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Oil rises as OPEC and allies announce deep production cut

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Oil moved higher on Friday as OPEC and its allies agreed to deepen oil production cuts to 500,000 barrels a day through to March 2020. This brings the total production cut to 1.7 million barrels a day.

U.S. West Texas Intermediate crude futures gained 1.2% to trade at $59.13 a barrel. Brent gained 1.5% to trade at $64.31 a barrel.

Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman told reporters on Friday that the oil-rich kingdom’s quota would be an additional 167,000 barrels per day. He also said that the kingdom would continue to exceed its quota by 400,000 barrels a day, which means the overall production cut will actually be closer to 2.1 million barrels a day.

The country is OPEC’s de facto leader, and has been adamant that those who were previously overproducing — such as Iraq and Nigeria — comply with the group’s quota. Prince Abdulaziz bin Salman said that the country’s additional and voluntary cut would be contingent on other countries abiding by their allocation.

Russian Energy Minister Alexander Novak said Moscow’s quota would be 300,000 b/d during the first three months of 2020. This measurement excludes gas condensate — a high-value light crude extracted as a by-product of gas production.

The energy alliance said it plans to review the policy at an extraordinary meeting on March 5-6.

Ahead of the decision

On Thursday the 14-member cartel, as well as its allies, which is known as OPEC+ and includes Russia, agreed in principle to reduce output by an additional 500,000 barrels per day.

But as day two of meetings in Vienna kicked off Friday, there were still many questions, including how the quota would be allocated, and how long the agreement would stretch for. Friday’s meeting followed a tumultuous and marathon session Thursday. Talks stretched on for hours, and the customary press conference held after the meeting wraps was abruptly cancelled.

The duration of the deal was one of the key unknowns. On Friday OPEC said it would meet again on March 5-6. The cartel typically meets every six months, so the announcement had led some on the Street to believe the increased cut would only extend through the first quarter.

“It remains unclear what would occur in 2Q20, potentially reflecting Saudi’s new stance that they could walk away from this deal if other countries did not comply fully,” Goldman Sachs analyst Damien Courvalin said in a note to clients Thursday.

Another key factor was compliance. Currently several members including Iraq, Nigeria and Russia are over-producing. Saudi Arabia, on the other hand, exceeds its current target cut, and signaled ahead of OPEC’s meeting that stricter rules should be implemented.

“The Saudi message is compliance,” Mizuho managing director Paul Sankey said in a note to clients Friday.

The deeper-than-expected cut might not have all that much of an impact on oil prices, however, since ahead of Thursday’s meeting OPEC+, as a whole, was not even pumping as much as allotted.

“While we await full details from OPEC and non-OPEC, we think a 0.5MMbls/d announced cut relative to existing quotas is just enough to keep markets balanced for 2020,” Bernstein analyst Neil Beveridge said Friday. “Overall, a satisfactory outcome but investors will likely want to see evidence cuts are being delivered before getting too excited.”

Russia had also reportedly asked that condensates no longer be quoted as part of output for countries, a move which would reduce the total impact of the cuts.

“Everyone’s starting to do math. Between the condi [condensates] exemption and the current rate of over compliance, it’s not really a new larger cut,” Again Capital’s John Kilduff said to CNBC Thursday.

– CNBC’s Brian Sullivan, Patti Domm, Michael Bloom and Sam Meredith contributed reporting.

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How the Saudis hacked Jeff Bezos’ phone, and how to protect yourself

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Mohammad bin Salman Al Saud and Jeff Bezos pose for a photo during his visit in in Riyadh, Saudi Arabia on November 9, 2016.

Bandar Algaloud | Anadolu Agency | Getty Images

Today, the U.N. called for an investigation into allegations that the crown prince of Saudi Arabia personally facilitated a hack on Amazon CEO Jeff Bezos’ mobile phone.

The report, which is based on research Bezos commissioned, alleges that Saudi Crown Prince Mohammed bin Salman may have personally been involved in a complex hacking campaign against Bezos, which started with a friendly dinner and exchange of phone numbers between the two in 2018.

