Posts Tagged ‘oil production’

Security situation at Najaf, Iraq deteriorates — Airlines suspend service — Protests over poor public services, unemployment, Iranian interference 

July 15, 2018

Image result for Royal Jordanian airline, photos

Jordan’s state airline said on Sunday it had suspended four weekly flights to the Iraqi city of Najaf due to the “security situation at it’s airport, a company statement said.

Royal Jordanian said Najaf is the ninth destination in the region – from Mosul in Iraq to Aden and Sanaa in Yemen – to which it has suspended flights due to turmoil in recent years.

Najaf is among the cities in southern Iraq that have witnessed days of protests over poor services and against alleged official corruption.

Reuters

Reporting by Suleiman Al-Khalidi; Editing by Toby Chopra

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DUBAI (Reuters) – Flydubai has halted flights to the Iraqi city of Najaf “due to the disruption on the ground” at the airport until July 22, the Dubai state-owned airline said on Sunday.

Najaf airport was closed on Friday after protests there halted air traffic. Najaf is among the cities in southern Iraq that have witnessed days of protests over poor services and against alleged official corruption.

Flydubai, which operates a daily return flight from Dubai to Najaf, is monitoring the situation, an airline spokeswoman said.

Reporting by Alexander Cornwell; Editing by Raissa Kasolowsky

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Iraqi protesters demanding services and jobs burn tires

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Iraq: Protests rage over poor public services, unemployment, Iranian interference

July 14, 2018

Security forces kill one as hundreds rally for better services, job opportunities and end to Iranian interference.

The Iraqi government held an emergency meeting on Saturday after protests against high unemployment and a lack of basic services spread to the nation’s capital, Baghdad.

The National Security Council was urgently convened under the chairmanship of Prime Minister Haider al-Abadi and decided to cut internet access in the capital to prevent the unrest from spreading further, Anadolu Agency reported.

Image result for protests, Iraq, July 2018, photos

Hundreds of Iraqi protesters stormed government buildings in the south of the country on Friday and occupied Najaf International Airport, demanding better services, job opportunities and an end to alleged Iranian interference.

In the latest in a week of daily protests against corruption and poor governance, demonstrators clashed with security forces in several provinces, including Maysan, Dhi Qar, Basra, Najaf and Karbala.

At least one person was killed and 15 injured in Maysan when Iraqi forces shot at protesters after they attacked and set fire to office buildings used by Prime Minister Haider al-Abadi’s Islamic Dawa Party, the Iranian-backed Al-Badr Organisation and the Shia Supreme Islamic Council Party.

According to Iraqi news website Al-Sumaria, 25 anti-riot policemen were also wounded as they tried to stop demonstrators from storming the governor’s house in the province of Dhi Qar.

Image result for protests, Iraq, July 2018, photos

The protesters had gathered near his residence and could be heard chanting slogans such as “Iran, we don’t want you anymore”.

Hundreds of protesters also cut a road leading to the Umm Qasr seaport in Basra province, Iraq’s largest seaport in the Gulf.

Earlier, a group of protesters stormed Najaf’s international airport, with videos posted on social media showing protesters lighting fires on the tarmac in front of the facility.

Hayder al-Khoei

@Hayder_alKhoei

Following anti-corruption protests across southern , protesters in Najaf storm the governor’s office and airport, chanting “the people want the fall of the [political] parties” pic.twitter.com/VkmXVCmAOq

Hayder al-Khoei

@Hayder_alKhoei

Entrance of Najaf airport pic.twitter.com/MDhJaoviEA

“People are hungry, there is no water, no electricity,” protester Abdullah Khaled, 29, told the AFP news agency.

On Saturday, state TV reported that the protest disrupted flights in and out of the busy travel hub but that air traffic had since resumed.

Rampant electricity cuts have exacerbated a sweltering heat wave, with Basra seeing temperatures exceed 48 degrees Celsius in recent days.

The region is home to the oil fields that account for the vast majority of the more than three million barrels of oil Iraq exports every day.

Yet it remains underdeveloped and has suffered from chronic power outages, poor water quality and uncollected waste.

“If they don’t create jobs and improve services such as water and electricity we will close down Basra and oil production,” said Mohammed Jabbar, 29, an unemployed college graduate.

“We will not stop until our demands are met.”

High unemployment

The demonstrations, which started earlier this week in Basra, spread after Grand Ayatollah Ali al-Sistani, the supreme spiritual leader of Shia Muslims in Iraq, expressed his solidarity with the protesters.

Image may contain: 1 person, sitting and beard

Grand Ayatollah Ali al-Sistani

“It is not fair and it is never acceptable that this generous province is one of the most miserable areas in Iraq,” Abdel Mahdi al-Karbalai, the representative of Grand Ayatollah Ali al-Sistani, said at Friday prayers in Karbala.

