Russian oil titan Rosneft said on Monday that it’s planning to pay a record-high dividend.
What does this mean?
The oil price has been surging this year, hitting $120 a barrel for the second time in a couple of months on Monday. That’s mostly because the European Union is reportedly edging closer to banning Russian oil imports altogether, while Iran just went ahead and seized two Greek oil tankers – a move that could jeopardize relations with (and the oil supply from) the Middle East.
Source: The Wall Street Journal
This has all played right into Rosneft’s hands: the company – which is responsible for about 40% of Russia’s total production – already posted its best-ever profit last year, and this booming oil price suggests it could top that record this year. And seeing as it now has so much cash burning a hole in its pocket, it just announced that it’d pay a record dividend to its investors too.
Why should I care?
The bigger picture: Russians are used to a chill.
You’d think Rosneft would be struggling more than it has been, given that many of the world’s biggest economies are giving Russia the cold shoulder. But India and China aren’t quite so at odds with the country, to the extent that their combined purchases hit an all-time high in April. In fact, Asian countries as a whole have been happy to hold up their empty bowl of gruel: new data has shown that Asia overtook Europe as the biggest buyer of Russian oil for the first time last month.
Zooming out: Russia’s got a friend in OPEC.
The sky-high oil price continues to be a serious concern for major economies, which is why the G7 has just urged OPEC – a group of oil-producing countries – to boost production significantly. But that’s a long shot: OPEC is benefiting from the current environment, meaning it has no real incentive to ramp up production faster than it was planning to anyway.
Keep reading for our next story...
The UK Housing Market Is Starting To Slow Down
Data out over the weekend suggests the UK housing market is finally starting to slow down.
What does this mean?
UK house prices hit an all-time high last month, which didn’t come as much of a surprise: demand was around 60% higher than the five-year average, while supply was around 40% lower. But there are a few signs that the market is finally easing up. First, house prices climbed 8.4% in April from the same time in 2021 – substantial, sure, but down on March’s 9%. Second, 5% of sellers slashed their asking prices by the most in 18 months. And third, the average time taken between listing a property and agreeing on its sale started to rise. So with demand slipping as the cost of living rises, UK real estate company Zoopla thinks house prices will be just 3% higher by the end of the year than they were at the end of 2021.
Why should I care?
For you personally: Get comfortable.
This is promising if you’re a Brit thinking about buying, but there’s a caveat here: data out last month showed that average monthly mortgage payment is now higher than the average rental payment, probably offsetting any benefit you’d get from the slowdown. And things are even tougher if you’re trying to get onto the property ladder, with first-time-buyers now in need of a 34% deposit on average – up from 25% a decade ago. Throw in the rising cost of just about everything, and you might want to get used to living with your parents…
Zooming out: Feed the rich.
Thank goodness the neediest people in the country are able to scrimp and save to afford their third homes: executives at FTSE 100 companies earned a near-record average of £3.6 million ($4.5 million) last year, according to data out on Monday. That means they made 81 times as much as their average employee, compared to 59 times in 2020.
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