Posts Tagged ‘oil’

Asian markets boosted by fresh China-US trade hopes

January 18, 2019

Asian markets rallied Friday as another broadly positive week drew to a close, with investors cheered by a report that the US was considering lifting tariffs on China as officials look to hammer out a trade deal.

Optimism that the world’s top two economies are on course to reach a deal ending their long-running trade row has helped boost equities across the world this year.

And while news that the US was carrying out a criminal probe into Chinese tech giant Huawei caused a wobble Thursday, the rally resumed after the Wall Street Journal story on tariff-lifting broke.

The paper reported Treasury Secretary Steven Mnuchin had raised the idea with Trade Representative Robert Lighthizer of removing some or all levies on Beijing in return for structural reforms.

It said the move was part of a bid to reassure markets and bolster the odds of a bigger trade deal, ending a months-long saga that is beginning to impact economies around the world, particularly China.

However, Treasury Department told AFP that no formal recommendation had been made by either Mnuchin or Lighthizer in the talks, which were “nowhere near completion”.

Investors have cheered a report that Steven Mnuchin has raised the idea of lifting tariffs on China in exchange for reforms by Beijing

Investors have cheered a report that Steven Mnuchin has raised the idea of lifting tariffs on China in exchange for reforms by Beijing AFP/File

Still, investors remained upbeat.

Hong Kong rose more than one percent and Shanghai added 0.8 percent while Tokyo ended the morning 1.3 percent higher. Sydney, Seoul and Singapore were each 0.5 percent higher while Wellington and Taipei added 0.3 percent. Manila and Jakarta were also up.

“The US government has said that there have been no formal talks to scale back tariffs, but the market saw the half glass full as the reports signal that concessions are in the works,” said Alfonso Esparza, senior market analyst at OANDA.

However, there was still scepticism among analysts, with the two sides still far apart on a number of issues, particularly regarding intellectual property.

– Crude on the rise –

“Certainly evidence that the administration is approaching a deal would be good news,” Laura Rosner, senior economist at MacroPolicy Perspectives, said. “We’ve heard noise around trade policy before though, so I would want to make sure the progress happens and sticks.”

On currency markets the pound edged up and was sitting around two-month highs against the dollar as dealers bet that Britain will not leave the European Union without a deal.

After her grand Brexit plan was soundly rebuffed by MPs this week, British Prime Minister Theresa May has called cross-party talks to put together a “Plan B” with a more palatable agreement by Monday.

Still, if that does not work, there is a growing expectation that the March 29 exit deadline will be pushed back to give May more time to reach another deal or possibly call another referendum.

Oil prices rose on the China-US tariffs report and after OPEC said it had cut output in December before a new agreement to limit supply took effect.

Both main contracts are up around a fifth since the end of December, thanks to an agreement to cut output by OPEC and other key producers including Russia. That followed almost three months of losses that wiped around 40 percent off prices that was fuelled by supply and demand worries.

And while the commodity is on the up, there are still concerns about the impact of a slowing global economy.

“As global growth stalls so does the appetite for crude,” said Esparza at OANDA. “Demand remains the biggest uncertainty. Positive trade headlines could boost energy prices as supply remains a tug-o-war between rising (US) shale production and OPEC agreed limits.”

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: UP 1.3 percent at 20,674.92 (break)

Hong Kong – Hang Seng: UP 1.1 percent at 27,042.08

Shanghai – Composite: UP 0.7 percent at 2,577.81

Pound/dollar: UP at $1.2988 from $1.2937 at 2130 GMT

Euro/dollar: UP at $1.1395 from $1.1391

Dollar/yen: UP at 109.31 yen from 109.19

Oil – West Texas Intermediate: UP 52 cents at $52.59 per barrel

Oil – Brent Crude: UP 43 cents at $61.61 per barrel

New York – DOW: UP 0.7 percent at 24,370.10 (close)

London – FTSE 100: DOWN 0.4 percent at 6,834.92 (close)

— Bloomberg News contributed to this story —



Pompeo: A united GCC is essential for planned MESA alliance

January 13, 2019

US Secretary of State Mike Pompeo said on Sunday that a rift between Qatar and its Arab Gulf neighbours had gone on for too long.
“We are all more powerful when we are working together and disputes are limited. When we have a common challenge, disputes between countries with shared objectives are never helpful,” he said at a press conference in Qatar.