Karbalai urged the “federal and local government to deal seriously with the demands of citizens”, while also calling on demonstrators to refrain from violence.

Prime Minister Abadi has vowed to rebuild Iraq’s economy, which has been ravaged by years of conflict, but frustrations have grown in the oil-rich south.

Officially, 10.8 percent of Iraqis are jobless, while youth unemployment is twice as high in a country where 60 percent of the population are aged under 24.

Iraq is the second biggest producer of crude in the OPEC oil cartel, with 153 billion barrels of proven reserves.

The oil sector accounts for 89 percent of the state budget and 99 percent of Iraq’s export revenues, but only one percent of jobs, as the majority of posts are filled by foreigners.

Iraq is currently in political limbo as the country looks to form a new government after populist leader Muqtada al-Sadr’s surprise poll win saw long-time political figures pushed out by voters seeking change in the country.

Protesters burned tires and blocked the road leading to the city of Basra on Thursday [Essam al-Sudani/Reuters]

SOURCE: AL JAZEERA AND NEWS AGENCIES

 

US vows to keep oil lanes open after Iran threatens to block key strait

July 5, 2018

IRGC commander says Iran could halt crude going through Strait of Hormuz, after Rouhani warns of ‘consequences’ to US sanctions

 

In this Tuesday, March 21, 2017 photograph, an Omani naval vessel sails alongside the USS George H.W. Bush as it travels through the Strait of Hormuz.  (AP Photo/Jon Gambrell)

In this Tuesday, March 21, 2017 photograph, an Omani naval vessel sails alongside the USS George H.W. Bush as it travels through the Strait of Hormuz. (AP Photo/Jon Gambrell)

The US military on Wednesday reiterated its promise to keep Persian Gulf waterways open to oil tankers, after an Iranian Revolutionary Guards commander vowed to disrupt global oil trade if the US prevents Iran from exporting its own oil.

Capt. Bill Urban, a spokesman for the US military’s Central Command, said that American sailors and its regional allies “stand ready to ensure the freedom of navigation and the free flow of commerce wherever international law allows.”

Iranian Revolutionary Guards commander Ismail Kowsari on Wednesday appeared to clarify Iranian President Hassan Rouhani’s warning of “consequences” if the United States convinces its allies to stop buying Tehran’s oil.

“If they want to stop Iranian oil exports, we will not allow any oil shipment to pass through the Strait of Hormuz,” Kowsari said, according to the Young Journalists Club (YJC) website.

General Ismail Kowsari, Deputy Commander of the Iranian Revolutionary Guards’ Tharallah base, seen on Al-Alam TV on September 27, 2017. (YouTube screenshot/Middle East Media Research Institute)

Rouhani said Tuesday that regional oil supply could be jeopardized if the US continues to pressure Iran.

“It would be meaningless that Iran cannot export its oil while others in the region can. Do this if you can and see the consequences,” he said according to an English-language report of his statements provided by Iran’s Press TV.

When pressured in the past, Iran has threatened to close the strategic Strait of Hormuz, through which one-third of the world’s oil supply passes.

Since the US pulled out of the nuclear deal with Iran, known officially as the Joint Comprehensive Plan of Action, Washington has been pushing allies to cut oil imports from the Islamic Republic altogether by November.

The Trump administration vowed Monday to stick with its pressure campaign against Iran, affirming its strategy to change Tehran’s behavior by gutting its oil revenue and isolating the country globally.

“Our goal is to increase pressure on the Iranian regime by reducing to zero its revenue on crude-oil sales,” said Brian Hook, the State Department’s director of policy planning, at a briefing with reporters.

He also suggested, however, that there would be some wiggle room to allow some countries that import Iranian oil to avoid immediate sanctions, once they are set to be re-imposed come November 4.

“We are prepared to work with countries that are reducing their imports on a case-by-case basis, but as with our other sanctions, we are not looking to grant waivers or licenses,” Hook said, in comments that were seen as a softening of the United States’ prior demands.

Iran is OPEC’s second-largest crude exporter with more than 2 million barrels a day.

Rouhani has asserted that Iran will not buckle under US pressure and urged dialogue to resolve the differences between the nations.

“Iran’s logic has not changed, one party without logic has left the Joint Comprehensive Plan of Action with the goal of putting pressure on the Iranian nation,” he said Tuesday.

“We told all our foreign parties that if they speak to the Iranian nation with the language of logic and respect, then we can get problems solved… and that threats, pressure and humiliation will never work against the people of Iran,” he said.

