Posts belonging to Category Middle East



Emirates, Etihad try the IATA anti-Covid passport

Travel Pass will be implemented in April

Dubai carrier Emirates and Abu Dhabi-based Etihad Airways have partnered with the International Air Transport Association (IATA) to trial the IATA Travel Pass – a mobile app that helps passengers manage their travel and  conform with relevant government requirements for Covid-19 testing or vaccine information.

In a statement issued by Emirates, the airline said that it will implement phase 1 in Dubai for the validation of Covid-19 PCR tests before departure. In this initial phase, expected to begin in April, Emirates customers travelling from Dubai will be able to share their Covid-19 test status directly with the airline.

https://gulfbusiness.com/

OPEC Has New Competitor

China Ships Oil From Swelling Storage

 Some oil from China’s swelling storage tanks is finding its way back into the international market as traders jump at the opportunity to source cheap crude for resale to regional refiners. The shipments in question, so far just 1 million barrels, have been procured by trading houses via the Shanghai futures exchange, and loaded from the bourse’s numerous storage tanks that dot the country’s eastern coast. From these Chinese ports, the cargoes were then shipped to international buyers who would have otherwise sourced such supplies from producers across the Middle East and Africa.

While China will never compete with the likes of Saudi Arabia as a supplier in the long run, the trickle of crude out of the world’s No. 1 importer underscores how fragile oil’s recovery remains. China went on a record buying spree to fill its reserves with low-cost supplies, helping prices double from April lows. Now the purchases are slowing and some of those stockpiles are hitting the market just as OPEC and its partners prepare to raise output. The oil is coming from the 14 depots designated as delivery and storage points for the Shanghai International Energy Exchange’s oil futures trading contracts. The exchange had a total of 39 million barrels of medium sour grades in storage as of this July 16, up more than 10-fold since April 20.

The rising inventories are weighing on the price of the oil futures, making it attractive for traders to buy them, accept physical delivery upon expiration, and then ship the crude to refineries nearby, according to traders and analysts surveyed by Bloomberg.

https://ca.finance.yahoo.com/

Trump told Saudi: Cut oil supply or lose U.S. military support

Threat to upend a 75-year strategic alliance

As the United States pressed Saudi Arabia to end its oil price war with Russia, President Donald Trump gave Saudi leaders an ultimatum. In an April 2 phone call, Trump told Saudi Crown Prince Mohammed bin Salman that unless the Organization of the Petroleum Exporting Countries (OPEC) started cutting oil production, he would be powerless to stop lawmakers from passing legislation to withdraw U.S. troops from the kingdom, four sources familiar with the matter told Reuters.

The threat to upend a 75-year strategic alliance, which has not been previously reported, was central to the U.S. pressure campaign that led to a landmark global deal to slash oil supply as demand collapsed in the coronavirus pandemic – scoring a diplomatic victory for the White House.

Trump delivered the message to the crown prince 10 days before the announcement of production cuts. The kingdom’s de facto leader was so taken aback by the threat that he ordered his aides out of the room so he could continue the discussion in private, according to a U.S. source who was briefed on the discussion by senior administration officials.

https://www.reuters.com

s.com/

What’s Next For Oil ?

Prices Go Negative

Oil prices crashed through zero, closing out the day at -$37 per barrel, an unprecedented meltdown.

There are mitigating circumstances to these insane numbers. The prices for WTI reflect the contract for May, which expires this week. The collapse is a reflection of traders abandoning the May contract, and moving on to June. The thinly-traded May contract loses some relevance, and analysts say that the June contract – trading at $20 per barrel as of Monday – now becomes the important number to watch.

Nevertheless, it is hard to ignore the historic numbers flashing across the screen. As futures contracts expire, they tend to converge with the realities of the physical market. Prices went negative because the physical market in Oklahoma and Texas is so overwhelmed. OPEC+ did agree to historic production cuts, but not for April. In any event, the cuts pale in comparison to the decline in demand. But taken together, the effects of the price war on the supply side are colliding against the depths of demand destruction at the same time.