Pompeo also said that a united GCC is essential for the planned MESA alliance, and that the US has agreed with Qatar on a widening presence in the Udaid military base.

US Secretary of State Mike Pompeo speaks in Doha. (AFP)

Pompeo arrived in Doha on Sunday and signed several agreements with Qatari officials.

Pompeo said countering Iran’s terror operations and proxy militia is one of President Donald Trump’s top priorities in an interview with Saudi-owned Al Arabiya News Channel on Saturday.

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U.S. Honors Ceremony for the fallen, at  Udaid military base

“Countering Iran, the threat from the world’s largest state sponsor of terror – the Islamic Republic of Iran, is something President Trump has identified as one of his top priorities. We are determined to do that, we will do it with our partners in the Middle East. This is a mission for the world. It’s incredibly important and we are determined to do it,” Pompeo said during the UAE leg of his Middle East tour.

The secretary of state was previously in Manama, Cairo, Amman, Baghdad, and the Kurdish capital Erbil on a tour that is pushing Washington’s continuous support for the region in confronting Iran and extremist groups such as Daesh.

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Pompeo also commented on the murder of Saudi journalist Jamal Khashoggi, who was slain inside the Saudi consulate in Istanbul last year.

“President Trump made clear immediately in the aftermath of this murder that the relationship is broader and deeper and bigger than that,” Pompeo said. “We absolutely have expectations when things go wrong, when heinous acts have occurred, people need to be held accountable for this, but this relationship predated that and the relationship must go forward. We have to have a good relation with the kingdom of Saudi Arabia and this administration intends to do so”.

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The US Secretary of State will also be travelling to Warsaw in February to attend a joint US-Poland hosted Iran-focused world summit.

Arab News


Saudi rift with Qatar threatens unity against Iran, Pompeo says — Urges “full and complete” accountability on the murder of Jamal Khashoggi

January 13, 2019

U.S. Secretary of State Mike Pompeo said on Sunday that a rift between Qatar and its Gulf Arab neighbors had gone on for too long and was threatening regional unity needed to counter Iran.

Saudi Arabia, the United Arab Emirates, Bahrain and non-Gulf Cooperation Council (GCC) member Egypt cut diplomatic, transport and trade ties with Qatar in June 2017, accusing it of supporting terrorism and their regional foe Shi’ite Muslim Iran — something Doha denies.

The United States, an ally of the six-nation Sunni Muslim GCC, sees the rift as a threat to efforts to contain Iran and has pushed for a united Gulf front.

“When we have a common challenge, disputes between countries with shared objectives are never helpful,” Pompeo, who is on an eight-day tour of the Middle East, told a news conference in the Qatari capital Doha.

Andrew Caballero-Reynolds/Pool via Reuters | US Secretary of State Mike Pompeo and Qatari Foreign Minister Sheikh Mohammed bin Abdulrahman Al-Thani in Doha, Qatar; Jan. 13, 2019.

“They never permit you to have as robust a response to common adversaries or common challenges as you might,” he added.

Gas-rich Qatar says the boycott is aimed at undermining its sovereignty and has started charting a course away from its Gulf neighbors, including forging new trade partnerships, strengthening its ties with Turkey and quitting OPEC. Those moves have deepened expectations that the row will not be resolved quickly.

“We’re hoping that the unity of GCC will increase in the days and weeks and months ahead,” Pompeo said, adding that Gulf unity was essential for a planned Middle East Strategic Alliance (MESA) that would also include Jordan and Egypt.

Saudi Arabia and the UAE have repeatedly said the dispute is not a top priority and assured Washington it will not affect defense cooperation.

Pompeo later told reporters that he had brought up the rift with officials in Bahrain, Egypt and the UAE. “It’s … not at all clear that the rift is any closer to being resolved today than it was yesterday and I regret that,” he said.

Khashoggi murder

Pompeo has used the regional tour, which included stops in Abu Dhabi and Cairo, to shore up support for the U.S. troop withdrawal from Syria.

He will head next to the Saudi capital Riyadh, where he said the United States would ensure there is “full and complete” accountability on the murder of Jamal Khashoggi, the U.S.-based Washington Post journalist from Saudi Arabia.

Jamal Khashoggi was killed on Oct. 2 at the Saudi Consulate in Istanbul after he went to get marriage documents. (File/AFP)

“We will continue to talk about that and make sure we have all the facts so that they are held accountable certainly by the Saudis but by the U.S. as well where appropriate,” Pompeo told the news conference.

