Oil Prices Drop As Saudi Eyes Non-Military Solution To Iran Crisis

Oil prices fell more than one percent on Monday after Saudi Arabia’s de facto leader said war with Iran would destroy the world economy and hinted instead at a non-military solution.

Washington, Riyadh, Berlin, London and Paris blame Iran for attacks that damaged the Saudi oil sector on September 14 and forced the world’s largest crude exporter to sharply reduce production.

Elsewhere Monday, stock markets diverged as traders tracked the latest twists and turns regarding the US-China trade war. The dollar was mixed against main rivals.

“In terms of geopolitical concerns, common sense is prevailing for now in Saudi Arabia,” noted analyst Naeem Aslam at traders ThinkMarkets, in reference to the comments by Saudi Arabia’s crown prince in an interview with CBS show “60 minutes” broadcast over the weekend.

Mohammed bin Salman said war would be catastrophic for global growth.

‘Unimaginably high’

“Oil supplies will be disrupted and oil prices will jump to unimaginably high numbers that we haven’t seen in our lifetimes,” the prince said.

“The region represents about 30 percent of the world’s energy supplies, about 20 percent of global trade passages, about four percent of the world GDP. Imagine all of these three things stop,” he said.

“This means a total collapse of the global economy, and not just Saudi Arabia or the Middle East countries.”

Iran’s oil minister meanwhile on Sunday ordered his country’s energy sector to be on high alert to the threat of “physical and cyber” attacks.

Bijan Namdar Zanganeh said “it is necessary for all companies and installations of the oil industry to be on full alert against physical and cyber threats”, in a statement published on the oil ministry’s Shana website.

Tehran has denied any link to the Saudi strikes, which were claimed by Huthi rebels in Yemen. Iran supports the rebels against a Saudi-led coalition that has been fighting the Huthis since 2015.

“Oil has been amazing everyone over the last couple of weeks, having surged on the back of the attack on the Saudi oil facilities before reversing the entirety of these gains, despite the country temporarily losing half its output,” Craig Erlam, senior market analyst at Oanda trading group, said Monday.

“Traders are clearly not particularly concerned about risk premiums in oil… Instead, the focus again seems to be shifting back to the demand dynamics and the risk of further downgrades as the global economic slowdown takes hold,” he added.

US-China trade war

Elsewhere Monday, investors digested reports in US media that President Donald Trump is mulling severe new restrictions on investment in China.

Shanghai and Tokyo stock markets slumped the day before a week-long patriotic holiday begins in China, despite assurances from the US Treasury that there were no plans to stop Chinese companies from listing on US exchanges.

On Tuesday the Asian giant celebrates 70 years since the founding of communist China, with markets closed from October 1 to 7, while planned pro-democracy protests in Hong Kong threaten to disrupt festivities.

Shanghai closed down 0.9 percent as some investors took profits, with uncertainty fuelled by fears of an escalation in the US-China trade war that has raged for more than a year.

“The Sino-US trade negotiations have been full of twists and turns,” said Zhang Gang, an analyst with Central China Securities.

“You don’t know what remarks Trump would make in the next seven days, or what variables there will be from the US side. So (investors) have set themselves in a low-key, waiting position.”

Key figures around 1100 GMT

Brent North Sea crude: DOWN 1.3 percent at $61.12 per barrel

West Texas Intermediate: DOWN 1.0 percent at $55.34 per barrel

London – FTSE 100: DOWN 0.3 percent at 7,406.37 points

Frankfurt – DAX 30: DOWN 0.1 percent at 12,368.83

Paris – CAC 40: FLAT at 5,639.56

EURO STOXX 50: FLAT at 3,546.40

Hong Kong – Hang Seng: UP 0.5 percent at 26,092.27 (close)

Shanghai – Composite: DOWN 0.9 percent at 2,905.19 (close)

Tokyo – Nikkei 225: DOWN 0.6 percent at 21,755.84 (close)

London – FTSE 100: UP 0.1 percent at 7,433.79

New York – Dow: DOWN 0.3 percent at 26,820.25 (Friday’s close)

Euro/dollar: DOWN at $1.0920 from $1.0941 at 2030 GMT

Pound/dollar: UP at $1.2302 from $1.2293

Euro/pound: DOWN at 88.80 pence from 89.01 pence

Dollar/yen: DOWN at 107.93 yen from 107.95

AFP

OPEC Eyes Output Cuts As Trump Calls For Boost

 

OPEC members and other oil-producing countries mulled cuts in output Thursday to prop up plunging prices, defying repeated calls by US President Donald Trump that they keep the taps open.