The report shows how outsiders can monitor seemingly private phone messages. However, while tools like those described in the report exist, they are costly and rarely used against normal citizens. Moreover, it’s worth keeping in mind that Bezos himself commissioned the report and there may be alternative explanations for how information about his personal life leaked.

What happened?

According to the allegations, Bezos’ phone was hacked using malicious software delivered in a WhatsApp message that came directly from Crown Prince Mohammed’s phone in November 2018. The two of them had met and exchanged phone numbers in the spring of that year.

In November of 2018, Bezos allegedly received a text from Crown Prince Mohammed’s WhatsApp number again, this time with a picture of a woman resembling Sanchez “months before the Bezos affair was known publicly,” according to the report. Bezos would later preempt a National Enquirer story on the affair in a post on Medium, which also was the first time he mentioned a possible connection between the hack and Saudi Arabia.

The Saudis apparently targeted Bezos because he owns The Washington Post, which published work from Jamal Khashoggi, a Saudi dissident. Saudi agents murdered Khashoggi in the Saudi consulate in Istanbul in October 2018 at the direction of the crown prince, according to the CIA. After initial denials, the Saudis have acknowledged the murder and sentenced several people to death for it, but denied that Crown Prince Mohammed knew about it.

The report says the hack used the software of an Israeli company called NSO Group, which sells a software platform known as Pegasus. This platform allows governments to access internet-connected devices.

The company says it only sells its products to government agencies pursuing information from the devices of criminals and terrorists. Human rights activists, however, have said the software is used much more widely and to target attorneys, journalists and dissidents who oppose various governments that have contracted with NSO Group, an allegation put forth in the report today.

NSO Group has denied its software was involved.

“As we stated unequivocally in April 2019 to the same false assertion, our technology was not used in this instance. We know this because of how our software works and our technology cannot be used on U.S. phone numbers. Our products are only used to investigate terror and serious crime. Any suggestion that NSO is involved is defamatory and the company will take legal counsel to address this.”

Saudi Arabia has called the allegations “absurd” and has also characterized the killing of Khashoggi as a “rogue operation.”

Not a worry for most of us

NSO Group isn’t the only company that makes this type of software. There are numerous other companies that have used differing versions of malicious code, delivered via text or call. These programs let outsiders compromise mobile devices by sending errant information through loopholes in these communication programs.

In some cases, respondents don’t even need to answer the call or text in order for the phone to be compromised. Once the phone is compromised, the attackers can download a wide array of information from it. This seems to be what happened in the case of Bezos’ phone, as subsequent messages suggested that Crown Prince Mohammed was aware of Bezos’ affair and impending divorce, according to the U.N. report.

While real, these types of hacks are exceedingly rare. The software required to carry them out is extremely costly, and companies such as Facebook, which owns WhatsApp, and Apple are usually quick to patch the holes that these programs exploit.

These types of hacks have targeted attorneys and other professionals representing controversial figures, however. Anyone in a position connected to politically controversial figures — including bankers, accountants, political advisors, speechwriters and so on — should be concerned about having their communications monitored in this way.

If you’re in this boat, make sure you routinely update your phone and all its software, especially with all security-related updates, and consider consulting with a cybersecurity expert who can help you tailor a security plan. Share your phone number very selectively only with people who absolutely need it, and consider conducting private or sensitive business on a device that’s separate from your day-to-day phone.

But for most of us, these types of hacks are a very remote concern and easily remedied by updating messaging software on a regular schedule.

Skepticism warranted

It’s worth keeping in mind that the report may not tell the whole story.

While sophisticated tools and hacking methods like those described in the U.N.’s letter today do exist, so do programs that can spoof phone numbers and device ownership, as well as a wide range of programs that can make it appear quite convincingly that information is being sent from an individual’s device or location when it is not.

There are other possible alternative explanations for what happened. Some other entity could have spoofed Crown Prince Mohammed’s credentials, or Bezos’ information could have leaked in more ways than a single hack. For instance, The Wall Street Journal reported last March that Sanchez’s brother sent incriminating pictures from her phone to the National Enquirer.

