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Business

Oil steady as Ida outages offset Saudi price cuts

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General view of Aramco tanks and oil pipe at Saudi Aramco’s Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah/File Photo

  • Saudi cuts October prices for Asia by at least $1 a barrel
  • U.S. offshore oil output lags after Ida
  • U.S. oil rig count falls by most since June 2020 -Baker Hughes

NEW YORK, Sept 6 (Reuters) – Oil prices steadied on Monday as gains on production outages after Hurricane Ida were tempered by Saudi Arabia’s sharp cuts to crude contract prices for Asia, reviving concerns over the demand outlook.

Brent crude futures fell 16 cents to $72.45 a barrel by 10:52 a.m. EDT (1452 GMT). U.S. West Texas Intermediate crude fell 12 cents to $69.17 a barrel.

Both contracts had been down by $1 in earlier trade.

State oil group Saudi Aramco notified customers in a statement on Sunday that it will cut October official selling prices (OSPs) for all crude grades sold to Asia, its biggest buying region, by at least $1 a barrel.

The price cuts were larger than expected, based on a Reuters poll of Asian refiners. read more

“When the Saudi giant cuts its selling prices to Asia for October, signaling it sees the supply-demand relationship slightly shifting, traders can’t but follow down that path today,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy.

Global oil supplies are increasing as the Organization of the Petroleum Exporting Countries and its allies, a grouping known as OPEC+, are raising output by 400,000 barrels per day (bpd) each month between August and December. read more

“Given that OPEC+ is continuing its plan to raise production monthly, despite weak data from China and the U.S. raising slowdown fears and Saudi Arabia looking for market share in the region, oil is likely to remain under pressure,” said Jeffrey Halley, senior market analyst for Asia Pacific at brokerage OANDA.

The earlier decline in crude futures added to falls on Friday after a weaker-than-expected U.S. jobs report indicated a patchy economic recovery that could mean slower fuel demand during a resurgent pandemic. read more

Losses were capped by concerns that U.S. supply would remain limited in the wake of Hurricane Ida.

The U.S. government is releasing crude from strategic petroleum reserves as production in the U.S. Gulf Coast struggles to recover.

About 1.6 million barrels of crude oil remained offline, with only about 100,000 barrels added since Saturday. Another 1.8 billion cubic feet per day of natural gas output also was shut-in. [nL1N2Q70BU]

The hurricane also led U.S. energy companies to cut the number of oil and natural gas rigs operating for the first time in five weeks, data from Baker Hughes showed on Friday. The oil rig count last week fell the most since June 2020.

Reporting by Stephanie Kelly in New York; additional reporting by Julia Payne and Florence Tan
Editing by Jason Neely, David Goodman and Sonya Hepinstall

Our Standards: The Thomson Reuters Trust Principles.

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World

EXCLUSIVE Iran resumes fuel exports to neighbouring Afghanistan

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Traffic jam and crowds are seen near Kabul’s airport in Afghanistan August 16, 2021. SATELLITE IMAGE 2021 MAXAR TECHNOLOGIES/Handout via REUTERS.

LONDON, Aug 23 (Reuters) – Iran resumed fuel exports to Afghanistan a few days ago following a request from the new Afghan government, which feels empowered by the U.S. withdrawal to buy the sanctioned nation’s oil more openly, an Iranian official told Reuters.

The Sunni Muslim group seized power in Afghanistan last week as the United States and its allies withdrew troops after a 20-year war.

The price of gasoline in Afghanistan reached $900 per tonne as many Afghans drove out of cities, fearing reprisals and a return to a harsh version of Islamic law the Taliban imposed when in power two decades ago.

To counter the price spike, the new Taliban asked Shi’ite Iran to keep the borders open for traders.

“The Taliban sent messages to Iran saying ‘you can continue the exports of petroleum products’,” Hamid Hosseini, board member and spokesperson of Iran’s Oil, Gas and Petrochemical Products Exporters’ Union, in Tehran, told Reuters.

The Taliban sent messages to Iranian traders and to an Iranian chamber of commerce, which has close links to the government.

