U.S. lawmakers blast Iran, wary of war, after Saudi oil attack

By Patricia Zengerle

WASHINGTON (Reuters) – Members of the U.S. Congress blasted Iran after the attack on Saudi Arabian oil facilities, but expressed wariness about U.S. military action, especially before they have a clearer picture of who was behind it.

President Donald Trump said the United States was “locked and loaded” to hit back after Saturday’s attack, which knocked out more than half of Saudi Arabia’s oil production and damaged the world’s biggest crude processing plant.

Iran denied U.S. accusations it was to blame and said it was ready for “full-fledged war.”

U.S. lawmakers, especially Trump’s fellow Republicans, were quick to blame Tehran.

Mitch McConnell, the Senate’s Republican majority leader, called it “a brazen attack” with significant implications for the global energy market and said he welcomed Trump’s preparation to potentially release oil from the Strategic Petroleum Reserve to stabilize markets if necessary.

“I hope our international partners will join us in imposing consequences on Iran for this reckless destabilizing attack,” McConnell said as he opened the Senate.

Many lawmakers stressed that Congress, not the president, has the right to declare war and warned against any quick military action.

Congress, with backing from both Republicans and Democrats, has passed – but Trump has vetoed – four bills seeking to push back against Trump’s strong support for the Saudi government, despite its human rights record and steep civilian casualties in the war in Yemen.

Senate aides said the administration was expected to begin providing classified briefings on Saturday’s attack for congressional staff and members as soon as Monday.

Senator Chris Murphy, a Democrat who is on the Senate Foreign Relations Committee, noted that the United States has long been wary of getting involved in conflicts between nations in the Middle East. He noted that Washington does not have a defense treaty with Riyadh.

“Why should the United States get dragged into a conflict that has more to do with Saudi and Iranian power in the Middle East than American power?” Murphy, a critic of Saudi Arabia on rights issues including its role in the Yemen war, told Reuters.

Senator Jim Risch, the Republican chairman of the foreign relations panel, warned of U.S. retaliation in case of an attack on U.S. troops.

“Iran should not underestimate the United States’ resolve,” he said. “Any attack against U.S. forces deployed abroad must be met with an overwhelming response – no targets are off the table.”

Republican Senator Rand Paul, another foreign relations committee member, said on CNN that any attack on Iran would constitute a “needless escalation” of war.

(Reporting by Patricia Zengerle; Editing by Sandra Maler)

Explainer: How the Saudi attack affects global oil supply

A worker fills up a car at a gas station in Riyadh, Saudi Arabia September 16, 2019. REUTERS/Stringer

LONDON (Reuters) – The strike on the heartland of Saudi Arabia’s oil industry, including damage to the world’s biggest petroleum-processing facility, has driven oil prices to their highest level in nearly four months.

Here are some facts about the impact on oil supply and spare capacity:

WHY IS IT SO DISRUPTIVE FOR GLOBAL OIL SUPPLIES?

The attack on Saudi oil facilities on Saturday not only knocked out over half of the country’s production, it also removed almost all the spare capacity available to compensate for any major disruption in oil supplies worldwide.

The attack cut 5.7 million barrels per day (bpd) of Saudi crude output, over 5 percent of the world’s supply. But the attack also constrained Saudi Arabia’s ability to use the more than 2 million bpd of spare oil production capacity it held for emergencies.

The kingdom has for years been the only major oil-producing country that has kept significant spare capacity that it could start up quickly to compensate for any deficiency in supply caused by war or natural disaster.

Most other countries cannot afford to drill expensive wells and install infrastructure, then maintain it idle.

Before the attack, the Organization of the Petroleum Exporting Countries (OPEC) global supply cushion was just over 3.21 million barrels per day (bpd), according to the International Energy Agency (IEA).

Saudi Arabia – the de facto leader of OPEC – had 2.27 million bpd of that capacity. That leaves around 940,000 bpd of spare capacity, mostly held by Kuwait and the United Arab Emirates. Iraq and Angola also have some spare capacity. They may now bring that production online to help plug some of the gap left by Saudi Arabia – but it won’t be enough.

HAVEN’T OPEC AND ITS ALLIES BEEN CUTTING OUTPUT? CAN’T THEY JUST REVERSE THOSE CUTS?

Yes, OPEC and its allies such as Russia have cut output to prevent prices from weakening because the market has been oversupplied.

Those cuts aimed to reduce supply by 1.2 million bpd. But much of that was from Saudi Arabia so it now cannot be reversed quickly.

Non-OPEC members such as Russia are pumping near capacity, with perhaps only 100,000-150,000 bpd of available additional production.

WHAT ABOUT IRAN?

Iran holds spare capacity but it cannot get the oil to market because of sanctions imposed by the government of U.S. President Donald Trump.

Iran’s exports have fallen over 2 million bpd since April.

Washington has said Iran was behind Saturday’s attack, so is unlikely to ease sanctions to allow Iran to plug a gap it believes was created by Tehran.

Iran, for its part, said after the attack that it would pump at full volume if sanctions were eased.

AND VENEZUELA?

U.S. sanctions have also impacted the Venezuelan oil industry. But Venezuelan output has been in free fall for years and state oil company PDVSA is unlikely to be able to boost production much even if sanctions were eased.

WHAT ABOUT U.S. SHALE? CAN SHALE PRODUCERS PUMP MORE?

The United States has become the world’s top crude producer after years of rapid growth in supply from the shale sector, much of it pumped from fields in Texas. The U.S. has also grown as an exporter and shipped more crude to international markets in June than Saudi Arabia.

