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There is a mounting risk that fuel prices could soon begin to rise again as major oil-producing countries ponder a big cut in output.

The Opec+ cartel, which includes Saudi Arabia and Russia among its main members, is expected by markets to reveal this week a collective target to reduce delivery by more than one million barrels per day.

The price of Brent Crude, which rose 4% on Monday in anticipation of such a cut, was up further during Tuesday’s trading – to just shy of $90 per barrel.

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Opec+ is responding to weaker demand for oil globally as economies tackle high inflation though there is pressure from the West to maintain supply to help tame the pace of price rises.

While the current Brent price remains far below the early Russia-Ukraine war highs of above $120 per barrel, the recent weakness of the pound would be expected to contribute to pressure on UK pump prices, potentially adding to the cost of living crisis again according to motoring organisation the RAC.

That is because wholesale fuel, like oil, is traded in dollars.

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‘Further pain at UK pumps’

RAC fuel spokesman Simon Williams told Sky News: “The extent of the (Opec+) cuts will be crucial, as will compliance from member countries throughout October.

“But one thing’s for sure, it’s likely to cause further pain for drivers at the pumps in the UK, particularly with the pound so weak against the dollar.

“If the cost of a barrel were to climb back up to $100, drivers at the current exchange rate would very soon see forecourts displaying prices around 175p a litre again, which is 12p more than the current UK average.”

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How rising costs will affect you

Average pump prices are currently 163p for unleaded and 180p for diesel – the latter remaining higher because of the loss of Russian supplies.

The pound was infinitely higher in value versus the US currency, around the $1.25 level, when petrol and diesel costs were hitting record levels daily in the spring following the Russian invasion.

It slumped to an all-time low of $1.03 last week in the wake of the government’s mini-budget when financial markets balked at the volume of giveaways and level of borrowing required to fund the growth programme.

How the markets are performing

It had recovered to just shy of $1.14 by Tuesday morning. That has been credited to government U-turns since Kwasi Kwarteng’s statement to the Commons and a weakening in the historic level of dollar strength.

The reason cited for the weakening was data suggesting the US economy was slowing faster than expected, raising the prospect of a pause to sharp US interest rate hikes.

Stock markets also recovered some poise as investors left the safety of the dollar, with the FTSE 100 putting on 1.5% in early dealing to take the index above the 7,000 points mark.

The more domestically-focused FTSE 250 was 2% higher.

Energy and commodity stocks were among those to enjoy the best gains as prices recovered from their recent recession -induced slump.

Opec sources told the Reuters news agency that voluntary output cuts by individual members could come on top of the group production reductions.

That being the case, it would amount to the largest output reduction since the start of the COVID pandemic in early 2020.

However, there were signs that the markets were yet to fully shrug off the fallout from the mini-budget that saw UK borrowing costs soar.

There were clear concerns around the UK’s credibility when the government raised £2.5bn on the bond markets.

The 0.5% of the 2061 (40-year) gilt on offer was sold at an average yield of 3.371%.

While that was the highest yield for any gilt sold at auction since 2014, it came in below that for a 30-year green bond syndicated last week.

It drew bids worth 1.97 times the volume on offer – the lowest bid-to-cover ratio since March.

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Japan could be hours away from running out of Asahi

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Japan could be hours away from running out of Asahi

Japan could be hours away from running out of Asahi, the country’s most popular beer.

Dozens of factories nationwide have ground to a halt following a cyber attack on Monday.

The breach disabled the company’s ordering and delivery systems – and also took its call centre operations offline.

Supermarkets and Japanese pubs known as izakayas risk running super dry, with some retailers raising fears of potential panic buying.

Reuters file pic
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Reuters file pic

According to NHK, Asahi Group has now had to suspend plans to launch new products including soft drinks, coffee and throat lozenges.

One wholesaler expects to run out of beer kegs by Saturday at the latest, meaning they’ll no longer be able to supply booze to retailers.

They are now considering whether to start selling other brands as a temporary measure.

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Akira Kudo, who runs an izakaya in Tokyo, has been told that one of the two brands of Asahi he regularly purchases is now out of stock.

He’s now unable to predict when pints can be poured again.

“We have received beer from the wholesaler to replace Asahi, but we would like to avoid using other manufacturers if possible, so we will consider our options until the very last minute,” Akira added.

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Reuters file pic

A shortage may leave Japanese drinkers unimpressed. While there are other breweries in the country, Asahi has a fiercely loyal following.

Figures from Kirin Holdings suggest that the typical consumer drank 34.5 litres of beer a year in 2022, the equivalent of 54 large bottles.

Asahi executives are now consulting with the police and trying to determine whether the company has fallen victim to ransomware.

They have stressed that no personal information or customer data has been leaked.

Brewing operations outside of Japan – including in the UK – are also unaffected.

There have been a series of high-profile cyber attacks on well-known brands in recent months – including Marks and Spencer, the Co-op and Jaguar Land Rover (JLR).

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Jaguar Land Rover cyber attack: ‘We need certainty’ on aid, supplier pleads

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Jaguar Land Rover cyber attack: 'We need certainty' on aid, supplier pleads

A member of cyber attack-hit Jaguar Land Rover’s (JLR) supply chain has told Sky News the government must act to safeguard the sector as it has seen no financial relief to date.

Mike Beese, who owns Walsall-based Genex UK, was speaking as an industry body complained that support revealed by the government last week was failing to reach suppliers.