The result is really ugly. Nobody wants physical delivery of WTI for May, and with storage options dwindling in some places, traders liquidated their positions, selling contracts at crazy discounts. With the contract expiring on Tuesday, nobody wanted to be left holding the bag. Unable to actually accept physical delivery, traders ended up paying someone to take oil off of their hands. Surely, some fascinating reportage will be written about the last guy that got stuck with an unwanted May contract

http://oilprice.com

OPEC, Russia approve biggest-ever oil cut to support prices

Curb the global oil supply

OPEC and allies led by Russia agreed on Sunday to a record cut in output to prop up oil prices amid the coronavirus pandemic in an unprecedented deal with fellow oil nations, including the United States, that could curb global oil supply by 20%. Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers and hammering the U.S. shale industry, which is more vulnerable to low prices due to its higher costs.

The group, known as OPEC+, said it had agreed to reduce output by 9.7 million barrels per day (bpd) for May and June, after four days of talks and following pressure from U.S. President Donald Trump to arrest the price decline. OPEC+ sources said they expected total global oil cuts to amount to more than 20 million bpd, or 20 percent of global supply, effective May 1. OPEC had the same figure in its draft statement but removed it from the final version.

https://www.reuters.com/

Trump threatens imposing tariffs on ‘oil coming from outside’

“I have to do something to protect our tens of thousands of energy workers”

U.S. President Donald Trump has threatened imposing tariffs on crude imports “coming from outside” amidst the COVID-19 pandemic and the price war between Russia and Saudi Arabia.

“If I have to do tariffs on oil coming from outside or if I have to do something to protect our — tens of thousands of energy workers and our great companies that produce all these jobs, I’ll do whatever I have to do,” Trump told reporters during a COVID-19 briefing held Saturday.

Trump’s comments come a little more than a week after Alberta Premier Jason Kenney called for an aggressive approach from governments across North America, floating the possibility of imposing tariffs on foreign oil exports.

https://www.cbc.ca/

Could Oil Really Fall To $0?

Analysts are now watching global storage capacity

The outlook for U.S. shale continues to darken with WTI testing sub-$20 territory. The supply glut could grow worse as the contraction in demand continues to deepen. On Sunday, President Trump extended the social distancing guidelines through the end of April, retreating from his plan to “open up” the economy by Easter. And before the ink was even dry on the $2 trillion stimulus, Congress has already started preparing the fourth emergency coronavirus legislation.   As of now, 193 million people in the U.S. and a staggering 2.3 billion people worldwide are living under some sort of lockdown order, according to Raymond James.

In early March, a few forecasters suggested that oil demand may be slightly negative in 2020, dipping by a mere 220,000 bpd. The call was somewhat provocative at the time. By the middle of the month, some forecasters said the demand hit could be as large as 10 million barrels per day (mb/d) in the second quarter. A few days later, another set of analysts put it at 13-14 mb/d. By last week, the IEA warned demand could fall by 20 mb/d. The negative revisions could keep on coming. Oil prices dropped sharply during midday trading on Monday. “For us, this is simply reflecting the increasing awareness that oil demand is breaking away, probably by much more than the 20% we have currently in our books for April/May,” JBC Energy said.

The market has fallen apart rather quickly. Some areas are seeing catastrophically low pricing, including prices dipping into negative territory in areas far from takeaway infrastructure. “Estimates for the demand side are being revised downwards on an almost daily basis, while on the supply side there is still no sign of any reconciliation between Saudi Arabia and Russia,” Commerzbank said in a note on Monday. Analysts are now watching global storage capacity, which could fill up in weeks or months at most. The contango for Brent between May and November has widened to a record $13.45 per barrel, a reflection of the massive short-term glut.

https://www.oilprice.com/

Oil Prices Crash 25%

Oil War Begins

Russian President Vladimir Putin announced on Sunday that present oil prices were sustainable for the Russian economy. Adding that Russia had the tools to react to any adverse results of the spread of the coronavirus on the global financial climate.

“I want to stress that for the Russian budget, for our economy, the current oil prices level is acceptable,” Putin explained in a meeting with Russian energy officials.