Shale producers can move quickly to pump more when prices rise and can bring production online in a matter of months. That is a much faster timeline than most traditional oil production.

If the Saudi outage looks like it will be prolonged and oil prices rally significantly, then shale producers will raise output.

But even if shale producers pump more, there are constraints on how much the United States can export because oil ports are already near capacity.

(Graphic: U.S. Oil Production png, https://fingfx.thomsonreuters.com/gfx/editorcharts/OIL-PRODUCTION-US/0H001PBVH68N/eikon.png)

SO WHAT HAPPENS NOW? WHAT ABOUT OIL IN STORAGE?

It all depends on how long the outage lasts.

Saudi Arabia, the United States and China all have hundreds of millions of barrels of oil in strategic storage. That is the storage that governments keep for exactly this scenario – to compensate for unexpected outages in supply.

They can release oil from strategic storage to meet demand and temper the impact on prices. U.S. President Donald Trump said on Sunday he had authorized a release from the U.S. Strategic Petroleum Reserve.

The IEA, which coordinates energy policies of industrialized nations, advises all its members to keep the equivalent of 90 days of net oil imports in storage.

Oil from storage should keep the market supplied for some time, but oil markets will likely become increasingly volatile as storage is run down and the possibility of a supply crunch rises.

The IEA said on Saturday the markets were still well supplied despite the Saudi disruptions.

“We are massively oversupplied,” said Christyan Malek, head of oil and gas research for Europe, Middle East and Africa at J.P. Morgan, adding it would take five months of a 5 million-bpd outage to take global crude supply levels back to a 40-year normal average.

“Having said that, this attack introduces a new, irreversible risk premium into the market,” he added.

WHAT HAPPENS IF THERE IS ANOTHER SUPPLY DISRUPTION?

With no spare capacity, future disruptions would cause oil prices to rise. A higher price over time will encourage producers to invest and pump more, while at the same time reducing consumption.

OPEC member Libya is in the middle of a civil war, which threatens its ability to continue pumping oil. Another big Libyan disruption would add to the shocks and highlight the lack of spare capacity.

Nigerian exports have also suffered from disruptions.

Even before the Saudi attack, spare capacity was falling. Consultancy Energy Aspects has said it expects OPEC spare capacity to fall to below 1 million bpd in the fourth quarter from two million bpd in the second quarter of 2019.

(Reporting by Dmitry Zhdannikov, Ron Bousso and Alex Lawler; Writing by Dmitry Zhdannikov and Simon Webb; Editing by Daniel Wallis)

North Korea leader Kim invited Trump to Pyongyang in letter: report

By Hyonhee Shin

SEOUL (Reuters) – North Korean leader Kim Jong Un invited U.S. President Donald Trump to visit Pyongyang in a letter sent in August amid stalled denuclearisation talks, a South Korean newspaper reported on Monday, citing diplomatic sources.

Kim, in the letter sent in the third week of August, spoke of his “willingness” for a third summit and extended an invitation for Trump to visit the North Korean capital of Pyongyang, the Joongang Ilbo newspaper reported, citing an unidentified source.

Trump on Aug. 9 said he had received a “very beautiful letter” from Kim.

But U.S. officials have not said anything about a second letter in August.

Trump and Kim have met three times since June last year to discuss ways to resolve a crisis over North Korea’s missile and nuclear programs, but substantive progress has been scant.

Their first two meetings were formal summits, the second of which, in Vietnam in February, broke down after they failed to narrow a gap between U.S. demands for North Korean denuclearisation and a North Korean demand for relief from sanctions.

They met for a third time on June 30 in the Demilitarized Zone between the two Koreas and agreed to restart working-level talks but that has not happened.

Since the June meeting, North Korea has several times tested short-range projectiles.

The White House, the U.S. State Department and the North Korean mission to the United Nations did not immediately respond to requests for comment on the report.

‘THREATS AND HURDLES’

An unidentified director-general for U.S. affairs at North Korea’s foreign ministry said on Monday he hoped a “good meeting” with working-level U.S. officials would take place “in a few weeks”.

But whether a meeting would lead to a “crisis or chance” was up to the United States, the official said, calling for a more flexible approach.

“The discussion of denuclearisation may be possible when threats and hurdles endangering our system security and obstructing our development are clearly removed beyond all doubt,” the official said in a statement carried by North Korea’s official KCNA news agency.

North Korea’s vice foreign minister, Choe Son Hui, said last week Pyongyang was willing to have “comprehensive discussions” late this month.

Trump subsequently said he would be willing to meet Kim at some point this year.

South Korea’s foreign minister, Kang Kyung-wha, asked about the newspaper report, said there were “detailed explanations about such a letter” but declined to elaborate.

Kang said it could be “too much to expect” that Trump and Kim would meet before any working-level talks.

“No agreement was reached between the two leaders in Hanoi even after working-level negotiations,” Kang told a parliamentary panel.

“For the sake of the success of another summit, their working-level teams should meet and have primary discussions on the outcome of the summit,” Kang said.

(Reporting by Jack Kim and Hyonhee Shin; Additional reporting by Michelle Nichols in NEW YORK and Arshad Mohammed in WASHINGTON; Editing by Robert Birsel)

Biggest oil price surge since 1991 as ‘locked and loaded’ U.S. points finger at Iran for attack

By Rania El Gamal and Aziz El Yaakoubi

DUBAI (Reuters) – An attack on Saudi Arabia that shut 5% of global crude output triggered the biggest surge in oil prices since 1991, after U.S. officials blamed Iran and President Donald Trump said Washington was “locked and loaded” to retaliate.

