European carmakers would suffer badly if America imposed a 20% tariff on exports.

The EU car industry is a major exporter -- selling €192bn of motor vehicles overseas in 2016.

The US is the biggest single export market for EU carmakers, with 25% of all exports. That’s followed by China (16%) and Turkey (7%), followed by Japan, South Korea, Russia, Australia, Norway and Canada.

However, the European Union only imported €77bn of cars, meaning it ran a chunky surplus with the rest of the world.

Turkish car factories contributed 20% of Europe’s car imports, followed by Japan with 19% and then America with 14%.

So European carmakers have more to lose if the car trade across the Atlantic were to freeze.

Donald Trump’s belligerent demand that European auto firms make cars in America ignores the fact that several already have large factories in the US.

Daimler, for example, makes Mercedes SUVs in Alabama. BMW has a large factory in South Carolina.

Both factories make cars for export abroad, so they could be badly hit if China imposes tariffs on US-built cars [which is why Daimler issued a profits warning on Wednesday night]

Ironically, US carmakers such as Ford and General Motors have partnerships with Chinese firms - meaning most of the cars they sell in China are made locally. Thus, they won’t be hurt by Chinese tariffs on imports.

As the FT put it yesterday:

It is one of the tantalising ironies of the trade war between the US and China: German carmakers BMW and Daimler could end up as the biggest losers.

After decades of investing in American states that back Donald Trump’s Republican party, the US’s two largest car exporters by value are likely to be hurt most.

Looking back at the Opec deal.... this chart suggests today’s agreement won’t make a massive difference to the oil market.

It shows that Iraq, Iran and Venezuela are all unable to boost their production. So the total supply increase will be less than the headline figure of one million barrels per day.

Britain’s opposition Labour party has warned that tit-for-tat tariffs between the US and Europe will cost jobs on both sides of the Atlantic.

Barry Gardiner MP, Labour’s Shadow International Trade Secretary, says president Trump’s attack on Europe’s steel industry will backfire.

“Donald Trump said he would welcome a trade war and could win it but the workers in the motorbike factories in Wisconsin, Missouri and Pennsylvania are the foot soldiers he is prepared to sacrifice.

Nobody wins in a trade war and Donald Trump may finally come to realise that his attack on steel workers in Europe was not such a good idea after all, as the European Union is forced to reciprocate with retaliatory tariffs.

“We don’t want to see a trade war and, ultimately, these tariffs need to be removed by both sides as we begin to work together to address the real issue of global overcapacity in steel and unfair market practices.

Shares in European carmakers are falling, as Donald Trump’s threat to impose tariffs sends a shiver through the sector.

Fiat has shed 2.6%, BMW are down 2.1% and Daimler (which issued a tariff-related profits warning this week) have lost another 1.1%.

American auto-makers are also suffering; traders may be anticipating retaliatory action from Europe against US cars.

The oil price is continuing to strengthen following Opec’s agreement - which will not please Donald Trump!

Brent crude (sourced from the North Sea) is up over 2% now at $74.64 per barrel.

US crude oil has jumped by 3%, or two dollars per barrel, to $67.58.

Analysts at Danske Bank say today’s agreement should keep oil prices up in the months ahead.

The Organisation of Petroleum Exporting Countries (OPEC) today agreed to lift output by one million barrels per day, effective from 1 July. The aim of the deal is to return total compliance to the current output agreement to 100%.

Compliance has been well above 100% this year since some countries, notably Venezuela, have seen a drop in production.

The price of Brent crude rose about $1/barrel to above €75/barrel on the news. The fact that oil prices are rising when OPEC is returning supply to the market reflects a concern in the market heading into the meeting that OPEC would agree to raise output further than the level needed to ensure 100% compliance.

For the rest of the year, the deal today reduces the upside risk to prices from the risk of lower output in, e.g. Iran and Venezuela, since OPEC now effectively has established a mechanism which opens the way for other countries to increase production correspondingly.

Reminder, Iran has been unwilling to accept a supply boost, at a time when US sanctions are hurting its energy sector.

Saudi Arabia, though, had pushed for an increase - under pressure from Trump to get energy prices down.

Today’s agreement looks (at first glance) like a compromise. Output will go up, but in practice by less than some analysts had expected.

Newsflash: House of Fraser has been given approval by creditors to close 31 stores, resulting in up to 6,000 job losses, the Press Association reports.

That follows this morning’s meeting with HoF’s landlords, where they were asked to vote on a plan to shut more than half its stores and cut the rent on another 10 of its 59 outlets.

Oxford Economics predicts that today’s deal (if confirmed) will push the oil price higher.

Journalists in Vienna are waiting patiently for the Opec press conference begin.

