US lashes out at Opec+’s oil cuts

This is an audio transcript of the FT News Briefing podcast episode: US lashes out at Opec+’s oil cuts

Sonja Hutson
Good morning from the Financial Times. Today is Thursday, October 6th, and this is your FT News Briefing.

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Opec+ is cutting oil production to boost prices. And the US accuses the cartel of aligning with Russia. Massive protests across Iran are continuing and it’s not just students in the streets. Plus, the US remains the world’s top destination for foreign investment, but what’s the number one US city for foreign investors? We’ll tell you the winner in just a bit. I’m Sonja Hutson, in for Marc Filippino. And here’s the news you need to start your day.

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Opec and its oil-producing allies yesterday agreed to reduce their oil production target by 2mn barrels a day. That’s 2 per cent of global oil supply. Actual cuts are likely to be smaller, but the move by Opec+, as the group is called, still provoked a backlash from Europe. And it deepens the rift between Opec+ and the US. Here’s the FT’s senior energy correspondent, Tom Wilson.

Tom Wilson
This is a really huge moment, particularly for Joe Biden, when you think about political capital that is invested in engaging with Opec and engaging with Saudi Arabia over the last few months to try and prevent them from doing exactly what they did. And then from Opec’s perspective, this really feels like this is the group seeking to reassert its presence on the world stage and demonstrate that it remains today and will remain for the foreseeable future the dominant force in oil markets.

Sonja Hutson
So what’s been the reaction from the White House?

Tom Wilson
The Biden administration responded immediately, calling it a short-sighted decision. And then later, White House spokesperson Karine Jean-Pierre told reporters on Air Force One that Opec+ was, quote, “aligning with Russia”.

Sonja Hutson
Yeah, I mean, the timing of this just really can’t be worse for President Biden. His party is heading into a tough election and Republicans are criticising him a lot over inflation. Is there anything the Biden administration can do?

Tom Wilson
Firstly, they’ve said that they will continue to draw oil from their strategic petroleum reserves. They’ve also said that they are going to look at returning to a piece of legislation in Congress which would seek to reduce Opec’s control over energy prices. But that’s been on the books for a long time and has never actually pass muster. So we’ll see whether that actually amounts to anything.

Sonja Hutson
Tom Wilson is the FT’s senior energy correspondent.

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Iran is in the midst of the most prolonged and widespread social unrest in decades.

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(Crowd chants in foreign language)

Sonja Hutson
Demonstrations erupted last month after a young Kurdish woman died while in custody of Iran’s morality police. She’d been arrested for allegedly violating Iran’s Islamic dress code. Across the country, Iranians have poured out on to the streets. Women have burnt head coverings. There are placards that read “We don’t want an Islamic Republic.” Hundreds of people have been arrested and dozens have been killed. Iran analyst Sanam Vakil says the protesters come from all walks of life.

Sanam Vakil
It’s brought out Kurds. It’s brought out Balochi Iranians in south-eastern Iran. It’s brought out frustrated labourers. Shopkeepers have gone on strike and now students are mobilising also. So it is threading together a series of grievances around the country.

Sonja Hutson
Vakil says the protests reveal a breakdown in the social contract.

Sanam Vakil
Iran, in fact, is showing that it’s a tinderbox and people are coming out on social justice issues, issues of equality, making it very clear that the covenant of the revolution that held together the Islamic Republic is being broken, that the social contract is failed, really showcasing the legitimacy challenges ahead for the leadership.

Sonja Hutson
Sanam Vakil is deputy director of the Middle East Programme at the Royal Institute of International Affairs in London. She was the FT’s Gideon Rachman’s guest in this week’s Rachman Review podcast. We’ll have a link to subscribe in the show notes.

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The US is still the world’s top destination for foreign direct investment or FDI. That’s despite tough competition from China. But cities across the US have had to step up their game. To find out who’s doing the best at attracting foreign investment, the FT partnered with Nikkei and did some research. The FT’s US managing editor Peter Spiegel is with me now to reveal who the winner is. Hey, Peter.

Peter Spiegel
Thanks for having me on.

Sonja Hutson
So before we get to the big reveal, tell me, how did you do this ranking? How did you figure out what city is the top destination for foreign investors?