The Iran-aligned Houthi movement that controls Yemen’s capital claimed responsibility for the attack, which damaged the world’s biggest crude oil processing plant. Iran denied blame and said it was ready for “full-fledged war”.

Two sources briefed on state oil company Saudi Aramco’s operations told Reuters it might take months for Saudi oil production to return to normal. Earlier estimates had suggested it could take weeks.

Oil prices surged by as much as 19% before coming off peaks. The intraday jump was the biggest since the 1991 Gulf War. [O/R]

Prices eased after Trump announced that he would release U.S. emergency supplies and producers said there were enough stocks stored up worldwide to make up for the shortfall. But traders still spoke of a long-term price increase as markets absorb the proof that global supply can be so sharply hit.

“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Trump said on Twitter on Sunday.

U.S. Energy Secretary Rick Perry pinned the blame squarely on Iran for “an attack on the global economy and the global energy market”.

“The United States wholeheartedly condemns Iran’s attack on Saudi Arabia and we call on other nations to do the same,” he said in a speech to an annual meeting in Vienna of the U.N. nuclear watchdog IAEA. He added that he was confident the oil market “is resilient and will respond positively”.

While Iran has denied blame for the attacks, its Yemeni allies have promised more strikes to come. Houthi military spokesman Yahya Sarea said the group carried out Saturday’s pre-dawn attack with drones, including some powered by jet engines.

“We assure the Saudi regime that our long arm can reach any place we choose and at the time of our choosing,” Sarea tweeted. “We warn companies and foreigners against being near the plants that we struck because they are still in our sights and could be hit at any moment.”

U.S. officials say they believe that the attacks came from the opposite direction, possibly from Iran itself rather than Yemen, and may have involved cruise missiles. Wherever the attacks were launched, however, they believe Iran is to blame.

“There’s no doubt that Iran is responsible for this. No matter how you slice it, there’s no escaping it. There’s no other candidate,” a U.S. official said on Sunday.

Saudi Arabia and Iran have been enemies for decades and are fighting a number of proxy wars, including in Yemen where Saudi forces have been fighting against the Houthis for four years.

Tension in the oil-producing Gulf region has dramatically escalated this year after Trump imposed severe U.S. sanctions on Iran aimed at halting its oil exports altogether.

THREATS

For months Iranian officials have issued veiled threats, saying that if Tehran is blocked from exporting oil, other countries will not be able to do so either. However, Iran has denied a role in specific attacks, including bombings of tankers in the Gulf and previous strikes claimed by the Houthis.

Foreign Ministry spokesman Abbas Mousavi called the U.S. accusations of Iranian involvement in Saturday’s attacks “unacceptable and entirely baseless”.

Iran said on Monday it had seized a vessel accused of smuggling diesel fuel to the United Arab Emirates. Tehran has long fought against smuggling of its subsidized fuel.

Russia and China said it was wrong to jump to conclusions about who was to blame for the attack on Saudi Arabia.

“Proposals on tough retaliatory actions, which appear to have been discussed in Washington, are even more unacceptable,” Russia’s Foreign Ministry said in a statement.

Britain – Washington’s close ally but wary of its hardline Iran policy – stopped short of ascribing blame but described the assault as a “wanton violation of international law”.

Washington has imposed its “maximum pressure” strategy on Iran since last year when Trump pulled out of an international deal that gave Tehran access to world trade in return for curbs on its nuclear program.

U.S. allies in Europe oppose Trump’s strategy, arguing that it provides no clear mechanism to defuse tensions, creating a risk that the foes could stumble into war.

Trump has said his goal is to force Iran to negotiate a tougher agreement and has left open the possibility of talks with President Hassan Rouhani at an upcoming U.N. meeting. Iran says there can be no talks until Washington lifts sanctions. Its foreign ministry said on Monday Rouhani would not meet Trump.

Officials in big energy-exporting countries were eager to assert that global markets could cope with the Saudi outage.

“We have spare capacity. There are volumes we can deal with as an instant reaction,” the energy minister of the United Arab Emirates, Suhail al-Mazrouei, told reporters in Abu Dhabi.

Russian Energy Minister Alexander Novak told reporters there was enough oil in commercial stockpiles to cover the shortfall.

The giant Saudi plant that was struck cleans crude oil of impurities, a necessary step before it can be exported and fed into refineries. The attack cut Saudi output by 5.7 million barrels a day, or around half.

Saudi Arabia is not only the world’s biggest oil exporter, it has a unique role in the market as the only country with enough spare capacity to increase or decrease its output by millions of barrels per day, keeping the market stable.

Big countries such as the United States and China have reserves designed to handle even a major outage over the short term. But a long outage would make markets subject to swings that could potentially destabilize the global economy.

(Reporting by Ghaida Ghantous, Rania El Gamal, Aziz El Yaakoubi, Asma El Sharif, Saed Azhar Hadeel Al Sayegh and Dubai bureau, Karin Strohecker and Dmitry Zhdannikov in London, Michael Martina in Beijing, Vladimir Soldatkin in Moscow, Roberta Rampton and Arshad Mohammed in Washington; Writing by Peter Graff; Editing by Mark Heinrich)

U.S. blames Iran for Saudi oil attack, Trump says ‘locked and loaded’

A satellite image shows an apparent drone strike on an Aramco oil facility in Abqaiq, Saudi Arabia September 14, 2019. Planet Labs Inc/Handout via REUTERS

By Roberta Rampton and Arshad Mohammed

WASHINGTON (Reuters) – U.S. President Donald Trump said on Sunday the United States was “locked and loaded” for a potential response to the attack on Saudi Arabia’s oil facilities, after a senior U.S. administration official said Iran was to blame.

