Posts Tagged ‘Venezuela’

OPEC Will Struggle To Bring Prices Down

July 11, 2018

Cartel faces serious challenges despite injection of extra crude from Libya

By David Sheppard

Libya, which has been wracked by war and civil strife since 2011, is reopening four major ports that its state oil company had lost control of © EPA

US president Donald Trump has been demanding Opec lower oil prices for weeks. On Wednesday he might have temporarily got his wish, albeit from an unexpected source: Libya.The Opec member, which has been wracked by war and civil strife since 2011, announced it was reopening four major ports that its state oil company lost control of last month.

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Brent crude, the international benchmark, quickly dropped 2.5 per cent to below $77 a barrel, as traders bet that around 800,000 barrels a day of crude exports that had been under threat were going to now make it to market.But for those in Opec breathing a sigh of relief, hoping Mr Trump might soon be sated, they may still want to take a pause.

While the immediate risk of higher oil prices has been reduced by the news out of Tripoli, a number of serious challenges remain even as Saudi Arabia and others in the cartel have started to rapidly increase output to make up for shortfalls in other members.

Venezuela shows little sign of stemming its collapse in production amid a political and economic crisis. It lost nearly 50,000 b/d in June, according to Opec, taking losses since this time last year close to 700,000 b/d. Angola’s output has dropped 300,000 b/d in a year due to under-investment.

Libya remains a near basket case, with no part of the underlying political situation any closer to being resolved.

“We’ll see what happens tomorrow,” was the frank assessment of one Libya watcher.The scale of the challenge was illustrated by Opec’s own monthly report on Wednesday.While the group estimates that demand for its oil will fall next year by 760,000 b/d to 32.18m b/d — a substantial drop as demand growth slows and US shale production rises — it is still not clear if the market will be comfortably supplied.

Even as Saudi Arabia moved to open the taps, raising output by more than 400,000 b/d in June, Opec still only pumped 32.3m b/d.

The risk is that that total could fall substantially by November when renewed US sanctions on Iran’s 2m b/d of crude exports kick in.If the US succeeds in cutting Iran’s exports by half, the market will still be in a deficit without substantial further increases from Saudi Arabia and a sustained recovery in Libya.

Even if you back the Saudis to deliver, the oil market is now essentially relying on the chaotic situation in Libya becoming stable enough to keep the crude flowing.Mr Trump may not be happy with those implications for prices.

https://www.ft.com/content/30b09c08-84fc-11e8-a29d-73e3d454535d

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Glencore Looks to Shore Up Investor Confidence With Buyback

July 5, 2018

Move to repurchase $1 billion in shares comes days after news about U.S. subpoena

Glencore’s shares fell as much as 12% Tuesday after it said the Justice Department asked for documents related to business in Congo, Nigeria and Venezuela.
Glencore’s shares fell as much as 12% Tuesday after it said the Justice Department asked for documents related to business in Congo, Nigeria and Venezuela. PHOTO: ARND WIEGMANN/REUTERS

Glencore GLNCY -9.43% PLC said Thursday it would purchase $1 billion in stock from investors, launching the buyback just days after disclosing it had received a subpoena from the U.S. Department of Justice.

Glencore’s shares fell as much as 12% Tuesday after it said the Justice Department was seeking records related to its compliance with American antibribery and anti-money-laundering laws in the Democratic Republic of Congo, Nigeria and Venezuela. It declined to provide details.

Glencore’s shares are down 16% so far this year, compared with advances by mining-giant rivals that are benefiting from strong commodity prices amid steady appetite for resources in China and elsewhere. Anglo American NGLOY -1.22% PLC is 12% higher year-to-date, BHP Billiton Ltd. BHP 0.29% is up 11% and Rio Tinto RIO -0.30% PLC has gained 2%.

Glencore has long signaled a buyback. Amid several years of low commodities prices, Chief Executive Ivan Glasenberg sold off assets and pared back debt dramatically. More recently, prices have bounced back strongly, boosting Glencore’s stock price. On Thursday, shares rose more than 2% after the buyback disclosure.