There’s chatter that today’s communique will focus on getting Opec members to comply with the current production curbs.

Britain’s stock market is rallying hard today, partly thanks to the jump in the oil price.

The FTSE 100 has gained 98 points, or 1.3%, to 7654 points.

Mining companies and energy producers are leading the rally, with BP up 3% and Royal Dutch Shell up 2.7%.

Or maybe not...

An Opec announcement could be imminent...

There’s nothing official from Opec yet....

Bloomberg and Reuters are both reporting that Opec has agreed ‘in principle’ to lift their production cap by one million barrels per day.

That’s what the Saudis have been lobbying for at today’s meeting, following pressure from Donald Trump to push oil prices down.

But the actual increase will actually only be 600,000bpd, compared to what’s actually being produced today, as not every Opec member can boost production.

Oil is actually pushing higher on the back of this news, with Brent crude now up 2% at $74.40 per barrel.

Another newsflash from Vienna: Opec ministers have been discussing how to ensure everyone is fully complying with the supply freeze agreed in 2016:

Reuters newsflash: OPEC SOURCE SAYS MINISTERS ARE NEARING AN AGREEMENT

My colleague Adam Vaughan reports that Opec ministers are inching towards a deal.

From Vienna, he writes:

Major oil producers are set to pump around 1m more barrels a day to help cool crude prices as part of an Opec deal, according to Saudi Arabia’s energy minister.

Khalid Al-Falih said he was hopeful an agreement would be reached on Friday, minutes after meeting Iran, which has been the key holdout to a rise in output.

Delegates privy to the negotiations in Vienna told the Guardian that talks had been fraught but they thought the cartel could maintain unity despite divisions.

“An agreement was reached yesterday to release the equivalent of about 1m barrels to the market; it will be distributed pro rata,” Al-Falih said on Friday, of an Opec committee meeting on Thursday. The deal has not been formally signed off yet, however.

“Saudi Arabia is unique. All of our spare capacity is available at short notice,” he added. He acknowledged not all of the cartel’s members could increase output, in a reference to countries such as Venezuela.

More here:

Opec insiders report that the “closed door” session of today’s meeting has begun.

With the cameras switched off, and no journalists in the room, this is the opportunity for energy ministers to agree production increases, or not....

Lukman Otunuga, research analyst at FXTM, says the financial markets are increasingly edgy about today’s Opec meeting.

The clashes between Saudi Arabia and Iran over whether to increase production has created “a growing sense of uncertainty”, he says:

And while Opec’s deal is important, traders are also wondering whether the cartel can maintain its current agreement with Russia to curb production. That deal has been crucial in keeping output down, and prices up.

Otunuga says:

While Saudi Arabia and Russia have proposed to ease supply curbs, other members including Iran, Iraq, Algeria and Venezuela are against such a move. With Iran already storming out of preparatory discussions yesterday, investors should fasten their seat belts in preparation for potential fireworks today.

If Iran continues to reject the deal to raise output and gathers support from other cartel members, talks are at risk of ending in an impasse. Such an undesirable outcome is likely to create uncertainty and will spark fears over the future of OPEC’s 18-month agreement with Russia to limit production. A market-friendly outcome could be a scenario where Iran makes a last-minute U-turn to cooperate, consequently allowing Saudi Arabia and Russia to move forward with a gradual production increase.

Newsflash: UK supermarket chain Asda has cut its fuel prices, in response to recent drops in the oil price.

Asda is shaving 2p per litre off its unleaded petrol, and 1p per litre off diesel prices.

This follows a fall in crude oil prices - with Brent dropping from $80 per barrel to $74 in the last month.

Motorists suffered a surge in prices on the forecourt in recent weeks, as the oil price jumped to its highest levels since 2014. Asda’s move suggests other retailers could also trim prices....

Back in Vienna, security officers have now emptied the Opec meeting of journalists, so the serious negotiations can get underway.

Here are some photos of the main players speaking to reporters:

Back in London, landlords are arriving to vote on House of Fraser’s proposal to shut half its stores and lay off 6,000 staff.

Most people heading into the meeting refused to comment but those who did speak said they thought the vote would be approved.

House of Fraser are making the cuts to preserve the rest of their business. If creditors reject the plan (a company voluntary arrangement), then the whole business could collapse.

Today’s Opec meeting has been difficult, Ecuador’s oil minister Carlos Perez tells us.

Saudi Arabia’s Khalid Al-Falih tells us he’s hoping to get a deal to increase production limits today.

Kuwait’s oil minister says he will support a production increase of one million barrel’s per day (Saudi Arabia’s goal), or less.

While Saudi Arabia and Iran negotiate, scores of journalists are still kettled on a stairwell waiting to be allowed into the meeting.