Now some oil analysts are anticipating barrel prices as low as $20 within the year. Some experts have suggested that Russia’s move is intended to counter U.S. shale producers and hit back against the U.S. for targeting the Nord Stream 2 gas pipeline connecting Russia and Germany.

Saudi Arabia blasted back, in kind. Sunday morning, Saudi Arabia dropped its own oil weapon. Its latest plans will not only reduce its unrefined price to Chinese consumers by as much as $6 or $7 per barrel, but it is also reportedly looking to increase its daily unrefined output by as much of as 2 million barrels per day into an increasingly oversupplied international market.

The shocking move by the Saudis is both a market share grab as well as a loud signal to Moscow that it is finished playing games.

https://oilprice.com/

Iran attacks bases housing US troops

Uunequivocal warning to Iran not to attack Israel

Iraq received “an official verbal message” from Iran shortly after midnight and prior to the missile attacks, according to a statement from Iraqi Prime Minister Adil Abdul Mahdi.

Benjamin Netanyahu issued an unequivocal warning to Iran not to attack Israel.

He said he spoke for many of Israel’s neighbors in reiterating his strong support for the US killing of Iranian military commander Qasem Soleimani, a man the Israeli Prime Minister described as Iran’s “terrorist-in-chief.”

Addressing a conference in Jerusalem Wednesday morning, just hours after Iran launched a missile attack on military bases in Iraq housing US troops — and amid renewed Iranian threats to hit Israeli cities — the Israeli Prime Minister said, “Anyone who tries to attack us will suffer the most devastating blow.”

https://cnn.com/

Oil prices jump $3 after U.S air strike kills Iran, Iraq military personnel

US air strike killed the most important army general of  Iran

Oil prices jumped more than $1 on Friday after a U.S. air strike killed key Iranian and Iraqi military personnel, raising concerns that escalating Middle East tensions may disrupt oil supplies.

Brent crude futures LCOc1 were at $67.48 a barrel, up $1.23, or 1.86%, by 0202 GMT, and West Texas Intermediate (WTI) crude futures CLc1 rose $1.03, or 1.68%, to $62.21 a barrel.

https://reuters.com/

Saudi Aramco becomes most valuable listed company in history

Investor demand pushes oil giant’s market value to $1.9tn

Saudi Aramco has secured its position as the most valuable listed company in history after investor appetite for the world’s biggest fossil fuel producer pushed its market value to $1.9tn (£1.4tn) on its first day of trade.

Shares in the Saudi state-backed oil company defied Aramco’s critics by climbing nearly $200bn above the $1.7tn valuation set before its market debut on Riyadh’s stock exchange.

The world’s biggest contributor to the climate crisis had been valued at more than Apple and Facebook – previously the world’s most valuable and fifth-most valuable companies respectively – combined. It is also twice the size of Amazon and Alphabet, Google’s parent company, and bigger than the next five listed oil companies put together.

The record market listing is expected to keep rising on its second day of trade on the Tadawul stock exchange on Thursday after Aramco’s share price surge was capped at 10% under rules designed to safeguard market stability.

https://theguardian.com/

WTO faces crisis

WTO could cease to settle disputes between its member states

The World Trade Organization is set to plunge into the biggest crisis in its 25-year history later this week as the climax to a long-running and bitter dispute means the Geneva-based body will cease to be able to settle disputes between its member states.

Unless Donald Trump backs off at the last minute and agrees to a peace plan, Washington’s protracted battle to safeguard US sovereignty will lead to the neutering of the WTO’s ability to police global trade.

However, hopes are fading that the US will agree to a blueprint drawn up by a senior diplomat in Geneva that would keep the WTO’s appellate body – the ultimate arbiter of trade disputes – operating beyond the 11 December deadline. One trade source said the failure to resolve the row amounted to an “existential crisis” for the WTO because it affected its ability to fulfil one of its core functions.

