Good morning from the Financial Times.
Today is Friday, October 24th, and this is your FT News Briefing.
Sanctions on Russian oil groups have thrown a wrench into the oil market, and the US pardoned another crypto executive yesterday.
Plus, Argentina heads to the polls for midterm elections this weekend.
It's a make or break moment for President Javier Millay.
If Milley loses the midterms, Trump could pull the plug on that loan, which would be pretty disastrous at this point for the peso.
I'm Mark Filippino, and here's the news you need to start your day.
U.S.
President Donald Trump this week imposed what he described as massive sanctions on Russian oil giants Rosneft and Lukoil and their subsidiaries.
Look, the president has always maintained that he would implement sanctions on Russia when he felt it was appropriate and necessary.
And yesterday was that day.
That's White House Press Secretary Carolyn Leavitt.
Trump wants to strong-arm Russian President Vladimir Putin to the negotiating table to end the war in Ukraine.
Oil prices surged higher in response to the sanctions, and the move could have huge implications for the energy market.
The FT's U.S.
Energy Editor, Jamie Smith, has been following all this.
Hi, Jamie.
Hi, Mark.
So why did Trump decide now is the time to take such a substantial step, especially given that his predecessor, Joe Biden, decided to avoid it altogether?
Yeah, I think that's a very interesting point.
What we see now is a completely different oil market than we had during President Biden's term.
So right now we've got an oversupplied global oil market.
The price of crude has really tumbled, and this has given Trump the ability to intervene effectively in this way and impose sanctions without the fear that it's going to be politically damaging by pushing up domestic petrol prices here in the US.
Because when you do impose sanctions like this, it shocks the market.
And as you've seen, the oil prices spiked up 6% since the sanctions were announced.
Yeah, I want to get into that oil price jump in a little bit.
But first, after the White House announced the sanctions, India's and China's largest refinery said they might actually stop buying Russian oil.
They're worried about secondary sanctions.
How big of a deal would that be?
It would be really significant.
Russia exports about 5 million barrels of crude per day.
It's a huge amount.
And China and India take up more than half of that.
So this would leave a lot of Russian barrels struggling to find anyone else able to take them.
What we've seen in the past is that when sanctions have been introduced.
There's been nifty ways that the Russians have been able to circumvent them.
A big difference would be is if the US goes ahead and imposes what's called secondary sanctions against companies who buy Russian oil or the financial intermediaries that facilitate this.
This would mean that any of these companies or banks would risk exclusion from US capital markets.
Now, that's a really big deal.
And I think if Trump went this far, then it would be a much higher likelihood that you would actually see Russian oil finding it difficult to find buyers.
Interesting.
I want to go back to what you had mentioned earlier about that 6 spike in global oil prices on the back of Trump's decision to impose sanctions.
What does that mean for the oil industry and its outlook?
Well, as I mentioned before, there has been this really steep drop in oil prices over the course of the year.
So the profits that some of the big oil majors make have been falling precipitously.
That puts so much pressure on them, because they have promised to investors that they're going to provide huge dividends.
Do share buybacks and, you know, plough cash back to their investors.
So low oil prices mean it's much more difficult to do that.
In a sense, they will be relatively happy that the prices have spiked back up by 6 over the last 24 hours.
Jamie, what are you looking for next when it comes to this oil sanctions story?
I mean, I think a real key issue on the sanctions is does Trump actually go ahead and do these secondary sanctions?
If it's able to continue shipping its oil and selling its oil.
Russia will actually benefit from that, unless it is made clear that buyers can't be forced to stop purchasing the Russian oil.
That's the FT's Jamie Smith in New York.
Thanks, Jamie.
Thank you very much.
President Trump pardoned a cryptocurrency tycoon yesterday.
Shengpeng Zhao is the co-founder of Binance, the world's largest crypto exchange.
He pleaded guilty to criminal charges related to money laundering in 2023.
Zhao was convicted when former President Joe Biden was in office.
The White House said, now that Trump is in office, quote the Biden administration's war on crypto is over.
Trump has also pardoned several other crypto executives, including the founder of the dark web marketplace, Silk Road.
The president is a big crypto enthusiast.
The FT recently reported that Trump companies have made more than a billion dollars in pre-tax profits from crypto ventures over the past year.
