissions in 2050. Climate change has caused Europe to become the fastest-warming continental in the world, unleashing deadly wildfires and record-breaking heatwaves. The EU is divided on how ambitious it should be when tackling global climate change, while also trying to increase defense spending and support struggling industry. On September 18, EU ministers were to have approved the 2040 target for climate change. Three EU diplomats have said that the ambassadors of EU countries cancelled this plan at a Friday meeting. The ministers said that next week they will discuss the goal of 2040, but any agreement will be discussed with EU leaders before the discussion is concluded. The diplomats asked to remain anonymous when discussing the closed-door discussion. If the EU fails to reach a deal by next week, it could miss the mid-September deadline set by the U.N. for all countries to submit their new climate plans in preparation for the COP30 summit on climate change scheduled for November. Diplomats have said that Denmark, Spain, and the Netherlands all support the 90 percent reduction in emissions target. France, Poland, and Italy, among others, have rejected the goal and asked that it be taken up with the heads of government at their next meeting in October. This could make it more difficult to reach an agreement. EU leaders make decisions in a unanimous manner, unlike ministers. Diplomats are discussing ways to convince sceptical nations, such as covering a larger share of the climate goal with carbon credits or tying a deal to other EU laws, like the carbon border tax or the 2035 phase-out of combustion engine cars. A spokesperson for the Environment Ministry said that Germany supports the goal of cutting emissions by 90%, but believes it is important to have discussions among the government leaders prior to a final deal. (Reporting and additional reporting by Holger Hanen in Berlin.)
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Poland contradicts Trump by saying that the Russian drone incursions were not a mistake.
Poland rejected Donald Trump's suggestion that Russian drone incursions in its airspace may have been an error, a rare contradiction from one of Washington’s closest European allies. Poland, supported by aircraft from NATO allies, shot down drones on Wednesday that violated its airspace. This is the first time an alliance member has fired during the Russian war in Ukraine. Russia claimed that its forces were attacking Ukraine at the moment and had no intention of hitting any targets in Poland. Trump told Washington reporters on Thursday that it could have been an accident. Donald Tusk, the Polish Prime Minister, responded on X. "We too would wish that the drone strike on Poland was a miscalculation." It wasn't. "We know it." Trump told Fox News in an interview on Friday that he was losing patience with Russian president Vladimir Putin. Germany announced on Friday that it had increased air patrols over Poland after European leaders strongly condemned Russia over the incident. It also summoned Russia's ambassador. On Poland's initiative, the United Nations Security Council would meet Friday to discuss this incident. NATO's top military officials, including its chief, Mark Rutte and Supreme Allied commander Europe Alexus Grynkewich (a U.S. Air Force General), were scheduled to hold a joint press conference on Friday afternoon. Questions about European Defence It is rare for Warsaw to directly contradict Trump. This shows the alarm of Europe at Trump's willingness, in this case, to accept Moscow's version of events. Poland is one of the closest U.S. ally in Europe. The Trump administration has praised Poland for its commitment to greater European military expenditures. Warsaw has described the drone incursions by Russia as an attempt to test the response capabilities of Poland and NATO. The incident this week has raised concerns about NATO's readiness for drone attacks, and the safety of civil aviation in Europe. The European leaders claim that this is yet another demonstration of Moscow's lack of interest in a peace agreement in Ukraine. This comes weeks after Trump met with President Vladimir Putin in Alaska, and retracted his demand for Russia to accept a ceasefire immediately. Trump has repeatedly given Moscow deadlines to reach a ceasefire, or else face new sanctions. But he's backed down. This week, European officials are in Washington to coordinate sanctions against Russia with the U.S. government. Previously, such announcements of sanctions were made in tandem. However, this hasn't happened since Trump took office. The U.S. Treasury urged allies in the Group of Seven (G7) and European Union to impose "meaningful" tariffs on Chinese and Indian goods to stop their purchases of Russian crude oil. A G7 emergency finance meeting was convened to discuss ways to increase pressure on Moscow and end the conflict in Ukraine. The EU member states have agreed to extend by six months the existing travel bans, and to freeze bank accounts for individuals and companies in response to the Russian invasion. Dmitry Peskov, Kremlin spokesperson, said that peace negotiations had been halted and "the Europeans" were hindering the peace process. The French announced that they would be deploying three Rafale jet fighters to Poland to protect their airspace, and the Germans said they would increase their commitment to NATO's eastern borders. RUSSIA AND BELARUS HOLD MILITARY ACTIVITIES On Friday, Russia and Belarus began a joint military drill that had been planned for years. The drills took place in both countries as well as in the Baltic Sea and Barents Sea. Peskov dismissed concerns about the exercise abroad, saying that Western European countries suffered from "emotional overload" and that Russia was not a threat. Local Ukrainian prosecutors reported that Russia continued to attack Ukraine and killed three people in Sumy, a region located in northern Ukraine. The regional governor reported that Ukrainian drones had attacked the port of Primorsk in Russia's northwest, setting a fire to both a vessel as well as a pumping station. This was the first drone attack on a major oil and fuel terminal in the country. (Additional reporting from Anna Koper in Warsaw; Anastasiia Melenko in Kyiv; John Irish and Michel Rose, in Paris; Andrea Shalal, in Washington; William James and Marktrevelyan, in London. Writing by Timothy Heritage. Editing by Peter Graff.