Notable countries that import Iranian crude include Turkey, India, China and South Korea.

Since a US State Department official first told reporters on June 26 that the US was preparing to ask allies to cut their oil imports from Iran, the price of US crude jumped more than 8 percent.

Trump subsequently expressed concern about oil prices last week, announcing in a tweet that he and King Salman of Saudi Arabia had agreed to raise daily oil production by 2 million barrels.

Donald J. Trump

@realDonaldTrump

Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!

“Prices [too] high!” he said. “He has agreed!” It is not clear when that agreement will begin implementation.

Eric Cortellessa contributed to this report.

https://www.timesofisrael.com/us-vows-to-keep-oil-lanes-open-after-iran-threatens-to-block-key-strait/
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Oil prices edge up as US supply tightens, Iran sanctions loom

July 4, 2018

Oil prices edged up on Wednesday following a report of tightening US fuel inventories amid an outage at Syncrude Canada oil sands facility in Alberta, which usually supplies the US.

Prices were also pushed up by looming U.S. sanctions against Iran, which threaten to cut supplies to an already tight market despite pledges by producer cartel OPEC to raise output to make up for the disruptions.

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 46 cents, or 0.6 percent, to $74.60 a barrel at 0343 GMT (11.43 p.m. ET), compared with their last settlement. On Tuesday, WTI hit its highest since November 2014 at $75.27.

Brent crude futures LCOc1 were changing hands at $78.10 per barrel, up 34 cents, or 0.4 percent, from their last close.

Trading activity is expected to be limited on Wednesday by the U.S. Independence Day holiday.

U.S. crude inventories fell by 4.5 million barrels to 416.9 million barrels in the week to June 29, the American Petroleum Institute (API) said on Tuesday. Gasoline and distillate stocks, which include diesel and heating oil, also fell, the API said.

“The draw in distillates was against expectations,” said Sukrit Vijayakar, managing director of energy consultancy Trifecta.

The decline in fuel inventories was largely down to the outage at Syncrude Canada’s 360,000 barrels per day (bpd) oil sands facility near Fort McMurray, Alberta. The outage is expected to last through July.

Image result for oil sands , Fort McMurray, Alberta, photos

Alberta Oil Sands #1 Fort McMurray, Alberta, Canada

But brokerage Phillip Futures said the lower stocks come “as gasoline demand spikes on peak driving season in the northern hemisphere”.

Outside North America, looming U.S. sanctions against major oil exporter Iran were the focus of attention.

The U.S. government has demanded that all countries stop buying Iran’s oil from November.

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A gas flare on an Iranian oil-production platform in Soroush oil fields in the Persian Gulf. PHOTO: RAHEB HOMAVANDI/REUTERS

To make up for potential shortfalls in supply from Iran and other disruptions including in Libya and Venezuela, the Organization of the Petroleum Exporting Countries (OPEC) has agreed with Russia and other oil-producing non-OPEC members to raise output from July.

OPEC-member Iran, however, has warned it would not accept other producers reaping the benefits by taking its market share.

Iran’s President Hassan Rouhani on Tuesday said it was “unwise to imagine that some day all producer countries will be able to export their surplus oil and Iran will not be able to export its oil.”

Reporting by Henning Gloystein; Editing by Joseph Radford and Neil Fullick

Reuters

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USA Today

Fourth of July gas prices will notch their highest mark since 2014 but remain sharply lower than their all-time high for the holiday.

At about $2.86 per gallon as of Tuesday morning, the national average price of gasoline is about 63 cents higher than a year ago, according to AAA.

Prices have been stable over the last week but have fallen by 9 cents in the last month as the commodity eases off its typical spring peak.

Higher oil prices, caused largely by continued production limits at the Organization of the Petroleum Exporting Countries, have nudged gas prices near the $3 mark this year.

The price spike since 2017’s Independence Day is likely to cost motorists about $1 billion in extra gas purchases over the usual four-day travel period, according to fuel-station-finding app GasBuddy’s petroleum analysts.

“Even with high gas prices, however, most motorists aren’t likely to curtail their travel during the most popular summer holiday,” according to GasBuddy.

More: Trump tariffs could add $5,000 to price of new vehicle in U.S.

More: Iran warns against oil production boost after Trump tweet

More: Americans will spend a little less on the Fourth of July this year

Put simply, it would take much bigger increases for Americans to significantly curb their driving habits.

For starters, it’s only a four-year high. In 2014, Fourth of July prices hit $3.66. In 2008, they hit an all-time high for the holiday of $4.09.

Some states are feeling more pain than others, however. Hawaii was in the worst shape Tuesday with prices averaging $3.90, according to GasBuddy.