Trump also authorized the use of the U.S. emergency oil stockpile to ensure stable supplies after the attack, which shut 5% of world production and sent crude prices soaring more than 19% in early trade on Monday, before moderating to show a 10% gain.

“There is reason to believe that we know the culprit, are locked and loaded depending on verification, but are waiting to hear from the Kingdom as to who they believe was the cause of this attack, and under what terms we would proceed!” Trump said on Twitter.

Earlier in the day, a senior U.S. official told reporters that evidence from the attack, which hit the world’s biggest oil-processing facility, indicated Iran was behind it, instead of the Yemeni Houthi group that had claimed responsibility.

U.S. Secretary of State Mike Pompeo also said there was no evidence the attack came from Yemen, where a Saudi-led coalition has been battling the Houthis for over four years in a conflict widely seen as a proxy war between Saudi Arabia and Shi’ite Muslim rival Iran.

“Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world’s energy supply,” Pompeo said.

Iranian Foreign Ministry spokesman Abbas Mousavi dismissed the U.S. allegations that it was responsible was “pointless”. A senior Revolutionary Guards commander warned the Islamic Republic was ready for “full-fledged” war.

“All American bases and their aircraft carriers in a distance of up to 2,000 kilometers around Iran are within the range of our missiles,” the semi-official Tasnim news agency quoted Commander Amirali Hajizadeh as saying.

Tensions between Washington and Tehran were already running high because of a long-running dispute between the two nations over Iran’s nuclear program that led the United States to impose sweeping sanctions.

Oil prices surged as much as 19% in early Asian trade on Monday on worries over global supply and soaring tensions in the Middle East.

Brent crude posted its biggest intra-day percentage gain since the start of the Gulf War in 1991.

State oil giant Saudi Aramco said the attack on Saturday had cut output by 5.7 million barrels per day.

The U.S. official, who asked not to be named, said on Sunday there were 19 points of impact in the attack on Saudi facilities and evidence showed the launch area was west-northwest of the targets – not south from Yemen.

The official added that Saudi officials indicated they had seen signs that cruise missiles were used in the attack, which is inconsistent with the Iran-aligned Houthi group’s claim that it conducted the attack with 10 drones.

“There’s no doubt that Iran is responsible for this. No matter how you slice it, there’s no escaping it. There’s no other candidate,” the official told reporters.

Riyadh has accused Iran of being behind previous attacks on oil-pumping stations and the Shaybah oil field, charges that Tehran denies, but has not blamed anyone for Saturday’s strike. Riyadh also says Tehran arms the Houthis, a charge both deny.

Richard Nephew, a program director at Columbia University’s Center on Global Energy Policy, said if Iran was responsible for the attack, it may be as retribution for U.S. sanctions.

“They are making decisions about whether and how to respond to what they see as a massive attack on their interests from the U.S. via sanctions by attacking U.S. interests in turn, and those of U.S. partners they believe are responsible for U.S. policy,” he said.

Aramco gave no timeline for output resumption. A source close to the matter told Reuters the return to full oil capacity could take “weeks, not days”.

Riyadh said it would compensate for the damage at its facilities by drawing on its stocks, which stood at 188 million barrels in June, according to official data.

Trump said he had “authorized the release of oil from the Strategic Petroleum Reserve, if needed, in a to-be-determined amount sufficient to keep the markets well-supplied.”

CALLS FOR RESTRAINT

Consultancy Rapidan Energy Group said images of the Abqaiq facility after the attack showed about five of its stabilization towers appeared to have been destroyed, and would take months to rebuild – something that could curtail output for a prolonged period.

“However Saudi Aramco keeps some redundancy in the system to maintain production during maintenance,” Rapidan added, meaning operations could return to pre-attack levels sooner.

The Saudi bourse closed down 1.1% on Sunday, with banking and petrochemical shares taking the biggest hit. Saudi petrochemical firms announced a significant reduction in feedstock supplies.

“Abqaiq is the nerve center of the Saudi energy system. Even if exports resume in the next 24 to 48 hours, the image of invulnerability has been altered,” Helima Croft, global head of commodity strategy at RBC Capital Markets, told Reuters.

Some Iraqi media outlets said the attack came from there. Baghdad denied that on Sunday and vowed to punish anyone using Iraq, where Iran-backed paramilitary groups wield increasing power, as a launchpad for attacks.

Kuwait, which borders Iraq, said it was investigating the sighting of a drone over its territory and coordinating with Saudi Arabia and other countries.

U.N. Secretary-General Antonio Guterres condemned Saturday’s attacks and called on all parties to exercise restraint and prevent any escalation. The European Union warned the strikes posed a real threat to regional security, and several nations urged restraint.

The attack came after Trump said a meeting with Iranian President Hassan Rouhani was possible at the U.N. General Assembly in New York this month. Tehran ruled out talks until sanctions are lifted.

But Trump appeared on Sunday to play down the chances he might be willing to meet with Iranian officials, saying reports he would do so without conditions were not accurate.

As recently as last Tuesday, Pompeo said Trump “is prepared to meet with no preconditions”.

Saudi de facto ruler Crown Prince Mohammed bin Salman told Trump that Riyadh was ready to deal with “terrorist aggression”. A Saudi-led coalition has responded to past Houthi attacks with airstrikes on the group’s military sites in Yemen.