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Russia unveils monument for Ukraine war dead near St Petersburg
On Friday, hundreds of people, including Russian soldiers' relatives, gathered in front of St Petersburg to unveil a memorial for those killed in Ukraine. It was the first time such a memorial had been erected so close to one of Russia’s two largest cities. "A monument is one way to immortalize history." "Now we have a brand new history," Anna Krasnova said, after seeing the statue of two soldiers with guns unveiled at Kudrovo in a commuter city of 60,000. She said that her husband is fighting there and that her brother's name is missing in action. The memorial is unique in its proximity to Moscow and St Petersburg. Similar monuments were erected throughout Russia in the provinces. At the dedication ceremony, Alexander Drozdenko said, "The memory of our people is the most valuable asset we have." "Our cause will prevail, our enemy will be defeated, and we will win." The inscription on the monument, which is located above the figures, does not mention a date nor the location of the battles it honors. The inscription reads: "To the Heroes of the SMO", which is an acronym for Special Military Operation (the official term used by the Kremlin for this conflict). Kirill Drantsov, another spectator, stated that the monument would remind young people how to serve their country. We will not have to explain to anyone why and how we love and defend the Motherland. (Reporting in Kudrovo, writing by Lucy Papachristou).
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Gold nears all-time high as markets eye Fed rate reduction
Gold prices increased on Friday and remained close to the record highs set earlier in the week. Signs of a weakening U.S. labour market reinforced expectations that the Federal Reserve would deliver its first rate reduction of the year, next week. As of 9:19 am EDT (1319 GMT), spot gold was up by 0.4% to $3,649.54 an ounce. This is still close to the all-time high set on Tuesday of $3,673.95. This week, the metal is up 1.8% and on track for a fourth straight weekly gain. U.S. Gold Futures for December Delivery were up 0.4% to $3,688.10. Daniel Pavilonis is a senior market analyst at RJO Futures. He said that metals are rising because of the longer-term risk of inflation. The recent data that showed a surge in jobless claims last week, while consumer prices rose at their fastest rate in seven months, in August, have shifted expectations in the direction of higher rates. Investors are prioritizing signs that the labor market is weaker than inflation when determining rate expectations. Fed fund futures fully reflect a 25 basis-point cut during the Fed's meeting on September 17, though expectations of a 50-bps increase have eased. UBS analyst Giovanni Staunovo said: "Given the tailwinds, and after the recent increase in ETF flows (exchange-traded funds), we expect gold to reach $3,900/oz mid next year." Investors value the yellow metal as a hedge to inflation and uncertainty. It has increased 39% this year. China's central banks has asked the public for feedback on its plans to streamline gold import and export regulations by streamlining licensing. Other metals rose as well. Spot silver rose by 1.3%, to $42.08 an ounce. This is a record high for the 14 years. Platinum was up 1.4%, to $1,396.71, and palladium jumped 2.2%, to $1,214.70. All three metals are set to gain weekly. (Reporting and editing by Krishna Chandra Eluri, Sherin Elizabeth Varighese and Sarah Qureshi in Bengaluru).