The Anglo-Swiss mining company’s shares have been weighed down this year by a series of negative news surrounding its giant copper and cobalt mining operations in Congo. The Congolese government has imposed a new mining code seeking to extract higher payments from mining companies, a move Mr. Glasenberg and other mining executives have rallied against.

Glencore faced a legal threat from Congo’s state-owned mining company, Gecamines, which sued one of its Congo copper companies, Katanga Mining , over its $9.2 billion debt load. Glencore later said a unit of Katanga Mining would issue $5.6 billion in stock to retire debt, resolving the dispute.

Glencore also sued in Congo by its former partner, Israeli billionaire Dan Gertler, who last year was sanctioned by the U.S. Treasury Department for alleged corruption in Congo. Glencore temporarily halted royalty payments it owed Mr. Gertler following the sanctions, prompting the lawsuit. In June, Glencore said it would resume the payments.

Write to Scott Patterson at scott.patterson@wsj.com

https://www.wsj.com/articles/glencore-looks-to-shore-up-investor-confidence-with-buyback-1530793685

US subpoenas mining giant Glencore in corruption probe

July 3, 2018

The U.S. Justice Department has demanded that Glencore PLC hand over records related to the Anglo-Swiss mining giant’s compliance with laws against foreign-corrupt practices and money laundering concerning its business in the Democratic Republic of Congo, Nigeria and Venezuela.

Glencore, which is based in Switzerland, may also be facing a British fraud probe over its operations in the DR Congo. (AFP)

Glencore GLEN, -12.02%  , which disclosed it had received a subpoena in a statement Tuesday, said it is reviewing the request and “will provide further information in due course.” The company said the subpoena was dated July 2 and relates to its operations in the three countries from 2007 to the present. Shares of Glencore fell more than 12% in early trading.

Glencore has oil businesses in Venezuela and Nigeria. In Congo, Glencore operates a pair of giant copper mining operations that also produce cobalt, a key ingredient of lithium-ion batteries that power mobile phones and electric vehicles.

Since the U.S. government’s subpoena covers several countries, that indicates “there is a relatively thorough investigation at hand,” said Tyler Broda, an analysts at RBC Capital Markets.

An expanded version of this report appears on WSJ.com.

Oil Prices Still a Problem

July 3, 2018

Oil is becoming a problem.

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Nymex crude-oil futures fell a bit today, but have lately rallied to their highest levels in nearly four years, more than doubling from the bottom of a crash a couple of years ago. Prices aren’t catastrophically high yet – at about $74 a barrel, they’re still much lower than the $100 or so of earlier this decade, when the economy was on shakier ground. (And if you want society to swear off fossil fuels, then $74 isn’t high enough.)

But oil is expensive enough that many people, including the most important person in the world, President Donald Trump, are noticing. Trump has tweeted his anger over this situation a couple of times, including a recent declaration that he had convinced Saudi Arabia to pump more oil. That is … not how this works; Saudi Arabia’s OPEC buddies at least have to pretend to be OK with such a thing. And they did sort of agree recently to pump more, partially in response to another Trump tweet. But oil prices have surged anyway, pushing gas prices higher, “timed exquisitely for November’s midterms,” writes Liam Denning. He notes the whole episode illustrates how little Trump controls, or even understands, the oil market.

In fact, Trump’s own policy of squeezing Iranian oil exports has the market worried about supply, at a time when  Venezuela’s ineptitude has crippled its own output, and infrastructure bottlenecks are keeping U.S. shale oil off the market (for now). Add it all up, and it starts to look like an oil-price shock that could eventually crush prices, but by destroying demand first, warns David Fickling. Oil shocks don’t last long, but they do often bring recessions with them.