While unveiling a £1.5bn loan guarantee to JLR last Saturday, Business and Trade Secretary Peter Kyle said it would “help support the supply chain and protect skilled jobs in the West Midlands, Merseyside and throughout the UK.”

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Many interpreted the liquidity offer as a bailout, of sorts, that JLR would draw down on and distribute to ease pressure on direct and indirect suppliers.

Businesses affected by the production shutdown are now arguing they need the support they thought they were being promised by the Secretary of State.

It is unclear how Mr Kyle’s department and the chancellor saw the loan guarantee working in practice.

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JLR is understood to have not seen a need to draw on any such arrangement to date as its direct suppliers – the companies it deals with – have continued to be paid through existing funds.

It expects that money to trickle down to lower tiers of that supply chain.

The production shutdown has entered a second month and there is no visibility on when factories will get back to full speed.

Mr Beese said it was for this reason that the government had to intervene, potentially through a loan scheme for suppliers. “We need certainty”, he declared.

Pic: Genex UK
Image:
Pic: Genex UK

He said of his own customers: “We need that money to come in so we can pay our suppliers. “That money needs to cascade down the tiers,” he added [but] “it’s not going to be enough and you’ve got to make that up at some point.

Mr Breese, who employs 17 people and provides parts for several major JLR suppliers, said he attached no blame to JLR, which has been losing at least £50m a week since the attack in late August.

He also laid no fault at the door of the companies he supplied. “Only the government” could bring the relief the industry needed, he argued, while explaining that terms from lenders were out of reach given the scale of the uncertainty.

Commenting on the toll the crisis was taking, Mr Beese added: “It’s very stressful… people in the same boat are ringing me to be paid. “My staff all need certainty as well… these people aren’t just a number, they have families”, he said.

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Inside factory affected by Jaguar Land Rover shutdown

The president of the Confederation of British Metalforming (CBM), Stephen Morley, said: “We need to find a way to get money quickly to where it is needed most, to prevent the supply chain from completely collapsing and that could be an additional type of loan.

“JLR is rightly focused on getting payments through to their first-tier suppliers, and it’s best we allow them to complete that process.

“Our focus now must be on ensuring that second tier and smaller suppliers in the chain are supported, so the whole framework is in place when production restarts.”

JLR revealed earlier this week that it planned to resume limited production “in the coming days” as it continues efforts to restart key IT systems.

No firm date has sine been announced.

A spokesperson for JLR said: “As the controlled, phased restart of our operations continues, we are delivering solutions to support our suppliers through the period of disruption caused by the cyber incident.

“This includes establishing a supplier help desk with additional resources, putting in place a manual payment system to clear down outstanding invoices, and working to re-establish the automated supplier payment systems.

“We would like to thank everyone connected with JLR for their continued patience, understanding and support. We know there is much more to do but the foundational work of our recovery is firmly underway, and we will continue to provide updates as we progress.”

A spokesperson for the Department for Business and Trade said: “We acted swiftly to protect JLR, recognising the importance of the tens of thousands of people they employ directly and indirectly and to provide the company with liquidity at a key time.

“We continue to work with JLR and suppliers directly to understand the impact of the cyber attack – including on tier 2 and tier 3 suppliers – and how the support put in place is helping them.”

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Tesco promises ‘strong deals’ amid ‘intensive’ price war – as profits set to hit £3bn

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Tesco promises 'strong deals' amid 'intensive' price war - as profits set to hit £3bn

The UK’s most popular supermarket has said it is to introduce “strong deals” over the next three months as it prepares for Christmas.

It’s being done as Tesco chief executive Ken Murphy said he expected people to spread Christmas spending over a wider period to be more manageable and affordable.

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The supermarket price war, spurred by grocers competing to lower costs and win customers, “could be even more intensive” over the next months, Mr Murphy said.

Tesco, which is the UK’s number one supermarket by market share, has been successful in this fight, saying it was “continuing to win with customers”.

Defending higher profits

As a result, it said on Thursday that it expected annual profit to be higher than first thought, in the region of £2.9bn to £3.1bn.

It’s attracted criticism from the union Unite, whose general secretary Sharon Graham said Tesco “has profited from the cost-of-living crisis, making a fortune through unfairly inflating grocery prices”.

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Warning on food inflation ahead

But Tesco’s chief financial officer Imran Nawaz defended the company’s profits, saying its investment to bring costs down “worked better than we thought”.

“When you sell more, you make more.”

This was the biggest contributor to the higher profit outlook, he added.

‘Enough is enough’

A lot of the overall price rises in the UK, however, are due to policy measures, Mr Murphy said, referring to a new plastic packaging tax and higher employers’ national insurance contributions.

When asked what the chain hoped to see in the upcoming 26 November budget, Mr Murphy said he didn’t want it to be “harder for the industry to deliver great value for customers”.

After last year’s budget delivered “substantial additional operating costs”, he said, “enough is enough”.

The CEO said he had made “no decision” and “can’t speculate” on whether Tesco would close shops if its larger stores are not made exempt from paying business rates.

The company pays more than £700m a year in tax on premises, he added.

Consumer trends

The supermarket chain has also benefited from the trend it observed of people cooking at home and eating in more, it said.

There’s been an uptick in sales of fresh food and a “meaningful increase” in cooking from scratch.

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This could be a hangover from the COVID-19 era, maybe due to the growth of streaming services, or potentially a money-saving exercise, Mr Murphy said.

“It’s hard to put your finger on the single reason, but it’s definitely a trend”.

Similarly, Tesco’s luxury own-brand line continued to grow in popularity with double-digit sales growth for the third year in a row.

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