My colleague Adam Vaughan reports that some are even wearing trainers, to give them an advantage in the race to speak to ministers.

Reuters’ Amanda Cooper reports that other ‘side meetings’ are now taking place, as ministers continue to haggle about production levels...

Here’s a handy reminder of what the various Opec ministers hope to achieve today, from Jon Andersson, head of commodities at Vontobel Asset Management.

• Saudi Arabia want OPEC+ (OPEC and Russia) to increase production to please the US. In other words they want to show a ‘bearish’ headline number to demonstrate to the US that they are listening and playing their part in balancing the market.
• Russia wants OPEC+ to increase production because they together with Saudi Arabia are the only ones that can significantly increase production in the near and medium term. In addition they will not be able to increase production during the winter so they strongly favour a decision to increase now compare to later this year.
• Iran don’t want OPEC+ to increase production because they will be forced to reduce production as a consequence of US sanctions. Current expected loss around 1 million barrels per day
• All the other OPEC and non OPEC participants will play along.

So what might happen? Andersson sees two likely scenarios:

1. If OPEC increase by 500,000 to 1 million barrels per day, that will offset the expected loss from Iran in H2.
2. A possible (but unlikely) scenario is that Iran veto an production increase and that OPEC decide to postpone the decision to the next OPEC meeting in September.

The Opec meeting is running late! The opening session should have started 45 minutes ago, but there’s a hiatus.

There’s a rumour that Iranian oil minister Bijan Namdar Zangeneh and his Saudi counterpart Khalid A. Al-Falih are holding a private meeting.

Presumably they’re trying to reach agreement on production limits before the meeting formally starts - when journalists are allowed to quiz minister.

Amir Paivar of BBC Persian TV makes a good point: Why should Iran agree to boost Opec’s production targets when US sanctions are squeezing Iranian supplies down?

Last week Donald Trump tweeted that Opec was ‘at it again’ - keeping oil prices too high.

Presumably the president wants to put pressure on the cartel, but this intervention means Iran won’t want to lose face today.....

A date for your diaries.....

Impressive can-kicking, even by eurozone standards!

Jake Robbins, Manager of the Global Alpha Growth Fund at Premier Asset Management, thinks Opec will probably agree to pump more oil at today’s meeting.

“OPEC look likely to raise production targets for the first time since late 2016, with the likes of Russia looking to cash in on the much improved oil price since the introduction of the policy. OPEC has been surprisingly disciplined over the past couple of years and successfully pushed oil to levels that are now profitable for the majority of producers.

“Unfortunately for OPEC, the higher price has also encouraged further expansion from non-OPEC producers, most notably the US shale producers who have benefitted the most from OPEC’s supply constraints. Now some members are keen to also make the most of the higher oil price, particularly many in the Middle East and Russia who require the cash to cover big budget deficits.

Any increase will probably end the “bull run” in the oil price, Robbins adds, as it could lead to another oil glut.

Despite Iran’s resistance, Opec last night drew up a ‘preliminary deal’ to raise production by around one million barrels per day.

But there’s no certainty that Iran will back the deal today, as Bloomberg explains:

In a night of drama in Vienna, the Joint Ministerial Monitoring Committee, which includes Russia and Saudi Arabia, recommended a supply boost despite Bijan Namdar Zanganeh, the Iranian oil minister, walking out of the meeting and predicting OPEC won’t convince him to back an increase.

Iran could wield a veto over any formal deal on Friday, but such a move wouldn’t necessarily prevent additional oil coming onto the market. Riyadh could seek to assemble a coalition of countries ready to pump more within their existing agreement, act unilaterally to boost output or abandon the 2016 cuts deal entirely.

Today’s Opec meeting is overshadowed by a raft of political tensions, from the Saudi-Iran proxy war in Yemen to Donald Trump’s new sanctions against Iran.

The AFP newswire points out that Washington is putting the Saudi’s under pressure to lower the oil price, ahead of Congressional elections this autumn.

Saudi Arabia, backed by non-member Russia, is now pushing to raise production again in order to meet growing demand in the second half of 2018.

But the proposal has run into resistance from Iran, Iraq and Venezuela, who would struggle to immediately raise output and fear losing market share and revenues if other countries open the spigots.

Iran is particularly vocal about its objections as it braces for the impact of fresh US sanctions on its oil exports after President Donald Trump quit the international nuclear agreement.

But Riyadh, which cheered Washington’s exit from the nuclear pact, is under pressure from Trump to boost output in order to lower oil prices ahead of November’s midterm elections...

More here...

My colleague Adam Vaughan is attending the Opec meeting in Vienna.

He’s heard that a deal to raise oil production is “likely today”: