China’s Growing Leverage Over the U.S., and How Oil Companies Hit the Jackpot
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What are the implications of Trump's summit with Xi Jinping?
I'm Valerie Hopkins. I cover Russia for The New York Times. It's pretty difficult to report from Russia. Often I'm the only New York Times reporter in the country. I keep working in Russia because what happens here matters, and our audience deserves to get a broad perspective of the world that they live in. If you want to make sure we can keep doing this work, subscribe to The New York Times.
From The New York Times, it's The Headlines. I'm Tracey Mumford. Today's Thursday, May 14th. Here's what we're covering.
In Beijing this morning, President Trump was welcomed with a 21-gun salute as Chinese President Xi Jinping greeted him for the start of their high-stakes summit.
Such respect for China, the job you've done. You're a great leader. I say it to everybody. You're a great leader.
The meeting marks the first visit to China by a U.S. president in nearly a decade. And in their opening remarks, both leaders stressed the importance of U.S.-China cooperation.
We've gotten along. When there were difficulties, we worked it out. I would call you and you would call me.
But hanging over that relationship, and this week's talks, are longstanding clashes over trade and Taiwan, as well as a new source of tension, the war in Iran. Iran is China's closest partner in the Middle East, and the country buys about 80% of Iran's oil exports. Since the beginning of the war, China has given Iran intelligence, plus access to a spy satellite that has tracked the positions of U.S. forces in the region. And just as Trump was flying to China, the Times learned from U.S. officials that Chinese companies have been discussing selling weapons to Iran. No Chinese weapons seem to have been used on the battlefield yet, but the American officials say the plan would be to send the weapons via third-party countries to hide the fact that they're coming from China.
Whether President Trump will bring any of that up on this visit, though, and pressure China over its support for Iran is an open question. He seems eager to keep the U.S. relationship with China stable rather than stirring up conflict. And, notably, the war in Iran has actually tied the U.S. more closely to China. That's because China dominates global production of rare earth minerals, which are crucial components of U.S. weapons, from cruise missiles to fighter jets. One former U.S. trade official told The Times, quote, Meanwhile, now the UK energy giant BP has just released its latest results and it made profits of $3.2 billion in the past three months, double this time last year. As the war continues, oil companies have been posting spectacular profits.
Shell, the latest firm to announce its first quarter results. They reported profits of just under $7 billion.
In recent weeks, they've been sharing huge earnings numbers, with the conflict rocking the global energy market. One executive saying the volatility has created opportunities. The Times global econ correspondent, Patty Cohen, has been digging into what is behind those sky-high profits.
One reason is obvious is look how much oil prices have gone up. If you're going to the gas station, if you're looking at your heating bill, whatever, you can see that the price has just shot up. But a second reason, which most people probably don't realize, which accounts for a huge portion, particularly of European oil companies' revenues in this first quarter, is because of their trading desks. Now, what do the trading desks do? They buy, sell, and they transport oil. And at a time when prices are very volatile, you can make money by trading. So let me give you an example. Total Energies, which is a French oil company, they made essentially a billion dollars in one day by trading oil. And what they did was they bought up every single cargo of oil
that was available in March that could be loaded in May. And just by buying up all of this supply, because they knew there was a shortage coming, they made a billion dollars.
Patty says the new profits have reignited a debate in Europe over whether to impose a temporary windfall tax on oil and gas companies' sudden jackpot.
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