You may have noticed that the U.S. has taken a keen interest in Argentina lately.
Argentina is one of the most beautiful countries that I've ever seen.
And we want to see it succeed.
Very simple.
President Trump's administration has earmarked a $40 billion rescue package for Argentina.
The country needs that bailout to stabilize its markets.
They've been turbulent since regional elections last month, when President Javier Millet's party underperformed.
But this weekend is the real test for Millay.
Voters head to the polls on Sunday for midterm congressional elections.
And if his party doesn't do well, it'll be a lot harder for Millay to continue his economic agenda.
Plus, it could impact his relationship with the U.S.
The FT's Kira Nugent is in Buenos Aires and she joins us now.
Hi, Kira.
Hi, Mark.
So get us up to speed because a lot has happened since Mollet took office about two years ago.
He came in with this big promise to introduce some pretty tough austerity measures to cut down on massive inflation.
What happened after that?
Yeah, so he did that.
He cut public spending by about 30% overall.
And that did have a big impact on inflation, which has fallen from almost 300 in early 2024 to about 30 now.
But things have started to go... quite wrong in the last few months.
From a voter perspective, Millet's strategies for lowering inflation have really started to weigh on economic activity.
At the same time, the president has alienated the Libertarian Party's main allies in Congress.
And that's a big problem because it has a really tiny minority of seats on its own.
His government has had several corruption scandals crop up.
Investors are really nervous that he's not going to do well at the midterm elections and that that will stop him from being able to continue his free market reforms and to continue his exchange rate policy, which has kept the peso very strong.
And that has caused the peso to fall quite quickly in the last few weeks.
Right.
And going back to the Trump thing I mentioned earlier, this is why the US government is intervening the way it is to prop up the peso.
Kira, you spoke to some voters recently.
How are they feeling about all this?
Yeah, so I went to Avellaneda, which is a working class town near Buenos Aires.
And I found that a lot of people just felt like the economy was really stuck.
I met Natalia Rios, who is a teacher in Avellaneda.
And she voted for Millet in 2023 because she was really, really frustrated with this runaway inflation.
She has found, though, that the last year has been really, really difficult.
She told me she hadn't realized that Millet's reforms were going to be so painful for the middle class.
She said she'd never struggled to make ends meet in the same way that she is now.
Because her salary has fallen quite far in real terms, which is a situation that a lot of Argentines are in.
And it has really caused a kind of waning of enthusiasm among right-leaning voters.
Now, these are the people who are a little on the fence when it comes to Malay.
What did Malay's supporters say to you?
So Malay supporters think it's kind of unfair to expect Malay to have solved all of Argentina's really deep-rooted economic problems in just two years.
I went to a rock concert that Malay put on in Buenos Aires earlier this month.
Sorry, did you say a rock concert?
Yes.
Okay.
Okay.
A couple of weeks ago, Millay put on this arena rock show.
He sang a bunch of songs for his fans.
Outside the show, I met Leonel Lavachen, who's 23.
I'm from Córdoba, from a town called Leones.
He's from rural Cordoba province and he works in pest control.
And he's a big Malay fan.
And he told me that you know, it's true, Argentines are not doing way better than they were before Malay took office, but that he really thinks Argentina is on the right path.
And that he hopes that his fellow Argentines kind of give Malay more seats in Congress and more time to continue with his reforms.
It's important to point out here Kira, that the implications of this election don't just pertain to Argentina.
There are ripple effects that will go outside the country, too.
What are those?
Totally.
So the Trump administration in the US has said it wants to give Argentina a 20 billion currency swap line, which is effectively a loan to help Malay kind of survive this crisis and continue with his reforms.
But last week in a meeting with Malay in Washington, Trump said that if Malay loses the elections quote like we are not going to be generous with Argentina.
That sparked a lot of concern in Argentina's markets that maybe if Millet loses the midterms, Trump could pull the plug on that loan, which would be pretty disastrous at this point for the peso.
Scott Besant, Trump's Treasury Secretary, has rode that back and said that the support from the US is contingent on Malay's reforms rather than on his success of the midterms.
But you know, it remains to be seen how easy the path for Malay's reforms will be after the elections.
Well, we will just have to see what happens on Sunday.
Kira Nugent covers Argentina for the FT.
Thanks, Kira.
Thanks, Mark.
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