Khashoggi, a long-time royal insider who had become a critic of the kingdom’s Crown Prince Mohammed bin Salman, was killed inside the Saudi consulate in Istanbul on Oct. 2.

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Crown Prince Mohammed bin Salman

U.S. intelligence agencies believe the crown prince ordered an operation to kill Khashoggi, whose body was dismembered and removed from the building to a location still publicly unknown. Top Turkish officials have also tied his death to the highest levels of Saudi leadership.

Saudi officials have denied accusations that the prince ordered the murder, which has left the kingdom facing its worst political crisis in generations, strained ties with Western allies and focused attention on the prince’s domestic crackdown on dissent and the war in Yemen.

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Loujain al-Hathloul

The sister of Loujain al-Hathloul, one of several Saudi women’s rights activists detained in the kingdom since last summer and accused of treason, pressed Pompeo to raise the issue with officials in Riyadh.

In a New York Times op-ed, Alia al-Hathloul described how her sister was allegedly tortured and threatened while in detention. “Even today, I am torn about writing about Loujain, scared that speaking about her ordeal might harm her,” she wrote.

The Saudi authorities have denied such torture charges.


UK oil explorer Faroe Petroleum: “There are still wells to drill in the North Sea”

January 11, 2019

Graham Stewart eyes North Sea assets after surrendering to DNO bid

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Graham Stewart, who founded Faroe, said: ‘There are assets out there to buy and there are exploration wells to drill and . . . and we’ve learned a lot of lessons over the years’

Nathalie Thomas, Energy Correspondent

The head of UK oil explorer Faroe Petroleum, which this week surrendered to a hostile takeover by Norwegian group DNO, plans to start a venture that could buy up assets in the North Sea. Graham Stewart, who founded Faroe in 1998, said he did not see himself “hanging up my boots anytime soon”.

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Graham Stewart

He would be “surprised” if he and other members of the Faroe management team did not start another exploration and production business, he added. “There are assets out there to buy and there are exploration wells to drill and we’ve got some very good relationships and we’ve learned a lot of lessons over the years,” Mr Stewart said.  “

We could reach quite a high level in a shorter time now we know how to do it . . . and we are all dead keen on it.”

A number of new companies, such as private equity-backed Chrysaor and Neptune Energy, led by former Centrica boss Sam Laidlaw, have quickly risen to prominence in the North Sea, as the oil majors continue to sell off assets in the region and focus their investments elsewhere.

Speaking to the Financial Times after a bitter hostile takeover battle for Faroe concluded on Wednesday, Mr Stewart said it would be “most natural” to exploit his knowledge of UK and Norwegian waters, although he has also spent some time in west Africa.

Aberdeen-based Faroe capitulated to a takeover by DNO after the Norwegian group tabled a final, higher offer of 160p a share— up from 152p — and raised its stake beyond 52 per cent. DNO had pursued Faroe since November. Mr Stewart, whose shares and share options in Faroe are worth more than £12.5m, said he was surprised DNO turned hostile and admitted it was “quite a challenge” when “you meet someone who has a different rule book”.

The takeover tussle became increasingly acrimonious and DNO had threatened to remove Faroe board members who continued to block the deal.  However, Mr Stewart said the Faroe board and management team would be “honourable in defeat” and “do everything we can to smooth this process through”.

He said he was proud the board had succeeded in forcing DNO to increase its offer, even though the final price was still below what many analysts estimated the company was worth. The final offer values Faroe at £641.7m. However, Faroe was always “going to struggle” against a cash bid, particularly when the oil price was so volatile, Mr Stewart admitted.

Asian markets retreat after rally, strong yen hits Tokyo

January 10, 2019

Asian markets turned south Thursday as investors took a breather after rallying this week on optimism over China-US trade talks and the Federal Reserve’s softer tone on interest rates.

There was also growing unease over the US government shutdown, which is now in its third week, after President Donald Trump walked out of a meeting with Democrats to resolve the issue, meaning it will likely drag on for some time to come.

Tokyo led the losses, with exporters hit by a rising yen against the dollar after minutes from the Fed’s latest policy meeting showed the policy board happy to slow its pace of rate hikes to prevent a slowdown in the economy.