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EU brings forward review of 2035 Vehicle Emissions Targets
EU sources confirmed on Friday that the European Commission would review its CO2 emissions targets for 2035 by the end of the year, instead of 2026. This was after the EU's chief executive met with auto executives to discuss their future. The EU set a goal of a reduction of 100% in CO2 emissions by new cars and vans, but auto industry groups said that this was no longer possible. This target is interpreted as the end of internal combustion engines in new vehicles. A member of the team led by Executive Vice President Stephane Sejourne said that the review would focus on vans. Electric vans only account for 8.5% of new vans in the EU. This is about half of the market share for electric vehicles. Details of the new proposal for 2035 are not yet clear. However, it could include biofuels that would be CO2 neutral and could power internal combustion engines as well as plug-in hybrids and range extenders. The Commission will present a proposal for a new category of small electric vehicles that could benefit from a lower tax treatment, and help to meet CO2 reduction targets. (Reporting and Editing by Benoit VanOverstraeten, Joe Bavier, and Charlotte Van Campenhout)
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Copper prices reach five-month high on hope for US rate cuts
Investors' expectations of U.S. rate cuts and concerns over possible shortages have fueled copper prices to their highest levels in five months. The price of three-month copper at the London Metal Exchange rose 0.2% in open-outcry official trading to $10,068 a metric ton. This is its highest level since march 26. The price of copper has increased by around 15% in the past year, but it has been unable to break through the $10,000 psychological barrier. Base metals rallied along with other markets after U.S. jobless claims surged on Thursday, confirming the belief that Federal Reserve would cut interest rates. "I thought the consensus was for a quarter point cut, but I now think that it could be more." "I think the market has been lifted by this, and the bullish mood helped copper," Robert Montefusco of broker Sucden Financial said. CTAs bought dips below $10,000 and pushed it higher. The Chinese came in overnight and that got us started. Commodity Trade Advisor investment funds (CTAs) are driven primarily by computer programs that use technical signals. The Shanghai Futures Exchange's most-traded copper contract gained 1.22%, to 81.060 yuan (11,384.67) per ton. Supply concerns also supported prices. The massive Grasberg Copper Mine in Indonesia, one of the largest copper mines in the world, remained closed on Friday while the search for trapped workers continued. In July, copper production in Peru, which is the third largest copper producer in the world, dropped 2% on an annual basis to 228,007 tons. Nickel was the biggest gainer on LME. It climbed 1.3% to $15,340 per ton in official activity after a taskforce in Indonesia, the world's top nickel producer, seized large plots of land from miners as part of a crackdown against illegal exploitation. Lead was up by 0.1% to $1,998 while tin increased 0.2% to $34,750. Click here to see the latest news in metals.
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Stocks rise on Fed rate-cut bets; gold is on a tear
The global stock market was on course for a weekly increase on Friday, as the expectation of rapid U.S. interest rate cuts led to a reduction in borrowing costs worldwide. This would be a relief for stressed bond markets and drag on dollar. After Wall Street indexes reached new peaks over night, European shares fell 0.1%. Nasdaq futures and S&P500 futures were both flat or down by 0.1%. The MSCI All Country World Index is on track to achieve a weekly gain of 1.8%. Gold was also on course for its fourth consecutive weekly gain and traded at near-record levels as investor concerns over global economic uncertainty persist. Stock markets in Asia made significant gains earlier. Chinese stocks reached a three-and-a half year high due to expectations of AI related earnings growth. While the U.S. Consumer Price Report showed an increase, the markets were still focused on the weak job numbers from the previous week. Amelie Derambure is a senior portfolio manager of Amundi. She said, "Even though we may have weaker job numbers, the markets really focus on the Fed's impact, which will give growth a boost in the future." Veronica Clark, an economic at Citi, stated that the bank continues to expect 125 basis point Fed rate reductions over the next five meeting. The futures market shows a 95% probability of a quarter point cut next week to 4.00%-4.25 % and a 5% likelihood of a half point cut. The yield on the benchmark 10-year Treasury note rose by 2.5 basis points to 4,035%. It had fallen below 4% on Thursday for the first since April. ECB - "IN A GOOD PLACE" The dollar index, which measures the greenback versus six other currencies, was essentially unchanged at 97.635. The dollar rose 0.3% against the yen, to 147.68. This was after Japanese and U.S. Finance Ministers released a joint statement on Friday reaffirming their commitment not to target currency levels. The euro was largely flat at $1.17305 after receiving a modest boost on Thursday, when the European Central Bank left rates unchanged and indicated that it was "in a good place" with policy. Greg Fuzesi is an economist with JPMorgan. He said, "This indicates the Governing council is not inclined towards easing in the absence a significant growth shock." "We have therefore pushed back our call for the final rate cut to December from October." After the meeting, ECB source told us that the December meeting was the best time to discuss whether another cut is needed to cushion the economy. The markets indicate that there is only a 1 in 6 chance of an easing in December. The British economy registered zero growth for the month of July. This was in line with expectations, but a sharp decline in factory production weighed on sterling, which fell 0.1% to $1.35586. Gold prices rose 0.5% in commodity markets to $3651, just below the record high of $3673.95 that was set earlier this week. The oil prices rose despite predictions by the International Energy Agency that OPEC will continue to pump out more oil next year, resulting in an even greater record surplus. Brent crude oil was up 1.4% to $67.28 per barrel. U.S. crude rose 1.2% to $63.09 a barrel.
