03/02/2026

BIZ & FINANCE TUESDAY | FEB 3, 2026

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Two things Opec+ can’t control – Trump and China

Asia factory activity rises on global demand TOKYO: Asia’s factory activity expanded in January as solid global demand lifted export orders, private-sector surveys showed yesterday, offering policymakers some assurance the hit from higher US tariffs has run its course for now. Japan and South Korea saw manufacturing activity grow at a multi-year pace as big markets like the US sustained momentum, the surveys showed, brightening prospects for Asia’s export powerhouses. China’s factory activity expanded at a faster pace in January as export orders rebounded, one of the surveys showed, which contrasted with an earlier official report showing activity faltering. “Exports from most countries have surged in recent months, and we think the near-term outlook for Asia’s export-oriented manufacturing sectors remains favourable,“ said Shivaan Tandon, Asia Economist at Capital Economics. The RatingDog China General Manufacturing Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 50.3 from 50.1 in December, exceeding the 50 mark that separates growth from contraction and hitting the highest level since October. The upbeat survey likely reflects China’s export drive that offset weak domestic consumption and helped the world’s second largest economy expand 5% last year. Japan’s S&P PMI rose to 51.5 in January from 50.0 in December, the strongest level since August 2022, driven by robust demand from key markets such as the US and Taiwan. “Japan’s manufacturing industry propelled itself back into growth territory at the start of 2026, with firms signalling the strongest upturns in output and new orders for nearly four years,“ said Annabel Fiddes, an economics associate director at S&P Global Market Intelligence. South Korea’s PMI also rose to 51.2 in January from 50.1 in December to mark the highest reading since August 2024. The International Monetary Fund raised its 2026 global growth forecast last month on receding fears over the hit from US tariffs, and a continued AI investment boom that has fueled asset wealth and expectations of productivity gains. Brightening prospects for global demand have helped factory activity expand across Asia. Taiwan’s PMI rose to 51.7 in January from 50.9 in December, while that of Indonesia rose to 52.6 from 51.2. Factory activity in Malaysia, the Philippines and Vietnam also expanded in January, the surveys showed. India’s manufacturing activity inched up in January as demand improved slightly, though the gain wasn’t strong enough to lift business optimism or meaningfully increase hiring. – Reuters questioned whether aircraft certification could be influenced by politics. “There can be no bargaining over certification,“ a senior regulatory official told Reuters. EU Transport Commissioner Apostolos Tzitzikostas became the latest senior figure to warn of the “weaponisation” of supply chains as major powers pursue their geopolitical agendas. “Today, (there are) real issues in developing the growth of aviation in the years to come... issues of weaponisation of dependencies in supply chains,“ he told the conference. His comments echoed a warning last month by France’s aerospace industry over the fate of cross border supply chains fuelled by globalisation policies that are now in widespread retreat. Aerospace executives say rare earths remain a particular pressure point despite a US-China trade truce. – Reuters

SYDNEY: There are two factors that are largely beyond the control of Opec+ and they are likely to determine the price of crude oil in the coming weeks. The first is whether US President Donald Trump does decide to start a shooting war with Iran, and if he does, whether both sides will be able to keep oil cargoes moving and production infrastructure intact. The second is whether China, the world’s biggest crude importer, decides to ease back on its recent run of strong imports in light of the 16% jump in benchmark Brent futures in January. Given the current state of uncertainty gripping crude oil markets, it made sense for the eight members of Opec+ with output quotas to make no changes to production policy at their meeting on Sunday. The eight Opec+ members, which pump about half the world’s oil, raised production quotas by about 2.9 million barrels per day from April through December 2025, roughly 3% of global demand. They then froze further planned increases for January through March 2026 because of seasonally weaker consumption. In some ways, things are moving in favour of the exporter group. Prices are up, but not high enough to start sparking concerns about renewed inflation and weaker economic growth in importing nations. Brent ended at US$70.69 a barrel on Jan 30, just shy of the six-month high of US$71.89 hit the previous day. The market narrative of a supply glut has also largely disappeared from the media and analyst