South Carolina had the cheapest gas at $2.52.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

https://www.usatoday.com/story/money/cars/2018/07/03/fourth-july-independence-day-aaa-gas-prices/753947002/

White House Backs Off Tweet on Saudis Helping Lower Oil Prices — Trump is Running OPEC? — Price Fixing?

July 1, 2018

U.S. President Donald Trump’s administration backed off an assertion he made hours earlier indicating he persuaded Saudi Arabia to effectively boost oil production to its maximum capacity, which would have threatened to blow up a fragile truce agreed by OPEC last week and inflamed the Saudi-Iran rivalry.

Image result for donald trump, arms out, photos

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!,” Trump said on Twitter Saturday.

But in a statement Saturday evening, the White House said King Salman bin Abdulaziz affirmed that Saudi Arabia has 2 million barrels a day of spare production capacity “which it will prudently use if and when necessary to ensure market balance and stability, and in coordination with its producer partners, to respond to any eventuality.”

The White House statement aligned with one by the state-run Saudi Press Agency saying that the king and Trump, in a phone call Saturday, discussed efforts by the oil-producing countries to compensate potential shortages in oil supply. The two leaders stressed the importance of maintaining oil-market stability, according to the report. The agency didn’t say the leaders agreed and didn’t make any reference to 2 million barrels.

The telephone exchange is another sign of how U.S.-Saudi ties have improved under Trump compared with the Obama administration, which alienated the kingdom by seeking a nuclear deal with Iran. Trump last year chose Saudi Arabia for his first foreign trip. Since then, the two governments have announced hundreds of billions of dollars worth of contracts, with Trump openly bragging about how many U.S. jobs the Saudis were helping to create.

Iran’s Response

If the Saudis had agreed to Trump’s request, “that means he is calling on them to walk out from OPEC,” Iran’s OPEC governor Hossein Kazempour Ardebili, said in an interview. “There is no way one country could go 2 million barrels a day above their production allocation unless they are walking out of OPEC.”

At a meeting of the Organization of Petroleum Exporting Countries in Vienna last weekend, Saudi Arabia — the group’s largest producer — joined other members in agreeing to scale back its over-compliance with output cuts that have been in place since the beginning of 2017. Saudi Energy Minister Khalid Al-Falih indicated the group’s action would add nearly 1 million barrels a day to the market.

Brent crude, the global oil benchmark, topped $80 a barrel in mid-May, the highest level since November 2014. It closed Friday at $79.44 a barrel.

U.S. retail unleaded gasoline prices, including taxes, averaged $2.833 a gallon for the week ended June 25, according to the nation’s Energy Information Administration. That’s up about 55 cents from the same period last year, at a time Trump’s Republican Party is trying to hold on to its majorities in Congress in the November midterm elections.

Spare Capacity

If Saudi Arabia were to respond to Trump’s request, it would stretch spare production capacity to the limit, meaning that any supply outage could have an out-sized effect on oil prices. It would also likely aggravate other OPEC members, such as Iran and Venezuela, which initially sought to prevent any increase as OPEC, along with allies led by Russia, headed into their Vienna meetings earlier this month.

“We will be in uncharted territory,” Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London, said. “While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year,” she said.

Saudi Arabia has the capacity to pump a maximum of 12.04 million barrels a day, according to the International Energy Agency. The kingdom pumped slightly more than 10 million barrels a day in May.

Oil analysts and consultants nonetheless think the kingdom can produce more than 12 million barrels a day in an emergency through a so-called surge, in which oil fields are depleted beyond what engineers consider a reasonable rate. In addition, Saudi Arabia shares with Kuwait a so-called neutral zone that hasn’t been used for the past couple of years and can pump as much as as additional 500,000 barrels a day.

‘Ramp Up’

“Saudi Arabia can use some of its stocks to boost exports, visible to the U.S. president, while it takes time to ramp up operating capacity,” said Olivier Jakob, head of Swiss-based consultant Petromatrix GmbH.

Trump earlier this month blamed OPEC for oil prices being too high, reprising comments he made on Twitter in April. At meetings in Vienna on June 22-23, OPEC and its allies cobbled together a delicate accord in order to satisfy some producers, like Iran and Venezuela, which wanted to limit output, and others like the Saudis, which sought to ease away from the supply cuts.

The curbs were intended to help drain a global oil glut, a goal that has largely been achieved, though supply disruptions are now adding pressure to prices. Venezuela is in the midst of an economic crisis, which has caused oil production to plummet. In Libya, where a dispute over control of key ports has hindered output, the Arabian Gulf Oil Co. on Saturday halted220,000 barrels a day of production, according to a person familiar with the outage.