“We’re looking for a sufficient cut to balance the market, equally distributed between countries,” Saudi oil minister Khalid al-Falih told reporters ahead of an OPEC meeting in the Austrian capital.

Oil ministers from 20 or so countries are in Vienna for two days of meetings — first, the 15 members of OPEC, then a wider group including countries outside the cartel — to discuss how to counter the tumble in prices over the past two months.

The price of a barrel of Brent, the European benchmark, fell four percent to below $60 Thursday, hit by the Saudi comments which were taken on the markets to be very cautious and concerns over an economic slowdown.

On Wednesday, Trump took to Twitter to urge producers to keep pumping.

“Hopefully OPEC will be keeping oil flows as is, not restricted. The World does not want to see, or need, higher oil prices!” said Trump, who has repeatedly accused the cartel of keeping prices artificially high.

Saudi minister al-Kalih pointedly said Washington should back off.

“We don’t need permission from anyone to cut,” he said.

The US “is not in a position to tell us what to do,” he added.

At the end of 2016, OPEC’s regular members joined forces with other countries — most notably Russia — to scale back output in a bid to reduce a glut that was weighing on prices.

The coordinated move — which has since been extended — stimulated a long rally in oil prices right up until October 2018.

Over the past two months, however, prices have plunged again.

 Cuts on the cards? 

In order to try and counter this, the so-called OPEC+ — who together account for more than half of the world’s oil output — is discussing renewing the pact or perhaps cutting output still further.

All the signals are that more reductions in output are on the cards, despite the pressure from Trump, who argues that higher energy costs will choke off the economy.

“A million (barrels cut) would be ideal,” the Saudi minister said. “Ideally, everyone should join equally. I think that’s the fair and equitable solution.”

OPEC daily output stood at 32.99 million barrels in October, according to the International Energy Agency.

However, OPEC’s third-biggest producer Iran wants to be exempted from any such measures.

Given the economic sanctions being reimposed by the United States, the Islamic republic ” doesn’t join any agreement for cutting production because of the special situation Iran faces,” oil minister Bijan Namdar Zanganeh said.

Zangeneh said the estimated surplus currently on the market amounted to 1.3-2.4 million barrels per day.

Ideally, “the price would be better to stand at $60-70. That is acceptable for most OPEC countries.”

Trump’s intervention complicates matters.

OPEC kingpin Saudi Arabia, in particular, finds itself in an especially delicate position in the wake of the murder of opposition journalist Jamal Khashoggi.

Trump has continued to support the kingdom despite worldwide outrage over the murder but he is at the same time keeping up the pressure for lower prices.

“The big unknown is how President Trump will react to any production cuts,” said analysts at ING.

Iran’s Zangeneh said it was the first time a US president was trying to tell OPEC what to do.

“They should know that OPEC is not part of their Secretary of Energy.”

Most OPEC members felt the same way, but “some members are going along with US policy,” he said.

Negotiations between OPEC members are fraught, however, as some  feel that Saudi Arabia wields too much clout in setting policy.

Iran has accused Saudi Arabia of being in thrall to the US.

In a surprise move on Monday, Qatar — which has been an OPEC member since 1961 — said it would quit the cartel next month in order to focus on gas production.

Doha accounts for only around two percent of OPEC output but the move caught the headlines given the political overtones.

Qatar minister Saad Sherida Al-Kaabi said he had met a number of other OPEC ministers, but not his Saudi Arabian colleague.

“I don’t think they want to meet me. They are blockading our country,” he told journalists.

Qatar has been isolated by a group of countries led by Saudi Arabia since June 2017, in the worst political fallout between the energy-rich Gulf powers.

AFP

Oil Prices Slump Over Concerns About Excess Supply, Weak Demand

Indigenous Firms Plan To Increase Oil Output

 

Oil prices slumped Friday to lows not seen since last year as concerns over high crude supplies and uncertain economic growth triggered massive selling.