Electric Feel

Another thing oil-price shocks do is make people look for alternatives. That’s why it’s a good time for an oil-buyers’ cartel to band together to boost electric-car use and other ways to consume less oil, writes Carl Pope. China and India are already talking about such a thing, and Europe and Japan might be convinced to go along (forget the U.S.; Trump’s not much of a “joiner”).

Such a club might be great news for, say, electric-car maker Tesla Inc. – although it still remains to be seen whether Tesla can ever manage to consistently produce enough cars to take full advantage. The company used a manufacturing “burst” to finally hit its Model 3 target production, but Liam Denning wonders whether this is sustainable, or profitable.

https://www.bloomberg.com/view/articles/2018-07-02/trump-tweets-can-t-stop-an-oil-shock

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.

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“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 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

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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

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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

Saudi Arabia pushing Iran closer to Opec deal

June 22, 2018
Oil cartel seeks to cool a price rally that has taken crude prices to highest level since 2014
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Anjli Raval and David Sheppard in Vienna


Saudi Arabia on Friday led Opec in pushing Iran closer to a deal to unwind supply curbs by up to 1m barrels per day, as the cartel and its allies tried to find a way to cool a price rally that has taken crude to the highest level since 2014.

Khalid Al Falih, the kingdom’s energy minister, said on Friday he was hopeful producers could reach an agreement, with Saudi Arabia engaging in private talks with Iran and Russia to bring on more barrels amid pressure from consumers including the US.

Bijan Zanganeh, Iran’s oil minister, said producers were “cooking something” but it was unclear if the main sticking point — how to distribute any raises — had been resolved.

Oil prices have risen above $80 a barrel in recent weeks as Opec and Russia-led supply cuts coincided with robust demand and unplanned outages from countries such as Venezuela.

Iran had opposed any change in the original agreement in the lead up to the meeting, arguing crude prices received an additional boost after the US reimposed sanctions on its oil exports and any new deal would mean Opec was acting on behalf of President Donald Trump.

“There was a lot of discussion about listening to consumers, but clearly the one at 1600 Pennsylvania Avenue is overweight in influence and cannot be easily ignored, “ said Helima Croft at RBC Capital Markets.

Mr Falih said that while a headline figure of 1m barrels per day was being proposed by most ministers — to be shared among Opec and non-Opec producers — he said the actual level of increases could be lower as some countries were unable to boost output.

Before the meeting, Saudi Arabia was said to seek an outcome that would return 600,000-800,000 barrels per day of real crude to the market.

The existing cuts, which have been in place between Opec and its allies since January 2017, have far exceeded the original target of 1.8m barrels per day due to unplanned outages in countries including Venezuela, Angola and Libya.

Mr Falih said the proposal on the table would bring compliance within Opec back to 100 per cent. By sticking broadly within the limits of the existing deal, this might placate Iran.

Still, Raad Alkadiri of the Boston Consulting Group said: “The Iranians and other producers who can’t raise output are understandably concerned about what is in it for them. There’s been a lot of focus on the politics but the economics are arguably even more important.”

Iran’s oil minister said before the meeting that he agreed that raising production would be a “responsible” outcome for consumers but emphasised that he saw $70 a barrel as a “good” price for oil.

That is a level Saudi Arabia is also said to be loath to see prices fall below, illustrating part of the delicate balancing act Opec and its allies are trying to achieve.

While Iran’s oil minister reiterated on Friday that Opec is not an organisation to “take instructions from President Trump”, Saudi Arabia — a key ally of Washington — has felt pressure from the US and other big oil consumers, including China and India, to stop prices rising further.

As the meeting got under way late on Friday morning, Brent crude, the international benchmark, was up 1.7 per cent at $74.31 a barrel.

Mr Falih said the vast majority of members backed an increase and he hoped “reason will ultimately prevail.”

Saudi Arabia has allied with Russia — who is not an Opec member — since 2016 and are looking to formalise an arrangement between the cartel and Moscow.

Alexander Novak, the Russian energy minister, has backed an output increase with the country’s energy companies keen to raise production. Non-Opec countries, led by Russia, will meet with the cartel on Saturday and will probably rubber stamp any agreement reached between Opec producers on Friday.

