By Carmel Crimmins, Reuters Econ World podcast host

Hello there,

Saudi Arabian officials are briefing allies that they can live with lower oil prices. That’s what sources are telling Reuters. It marks a potential major shift in policy after years spent balancing the market through deep output cuts and comes ahead of the next OPEC+ meeting on Monday.

Theories on the apparent change in Saudi strategy range from punishing OPEC+ members exceeding their quotas to a move to fight for market share after ceding ground to non-OPEC+ producers such as the United States and Guyana.

Higher output may also be a gesture to U.S. President Donald Trump who is visiting Riyadh this month. An arms package for Saudi Arabia worth well over $100 billion could be announced during the visit, which includes stops in the UAE and Qatar, where the Trump Organization has just struck a deal to build a luxury golf resort.

Sticking with energy, Spain’s Prime Minister Pedro Sanchez is coming under increasing pressure to explain what was behind his country’s massive power outage this week. Sanchez's opponents are pointing the finger at low investment in a system that increasingly relies on intermittent solar and wind power.

Whatever the cause, the outage exposes the fragility of Europe’s power grid at a time when it’s facing challenges on a number of fronts. The region is increasingly reliant on the United States for its supplies of natural gas since Russia’s invasion of Ukraine. But switching from Moscow to D.C. has created a new vulnerability since Trump returned to the White House pledging to use American oil and gas in trade talks. Plus, Brussels’ plan to wean the European Union entirely off Russian gas by 2027 is facing pushback. Listen here.

After yesterday’s U.S. GDP report showed that businesses were racing to get ahead of Trump’s tariffs, we now await the April nonfarm payrolls report on Friday. Claims for jobless benefits surged to a two-month high last week, but that likely did not mark a material shift in labor market conditions as the rise was related to school spring breaks in New York State.

Economists expect the tariffs to result in a wave of job losses, but so far, businesses have mostly adopted a wait-and-see attitude and are retaining their workforces, while remaining cautious about adding headcount.

The fog of this trade war is thick with dozens of companies worldwide pulling or lowering their forward guidance in the first two weeks of the first-quarter earnings season. The results themselves have been respectable – nearly three-quarters of the 375 companies in the S&P 500 that have reported have beaten analyst expectations, according to LSEG. Big Tech is also providing relief for investors with upbeat quarterly results from Meta and Microsoft helping to send the Nasdaq up 2.4% on Thursday.

The macro mood, however, is downbeat, with the Bank of Japan sharply cutting its growth forecasts and a gauge of British private-sector activity sinking in April to its lowest since the turmoil caused by former Prime Minister Liz Truss' budget plans in late 2022. Not surprisingly, the Bank of England is expected to lower interest rates by a quarter point on May 8, and some economists think it will soon need to speed up its gradual approach to rate cuts.

Speaking of May 8, there won’t be an Econ World newsletter that day. I am doing an early exit next week, so you can expect it on Wednesday, May 7, instead.

As always, I'd love to hear from you by hitting reply on this email or finding me on LinkedIn.  

The euro bloc economy outstripped the United States by almost two percentage points in the first quarter. Whether the outperformance can last is the big question.

“ The main reason to phase out Russian gas was that Russia has been seen as an unreliable supplier using gas as a weapon. People have started now to think that this is also happening with the U.S. with President Trump ."

Marwa Rashad, senior energy correspondent, on Reuters Econ World podcast. 

On this week's show, we look at Europe's energy security dilemma. Listen here.