The petroleum slump, which took major oil contracts down to their lowest level since October 2017, comes as oil output remains high in the United States, Russia and Saudi Arabia and as some forecasters have trimmed their outlook for global growth, due in part to the US-China trade fight.

US oil benchmark West Texas Intermediate dropped $4.21 to $50.42 a barrel for January delivery, a decline of 7.7 percent.

In London, Brent oil futures for January delivery, slid 6.1 percent to $58.80 per barrel.

“The truth of the matter remains that rising global crude supply coupled with worrying signs of slowing demand have written a recipe for disaster for the oil markets,” said Lukman Otunuga, a research analyst at FXTM.

Global stock markets were mixed, with major US indices retreating in part due to worries about lower oil prices and weak global growth.

Bourses in Paris and Frankfurt notched modest gains, while London, Shanghai and London all fell.

Trump effect?

High global oil production compared to demand was the top reason for Friday’s selling, while the outlook for a weakening world economy led investors to conclude that growth would not be strong enough to soak up the surplus.

The retreat comes ahead of a meeting of the Organisation of the Petroleum Exporting Countries in Vienna on December 6.

Some analysts view the organisation as constrained following heavy pressure from US President Donald Trump on Saudi Arabia.

Earlier this week, Trump thanked Saudi Arabia for low prices and decided to essentially overlook the Central Intelligence Agency’s reported conclusion over Crown Prince Mohammed bin Salman’s involvement in the gruesome murder of journalist Jamal Khashoggi, a stance that has outraged White House critics.

“Although most analysts claim that this has to do with supply overhang and increased production from Russia and Saudi Arabia, the bottom line is that the US President keeps pushing for lower prices,” said Fiona Cincotta, senior market analyst at City Index trading group.

“While this is the case it will be difficult to see a return to oil at a higher level unless oil cartel OPEC decides on a major output cut at its next meeting.”

But Andy Lipow of Lipow Oil Associates predicted the “Saudis will decide in their best interest to cut production,” adding that “it will not have an impact on the relationship with Washington because the US already said how this relationship was important and how important was the weapon business with the Saudis.”

Still, Friday’s drop in prices reflects market concern that OPEC production cuts are “not going to be enough to support prices,” Lipow added.

The drop in oil prices reverberated in equity markets, with oil giants Chevron, Royal Dutch Shell and Total all shedding three percent or more on their local bourses.

Chinese shares also stumbled as Shanghai slumped by more than two percent, with the tech sector hit hard by a Wall Street Journal report that Washington is urging its allies to avoid using equipment from Chinese telecoms giant Huawei.

Worsening trade tensions between the United States and China have shattered confidence on global trading floors.

Key figures around 1930 GMT

Oil – West Texas Intermediate: DOWN $4.21 at $50.42 per barrel

Oil – Brent Crude: DOWN $3.80 at $58.80 per barrel

New York – Dow: DOWN 0.7 percent at 24,285.95 (close)

New York – S&P 500: 0.7 percent at 2,632.56 (close)

New York – Nasdaq: DOWN 0.5 percent at 6,938.98 (close)

London – FTSE 100: DOWN 0.1 percent at 6,952.86 points (close)

Frankfurt – DAX 30: UP 0.5 percent at 11,192.69 (close)

Paris – CAC 40: UP 0.2 percent at 4,946.95 (close)

EURO STOXX 50: UP 0.3 percent at 3,137.21 (close)

Tokyo – Nikkei 225: Closed Friday for holiday

Hong Kong – Hang Seng: DOWN 0.4 percent at 25,927.68 points (close)

Shanghai – Composite: DOWN 2.5 percent at 2,579.48 points (close)

Pound/dollar: DOWN at $1.2805 from $1.2877 at 2200 GMT Thursday

Euro/dollar: DOWN at $1.1331 from $1.1403

Dollar/yen: DOWN at 112.85 yen from 112.95 yen

AFP

Oil Prices Fall As Saudis See Likely Supply Boost

 

Indigenous Firms Plan To Increase Oil Output

 

Global oil prices fell Friday after top producer Saudi Arabia signalled a likely boost in supply as soon as the third quarter, and world stock markets were mixed over the sudden US move to cancel the summit with North Korea.

Saudi oil minister Khaled al-Faleh said at an economic conference in Russia that a gradual output increase could happen in the second half of the year to prevent any supply shocks, according to the RIA Novosti agency.