The conflict has been in military stalemate for years. The Saudi alliance has air supremacy but has come under scrutiny over civilian deaths and a humanitarian crisis that has left millions facing starvation.

(Reporting by Roberta Rampton and Arshad Mohammed; Additional reporting by Rania El Gamal and Parisa Hafezi, Saeed Azhar and Hadeel Al Sayegh in Dubai, David Shepardson and Timothy Gardner in Washington, William James in London, John Irish in Paris, Alex Lawler, Julia Payne and Ron Bousso in London, Robin Emmott in Brussels and Devika Krishna Kumar and Michelle Nichols in New York; Writing by Ghaida Ghantous and Richard Valdmanis; Editing by William Maclean, Peter Cooney & Simon Cameron-Moore)

Trump favors ‘whole deal’ with China, two sides prepare for trade talks

By Jeff Mason and Chris Prentice

WASHINGTON (Reuters) – President Donald Trump said on Thursday he preferred a comprehensive trade deal with China but did not rule out the possibility of an interim pact, even as he said an “easy” agreement would not be possible.

“I’d rather get the whole deal done,” Trump told reporters at the White House. “I see a lot of analysts are saying an interim deal, meaning we’ll do pieces of it, the easy ones first. But there’s no easy or hard. There’s a deal or there’s not a deal. But it’s something we would consider, I guess.”

The president’s remarks came as the world’s two largest economies prepare for new rounds of talks aimed at curbing a more-than-year-long trade war that has hurt global economic growth and rattled financial markets.

The two sides have been making conciliatory gestures ahead of the talks, lowering the temperature between them and cheering investors.

China renewed purchases of U.S. farm goods, which the United States welcomed, and Trump delayed a tariff increase on certain Chinese goods by two weeks in honor, he said, of Chinese President Xi Jinping.

Lower-level U.S. and Chinese officials are expected to meet next week in Washington ahead of talks between senior trade negotiators in early October. Top-level negotiators last met face-to-face in China in July.

Washington is pressing China to end practices it considers unfair, including intellectual property theft, industrial subsidies, currency manipulation, and forced technology transfer from U.S. companies to Chinese counterparts.

Trump has made clear he wants such elements to be part of a deal and has demonstrated his resolve through tariff increases, even when they dented gains in the stock market.

Meeting U.S. demands would require structural change in China, which so far it has been unwilling to make. The two sides came close to a deal in May, but Chinese officials balked at requirements that Chinese laws be altered as part of the deal.

ECONOMIC IMPACT

The trade war is affecting the global economy. The International Monetary Fund on Thursday forecast that U.S. and Chinese tit-for-tat tariffs could reduce global GDP in 2020 by 0.8% and trigger more losses afterward.

Still, global stocks rose on Thursday after the conciliatory gestures from both sides.

China importers bought at least 10 cargoes, or 600,000 tonnes, of U.S. soybeans for October-December shipment, the country’s most significant purchases since at least June, U.S. traders with direct knowledge of the deals said.

That came after Trump on Wednesday announced his delay in the increase in tariffs on some Chinese goods by two weeks and China exempted some U.S. drugs and other goods from tariffs.

While welcoming China’s overtures, U.S. Treasury Secretary Steven Mnuchin sought to temper optimism in markets that the gestures might lead to a trade deal. He told CNBC that Trump was prepared to keep or even raise tariffs on Chinese imports and that Beijing had asked for more concessions beyond the removal of tariffs.

“The next month is important,” Mnuchin said at a later event hosted by the New York Times. “We’re hopeful we’ll make progress. If we can get the right deal, we’ll do a deal.”

NO CHANGE ‘ON THE FUNDAMENTALS’

The Wall Street Journal reported that China was seeking to narrow the scope of negotiations to trade matters by excluding national security issues. National security issues have not, however, been a key topic in the trade talks so far.

The soybean purchases sent benchmark prices of the commodity, of which China is the top buyer, soaring. They were the largest by private Chinese importers since Beijing raised import tariffs on the U.S. oilseed by 25% in July 2018 in retaliation for U.S. duties on Chinese goods. Duties were raised an additional 5% this month.

U.S. farmers, a core component of Trump’s political base, have been among the hardest hit by the tariff battle that began more than a year ago and has escalated in recent weeks.

Earlier in the day in Beijing, Commerce Ministry spokesman Gao Feng said Chinese firms have started to inquire about prices for U.S. farm goods. He also said that China welcomed the U.S. delay to its scheduled tariff hike on billions of dollars worth of Chinese goods.

“(China) hopes both sides would continue to meet each other half way and adopt concrete actions to create favorable conditions for negotiations,” Gao told a briefing, noting that possible purchases included pork and soybeans, both of which are still subject to hefty Chinese duties.

China has bought U.S. pork despite tariffs of 62% in place since last year because huge numbers of pigs have been culled across the country as Beijing struggles to contain an outbreak of African swine fever. The world’s biggest pork consumer has hiked imports to make up the shortfall.

China said it would reduce purchases of U.S. farm products in August after Trump vowed to impose new tariffs on around $300 billion of Chinese goods.

On Wednesday Trump announced a delay in increasing tariffs on $250 billion worth of Chinese imports to Oct. 15 from Oct. 1. The tariffs on those goods were set to increase to 30% from 25%.

Earlier that day China announced it was exempting 16 types of U.S. products from tariffs, including some anti-cancer drugs and lubricants, as well as animal feed ingredients whey and fish meal.

William Reinsch, a former senior U.S. Commerce Department official, said the goodwill gestures should help, but big hurdles remained.

“Both sides are trying to find a way out of the box,” he said. “Short term, that’s good. But I don’t think anything’s changed on the fundamentals, and once they get back to the table, they’ll discover that.”

(Additional reporting by Stella Qiu, Ben Blanchard, Michael Martina, and Dominique Patton in Beijing, and Andrea Shalal in Washington; Editing by Sandra Maler)

Newfound comet likely an ‘interstellar visitor,’ scientists say

Comet C/2019 Q4 is imaged by the Canada-France-Hawaii Telescope on Hawaii's Big Island September 10, 2019. NASA/JPL/Canada-France-Hawaii Telescope/Handout via REUTERS

By Joey Roulette

(Reuters) – A newly discovered comet hurtling toward the orbit of Mars has scientists scurrying to confirm whether it came from outside the solar system, a likely prospect that would make it the second such interstellar object observed in our planetary neighborhood.

The trajectory of the comet, first detected by Crimean astronomer Gennady Borisov, follows a highly curved path barreling in the sun’s direction at unusually high speeds, evidence that it originated beyond the solar system.

“On our team we’ve been scrambling here at the University of Hawaii to get observations to make position measurements,” said Karen Meech, an astronomer at the university whose team concluded that the object’s size and tail of gas classify it as a comet.

“Every time a new comet is discovered, everybody starts to try and get data so that you can get the orbit,” Meech told Reuters, adding that her researchers “all are 100 percent convinced that this really, truly is interstellar.”

The comet, an apparent amalgam of ice and dust, is expected to make its closest approach to the sun on Dec. 8, putting it 190 million miles (300 million km) from Earth, on a route believed unique to such objects of interstellar origin.

Once confirmed interstellar, the comet – dubbed C/2019 Q4 by astronomers – would become only the second such body ever observed by scientists.

The first was a cigar-shaped comet dubbed ‘Oumuamua – a name of Hawaiian origin meaning a messenger from afar arriving first – that sailed into our planetary neighborhood in 2017, prompting initial speculation that it may have been an alien spacecraft. Astronomers soon reached a consensus that it was not.

Unlike ‘Oumuamua, which visited the solar system for only a week, the newfound comet will linger near Mars’ orbit for almost a year, giving scientists ample time to characterize its chemical signatures and seek further clues about its origin.

“The high velocity indicates not only that the object likely originated from outside our solar system, but also that it will leave and head back to interstellar space,” said Davide Farnocchia, an astronomer at NASA’s Jet Propulsion Laboratory in California.

(Reporting by Joey Roulette in Washington; Editing by Steve Gorman and Leslie Adler)

Exclusive: While battling opioid crisis, U.S. government weighed using fentanyl for executions

By Jonathan Allen

NEW YORK (Reuters) – The U.S. Department of Justice examined using fentanyl in lethal injections as it prepared last year to resume executing condemned prisoners, a then untested use of the powerful, addictive opioid that has helped fuel a national crisis of overdose deaths.

The department revealed it had contemplated using the drug in a court filing last month, which has not been previously reported.

In the end, it decided against adopting the drug for executions. Attorney General William Barr announced in July his department instead would use pentobarbital, a barbiturate, when it resumes federal executions later this year, ending a de facto moratorium on the punishment put in place by the administration of U.S. President Barack Obama.

But the special consideration given to the possibilities of fentanyl, even as federal agents were focused on seizing illegal imports of the synthetic opioid, show how much has changed since the federal government last carried out an execution nearly 20 years ago.

Many pharmaceutical companies have since put tight controls on their distribution channels to stop their drugs being used in executions.

As old supply chains vanished, many states, and the federal government in turn, have been forced to tinker with their lethal recipes. They have experimented with different drugs, in some cases leading to grisly “botched” executions in which the condemned prisoners have visibly suffered prolonged, excruciating deaths, viewed by some as a breach of the constitutional ban on “cruel and unusual” punishments.

In 2017, Nebraska and Nevada announced they would use fentanyl, which is 100 times more powerful than morphine, in new multi-drug execution protocols.

By 2018, the U.S. Justice Department was also examining the “use of fentanyl as part of a lethal injection protocol,” according to a three-page internal memorandum from March 2018 by the director of the department’s Bureau of Prisons.

The Justice Department revealed the memo’s existence in an August court filing after a federal judge ordered it to produce a complete “administrative record” showing how it arrived at the new pentobarbital execution protocol announced in July.

The full contents of the memo are not public. It is not known why the department decided to examine fentanyl, what supply channels were considered or why it ultimately rejected fentanyl as a protocol. The government’s court filing shows the only other named drug examined as the subject of a department memo was pentobarbital, the drug it now says it wants to use in December and January to kill five of the 61 prisoners awaiting execution on federal death row.

Wyn Hornbuckle, a department spokesman, declined to share a copy of the memo or to answer questions about the government’s execution protocol.

Mark Inch, who was the Bureau of Prisons’ director at the time, acknowledged in a brief telephone interview writing the memo. Inch, who abruptly resigned a couple months after writing the memo, declined to answer questions, in part because he said it would be in conflict with his current role running Florida’s Department of Corrections.

Doctors can prescribe fentanyl for treating severe pain. In recent years, illegal fentanyl has become a common additive in bootleg pain pills and other street drugs, contributing to the tens of thousands of opioid overdose deaths in the country each year. Even tiny quantities can slow or stop a person’s breathing.

Earlier this year, an Ohio lawmaker proposed using some of the illegal fentanyl seized from drug traffickers to execute condemned inmates.

‘FUNDAMENTALLY WRONG’

Death penalty researchers say that just because a drug is deadly does not mean it is always appropriate as an execution drug.

“I don’t think it’d be a surprise that the government would be looking at alternative methods of carrying out lethal injection, and fentanyl has been in the news,” Robert Dunham, the director of the Washington-based non-profit group the Death Penalty Information Center, said in an interview.

“But there is just something fundamentally wrong about using a drug implicated in illegal activities as your method of executing prisoners.”

In August 2018, Carey Dean Moore became the first person in the United States to be executed using a protocol that included fentanyl.

Nebraska prison officials injected him with fentanyl and three other drugs. Moore took 23 minutes to die. Witnesses said that before succumbing, Moore breathed heavily and coughed and that his face turned red, then purple.

(Reporting by Jonathan Allen; Editing by Cynthia Osterman)

‘King Bibi’ fights for his political life in Israeli election

By Jeffrey Heller

JERUSALEM (Reuters) – Twenty years after Benjamin Netanyahu’s first term as Israel’s prime minister ended, the man hailed by supporters as “King Bibi” is again fighting for his political survival in a rerun election.

Opinion polls predict a close race when Israel goes to the polls on Tuesday, five months after an inconclusive election in which Netanyahu declared himself the winner but failed to put together a coalition government.

“A Likud victory is possible but it’s hanging by a thread,” said Abraham Diskin, political science professor at Jerusalem’s Hebrew University, referring to Netanyahu’s right-wing party.

An end to the Netanyahu era after his 10 successive years in power would be unlikely to lead to a dramatic change in Israel’s policy on hotly disputed issues in a peace process with the Palestinians that collapsed five years ago.

Relations with the United States would be likely to remain on track, despite Netanyahu’s close relationship with President Donald Trump.

Likud is running neck-and-neck with the centrist Blue and White party led by former armed forces chief Benny Gantz, who has focused heavily on looming corruption charges Netanyahu faces.

But Netanyahu’s political fate could ultimately end up in the hands of the far-right Yisrael Beitenu headed by former Defence Minister Avigdor Lieberman, a potential kingmaker in the coalition-building certain to follow the vote.

After the election in April, Lieberman blocked Netanyahu’s attempts to form a coalition, citing differences with the prime minister’s ultra-Orthodox allies. Opinion polls indicate Yisrael Beitenu will emerge stronger in the new ballot.

ANNEXATION

Netanyahu has campaigned hard to avoid losing power, as he did in 1999 against then-Labour party leader Ehud Barak, appearing in hours of live video question-and-answer sessions on Facebook in recent weeks and dominating the news in Israel.

In a step this week that alarmed Palestinian and other Arab leaders but delighted his core right-wing constituency, Netanyahu announced his intention to annex the Jordan Valley in the occupied West Bank.

It was, Israeli political commentators said, a clear attempt to draw votes away from far-right parties.

Netanyahu hammered home a get-out-the-vote message: Applying Israeli sovereignty to the valley, which Palestinians want as part of a future state, will happen only if Likud emerges from the election as the biggest party in the Knesset (parliament).

In Israel, votes are cast for a party’s list of Knesset candidates. Since no party has ever won a majority of seats on its own, Israel has always been ruled by coalitions, making post-election political bargaining key to determining the ultimate winner.

Netanyahu has burnished a statesman’s image during the campaign, visiting Britain last week for talks with Prime Minister Boris Johnson and U.S. Defense Secretary Mark Esper, and meeting President Vladimir Putin in Russia on Thursday.

Netanyahu has also showcased his relationship with Trump, featuring posters in which both are shaking hands. But there has been no sign from Trump of a “grand gesture” that could bolster Netanyahu as a candidate.

Shortly before the last election, with the prime minister at his side, Trump signed a proclamation recognizing Israeli sovereignty over the Golan Heights. Israel captured the strategic area in a 1967 war and annexed it in 1981, moves not accepted by most world powers, who deem it to be occupied Syrian territory.

“NATIONAL UNITY”

The line-up of challengers this time is similar to the one Netanyahu faced in the previous election, with Blue and White his biggest threat.

Blue and White has said it would “strengthen the settlement blocs” in the West Bank, with the Jordan Valley as Israel’s “eastern security border”. But that falls short of an outright commitment to annex the valley, and a party spokesman said a Blue and White-led government would “maintain an open channel” for a peace deal with the Palestinians.

Most of the international community regards the Israeli settlements as illegal, a view that Israel disputes.

The spokesman said the party would seek “the return of bipartisanship to Israel-U.S. relations”, a reference to Netanyahu’s close ties with Trump and his Republican party and sharp differences with the Democrats over issues such as Iran’s nuclear program and Middle East peacemaking.

After an election in Israel, its president gauges, following consultations with all political parties that won parliamentary seats, which legislator stands the best chance of forming a government.

Both Netanyahu and Gantz hope to be tapped, but a photo finish would complicate the picture.

A “national unity” government could avoid or resolve a stalemate if a Likud-led right-wing coalition or a Blue and White-led center-left alliance prove impossible.

Gantz has said his party would not join a government with Netanyahu in it, citing the prime minister’s legal troubles.

If a partnership with Gantz is the only way to stay out of the backbenches, prominent Likud members could try to topple Netanyahu as party leader, some political analysts have said.

Blue and White tied with Likud on 35 seats in the April election, and Gantz is seen by some voters as “Mr Clean”.

“His low-key style and relative ineloquence are for many a modest man’s refreshing antitheses to Bibi’s perceived bluster and soloism. Gantz is seen as balanced, cautious and pragmatic,” said Amotz Asa-El, a research fellow at Jerusalem’s Shalom Hartman Institute.