Also see: Unexpected oil losses swamp Saudi production surge

Trump’s administration in early May said that it would renew U.S. sanctions on Iran and has sought to reduce other foreign buyers’ purchases of Iranian oil.

“I guess the Saudis want to give the confidence to Trump to go very hardcore on Iran,” tweeted the oil market’s most vocal bull, commodities hedge-fund manager Pierre Andurand. “It seems that Iranian regime change is the priority number 1 for the Saudis.”

— With assistance by Grant Smith, Abbas Al Lawati, and Nayla Razzouk

https://www.bloomberg.com/news/articles/2018-06-30/trump-asks-saudi-arabia-to-boost-oil-output-to-offset-high-price

Trump Pushes Saudi Oil-Production Increase in Call With King — More Production should more lower prices at the gas station

June 30, 2018
U.S. seeks 2 million barrel a day increase, president says — Move would stretch capacity, undermine OPEC output agreement
Khalid Al-Falih

Photographer: Stefan Wermuth/Bloomberg

U.S. President Donald Trump said he persuaded Saudi Arabia to effectively boost oil production to its maximum capacity to cool down prices, a move that threatens to blow up a fragile truce agreed by OPEC last week and inflame the Saudi-Iran rivalry.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!,” Trump said on Twitter Saturday.

Saudi King Salman bin Abdulaziz and Trump, in a phone call Saturday, discussed efforts by the oil-producing countries to compensate potential shortages in oil supply, the state-run Saudi Press Agency reported. The two leaders stressed the importance of maintaining oil-market stability, according to the report. The agency didn’t say the leaders agreed or make any reference to 2 million barrels.

The telephone exchange is another sign of how U.S.-Saudi ties have improved under Trump compared with the Obama administration, which alienated the kingdom by seeking a nuclear deal with Iran. Trump last year chose Saudi Arabia for his first foreign trip. Since then, the two governments have announced hundreds of billions of dollars worth of contracts, with Trump openly bragging about how many U.S. jobs the Saudis were helping to create.

Iran’s Response

If the Saudis agree to Trump’s request, “that means he is calling on them to walk out from OPEC,” Iran’s OPEC governor Hossein Kazempour Ardebili, said in an interview. “There is no way one country could go 2 million barrels a day above their production allocation unless they are walking out of OPEC.”

At a meeting of the Organization of Petroleum Exporting Countries in Vienna last weekend, Saudi Arabia — the group’s largest producer — joined other members in agreeing to scale back its over-compliance with output cuts that have been in place since the beginning of 2017. Saudi Energy Minister Khalid Al-Falih indicated the group’s action would add nearly 1 million barrels a day to the market.

Brent crude, the global oil benchmark, topped $80 a barrel in mid-May, the highest level since November 2014. It closed Friday at $79.44 a barrel.

U.S. retail unleaded gasoline prices, including taxes, averaged $2.833 a gallon for the week ended June 25, according to the nation’s Energy Information Administration. That’s up about 55 cents from the same period last year. U.S. politicians closely follow pump prices, a measure of financial strain on their constituents.

Spare Capacity

If Saudi Arabia were to respond to Trump’s request, it would stretch spare production capacity to the limit, meaning that any supply outage could have an out-sized effect on oil prices. It would also likely aggravate other OPEC members, such as Iran and Venezuela, which initially sought to prevent any increase as OPEC, along with allies led by Russia, headed into their Vienna meetings earlier this month.

“We will be in uncharted territory,” Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London, said. “While Saudi Arabia has the capacity in theory, it takes time and money to bring these barrels online, up to one year,” she said.

Saudi Arabia has the capacity to pump a maximum of 12.04 million barrels a day, according to the International Energy Agency. The kingdom pumped slightly more than 10 million barrels a day in May, leaving exactly the 2 million barrels a day gap Trump asked the Saudi king to use now.

Oil analysts and consultants nonetheless think the kingdom can produce more than 12 million barrels a day in an emergency through a so-called surge, in which oil fields are depleted beyond what engineers consider a reasonable rate. In addition, Saudi Arabia shares with Kuwait a so-called neutral zone that hasn’t been used for the past couple of years and can pump as much as as additional 500,000 barrels a day.

‘Ramp Up’

“Saudi Arabia can use some of its stocks to boost exports, visible to the U.S. president, while it takes time to ramp up operating capacity,” said Olivier Jakob, head of Swiss-based consultant Petromatrix GmbH.

Trump earlier this month blamed OPEC for oil prices being too high, reprising comments he made on Twitter in April. At meetings in Vienna June 22-23, OPEC and its allies cobbled together a delicate accord in order to satisfy some producers, like Iran and Venezuela, which wanted to limit output, and others like the Saudis, which sought to ease away from the supply cuts.