OPEC and 10 other oil producers agreed at the end of 2016 to cut output by 1.8 million barrels per day to clear a glut that had led to a collapse in prices in 2014.

The deal, which has been extended until the end of 2018, has led to that glut disappearing and prices have recovered from around $30 per barrel to around $80.

The Saudi comments sent oil prices tumbling by over three percent. Brent Crude fell to $76.43 per barrel and WTI Crude to $68.03 around 1545 GMT.

Russia’s oil tsar Alexander Novak said ministers from the OPEC cartel and other members of the production pact would discuss how much to increase production next month.

“If we come to a common opinion that it is necessary” to increase supply it “should probably take place from the third quarter,” Novak said, according to RIA Novosti.

Uncertainties about supplies from Iran and Venezuela have led prices to spike higher in recent weeks, with industry players warning they could jump to $100 per barrel.

In stocks, London and Frankfurt indices finished the week slightly higher, while Paris was essentially flat at the close as investors hesitated amid the confusing series of reports on geopolitics.

In New York, the Dow slipped 0.4 percent in mid-day trading Friday as falling crude prices dragged energy stocks lower and investors continued to digest the US-North Korea situation and US-China trade.

Shortly after the open, President Donald Trump had said the summit with North Korea that he had called off just 24 hours before could go ahead after all as talks with Pyongyang were continuing.

But investors were contending with the possibility that the summit’s cancellation could cause Trump to be more aggressive in trade talks with China.

Asia down on Trump move

Asian markets mostly fell Friday after the news that Trump had abruptly axed next month’s summit with North Korean leader Kim Jong Un.

For its part North Korea declared that it is willing to talk to the United States “at any time”, while China urged both sides to show restraint.

“The focus has been firmly centred upon Donald Trump, with his decision to cancel the June meeting with Kim Jong Un bringing about a return to the risk-off sentiment,” said analyst Joshua Mahony at trading firm IG.

Markets have been jittery this week as the US president had warned in recent days that he could cancel the summit, while also voicing his displeasure at a deal to avert a trade war with China and threatening tariffs on car imports.

Thursday’s summit cancellation took many by surprise — including North and South Korean officials — and fuelled concerns about the future of a rapprochement that has had many hoping for peace on the divided peninsula.

“It looks like we are back to fire and fury as the modus operandi for the White House again after President Trump (threatened) a new 25 percent car import tariff and cancelled the summit with North Korea,” said Greg McKenna, chief market strategist at AxiTrader.

Key figures around 15:45 GMT

New York – Dow: DOWN 0.4 percent at 24,725.08

London – FTSE 100: UP 0.18 percent at 7,730.28 points (close)

Paris – CAC 40: DOWN 0.1 percent at 5,542.55 (close)

Frankfurt – DAX 30: UP 0.65 percent at 12,938.01 (close)

EURO STOXX 50: DOWN 0.18 percent at 3,515.36

Tokyo – Nikkei 225: UP 0.1 percent at 22,450.79 (close)

Hong Kong – Hang Seng: DOWN 0.6 percent at 30,588.04 (close)

Shanghai – Composite: DOWN 0.4 percent at 3,141.30 (close)

Euro/dollar: DOWN at $1.1662 from $1.1720 at 2100 GMT

Pound/dollar: DOWN at $1.3318 from $1.3381

Dollar/yen: UP at 109.32 yen from 109.26 yen

Oil – Brent North Sea: DOWN $2.36 at $76.43 per barrel

Oil – West Texas Intermediate: DOWN $2.68 at $68.03

AFP

Trump Says High Oil Prices ‘Will Not Be Accepted’

Trump Says High Oil Prices 'Will Not Be Accepted'
(Files) US President Donald Trump addresses the nation on the situation in Syria on April 13, 2018, at the White House in Washington, DC. Mandel NGAN / AFP

 

US President Donald Trump criticized the Organization of Petroleum Exporting Countries (OPEC) Friday for what he said were artificially high oil prices, adding they “will not be accepted.”

His comments on Twitter came as ministers from some top global crude producers met in Saudi Arabia to discuss maintaining limits on oil production.

“Looks like OPEC is at it again,” Trump tweeted. “With record amounts of Oil all over the place, including the fully loaded ships at sea, Oil prices are artificially Very High! No good and will not be accepted!”

