Business Updates: Britain’s Inflation Rate Climbs to Its Highest in 30 Years

The global oil market is tightening and demand for 2022 is likely to be higher than expected and supply lower than forecast, the International Energy Agency said on Wednesday.

Although the Omicron variant was causing record infections, the surge was not denting oil demand as previous jumps in infections have, with travel and other transportation remaining “robust,” said the forecasting group, which is based in Paris.

The findings in the group’s monthly Oil Market Report come as the industry faces difficulties raising production levels as prices climb higher. The group of oil producers known as OPEC Plus continues to fall short on its promised 400,000 barrel a day monthly increases, raising production by only 250,000 barrels a day in December. The major shortfalls continue to be in Nigeria and Angola. Russia pumped slightly below its quota in December, tending to confirm forecasts that it has reached its short-term limits.

Oil prices are now approaching $90 a barrel, exceeding the seven-year highs reached in October. Brent crude, the international standard, briefly traded at higher than $89 a barrel on Wednesday, while West Texas Intermediate, the U.S. benchmark, was selling for higher than $86 a barrel.

The International Energy Agency said that these prices were likely to lead to more drilling and production in the United States, the world’s largest oil producer, and elsewhere. That additional oil could bring price relief for consumers.

Prices in Britain rose at their fastest pace in 30 years in December, according to the national statistics agency, stoking concerns about the strain household budgets are under with inflation still months away from its expected peak.

The annual rate of inflation was 5.4 percent, up from 5.1 percent in November. That’s the highest since March 1992, the Office for National Statistics said on Wednesday, based on data modeling for the period before official records were collected.

Since the pandemic disrupted supply chains and labor markets as economies unevenly shut down and reopened, many countries are facing higher-than-expected inflation rates that are lasting longer than policymakers anticipated. In the United States, the inflation rate rose to 7 percent in December, its highest level in 40 years. In the eurozone, the annual rate increased to 5 percent last month, and it hasn’t been higher in the history of the common currency, which was established in 1999.

The Bank of England increased interest rates in December with inflation running substantially above its 2 percent target, and not expected to peak until April, when households are estimated to face a more than 50 percent increase in their energy bills. Most analysts expect the bank to raise rates two or three more times this year, and the next increase could be as soon as the next rate-setting meeting on Feb. 3.

The data on Wednesday showed that the biggest contributors to the increase in the inflation rate in December were higher prices for food, which had the biggest monthly rise in a decade; furniture and household goods; and charges at restaurants and hotels.

Bank of America made $32 billion in profit last year, the highest in its history, as its investment bankers pulled in record fees for arranging deals.

The lender bucked a fourth-quarter trend as its earnings rose 28 percent to $7 billion compared with a year earlier, according to results released Wednesday. Earnings per share rose to 82 cents in the final three months of 2021, exceeding analyst expectations. Other banking giants — JPMorgan Chase, Goldman Sachs and Citigroup — reported lower profits for the quarter.

Bank of America’s earnings were fueled by an “improving economy,” in which it added loans and deposits, Brian T. Moynihan, Bank of America’s chief executive, said in a statement. “Investment banking had its best year ever and global markets had its highest sales and trading revenue in a decade,” he said.

The company’s shares were up 2 percent in premarket trading.

Bank stocks have come under pressure this week as investors looked past solid annual results and focused on rising expenses and an uncertain economic outlook punctuated by surging coronavirus cases, high inflation and snarled supply chains. Shares of big banks have slid even after industry executives expressed optimism about the economic outlook, which they said was buoyed by solid consumer demand and business activity.

Microsoft will acquire Activision Blizzard, the video game maker behind Call of Duty and Candy Crush, in an effort to expand its presence in a $175 billion industry with three billion players worldwide.

The nearly $70 billion deal is Microsoft’s biggest ever and one that places a major bet that people will be spending more and more time in the digital world. Here’s more on the deal, why it’s important to Microsoft, and how gamers reacted to it.