Central bankers said they “can afford to be patient” owing to low inflation and uncertainty about the outlook and while there would likely be more increases in borrowing costs it would be a “relatively limited amount”.

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The minutes reinforced comments from Fed boss Jerome Powell last week that there was no “pre-set” plan on rates, which fanned a global market rally. Fears about rising costs were a key factor in driving equities lower last year.

They also fuelled a dollar sell-off with the greenback weakening across the board and the Chinese yuan at its highest level since late August.

While the dollar stabilised against its major peers Thursday, it saw more losses against higher-yielding currencies, with the new-found optimism providing a boost to riskier assets.

“I’m happy to see that there was caution in the minutes,” Alicia Levine, chief strategist at BNY Mellon Investment Management, told Bloomberg TV.

“You want it to be that this is what the (Fed policy board) really believes, that caution is warranted, that they’re going to be data-dependent, and there are alternative outcomes that they should be aware of. I take great comfort in these minutes.”

– ‘Total waste of time’ –

In early trade Hong Kong was down 0.3 percent after rising around five percent over the previous four days, while Shanghai was 0.1 percent off.

Sydney was also barely moved, while Singapore shed 0.2 percent and Seoul eased 0.1 percent.

Despite the losses, there is a much happier mood on trading floors, helped by hopes of a breakthrough in the tariffs spat between the world’s top two economies.

After three days of talks in Beijing, Chinese officials said negotiators had “laid the groundwork” to resolve their differences. Trump earlier this week tweeted his optimism a deal could be struck at some point.

“This outcome is very much in line with broader expectations given this was a preliminary mid-level US and Chinese trade representatives affair possibly setting up for a more significant announcement in Davos when President Trump takes the grand stage” said Stephen Innes, head of Asia-Pacific trade at OANDA.

Oil prices were also lower Thursday, having surged around five percent Wednesday in response to confirmation from Saudi Arabia that it would slash exports of the black gold after an agreement between OPEC and other top producers such as Russia late last year.

Both main contracts have rallied by more than a fifth since late December, before which they had dived more than 40 percent since October on supply and demand worries.

“Confidence in reduced Saudi, Russia and other OPEC+ member shipments, the positive trade vibes and a weaker US dollar are all contributing to the rebound,” said National Australia Bank strategist Ray Attrill.

Dealers are keeping tabs on developments in Washington after talks to end the US government shutdown broke down when Trump stormed out after Democrats told him they would not fund his Mexican border wall.

He later described the talks with congressional leaders as “a total waste of time”, meaning several parts of the government remain unfunded with hundreds of thousands of workers at home unpaid and no sign of an end to the impasse.

– Key figures around 0230 GMT –

Tokyo – Nikkei 225: DOWN 1.4 percent at 20,141.93 (break)

Hong Kong – Hang Seng: DOWN 0.3 percent at 26,373.07

Shanghai – Composite: DOWN 0.1 percent at 2541.91

Oil – West Texas Intermediate: DOWN 56 cents at $51.80 per barrel

Oil – Brent Crude: DOWN 58 cents at $60.86 per barrel

Dollar/yen: DOWN at 107.93 yen from 108.03 at 2200 GMT

Euro/dollar: DOWN at $1.1546 from $1.1547

Pound/dollar: DOWN at $1.2790 from $1.2796

New York – Dow: UP 0.4 percent at 23,879.12 (close)

London – FTSE 100: UP 0.7 percent at 6,906.63 (close)


Asian Markets Lower on Thursday — “Volatility is here to stay but you use volatility to your advantage…”

January 10, 2019

The post-Christmas rally in global equities stalled on Thursday in Asia as investors took a step back in the absence of any concrete details on trade negotiations. The yen and Treasuries gained.

The steepest declines were in Japan. S&P 500 Index futures retreated as while the U.S. and China laid the ground for resolving trade issues, negotiations seem likely to continue indefinitely. Shares fell in South Korea and Hong Kong, and fluctuated in Shanghai. The offshore yuan stayed at the strongest since August. The dollar was steady and crude pulled back after climbing above $52 a barrel and entering a bull market.

Image result for china stock markets, photos

Earlier, the S&P 500 Index posted a fourth day of gains as Fed minutes revealed policy makers took a more cautious approach to further interest-rate increases, chiming with Chairman Jerome Powell’s tone from last week. Still, advances were limited amid concern the partial government shutdown will continue for some time.