OPEC producers and non-OPEC countries struck a deal in 2016 to trim production by 1.8 million barrels per day to reduce a global glut of oil.

The deal, which is due to run out at the end of this year, has succeeded in boosting oil prices above $70 a barrel from below $30 a barrel in early 2016.

AFP

Oil Prices Fall For Third Day

Oil prices fell on Tuesday for a third straight day, hit by concerns that a political rift between Qatar and several Arab states would undermine an OPEC-led push to tighten the market.

Persistent gains in United States Production also dragged on benchmark crude prices.

Brent crude was trading at $49.27 per barrel earlier today, down 20 cents, from its last close.

That is down nine percent from the open of futures trading on May 25, when an OPEC-led policy to cut oil output was extended into the first quarter of 2018.

U.S. West Texas Intermediate crude had dropped 18 cents, to $47.21 per barrel. That is down about eight percent from the May 25 open.

READ ALSO: Oil Prices Fall Over Trump’s Climate Change Decision

Oil Prices Rise As Exporters Cut Ties With Qatar

Nigeria To Exit Joint Venture Cash Calls With Oil CompaniesOil prices rose more than 1 per cent early on Monday, pushed up by tensions in the Middle East where top crude exporters are cutting ties with Qatar.

Saudi Arabia, United Arab Emirates, Egypt and Bahrain have cut ties with top Liquefied Natural Gas and condensate exporter, Qatar accusing the state of supporting extremism and undermining regional stability.

The U.S. west Texas intermediate futures was trading at 48.34 dollars per barrel in early trade, higher by 68 cents.

Brent Crude Oil futures rose 70 cents or 1.4 per cent better to 50.65 dollars per barrel.

Traders say crude prices have also received support from a tightening spot crude market.

Oil Prices Fall Over Trump’s Climate Change Decision

Trump Willing To Work With Russia And ChinaOil prices have dropped today amid worries that the United State President Donald Trump’s decision to abandon a global climate pact could spark more crude drilling in the United States, stoking a persistent glut in global supply.

Global benchmark Brent Crude futures were down 23 cents, at $50.4 a barrel. While U.S. West Texas Intermediate crude futures dropped 26 cents to $48.1 per barrel.

Commodity markets were absorbing news the United States would withdraw from the landmark 2015 global agreement to fight climate change, a move that fulfilled a major campaign pledge but drew condemnation from U.S. allies.

Surging U.S. production has put a strain on OPEC members’ efforts to curb production to drain a global crude supply overhang and to prop up prices.

Trump had on Thursday announced that the United States will withdraw from the Paris Climate Deal, a move expected to rally his support base at home while deepening a rift with U.S. allies.

Trump had refused to endorse the landmark climate change accord at a summit of the G7 group of wealthy nations on Saturday, saying he needed more time to decide. He then tweeted that he would make an announcement this week.

The decision puts the United States in league with Syria and Nicaragua as the world’s only non-participants in the Paris Climate Agreement.

It could have sweeping implications for the climate deal, which relies heavily on the commitment of big polluter nations to reduce emissions of gases scientists blame for sea level rise, droughts and more frequent violent storms.

The accord, agreed on by nearly 200 countries in Paris in 2015, aims to limit planetary warming in part by slashing carbon dioxide and other emissions from the burning of fossil fuels. Under the pact, the United States committed to reducing its emissions by 26 to 28 percent from 2005 levels by 2025.

The United States is the world’s second-biggest carbon dioxide emitter behind China.

Supporters of the climate pact are concerned that a U.S. exit could lead other nations to weaken their commitments or also withdraw, softening an accord that scientists have said is critical to avoiding the worst impacts of climate change.

Canada, the European Union, and China have said they will honour their commitments to the pact even if the United States withdraws. A source told Reuters that India had also indicated it would stick by the deal.

Extending Oil Output Cuts Will Stabilise Prices, Says Putin

Russian President Vladimir Putin said on Monday that extending oil output cuts for further nine months would ensure stable oil prices.

Putin, speaking in Beijing, said extending the output cuts was the right thing to do.

“I have met with the heads of the companies … and we support the proposal,” said Putin, who said it was right that Russia was choosing how to approach the issue itself.