Green Party's political influence increases as it pushes for the phase-out of Norway oil
The idea of closing oil and gas fields in Norway is unsettling. But the Green Party, a small party, is pushing for it as the global shift away from fossil fuels is looming.
After the election on Monday, the Greens' seats more than doubled to seven. The ruling Labour Party needs their support to maintain a two seat majority.
Arild Hermstad, leader of the Green Party, said: "We will prioritise the climate issue."
"We need to make a transition away from fossil fuels and into the renewable energy sector." Norway lacks this today.
The party wants to stop all exploration immediately and phase out petroleum activities by the year 2040. It has even named the first fields that it wants closed - Statfjord Brage Draugen Ula. Eight more fields will be shut down by 2030.
Jonas Gahr Stoere, the newly elected Prime Minister of Norway, said that Norway should continue its exploration for oil and natural gas. This is a sign that negotiations will be difficult.
Norway's oil industry is currently booming with record exports and investments. Workers at the supplier companies, which account for nearly half of the sector's workforce, face increasing risks of being laid off as major projects wind down and new orders are scarce beyond 2028.
Five years ago, when the COVID-19 pandemic was ravaging the world, the government gave more than $10 billion to oil and gas companies in the form of tax breaks and other measures, and also provided modest funding for green energy.
The funding provided by the government has not been able to provide the "bridge" that was hoped for to bring green projects to a level of scale comparable to oil and gas. Most undeveloped discoveries remain small, and they will be unable to replace existing order books or production.
Karl Johnny Hersvik, CEO of oil and gas company Aker BP, said that the tax package was expected to be a gateway into another industry. "Now I am a little concerned... They'll struggle if these yards don't have work.
Aker Solutions, Norway's leading energy services company, cut its revenue forecasts for renewables earlier this year, citing the immaturity of the sector.
The company stated that it is currently very busy in most of its locations but, like many other companies in this sector, depends on future projects to materialize. The company said that it could not rule out future capacity changes.
Worley Rosenberg in Stavanger, which focuses on the oil sector, announced that it would lay off 30 percent of its staff, or around 300 employees, due to declining orders.
Aleksander Eriksen, a union representative, said: "It was shocking." "We do have a new offshore wind contract but it won't be coming anytime soon." In the next year or two, we'll be facing challenges.
Aibel, an energy services firm in Norway that employs 3,900 people, has found alternative employment by building floating converter stations alongside oil and gas platforms for UK and German Wind Farms at its shipyard located in Haugesund, on Norway's West Coast.
OUTPUT FALL-OFF
The scenarios for Norway's oil and gas production all point to a lower level.
According to the Norwegian Offshore Directorate, the base-case scenario shows a drop of 40% in production by 2040 and perhaps even 70%.
Torgeir Stordal, Director General of NOD, said: "We will not be able sustain the current plateau in production for much longer."
This is a concern for a sector which accounts for around 50% of Norway's revenue from exports and 10% of the private sector's jobs.
Aker BP’s 700 million barrels of oil equivalent Yggdrasil gas and oil field, which is due to begin in 2027, will be the last one of this size.
The Wisting oilfield, worth nearly 500 million BOE, was delayed until 2022 because of rising costs. The future is in smaller development.
So far, the Norwegian government's efforts to increase exploration in the Barents Sea have not sparked a surge of interest. The Barents Sea is believed to contain the majority of Norway's undiscovered natural resources.
Out of the 15 companies with licenses to operate on the Norwegian Continental Shelf, only Equinor's Var Energi, Aker BP and Eni are drilling explorations wells.
Hersvik, Aker BP's Hersvik said: "If you want to make big discoveries, look at areas that have not been explored."
The decline in Norwegian oil production will increase Europe's dependency on imports of liquefied gas and oil from the U.S.A. and Middle East.
The European Union's rules to end the production of petrol-powered cars by 2035 will also reduce demand for fossil fuels.
All sectors, including heavy industry, are also facing a mandatory target of reducing emissions by 90 percent by 2040 in comparison to 1990 levels.
SLOW DEVELOPMENT
Slow green energy development is a major factor in the lack of new jobs in the sector.
To date, the government has only awarded 1.5 GW of offshore wind capacity. In May, a long-awaited bid for 1.5-2 GW more floating offshore wind capacity was announced.
In a letter sent to Aker Solutions shareholders in May, billionaire Kjell-Inge Roekke said that there had been "little" progress in the sector.
He added that "Norwegian Offshore Wind, as a meaningful source of energy, is at best at least a decade off."
(source: Reuters)