Global stocks had been rallying amid optimism tensions are thawing between the U.S. and China on trade, though the most recent meetings have ended with few details. The Fed minutes indicated policy makers took a more cautious approach to further rate increases than their initial statement following the December meeting.

“Volatility is here to stay but you use volatility to your advantage to take some chips off the table when you start to see a bit of a rebound in the market,” Nathan Thooft, head of global asset allocation at Manulife Asset Management, told Bloomberg TV in Hong Kong.

Meanwhile, the U.S. government shutdown is dragging on. President Donald Trump said his party was “very unified” behind his plan to keep the government closed until he gets funding to build a wall along the Mexican border, which is at the center of the dispute. He then walked out of a meeting with Democratic congressional leaders Nancy Pelosi and Charles Schumer, calling it a “total waste of time.”

Here are some events investors may focus on this week:

  • Fed Chairman Powell will speak to the Economic Club of Washington D.C. on Thursday.
  • Britain’s Parliament resumes a debate on the Brexit withdrawal bill, with Prime Minister Theresa May seeking to avoid defeat in a vote set for the week of Jan. 14.

These are the main moves in markets:


  • Japan’s Topix index fell 1.2 percent as of 11:55 a.m. in Tokyo.
  • The MSCI Asia Pacific Index slid 0.5 percent following five days of gains.
  • S&P 500 futures declined 0.5 percent lower. The S&P 500 rose 0.4 percent.


  • The yen rose 0.2 percent to 107.98 per dollar.
  • The offshore yuan traded at 6.8102 per dollar.
  • The euro gained 0.1 percent to $1.1555.
  • The pound was at $1.2782.


  • The yield on 10-year Treasuries fell two basis points to 2.69 percent.
  • Australia’s 10-year bond yield fell three basis points to 2.29 percent.


  • West Texas Intermediate crude slipped 0.9 percent to $51.87 a barrel, after surging 5.2 percent to the highest in a month.
  • Gold added 0.1 percent to $1,294.62 an ounce.

— With assistance by Cormac Mullen, and Haidi Lun

Analysis: John Bolton’s Syria snafu reveals oil’s biggest risk

January 9, 2019

Trump administration’s unpredictable policy and personnel swings make dangerous misunderstandings more likely.

Analysis: Bolton's Syria snafu reveals oil's biggest risk
A partially constructed gas refinery on the northern coast of the Gulf in Asalouyeh, Iran [Vahid Salemi/AP]

It is difficult to tell who is more peeved at National Security Adviser John Bolton right now: his boss President Donald Trump or Turkey’s President Recep Tayyip Erdogan.

In seeking to reassure Israel this weekend about the withdrawal of US troops from Syria, Bolton added some nuances that first prompted Trump to tweet nothing had changed and then drew outrage from Erdogan, who skipped the reassuring meeting Bolton was supposed to have with him.

National Security Adviser John Bolton

John Bolton was in the region to discuss the consequences of a US withdrawal from Syria. Reuters photo

Secretary of State Mike Pompeo must surely be relishing the prospect of his own damage-limitation tour of the Middle East, which just got under way.

Meanwhile, in the somewhat gentler environs of Texas, the Federal Reserve Bank of Dallas just published the latest edition of its quarterly energy survey and quoted one anonymous oil executive saying this:

“The administration’s head fake with the Saudis regarding Iran sanctions, followed by leverage on Saudi Arabia with the Khashoggi murder, have compromised oil price market dynamics. The volatility in commodity and capital markets is unsettling, along with the challenge to the administration’s ongoing leadership posed by the Democratic majority in the House. The administration is our largest uncertainty in our business at this point, as they want low oil prices and will do everything in their power to deliver low oil prices.”

All these things are not unrelated.

Erdogan: US troop Syria pullout must be done with right partners

Erdogan  [File: Burhan Ozbilici/AP]

Trump’s desire to pull troops out of Syria shouldn’t be a shock. Antipathy to US foreign entanglements has been one of the more consistent positions for this president and fits with a broader shift in the global order that predates Trump and will likely outlast him.

What did come as a shock was the way Trump sprung his decision last month, followed quickly by the resignations of Defense Secretary James Mattis and Brett McGurk, the US envoy overseeing efforts to defeat the Islamic State of Iraq and Levant (ISIL, also known as ISIS). The dissonance over what exactly is happening, how and when has only grown since.