It’s also worth keeping in mind that Bezos commissioned the investigation. The report spins a very complex story of a vast technological conspiracy against him and bolsters previous claims of Saudi involvement from an investigator he hired, Gavin de Becker. An investigation independent of either Bezos or the Saudis, which the U.N. has called for, would hopefully include a completely objective view of the timeline and facts presented in today’s report.

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Italy is not in a political crisis, Gualtieri says

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DAVOS, Switzerland — Italy is not facing another political crisis, the country’s economy minister told CNBC just hours after a key government figure stepped back from his duties.

Luigi Di Maio has been leading the Five Star Movement (M5S), a party supportive of more social benefits in Italy, since late 2017. However, he said Wednesday he would be stepping down from the party’s leadership. Di Maio has also been serving as foreign affairs minister. His party entered a new coalition with the pro-European social democratic party, Partito Democratico (PD) in September and his resignation has raised concerns over the stability of this goverment.

Speaking to CNBC Wednesday, Roberto Gualtieri, the Italian minister for the economy and a member of PD, rejected such concerns.

Italian economy minister Roberto Gualtieri.

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“Not at all, it is not a political crisis, it is not affecting neither the government — by the way Mr Di Maio will remain foreign (affairs) minister — nor the majority, which is actually quite broad in the Parliament,” Gualtieri told CNBC’s Steve Sedgwick in Davos.

The PD and M5S came together last year to avert the need for snap elections. At the time, the anti-immigration party leader, Matteo Salvini, who was co-deputy prime minister alongside Di Maio, decided to quit government — sparking further political instability.

“The commitment to the stability of the Italian government is very strong from the Five Star Movement,” Gualtieri said.

Upcoming regional elections in Italy are adding further pressure on the current government. Salvini, the face of anti-immigration politics in Italy, could be about to make some sort of comeback with an election in the northeast region of Emilia-Romagna on Sunday. The region has traditionally voted in favor of left-leaning parties, but opinion polls suggest that could change.

Speaking about the upcoming vote, Gualtieri said: “I hope and I’m confident that the progressive candidates will win.”

Nonetheless, he pointed out that it is a regional vote and he doesn’t expect it to impact the current leadership between M5S and the PD.

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Trump says GDP, Dow would be higher if it weren’t for the Fed

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President Donald Trump told CNBC on Wednesday that U.S. economic growth would have been closer to 4% if it weren’t for the lingering effect of Federal Reserve rate hikes.

“That was a big blip that should not have taken place. It should not have happened. But it’s one of those things. But we had Boeing. We had the big strike with General Motors. We had things happen that are very unusual to happen,” Trump told CNBC’s Joe Kernen in an interview from the World Economic Forum in Davos, Switzerland.

The president also suggested that the stock market would be even higher than its already record-setting highs if the Fed hadn’t raised rates so quickly before cutting them three times during 2019.

“Now, with all of that, had we not done the big raise on interest, I think we would have been close to 4%,” Trump said of the U.S. gross domestic product. “And I – I could see 5,000 to 10,000 points more on the Dow. But that was a killer when they raised the rate. It was just a big mistake.”

The president has repeatedly taken the Fed and its chair, Jerome Powell, to task for raising rates too quickly, in his view. Trump nominated Powell to the role in November 2017, and the Fed raised rates four times in 2018.

The president’s remarks Wednesday echoed those his top economic advisor Larry Kudlow made to CNBC on Tuesday, when he predicted 3% growth in U.S. GDP in 2020.

“This is a long cycle, and what you’ve got here in the Trump years is essentially a mini upcycle,” Kudlow said Tuesday. “You’ve gone from 1.5% to 2% growth. We had it going at almost 4%, then the Fed tightened.”

Manufacturing and trade data released this month suggested the American economy ended 2019 on a strong note. The economy is expected to grow more than 2% in the fourth quarter. That would represent a slowdown from the 2.9% increase in 2018, and 2% growth would still suggest the decade-old expansion is set to continue into this pivotal election year.

President Donald Trump speaks with CNBC at the 2020 World Economic Forum in Davos, Switzerland on Jan. 22nd, 2020.

Adam Galica | CNBC

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