The curbs were intended to help drain a global oil glut, a goal that has largely been achieved, though supply disruptions are now adding pressure to prices. Venezuela is in the midst of an economic crisis, which has caused oil production to plummet. In Libya, where a dispute over control of key ports has hindered output, the Arabian Gulf Oil Co. on Saturday halted 220,000 barrels a day of production, according to a person familiar with the outage.

Also see: Unexpected oil losses swamp Saudi production surge

Trump’s administration in early May said that it would renew U.S. sanctions on Iran and has sought to reduce other foreign buyers’ purchases of Iranian oil.

“I guess the Saudis want to give the confidence to Trump to go very hardcore on Iran,” tweeted the oil market’s most vocal bull, commodities hedge-fund manager Pierre Andurand. “It seems that Iranian regime change is the priority number 1 for the Saudis.”

— With assistance by Grant Smith, Abbas Al Lawati, and Nayla Razzouk

Related:

Trump says Saudi Arabia has agreed to up oil output

June 30, 2018

US president wants action to offset Iran sanctions and production fall in Venezuela

Image may contain: 2 people, people standing

US President Donald Trump says he and Saudi Arabia’s King Salman bin Abdulaziz al-Saud have made an agreement © AFP

By Anjli Raval and David Sheppard in London

US President Donald Trump has said Saudi Arabia has agreed to his request to ramp oil production by up to 2m barrels a day in a move that could take the kingdom’s output close to maximum capacity to offset the impact of falling supplies from Iran and Venezuela.

In a tweet on Saturday, Mr Trump said he had spoken to King Salman about increasing output to calm oil prices, with Brent crude fast approaching $80 a barrel again.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference . . . Prices to high! He has agreed!” Mr Trump said.

The Trump administration has asked Saudi Arabia and its allies to raise output to offset losses from Iran after the reimposition of oil sanctions against the country. The US, which withdrew from the nuclear deal with Iran in May, has urged big importers of the country’s oil to cut their purchases in an attempt to cripple Tehran’s economy and spur regime change.

“Trump’s objective is cutting off oil revenue to Iran — in his mind that’s the way to change Iran’s behaviour,” said Joe McMonigle, senior energy analyst at Hedgeye Risk Management. “It’s becoming clear how closely the US and Saudi Arabia are co-ordinating on this,” he added.

The kingdom’s energy minister Khalid Al Falih was in Washington this week and met US secretary of state Mike Pompeo, who is known for his hawkish stance on Iran. The State Department said in a statement that the officials had discussed “energy security”.

US rhetoric on Iran has boosted oil prices in recent weeks, which have already risen on the back of a drop in Venezuelan production amid its economic crisis and outages elsewhere together with robust global demand. The US is trying to keep prices in check and stop US consumers feeling the effects at petrol stations ahead of the midterm elections in November.

“The political signal is very clear: President Trump wants higher oil supplies and lower oil prices,” said Olivier Jakob, at consultancy Petromatrix.

After more than a year of production cuts that far exceeded expectations, Saudi Arabia — Iran’s arch rival in the region and Opec’s largest producer — said last week producers would raise output by 1m b/d from July.

The move, backed by Russia, failed to calm oil prices as the US simultaneously maintained its combative approach on Iran, the third-largest producer in Opec, which produces about 3.8m b/d and exports roughly 2.5m b/d.

The kingdom this week briefed energy analysts that domestic output could breach 10.6m b/d and hit record levels at about 11m b/d, signalling total increases could be at far greater levels than expected after a meeting of producers last week in Vienna. This failed again to soothe oil prices.

Amrita Sen, chief oil analyst at Energy Aspects, said the uncertainty around how much producers, mainly the kingdom, would increase had become amplified. “This is uncharted territory,” she said.

Saudi Arabia’s state media agency confirmed that Mr Trump made a call to the Saudi king to discuss the oil market situation but a readout of the conversation did not specify the level of production increase.

“The two leaders stressed during the call the need to make efforts to maintain oil markets stability and the growth of the global economy, as well as efforts by producing countries to compensate for any potential shortage of supply,” the Saudi Press Agency said.

As the holder of the world’s largest spare production capacity, the kingdom has an additional 2m b/d on hand, on top of the 10m b/d in pumped in May. The chief executive of Saudi Arabia’s state energy giant Saudi Aramco told the Financial Times last week the kingdom could ramp up and sustain production at 12m b/d but this would not be immediate and could take around six months.

In the past it has been reluctant to increase output to the maximum because there would be little extra to counter an unplanned supply outage elsewhere, only propelling prices further.