Whether or not you regard this as 10-dimensional chess or mere disarray, we can surely agree it comes across as somewhat mercurial and creates one of those margins where misunderstanding can flourish.

Scapegoating the White House?

The “head fake” over Iranian sanctions lamented by that oil executive is a good example of this in action.

The widespread assumption that Washington would tighten the screws on Iran immediately, in the fall, stoked an oil rally even as Saudi Arabia boosted output to offset any concerns about supply. Trump’s granting of waivers to several countries importing Iranian oil (with an eye on gasoline in advance of midterms) undercut that, coinciding with an accelerating slide in prices. Little wonder another anonymous oil boss told the Dallas Fed: “The biggest distraction to conducting business is the uncertainty provided by the erratic and dysfunctional behaviour of the current presidential administration.”

Are they scapegoating the White House to some degree? Undoubtedly. Signs of weak demand and swaps dealers scrambling to reduce risk on hedging books were also at play in the oil sell-off. Moreover, in the same Dallas Fed survey, almost half the respondents said their primary goal in 2019 was to grow production. Just seven percent prioritised returning capital to shareholders. Given the industry’s broken relationship with investors, this is the opposite of getting with the programme.

Still, the extra layer of risk emanating from Washington, DC, is real enough, and that’s actually a novel thing. A few years ago, oil bosses griped about this or that federal regulation. Now, they fret about geopolitical curve balls and direct interventions in the oil market, something traditionally associated with the likes of OPEC members, not the US.

If it’s a novel feeling in Houston’s c-suites, imagine how it plays in the palaces and ministries of the Middle East. A region where virtually every state has come to either rely on US support (or regard it as a reliable adversary) must now adjust to not merely a more transactional Washington, but also one with conflicting voices and a changing set of faces. In short, the risk of local governments and the US talking past each other has ratcheted up in a region where the room for misunderstanding is vanishingly small.

Saudi Prince Mohammed Bin Salman To Visit Pakistan, May Announce $15 Billion Investment: Report

Saudi Crown Prince Mohammed bin Salman. (File)

Saudi Arabia’s aggressive posture

It is useful that the anonymous E&P executive specifically cited the Khashoggi affair because it gets at what may be the biggest, and most unexpected, risk to emerge. The backlash against the killing of journalist Jamal Khashoggi clearly caught Saudi Arabia and its de facto leader, Crown Prince Mohammed bin Salman (MBS), off-guard. In several respects – public opinion, Congress’ freedom to take a different line than the White House – that had nothing to do with Trump per se.

But in light of the administration’s close embrace of MBS and the great lengths to which Trump went in downplaying the incident, it is legitimate to ask just how enabled the prince feels in conducting policy. That’s especially so as Saudi Arabia’s foreign posture has become notably more aggressive, in parallel with its power structure transforming away from one of consensus among the ruling family towards a more autocratic model.

The added wrinkle is Trump’s own domestic headaches, as exemplified by the current face-off with a Democratic-controlled House over his wall idea. These pressures are likely to exacerbate Trump’s penchant for dramatic moves and populist crusades, with foreign policy and petrol prices likely to figure large (not least because they mostly lie beyond the reach of Congress).

As with last year’s waivers for Iranian sanctions, the interplay of domestic US politics, oil markets and the administration’s mixed messaging could make for many a miscalculation. Consider what might happen if, like Erdogan today, MBS made plans for a bold move assuming US backing that turned out to be less forthright than anticipated.

The relationship between Washington and Riyadh may look more solid than it has in a long time. That could be its biggest problem.

This analysis was originally published by Bloomberg News



Pakistan: Government announces an ‘immediate ban’ on import of furnace oil

January 7, 2019
Government has notified a ban on import of furnace oil with "immediate effect". — File photo
Government has notified a ban on import of furnace oil with “immediate effect”. — File photo

“In future, all refineries will ensure that FO production is minimal byproduct of Crude Oil processing,” said the notification. It said: “The oil refineries should undertake production of additional storage facilities as well as utilisation of the proceeds of deemed duty for upgradation/modernisation of their facilities.”

Ban on import of furnace oil notified

In general terms, the furnace oil is the dirtiest and the most inefficient petroleum product just above crude oil but based on obsolete technologies most of the Pakistani refineries produce up to 30 per cent FO out of their total capacity utilisation. The government has been following a plan for years to replace FO with imported liquefied natural gas (LNG) for cheaper and efficient electricity production.