“The last few days have seen at least a certain degree of tentative alignment in terms of opinions and have increased chances for a consensus-driven supply increase,” analysts at JBC Energy in Vienna said.

“In particular, the acknowledgment — crucially also by Iran — that dealing with the unintended over-compliance is a feasible and acceptable approach towards effectively getting more oil to the market, is encouraging.”

https://www.ft.com/content/c2d4232a-7606-11e8-b326-75a27d27ea5f

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Saudi and Iranian energy ministers meet privately ahead of Opec meeting

June 22, 2018

The energy ministers of Saudi Arabia and Iran held last-minute talks ahead of the Opec meeting on Friday

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Saudi Arabian Energy Minister Khalid al-Falih floated a plan Thursday to raise oil production by about one million barrels a day. PHOTO:STEFAN WERMUTH/BLOOMBERG NEWS

By David Sheppard 


The energy ministers of Saudi Arabia and Iran held last-minute talks ahead of the Opec meeting on Friday, Iran’s Shana news agency reported.

The talks will be seen as a last-ditch attempt by Saudi’s Khalid al Falih to have Iran’s Bijan Zanganeh back an Opec and Russia-led proposal to agree an oil output increase of 1m barrels a day.

Image result for Bijan Zanganeh, photos

Iran’s Bijan Zanganeh

Iran has opposed the increase, arguing it is a response to US pressure to lower oil prices, which jumped after Washington reimposed sanctions on Tehran’s crude exports.

Mr Zanganeh left a technical meeting of the producer group last night saying talks were not going well.

The start of the Opec meeting in Vienna has been delayed while the talks are ongoing.

https://www.ft.com/content/3631e596-75f8-11e8-b326-75a27d27ea5f

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Iran Throws Wrench Into OPEC Plan to Lift Production

Saudi minister says there is broad support for proposal to raise crude output by one million barrels a day

VIENNA—Iran said late Thursday it was still opposed to a deal to lift oil output, fraying a sense of consensus among OPEC members and putting it at loggerheads with Saudi Arabia, the cartel’s de facto leader.

The surprise move—after signals throughout the day that Iran was warming to an agreement—heightens uncertainty about whether Saudi Arabia can maintain discipline among members of the Organization of the Petroleum Exporting Countries as it seeks to dole out more oil to thirsty global markets. Riyadh has led OPEC in a pact with Russia and a handful of other non-OPEC members in whittling down a large surplus of crude that has kept prices low for years.

That deal, reached in 2016, displayed an uncommon level of compliance among global producers. Now, with Iran openly rebelling, that sense of discipline is threatened.

Saudi Arabia, its Persian Gulf allies and Russia can move ahead with an increase without Tehran. But OPEC decisions are usually unanimous. Disarray inside the group could signal to markets the tightly coordinated oil policy among the Riyadh- and Moscow-led group is coming apart.

Representatives of other influential OPEC members, including Nigeria and Iraq, in comments to reporters after a late-night technical meeting Thursday, said they backed a plan pushed by Saudi Energy Minister Khalid al Falih to boost output by one million barrels day. Mr. Falih said he had support from an “overwhelming majority” for the one-million-barrel increase.

Mr. Falih also said a working group of OPEC members and nonmembers had agreed to back the proposal. OPEC meets Friday to make a final decision.

Iran can’t raise output on its own, partly because new U.S. sanctions are likely to keep buyers away. But Iran’s intransigence would challenge Riyadh’s authority in the group. Analysts and officials have worried that could lead to a free-for-all among other producers, who might be tempted to open the taps to compete for market share—driving down prices.

“There still some time left to negotiate until the meeting starts on Friday, ‎but (it) is likely to be a tough one,” said Giovanni Staunovo, commodity strategist at UBS.