Jason Bordoff, former energy adviser to the Obama administration and founder of the Center on Global Energy Policy at Columbia University said: “If the Saudis were really to go that high with production, that would leave no real buffer of spare capacity, which could actually be bullish for prices by exacerbating market fears about any future supply disruptions.”

Concerns have mounted about Saudi Arabia’s ability to keep prices in check, with Brent crude rising despite its pledge to boost output to record levels.

Not only have Iran’s exports not fallen yet, there is little room for manoeuvre should geopolitical upheavals trigger another big supply outage.

Robert McNally, president of the Rapidan Energy Group consultancy and a former senior White House energy adviser, said while Mr Trump’s use of Twitter oil diplomacy was unusual it was not unreasonable request given large current and future oil supply losses due to geopolitical risk and sanctions.

“However, even if Saudi production hits 12m b/d in the coming months, it cannot offset the losses of all of Iran’s crude exports, much less that prospective Venezuelan and recent Libyan barrels,” he said.

Additional reporting by Ahmed Al Omran

https://www.ft.com/content/b935a2bc-7c64-11e8-8e67-1e1a0846c475

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Trump Asks Saudi Arabia to Increase Oil Production

June 30, 2018

In a tweet, Trump says he spoke with Saudi King Salman on a call

Image result for donald trump, king salman, photos

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U.S. President Donald Trump on Saturday said he asked Saudi Arabia to significantly boost its oil production to bring down crude prices.

“I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels,” Mr. Trump said in a tweet, citing a phone call with Saudi King Salman.

“Prices to high! He has agreed!” the t

https://www.wsj.com/articles/trump-asks-saudi-arabia-to-boost-oil-production-1530360926?mod=hp_lead_pos2

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Bloomberg

U.S. President Donald Trump said he asked Saudi Arabia to increase oil production by as much as 2 million barrels a day due to high prices, a move that would undercut an output agreement reached by OPEC this month.

“Just spoke to King Salman of Saudi Arabia and explained to him that, because of the turmoil & disfunction in Iran and Venezuela, I am asking that Saudi Arabia increase oil production, maybe up to 2,000,000 barrels, to make up the difference…Prices to high! He has agreed!,” Trump said on Twitter Saturday.

It was not immediately clear if Saudi Arabia agreed to Trump’s request. At a meeting of the Organization of Petroleum Exporting Countries in Vienna last weekend, Saudi Arabia — the group’s largest producer — agreed to scale back its compliance with output cuts that have been in place since the beginning of 2017. Saudi Energy Minister Khalid Al-Falih indicated the group’s action would add nearly 1 million barrels a day to the market.

If Saudi Arabia were to respond to Trump’s request, it would stretch the world’s spare production capacity to the limit, meaning that any supply outage could have an outsized effect on oil prices. It would likely aggravate other OPEC members, such as Iran and Venezuela, which initially sought to prevent any increase as OPEC, along with allies led by Russia, headed into their Vienna meetings.

Venezuela is in the midst of an economic crisis, which has caused oil production to plummet. Trump’s administration in early May said that it would renew U.S. sanctions on Iran and has sought to reduce other foreign buyers’ purchases of Iranian oil.

Brent crude, the global oil benchmark, topped $80 a barrel on May 17, the highest level since November 2014. It closed Friday at $79.44.

https://www.bloomberg.com/news/articles/2018-06-30/trump-asks-saudi-arabia-to-boost-oil-output-to-offset-high-price

Fighting in South Sudan Casts Shadow Over Peace Talks

March 31, 2018

Bloomberg

By Okech Francis

  • Clashes reported between rebels, army near Ugandan border
  • Famine looms in African nation as four-year civil war drags on

Clashes flared between South Sudanese troops and rebels, complicating talks to end the civil war, two days after a regional bloc called for the insurgents’ leader to be freed from house arrest in South Africa.

The army and rebels blamed each other for instigating the Wednesday clashes in Kajokeji, near the Ugandan border. Rebel official Lam Paul Gabriel claimed 28 soldiers and one insurgent were killed, while army spokesman Lul Ruai Koang said he didn’t have details.

 
Lam Paul Gabriel

Fresh violence is imperiling efforts to broker an end to the more than four-year conflict that’s claimed tens of thousands of lives, with the latest peace talks due in Ethiopia on April 26. East African cease-fire monitors on Thursday expressed “deep concern” over reports of hostilities in Central Equatoria, where Kajokeji is located, and areas of the oil-rich Upper Nile region.

 Image result for Lam Paul Gabriel, photos

On March 26, the Intergovernmental Authority on Development, a bloc of East African nations also known as IGAD, urged the release of Riek Machar, the former vice president turned-rebel leader who’s been under house arrest in South Africa since late-2016.