Also, the notification said the government had “imposed ban on import of FO with immediate effect (i.e. January 2, 2018) except for K-Electric”. The ban was earlier also announced by the PML-N government in late 2017 but then allowed an exemption for three months to cope with peak summer electricity demand.

As part of deregulation of the petroleum sector, the Musharraf government had allowed in 2002 about 10pc ‘deemed duty’ on local production of diesel and petrol and 6pc on other products to ensure price parity with imported products that carried 10pc customs duty, replacing the previous arrangement of guaranteed 10pc return on refining. The ‘deemed duty’ was linked with the commitment that part of the funds so collected would be utilised by refineries to upgrade their facilities.

The ‘deemed duty’ on all petroleum products was abolished in 2007-08 except for diesel on which it was reduced to 7.5pc that remains in place even at present. A judicial commission had concluded in 2009 that refineries had collected more than Rs80bn through ‘deemed duty’ but not spent on improving infrastructure and sought doing away with the duty altogether.

A senior government official said the notification was issued under the orders of the Cabinet Committee on Energy led by Petroleum Minister Ghulam Sarwar Khan. He said the coastal refineries had also been encouraged to export their FO production. He said Byco Refinery had already started the FO export with its first consignment departing last week.

He said National Refinery, Pakistan Refinery and Enar Refinery would also start exporting their product for the time being till such time a big deep conversion refinery near Khalifa Point is completed in a few years by Parco – a joint venture of Pakistan and the UAE – to absorb surplus FO for high-end petroleum products.

Last month, the refineries were asked to export up to 90,000 tonnes of FO and transfer 60,000 tonnes to the storages of power plants to vacate storage tanks of refineries as a short-term measure when it was reported that total furnace oil storage capacity of all the refineries put together stood at 164,000 tonnes, while total stocks had gone beyond 150,000 tonnes, forcing refineries to reduce capacity utilisation to avoid supply chain disruption of petroleum products, including shortage of refined products to defence and aviation sectors, particularly of jet fuel.

The country’s six refineries were producing 10,000 tonnes of furnace oil but the power sector has been reducing its consumption because of being the most expensive generation. Power plants had a storage capacity of more than 1.2 million tonnes. The oil marketing companies, mostly the Pakistan State Oil (PSO) had a storage capacity of more than 400,000 tonnes, but they were not interested or capable to meet power sector’s demand due to their choked credit lines.

The total receivables of the PSO alone were now in access of Rs340bn, including about Rs261bn, due from the power sector. The officials said the only solution in the medium to long term was to keep exporting around 200,000 tonnes of furnace oil per month and gradually shift all the refineries to hydrocracker units to produce higher quality products instead of furnace oil. The problem, however, was an estimated investment requirement of between $2-3bn over a period of 3-5 years to upgrade all the refineries which wanted subsidies and incentives from the government, including through product prices.

Published in Dawn, January 7th, 2019

Nigerian militant group claims ‘warning’ strike on Conoil facility

January 6, 2019

A Nigerian militant group said on Sunday it had carried out an as yet unconfirmed warning strike on an oil facility owned by local energy firm Conoil on Friday in the southern state of Bayelsa.

Koluama Seven Brothers, a little-known militant organization, is threatening a production shut-down as it demands action from Conoil and a traditional ruler called King Solomon Eddy on issues such as job creation.

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File photo

The strike, which the group said took place at 12:20 a.m. on Jan. 4 at Conoil’s Angle 2 Field, “is just a warning”, it said in a statement.

The organization said it had “no other option than to launch a strike to shut down Conoil” if demands were not met.

Conoil could not immediately be reached by telephone or email. The Nigeria Security and Civil Defence Corps said a blast was heard on Friday around a Conoil pipeline in the Koluama community of Bayelsa, but a patrol check had not revealed any leaks.

Attacks on pipelines and other facilities in the Niger Delta reached a peak in 2016, cutting Nigeria’s crude production from as much as 2.2 million barrels per day (mbpd) to near 1 mbpd – the lowest level seen in Africa’s top oil producer in at least 30 years.

That, combined with low oil prices, pushed the OPEC member into its first recession in 25 years – crude sales make up two-thirds of government revenue and most of its foreign exchange.

Nigeria emerged from recession in 2017 but growth remains sluggish ahead of a Feb. 16 presidential election.