Peter Spiegel
I mean, we literally interviewed, you know, dozens, if not hundreds of foreign companies that do business in the US trying to find out what are the things you look at when you move here. I mean, obviously, how much foreign direct investment you have gotten in the last year. But there are other things that make cities attractive. Things like how helpful is the local government to foreigners who arrive there? Do they help you with visas? Do they help with regulations? How much foreign-born population do you have in your city? So if you’re a foreign company and you’re looking to land, is it multicultural? Do you feel like you can feel comfortable there? And in the very most basic things that, you know, even domestic companies look for, is there a talent pool? So we tried to pull together the most important metrics to come up with, we think, is a pretty data-driven scientific ranking of every major American city.

Sonja Hutson
Is there one city that really sticks out in your mind as doing a really good job at this?

Peter Spiegel
Yeah. I mean, I’ll give you my favourite one because it’s a city I’m from. Phoenix, Arizona. So Phoenix has . . .

Sonja Hutson
Hometown pride, love it.

Peter Spiegel
Hometown pride, exactly. I mean, Phoenix won what is probably the most closely watched foreign direct investment over the last year or two. They won a $12bn fab, a plant that is moving now to Phoenix to build microchips in the US. And that was a case study in a city that has spent years, frankly, courting the Taiwanese. Taipei is the sister city of Phoenix. They would send government delegations out there. They would introduce them to the university and see if they can get people skilled up to work in the fab. So it has been a multiyear, almost multigenerational effort to woo the Taiwanese, to come to Phoenix. And again, they secured that commitment in 2020, and they’re constructing the plant right outside north Phoenix as we speak.

Sonja Hutson
All right. So we’re getting warmer. We’re getting closer to the winners here. But before we do that, I wanna ask, if you look at the top 10, are they all big cities? Are they in a particular region? Like, is there anything that we learn just from looking at that top 10?

Peter Spiegel
Well, I would say there is, there’s two categories in this top 10. One is, you know, I would say sort of your prototypical Sun Belt, low-tax, low-regulation city that has become a bit boomtown even for domestic investment. So, you know, the Deep South in particular has been able to attract a lot of manufacturing. But then you have sort of the old-line famous names, New York, Boston, these kinds of cities that really are attractive because of what we were just talking about, this talent pool, right. Boston in particular, finished very high. This is a city famous for its major universities. It’s got a nice lifestyle. And so you saw that sort of those two categories.

Sonja Hutson
Is there no love for the West Coast in the top 10?

Peter Spiegel
So oddly, we found it was almost all east of the Mississippi. I mean, Texas did very well, but San Francisco was one of those cities that actually did very, very badly. And what we have found there is just the high cost of living has really begun to sap San Francisco of its attractiveness and also, frankly, you know, a regional government that is increasingly viewed as anti-business. So, again, you have, certain municipalities have been able to balance — in New York, for instance, has done very well on our ranking. You know, they’ve been able to balance high cost of living, you know, with some views of being sometimes anti-business regulation, but able to create an environment that businesses still wanna go to. That’s one of the big trends we saw in our research.

Sonja Hutson
All right. So this interview, we’ve got lots of love for your hometown of Phoenix and no love for my hometown of San Francisco. (Laughter)

Peter Spiegel
Sorry about that. (Laughter)

Sonja Hutson
Hey, no, the data is the data. I’m not gonna disagree with it. All right. Well, let’s do the big reveal now. What city was the number one most popular place for foreign investors?

Peter Spiegel
So it’s a city that’s on a roll. It’s been written about, a lot about for domestic reasons, but it’s Miami, Florida. They did the best of any city in the US attracting FDI over the last year. But they also have other things going forward. I mean, obviously, a big international airport with dozens of direct flights to, you know, all over the world. It has a big foreign-born population, so it’s very open to different cultures and whatnot. Miami has for generations been the US’s gateway to Latin America. What we have found now is not just Latin America anymore, it’s, Europeans in particular are now looking at it. We have a story coming out that talks about how the “Davos in the Desert”, the big Saudi-backed conference, is looking at Miami for a second location. So they’re getting Middle East money. They’re getting European money. So Miami is on a bit of a roll and they finished first by quite a margin.

Sonja Hutson
So there you have it, folks. Miami takes the top spot for the most popular US city among foreign investors. Peter, thanks so much.

Peter Spiegel
Great to be on.

Sonja Hutson
Peter Spiegel is the FT’s US managing editor.

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You can read more on all these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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