If he renounces violence, Machar should be allowed to move to any country that doesn’t border South Sudan, IGAD said in a statement. The bloc also said it was resolved to “continue monitoring and taking necessary measures, including targeted sanctions, against violators” of a cease-fire agreement.

The conflict has forced 4 million people from their homes, cut oil production — a crucial source of government revenue — and caused economic chaos. Areas of the country are on the brink of famine and two-thirds of the 12 million population may face food shortages by May.

https://www.bloomberg.com/news/articles/2018-03-29/shadow-cast-over-peace-talks-as-fighting-flares-in-south-sudan

Related:

Oil price optimism would be ‘misplaced’ in early 2018, strategists say

December 26, 2017

By Sam Meredith
MSNBC
December 25, 2017

There’s little reason to expect oil prices to extend gains through the first quarter of 2018, energy strategists have told CNBC.

The prospect of rising U.S. shale production, subdued price movements and intensifying geopolitical risks is likely to offset a rally in prices at the start of next year, the analysts said.

Harry Colvin, director and senior economist at Longview Economics, told CNBC in a phone interview that he was “pretty bearish” over the price of oil over the next three months.

“While we could easily see an escalation of tensions in the Middle East, in the absence of that, optimism is probably misplaced for up to six months… Everybody seems to be facing the same way over oil at the minute and it’s when this happens that you need to be especially careful,” he said.

Oil prices have recovered well over a third of their value since hitting 2017 lows in June. The gains are largely due to the global supply cuts implemented by OPEC and non-OPEC producers at the start of the year.

What will happen with US shale?

Goldman Sachs said a stronger-than-anticipated OPEC-led commitment to extend production cuts would likely support oil prices through 2018. The U.S. bank lifted its Brent price forecast for next year to $62 a barrel and its West Texas Intermediate (WTI) projection to $57.50 a barrel. The revisions were up from $58 a barrel and $55 a barrel respectively.

The U.S. Energy Information Administration (EIA) and the International Energy Agency (IEA) have both indicated strong global demand growth in 2018 at 1.3 percent or above.

“A really key nub of the debate with oil is what will happen with the U.S. shale?” Colvin said.

Pump jacks and wells on the Monterey Shale formation in California

David McNew / Stringer | Getty Images News
Pump jacks and wells on the Monterey Shale formation in California

In recent months, U.S. shale producers have surprised market participants with how quickly they have ramped up production in the wake of rising prices. Almost all increases in American oil production over the last few years have stemmed from shale, which in total accounts for nearly two-thirds of the country’s existing output.

The U.S. is not part of a global effort to withhold oil production levels.

Colvin said it would be “easy” for oil to go to $50 a barrel by the end of the first quarter, before adding he would “not be surprised” to see levels as low as $45 a barrel.

‘Volatility killer’

OPEC, Russia and nine other producers agreed to extend their deal to keep 1.8 million barrels a day off the market through the end of 2018. Having extended the deal once already, the producers again reached an agreement at the end of November to try to drain a global crude glut.

OPEC’s latest deal was most likely a “volatility killer,” Chris Main, energy strategist at Citi, told CNBC in a phone interview.

Despite expecting fundamentals to continue to support the market, Main said he forecast oil prices to fall back to around $57 a barrel by the end of the first quarter.

“That price weakness could end up being supportive to the OPEC commitment next year… It would certainly reinforce the will of the Saudis,” he said.

OPEC kingpin Saudi Arabia is head of the cartel’s compliance monitoring committee and is reportedly expected to try to ensure all other member countries stick to agreed production levels over the next 12 months.

‘Bullish catalysts in short supply’

“The major price driver in the first quarter of 2018 will be geopolitical developments,” Stephen Brennock, oil analyst at PVM Oil Associates, said in an email to CNBC.

While Brennock cited Iran’s relationship with the U.S. and Saudi Arabia as geopolitical risks worthy of keeping an eye on, he argued it was likely to be only a “matter of time” before Venezuela‘s worsening debt crisis started to significantly hamper the OPEC members’ oil production.

An attendant sits at a closed Petroleos de Venezuela SA (PDVSA) gas station in Caracas, Venezuela, on Friday, Sept. 22, 2017.

Wil Riera | Bloomberg | Getty Images
An attendant sits at a closed Petroleos de Venezuela SA (PDVSA) gas station in Caracas, Venezuela, on Friday, Sept. 22, 2017.

The South American country has the largest proven oil reserves in the world but, amid intensifying economic pressure, its production levels have decreased to levels not seen in more than 30 years.

“All things considered, bullish catalysts will be in short supply and prices will therefore settle into their current trading ranges,” Brennock said.

The price of oil collapsed from almost $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil producing nations — in late 2016.