He was speaking after Saudi Arabia and Russia, the world’s two top oil producers, agreed on Monday on the need to extend the cuts for a further nine months until March 2018 to rein in a global crude glut, pushing up prices.

Nigeria To Exit Joint Venture Cash Calls With Oil Companies

Russia and Saudi Arabia heavily depend on oil revenues. Last year they agreed the first joint output cuts in 15 years despite major political differences, including their support for opposite sides in the Syrian war.

Saudi, the de facto leader of OPEC, and Russia, the world’s biggest producer, together control a fifth of global supplies.

Their latest joint action was spurred by oil prices dropping to under $50 per barrel, below their budget needs.

Under the current agreement that started on Jan. 1, the 13-country OPEC and other producers pledged to cut output by almost 1.8 million barrels per day in the first half of the year.

Reuters

Nigeria Exits Joint Venture Cash Calls With Oil Companies

Nigeria To Exit Joint Venture Cash Calls With Oil CompaniesNigeria on Thursday, signed a landmark agreement to exit cash calls on Joint Venture crude production with intertnational oil partners.

In a statement released by the Ministry of Petroleum Resources, the new framework would increase Nigeria’s annual revenue by two billion U.S dollars, and push net revenue outlook to 14 billion dollars by the year 2020.

The oil firms agreed to a five-year repayment of outstanding cash calls estimated at six billion dollars via incremental production by each of the joint venture firms.

Nigeria’s Deputy Petroleum Minister Dr Ibe Kachikwu said the new exit arrangement would restructure the country’s template for oil earnings, increase investments and boost government revenues.

The arrangement would ensure payments of statutory oil and gas royalties and taxes to the Nigerian government by all parties in the joint venture.

Oil Prices Fall Amid OPEC Meeting

Oil Prices, crude oilCrude oil futures fell on Tuesday after hopes faded for a deal to limit output from oil producers meeting in Algeria and cut one of the worst surplus supply in history.

Analysts say that current high production in Russia and Saudi Arabia, combined with potential increases from Libya and Nigeria, made discussions in Algiers difficult.

Global benchmark Brent crude futures slipped by 2.3 percent to 46 dollars 25 cents a barrel by 3:08 pm local time after rising by 3.2 percent on Monday.

Meanwhile, U.S. investment bank, Goldman Sachs has cut its price forecast for west Texas intermediate crude in the fourth quarter to 43 dollars a barrel, from a 45 to 50 per barrel range and expects global supply to exceed demand by 400,000 barrels per day in the same quarter.

Stakeholder Calls Government To Pay Attention To Gas As Oil Prices Dwindle

Albert OkumagbaThe Nigerian government is currently working on ways to cushion any effects, the global oil price slump may have on the nation’s oil-dependent economy.

Recently, the Minister of Finance and Coordinating Minister for the Economy, Professor Ngozi Okonjo-Iweala alongside key officials reeled out austerity measures, highlighting that the Federal Government had been advised to cut some of its expenses in the coming year, 2015.

The President of the Chartered Institute of Stockbrokers, Albert Okumagba, on Wednesday appeared as a guest on Sunrise Daily said it was time for the government to pay closer attention to the gas sector as well as other sectors with high potentials, including agriculture.

“Gas is more strategic to oil but we have not internalised the advantages of our gas resources

“I think stakeholders that are interested will have to engage with the executive arm of govt and National Assembly for us to start addressing those issues that very strategic to the economy,” he said.

He commended the Finance Minister’s efforts, noting that the austerity measure is a “wonderful development for the country” as they presented an opportunity for stakeholders to have an interest in the economy and support the process of making fundamental changes to the structure of the nation’s economy.

This will ensure that oil becomes one of the major commodities that will drive the country, he said.

He also said that, “I think we’ve reached a point where we need to look very deeply at how Agriculture is structured, the value chain around most of our commodities. How infrastructure is funded. What role government plays, what role the private sector will play in making sure that the right kind of infrastructure is out in place”.

He noted that there was a link between the lack of infrastructure, the state of agriculture and unemployment.

He stressed that while plans are in place to shape the 2015 budget, the government must start looking at medium to long term plans for the oil sector and other sectors that have major strategic impact on the structure of the economy.

“We must not restrict ourselves to focusing on just oil”, pointing out that there were issues around the PRP, gas master plan still pending.