Two weeks after the election, Israel’s attorney-general will hold a pre-trial hearing in which Netanyahu can argue against his announced intention to file fraud and bribery charges against him in the corruption investigations.

Netanyahu, who has denied any wrongdoing, has said he will not quit as prime minister if indicted, and there is no legal obligation to do so. Allies have said they will press parliament to grant Netanyahu, as a member of the body, immunity from prosecution.

After election night, it could all come down to Yisrael Beitenu’s Lieberman, at odds with Netanyahu’s traditional ultra-Orthodox partners over military conscription exemptions for Jewish seminary students.

Lieberman, whose party is projected to double its April Knesset seat tally to 10, has said Yisrael Beitenu will not join up with a Netanyahu administration after Tuesday’s vote if it includes the religious factions.

Netanyahu’s annexation plans: https://graphics.reuters.com/ISRAEL-ELECTION/0100B2981B3/ISRAEL-ELECTION.jpg

(Additional reporting by Dan Williams and Maayan Lubell, Editing by Timothy Heritage)

Former Netanyahu aide Lieberman could be Israeli kingmaker

By Jeffrey Heller

JERUSALEM (Reuters) – A former nightclub bouncer with a heavy Russian accent, Avigdor Lieberman used to carry a fresh change of shirt for his political boss, Benjamin Netanyahu.

He is now one of Israel’s most prominent politicians and opinion polls suggest he could emerge as a kingmaker after an election on Tuesday, putting him in a position where he could possibly end the prime minister’s decade in power. [nL5N25W3VZ]

After working as an aide to the right-wing Netanyahu, Lieberman quit the Likud Party and formed the far-right Yisrael Beitenu. He then went on to serve in a string of governments, including under Netanyahu, but quit as his defense chief last November in protest at a ceasefire in Gaza.

Since Netanyahu failed to form a coalition government after an election in April, Lieberman, 61, has refocused his political strategy to attract new supporters.

With opinion polls predicting Yisrael Beitenu will double to 10 the number of parliamentary seats it won in the election five months ago, Lieberman could be the linchpin in determining the composition and leadership of the next governing coalition.

It was Lieberman who handed Netanyahu a rare defeat after the April election. Netanyahu needed Yisrael Beignet’s five seats to secure a majority of 61 in the 120-member parliament but Lieberman rejected his approaches.

Lieberman is pushing for a “national unity” government after Tuesday’s poll that would include his own party, Netanyahu’s Likud and its strongest challenger, the centrist Blue and White party, but exclude what he calls “messianic” religious factions.

Where Netanyahu fits in is anyone’s guess. Blue and White’s leader, Benny Gantz, citing looming corruption indictments against the prime minister, says he is open to teaming up with Likud, but not if it is led by Netanyahu.

So far, potential successors to Netanyahu, who has denied wrongdoing in three criminal cases against him, have remained loyal. But no one party has ever won an outright parliamentary majority on its own in Israel and national politics are fluid.

“(Lieberman) has an ability to crown the next prime minister – and he knows it very well,” said Dmitri Doubov, editor in chief of Israel’s Russian-language Channel 9 television.

“I don’t think that he sees himself as the next prime minister but he can set the conditions for the next coalition to define it as he wants, as he sees fit.”

CHANGE OF FOCUS

With campaign billboards reading “Make Israel Normal Again”, Lieberman’s far-right political platform includes support for Jewish settlement in the occupied West Bank.

Most of the international community regards the Israeli settlements as illegal, a view that Israel disputes.

Lieberman, a settler himself who in his younger days also worked as an airport baggage handler, also calls for conscription of ultra-Orthodox Jews into the military.

Unlike other 18-year-old Israeli Jews, Orthodox seminary students are exempt from compulsory service. Lieberman gave his differences with an ultra-Orthodox party over a conscription bill as the reason for refusing to join the coalition Netanyahu had seemed poised to form after the election in April.

Lieberman’s frequent complaints about ultra-Orthodox political power and influence over everyday life in Israel, including the administration of marriage and divorce, have played well with his Russian-speaking immigrants, some of whom are not Jewish according to ritual law.

If the opinion polls showing a surge in support for Yisrael Beitenu are correct, his message is also now resonating with secular Israelis outside his power base.

In the port city of Ashdod, south of Tel Aviv, Jonathan Joseph Motro, a 28-year-old student, said he was looking for a candidate who was right-wing but not in step with the ultra-Orthodox. Lieberman fits the bill, he said.

“I voted Likud for a long time, now I’m voting for Lieberman,” Motro said.

Speaking at a public forum of “influencers” organized by Israel’s Channel 12 TV last week, Lieberman said in his usual deadpan delivery that “there is nothing personal” in his criticism of Netanyahu.

Back in the days of their early relationship, Lieberman would be at Netanyahu’s side during campaigning.

“Lieberman scheduled Netanyahu’s visits to Likud branches around the country, arriving in advance with signs to hang in the hall and a crisp powder-blue shirt for his fastidious boss to change into before his speech, Anshel Pfeffer, author of a Netanyahu biography, wrote in the Haaretz newspaper.

At the Channel 12 event, Lieberman said he did not rule out Netanyahu as a political ally or underestimate a veteran leader hailed by chanting Likud faithful after previous election victories as a “magician”.

“(But) I will not go to a Halacha government,” he said, in a reference to Jewish ritual law and ultra-Orthodox party participation in a coalition.

(Editing by Timothy Heritage)