The looming paralysis will lead to a backlog of unresolved disputes and make it easier for countries to break WTO trade rules without facing penalties.

https://theguardian.com/

Saudi Arabia Threatens To Flood Oil Markets If OPEC Members Don’t Cut Output

Individual member states ignore self-imposed production limits

Three days after oil tumbled following a Bloomberg report that Saudi Arabia was angry at its (N)OPEC co-members for not complying with production quotas, and was no longer willing to compensate for excessive production by other members of the cartel, the WSJ reports that Riyadh, furious that the price of oil refuses to rise, is threatening to boost oil production and unilaterally flood the market if “some” OPEC nations continue to defy the group’s output curbs, cartel officials say. The surprising ultimatum which reeks of what Saudi Arabia did in November 2014 when it effectively dissolved the cartel, and flooded the world with oil in hopes of putting shale producers out of business only to fail miserably as it never accounted for cheap money and the stupidity of US junk bond investors, comes one day ahead of a gathering between OPEC and non-OPEC nations including Russia on Thursday and Friday in Vienna.

Saudi Arabia, the argument goes, is contending with weak oil prices and members of the cartel who aren’t complying with the collective output cut they agreed to last summer. As a result, the Saudis are considering radical measures, including a new pact that would deepen production cuts although if there is one thing the cartel is notorious for, it is ignoring self-imposed production limits when it suits the individual member states as the Crown Prince is finding out now.

As the WSJ reports, at a technical meeting Tuesday, a Saudi delegate said his government is growing tired of indirectly benefiting the budgets of countries that are flouting the OPEC pact by overproducing oil, said a person who was present. If the noncompliance continues, “the Saudi official signaled that the kingdom would begin merely complying with its commitment—rather than overcutting to make up for laggards in the group.”

https://oilprice.com/

OPEC is no more a pricemaker

Forget OPEC: China Now Moves The Oil Markets

Not so long ago, oil prices would surge or plummet on just a whisper from OPEC, who at the time held all the supply cards. The mere hint that the world’s most powerful oil cartel was going to cut production could send oil prices up dramatically. Those days are over.

When the cartel announced on November 30, 2016, that it would cut production for the first time in eight years amid a major oil-price crisis, the market cheered. Before any cuts even happened, the sentiment alone boosted prices from a $50.74 close on that day to $54.94 at the close on December 5th, 2016. From that point on, at least up until recently, OPEC could drop the vaguest hint about production, or even think about production, and it would move the market–no fundamentals necessary.

This phenomenon was still going strong in the last quarter of 2018. On December 7, 2018, OPEC and its allies announced that they would do what they do best: rally together and withhold oil production from the market. OPEC promised to take 1.2 million barrels of oil daily off the market, sending oil prices up from $57.83 at the close on December 6th to $61.71 at the close on December 7th.

By July 1, 2019, when OPEC and allies agreed to extend production cuts for another nine months, the bling in cartel announcements had already been dulled. Not only did oil prices fail to jump, they moved in the opposite direction–not because of the OPEC cuts; rather, because the market was no longer that interested. From a closing price of $67.52 on June 28th, Brent dropped to $65.01 on July 1st, and then plummeted to $62.72 the following day.

Since then, it’s managed to move the needle only slightly, one way or another.

https://oilprice.com/

Oversupply angst drags oil lower

Stocks drift near highs

Oil prices fell sharply on Tuesday on oversupply concerns, while a gauge of stocks across the globe rose for a seventh straight session after large overnight gains in Asia. The U.S. benchmark S&P 500 index was little changed, the blue-chip Dow Jones Industrial Average fell and the Nasdaq rose, all having hit record intraday highs earlier in the session.

Traders cited the lingering uncertainty over whether the United States and China could agree to end a near 1-1/2 year trade war as a reason for stocks to drift and bond prices to go higher. U.S. President Donald Trump said he would raise tariffs on Chinese imports if no deal is reached with Beijing to end the trade war. The next round of tariffs is due to start in mid-December.

Oil fell after sources told Reuters that Russia is unlikely to agree to cut its oil output further at a meeting with fellow exporters next month. Separately, Norway’s October oil production beat forecasts and the potential oversupply, combined with some worries over global demand next year, sent prices lower.

https://www.reuters.com