OPEC meetings are often contentious right down to the last minute, and Iran in particular has frequently clashed with Saudi Arabia over output decisions. Tehran has used this OPEC meeting to accuse Riyadh of bowing to U.S. demands to pump more oil. Washington has asked Saudi Arabia to provide more oil amid the new sanctions on Iran, according to people familiar with the matter. President Donald Trump has tweeted that prices are too high and has blamed OPEC.

Earlier in the day, a relatively smooth meeting looked possible. Iran’s oil minister arrived early in the week vowing to reject any output increase. But by Thursday officials familiar with the Iranian delegation’s thinking expected a compromise. Mr. Falih floated the plan to lift daily output by one million barrels.

That was more than Riyadh had originally wanted but far less than the 1.5 million barrels a day Moscow was seeking. The plan was enough to convince traders more oil was coming to market and sent crude prices down.

Hours later, though, Iran’s Oil Minister Bijan Zanganeh said he was still far from convinced a deal was close. “I don’t think there will be an agreement,” he told reporters.

Mr. Falih and Russian counterpart Alexander Novak have said they are willing to ease up on the 2016 output cut the two countries orchestrated. That pact reduced output by about 2% of global production at the time—or about 1.8 million barrels a day.

More recently, though, it has led to sharply higher crude prices and complaints from consumer countries like the U.S. and Asian buyers. OPEC has traditionally worried that too-high oil prices could curb demand.

On paper, the plan circulated by Mr. Falih on Thursday is bigger than what he and other OPEC allies have floated recently in response to Russia’s entreaties. As recently as Wednesday, he was pushing a plan to increase the group’s output by 500,000 barrels a day, according to people familiar with the matter.

But behind the scenes, people familiar with the matter say, Thursday’s proposal is more in line with what the Saudis and allies have been advocating all along. Because of output constraints, the current proposal would eventually amount to just 600,000 barrels a day of additional crude, they say.

The Saudi plan, officials have previously said, would consist of a first boost by OPEC’s 14 member states and a group of 10 Russia-led allies amounting to about 500,000 barrels a day in the third quarter. This would then be followed by the same amount in the fourth quarter.

But many members of the group are limited in how much they can lift output. Several are pumping flat out, while a few OPEC members, including Libya, Venezuela and Iran, are dealing with output constraints. Rebels have attacked Libyan ports, reducing exports. An acute economic crisis has hit Venezuelan production. U.S. sanctions threaten to bottle up Iranian crude.

That all means the OPEC and non-OPEC group would only really be adding about 600,000 barrels a day in new crude output, people familiar with the matter said.

Write to Summer Said at summer.said@wsj.com, Benoit Faucon at benoit.faucon@wsj.comand Christopher Alessi at christopher.alessi@wsj.com

Appeared in the June 22, 2018, print edition as ‘Iran Threatens To Sink OPEC Deal On Output Boost.’

https://www.wsj.com/articles/opec-nears-deal-to-lift-oil-production-1529580187

 

Death toll in Caracas club stampede rises to 18

June 21, 2018

Venezuelan authorities on Wednesday revised to 18 the death toll following a stampede at a crowded Caracas club over the weekend.

The deaths occurred after a brawl broke out during a middle school graduation party and someone detonated the tear gas, sending more than 500 people rushing for the exits, said Interior and Justice Minister Nestor Reverol.

© AFP/File | Relatives of the victims of the night club “Los Cotorros” wait outside the morgue in Caracas on June 16, 2018

“The tear gas canister did not cause the death of these 18 people,” he told journalists. “It was the stampeded of 500 people in the place who did not have sufficient evacuation routes.

On Saturday, Reverol had said eight minors were killed in the incident.

On Wednesday he said eight people had been detained in connection to the case, including an adolescent who “confessed” to having set off the tear gas.

There have been several incidents with tear gas over the past year in Venezuela, but with no victims.

The country is grappling with a severe economic crisis and pressure for President Nicolas Maduro to step down, amid a collapse in the price of oil, leading to chronic food and medicine shortages.

AFP