The Rationale

Microsoft will acquire Activision’s huge pool of users and access to some of the world’s most popular games. The acquisition helps Microsoft gain on its rival Sony in the long-running battle for gamers’ attentions and wallets by offering top titles. It also helps the software giant stay ahead of powerful newer competitors in gaming, like Amazon and Google. READ THE ARTICLE →

A Bet on the Metaverse

Mexico’s national oil company, Petroleos Mexicanos, is about to take control of an oil refinery in Deer Park, Texas. It’s all part of Mexican President Andres Manuel López Obrador’s effort to achieve energy self-sufficiency, Clifford Krauss writes for The New York Times.

Mr. López Obrador aims to eliminate most Mexican oil exports over the next two years so the country can process more of it domestically. He wants to replace the gasoline and diesel supplies the country currently buys from other refineries in the United States with fuel produced domestically or by the refinery in Deer Park, which would be made from crude oil it imports from Mexico. The shift would be an ambitious leap for Petroleos Mexicanos, the company commonly known as Pemex.

While Mr. Lopez Obrador’s policies diverge from the rising global concern over climate change, they reflect a lasting temptation for leaders and lawmakers worldwide: replacing imported energy sources with domestically produced fuels. Further, the generally well-paying jobs the oil and other fossil fuel industries provide are politically popular across Latin America, Africa as well as industrialized countries like the United States.

But critics say Mr Lopez Obrador is reneging on Mexico’s climate change commitments. READ THE ARTICLE →

Almost a quarter of Manhattan’s major employers don’t know when their offices will start getting back to normal as the Omicron variant of the coronavirus roils employers’ back-to-work plans.

Twenty-two percent of 187 companies surveyed by the Partnership for New York City, a business advocacy group, said they could not estimate when their offices would reach even half capacity. And of the businesses polled — representing about 215,000 workers in white-collar fields — three-quarters had delayed plans to call employees back because of surging virus cases.

The Omicron variant has also prompted offices to change policies, such as reinstating mask mandates, sending nonessential workers home, and suspending in-person meetings and business travel, according to the survey, which was conducted starting Jan. 10. A quarter of the companies require employees who work from offices to be tested regularly, while 12 percent have mandated vaccinations or booster shots by a specific date.

More than a third of the businesses surveyed were financial services firms. Executives in the industry, which employs more than 330,000 people in the city, have been outspoken in pressing for in-office working. But those firms also had to pause their plans.

Even Goldman Sachs, which unlike many competitors did not encourage staff members to work from home during the holidays, has pushed back its planned return date twice this month. It initially said workers should be back on Tuesday, but has postponed that to Feb. 1, according to a person with knowledge of the policy, who spoke on the condition of anonymity to discuss personnel matters.

Vishal Garg, the Better.com founder, who fired roughly 900 of his workers via Zoom last month and then took “time off,” is returning to his position as the head of his mortgage lending company.

“As you know, Better’s C.E.O. Vishal Garg has been taking a break from his full-time duties to reflect on his leadership, reconnect with the values that make Better great and work closely with an executive coach,” Better.com’s board said on Tuesday in an email to the staff, which was reviewed by The New York Times. “We are confident in Vishal and in the changes he is committed to making to provide the type of leadership, focus and vision that Better needs at this pivotal time.”

Better.com, which is backed by SoftBank and was ranked last year as LinkedIn’s top start-up, had announced last month that Mr. Garg would take time off from his leadership role after he faced a backlash over his firing of about 9 percent of his staff in a Zoom call. Several top employees resigned shortly afterward.

“If you’re on this call you are part of the unlucky group that is being laid off,” Mr. Garg told his workers, in a recording later shared widely online. “Your employment here is terminated effective immediately.”

Better.com has since conducted a “thorough, independent” review of its culture, according to the board’s memo on Tuesday. The review was led by Anthony Barkow, a partner at the law firm Jenner & Block and a former federal prosecutor.