Writing by Alexis Akwagyiram; Editing by Angus MacSwan and Jan Harvey


Venezuela’s congress names new leader, declares Nicolas Maduro’s presidency illegitimate

January 6, 2019

Venezuela’s opposition-controlled but toothless National Assembly declared Nicolas Maduro’s presidency illegitimate on Saturday, calling on the military to support efforts to “restore democracy.”

Francisco BATISTA / Venezuelan Presidency / AFP | This handout photo released by the Miraflores presidential palace press office shows Venezuela’s President Nicolas Maduro delivering a message in Caracas, Venezuela on December 31, 2018.

The United States, which has sanctioned Venezuelan officials and entities, hailed the legislature as “the only legitimate and last remaining democratically elected institution” in the country.

“We reaffirm the illegitimacy of Nicolas Maduro,” the assembly’s new president Juan Guaido said after being sworn in at the start of a new legislative session.

“As of January 10, he will be usurping the presidency and consequently this National Assembly is the only legitimate representative of the people.”

Maduro, who has presided over a virtual collapse of the economy in the once-rich OPEC member state, is set to be sworn in on Thursday for a second six-year term after elections widely condemned by the international community.

Image result for Juan Guaido, venezuela, pictures

Venezuelan lawmaker Juan Guaido swears in as President of the National Assembly in Caracas, Venezuela

The ballot, on May 20, was boycotted by most of the opposition.

On Friday, foreign ministers from 12 Latin American countries and Canada announced in Lima that their governments would not recognize Maduro as president if he attempts to remain in office and urged him to turn over power to the National Assembly.

The arrival of two Russian Tupolev Tu-160 strategic long-range heavy supersonic bomber aircrafts at Maiquetia International Airport, just north of Caracas, on December 10, 2018.

Russian bombers conducted military exercises from v\Venezuela in December

The Maduro government accused the so-called Lima Group of “encouraging a coup d’etat” on instructions from Washington. Mexico, which is a member of the group, withheld its support for the statement.

Guaido, in a speech attended by lawmakers and members of the diplomatic corps, declared that the military’s chain of command had been “broken or usurped,” but called on the armed forces to support efforts “to restore democracy.”

He committed to “generate conditions for a government of transition and to call free elections.”

The US State Department said it “celebrates” the assembly officials’ swearing-in, a ceremony attended by charge d’affaires James Story.

Migrants cross the border in Cucuta, Colombia

Venezuelans leaving their home country for a better life. Getty Images

“The National Assembly should inspire hope in the Venezuelan people for a peaceful, prosperous, and democratic future, even as the corrupt and authoritarian Maduro regime and its allies seek to deny Venezuelans that right,” State Department deputy spokesman Robert Palladino said in a statement.

Hands tied 

The National Assembly has been largely sidelined by a separate regime-created Constituent Assembly, which called the elections at a time when most major opposition figures were in jail or banned from running.

Washington, which called the vote a “sham,” refused along with the European Union and the Lima Group countries to recognize the results.

“Maduro is a usurper, an invader and should be removed,” said Delsa Solorzano, an opposition deputy.

But she denied that the call for armed forces’ support was “to carry out a coup d’etat.”

The Supreme Court, which has consistently sided with Maduro, rendered the National Assembly powerless after the opposition gained the majority in 2016.

“Nothing will come out of the assembly that can have the least impact,” said Peter Hakim, of the Inter-American Dialogue, saying it has been “stripped of power and authority.”

“Our hands are tied,” Solorzano acknowledged.

Fractured opposition 

A previous attempt in January 2017 by opposition lawmakers to declare Maduro to have abandoned his responsibilities went nowhere.

More radical opposition leaders such as Antonio Ledezma or Maria Corina Machado have called on the legislature to immediately install a “government of transition” led by the president of the National Assembly.

Failure to do so could deepen divisions within an already fractured opposition.

“If there is something worse than doing nothing, it is doing that which weakens and makes you lose respect,” said political analyst Luis Salamanca.

Maduro is deeply unpopular, seemingly unwilling or incapable of halting a slide into hyperinflation and economic paralysis that has set off mass migrations of his compatriots.

He has shrugged off international and opposition criticism, brushing aside accusations that he is assuming dictatorial powers.

“They accuse me of being a dictator to justify anything imaginable,” he said, insisting that his reelection was “democratic” and that his opponents are in disarray, not because of him, but because of their “dependence” on the United States.