weeks in advance, a window when oil prices were relatively weak, with Brent dropping to a seven-month low of US$58.72 a barrel on Dec 16. With the current price above US$70 a barrel it’s likely that China will trim imports to levels sufficient to meet consumption, and hold off adding crude to its strategic reserve. China doesn’t disclose flows into or out of commercial and strategic stockpiles, but it has been importing far more crude than it has been processing. A calculation of China’s surplus crude can be made by adding imports and domestic production together and then subtracting refinery processing. On this basis, China’s surplus crude was 1.13 million bpd in 2025, and while not all of this would have been added to inventories, it is an indication that China was taking advantage of low oil prices to suck up much of the expected supply surplus. Past episodes of sharp increases in crude prices have resulted in lower imports by China, and if this dynamic repeats it’s likely that by late March and into April, fewer tankers will be arriving at Chinese ports. If China does trim imports by about 1 million bpd, that would likely result in the return of supply glut talking points, especially if whatever does unfold between the US and Iran doesn’t affect crude shipments and infrastructure. Clyde Russell is an Asia Commodities and Energy Columnist at Reuters. The views expressed here are those of the author.

discourse, with the focus more on the reshaping of Venezuelan oil flows after the US intervention that led to the seizure of President Nicolas Maduro, as well as the current tensions with Iran. The Iranian situation is the biggest challenge Opec+ faces, as it would not be in their interests to see a prolonged military conflict in the Middle East, even though they enjoy the likely US$7-8 risk premium in the current oil price. While Opec+ members such as Saudi Arabia can lobby Washington, ultimately it’s likely that Trump will make his own calculations as to whether he can attack Iran and achieve whatever goals he seeks, while still keeping oil prices low enough to avoid public anger and inflation at home. For now, the risk premium in crude oil is likely to remain until there is certainty on what actions the US will take, and the consequences of those actions. China imports However, one consequence of the rise in prices in January is that China may ease back on crude imports. China’s arrivals hit a record 13.18 million barrels per day (bpd) in December, and they are likely to have remained robust in January, with commodity analysts Kpler tracking seaborne arrivals of 10.4 million bpd, to which about 1 million bpd of pipeline imports need to be added, giving a total of around 11.4 million bpd. The crude arriving in December and January would have been arranged three months to four

Airbus and Boeing still face post-Covid supply issues, while engine makers balance new builds and maintenance. – PEXELS PIX

Aviation leaders tackle industrial and geopolitical headwinds SINGAPORE: Aviation leaders tackled barriers to growth and the impact of geopolitical tensions on the eve of the Singapore Airshow yesterday, while reaffirming pledges to reduce emissions.

support three times that number without transformation,“ he said. “We must boost progress to achieve net-zero carbon emissions by 2050.” The gathering of 350 aviation leaders comes as tensions over aircraft certification threaten to disrupt a decades-old system of globally accepted norms and trade in aviation. Onuma did not make direct reference to the dispute over US President Donald Trump’s demands last week for Canada to certify certain US-designed Gulfstream business jets or face tariffs. But he stressed the importance of global cooperation in securing the industry’s safe development. “Only together can we achieve a sector that is safer, more sustainable and more competitive,“ Onuma said. Trump’s comments have raised alarm among airlines and certification specialists who

flows of air freight. “I think the impact of geopolitical change was much more obvious on the air cargo side of the business than on the passenger side,“ Walsh said. Air cargo shipments between Asia and North America slipped 0.8% last year in the first such decline for some time, while volumes between Europe and Asia increased by 10.3%, he added. The Asia-Pacific region is the world’s fastest growing region for air travel, propelled by China and India, with passenger traffic growth of 7.3% projected for 2026. Toshiyuki Onuma, newly elected president of the governing council of the International Civil Aviation Organisation, the United Nations’aviation body, warned aviation would struggle to keep up with projected growth without coordinated action. “A system built for 4 billion passengers cannot

Supply chain problems are hurting global airlines and will remain for some time to come, the head of the International Air Transport Association (IATA) warned industry leaders and regulators. “This disruption continues to have a major impact,“ IATA director-general Willie Walsh said at the Changi Aviation Summit, ahead of Asia’s largest air show. Airbus and Boeing have faced supply chain problems since the Covid-19 pandemic, while engine makers like GE Aerospace and Pratt & Whitney are having to juggle competing demands from new plane assembly and maintenance. Aviation is also navigating geopolitical changes including US import tariffs that have upended