As a result, the Islamic Republic of Iran Customs Administration (IRICA), which is a part of the government, lifted a ban on fuel exports to Afghanistan, which had been in place since Aug. 6 because of Iran’s concerns about the safety of trading in the country.

Those concerns have been eased by the Taliban’s attitude, Hosseini said.

He also cited the Taliban’s decision to cut tariffs on imports of fuel from Iran and other neighbouring countries and shared with Reuters an official document issued by Islamic Emirate of Afghanistan – the name by which the Taliban refers to itself.

The document specified a 70% discount on tariffs on imports of gasoline, diesel and LPG from the neighbouring countries to Afghanistan.

IRAN-TALIBAN COOPERATION

Iran sits on the world’s fourth-largest oil reserves, but the latest round of U.S. sanctions imposed by former U.S. President Donald Trump in 2018, has significantly reduced Iranian oil exports.

Iran has nevertheless managed some trade, notably by trucking fuel to neighbours such as Afghanistan, and the U.S. troop withdrawal has made leaders of both Iran and Afghanistan less nervous about dealing more openly, Hosseini said.

The main Iranian exports to Afghanistan are gasoline and gasoil. Iran exported about 400,000 tonnes of fuel to its neighbour from May 2020 to May 2021, according to a report published by PetroView, an Iranian oil and gas research and consultancy platform.

Iranian fuel flows have been vital to Afghanistan in the last few years, according to traders and an Afghan government report, seen by Reuters.

Between March 2020 and March 2021, Iran accounted for $367 million of imports, mostly of fuel, according to the report compiled by the Afghan ministry of finance, chambers of commerce and data from private enterprises.

The next two most important oil suppliers are Turkmenistan and Uzbekistan with trade, mostly oil, valued at $257 million and $236 million respectively.

A source with direct knowledge of the matter, who asked not to be named, said more than 1 million tonnes per year, or over 20,000 barrels per day, of Iranian fuel goes to Afghanistan.

EXPANDING COOPERATION?

The main destinations of Iran’s fuel have been eastern provinces near the Iranian border, and southern regions like Kandahar and Nimrooz where the Taliban had a strong influence even before the push of recent weeks, Hosseini said.

“I think the new Iranian government will significantly expand cooperation with the Taliban government. Iran can easily double its trade with Afghanistan. The government of (Ashraf) Ghani was always trying to limit cooperation with Iran since Iran was under U.S. sanctions,” Hosseini said.

Afghanistan has not developed an oil industry of its own. The country has six mini-refineries that only produce several thousand barrels per day of refined products each.

They run on light oil from Turkmenistan whose two refineries also directly supply diesel and jet fuel.

Uzbekistan’s two main refineries also supply refined products by rail and truck.

The source with direct knowledge said supplies of Turkmen condensate (light crude oil) has ceased a month ago because of the security situation, but predicted it would resume in about two weeks’ time.

“The problem is the banks stopped working three days ago so we might be back to bags of cash,” the source said.

Reporting by Bozorgmehr Sharafedin and Julia Payne
in London; Editing by Edmund Blair and Barbara Lewis

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Business

Oil prices drop amid faltering demand outlook in China

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TOKYO, Aug 16 (Reuters) – Oil prices fell more than 1% on Monday, dropping for a third session, after official data showed that refining throughput and economic activity slowed in China in an indicator that fresh COVID-19 outbreaks are crimping the world’s no.2 economy.

Brent crude was down 90 cents, or 1.3%, at $69.69 a barrel by 0649 GMT. U.S. oil fell by 97 cents, or 1.4%, to $67.47 a barrel.

Factory output and retail sales growth slowed sharply in July in China, data showed, missing expectations as fresh outbreaks of COVID-19 and flooding disrupted business activity. read more

“Oil futures weakness … is likely triggered by weaker-than-expected growth data from China, which is a major consumer of oil,” said Kelvin Wong, market analyst at CMC Markets in Singapore. “All in all, the global peak growth narrative has been intensified.”

China’s crude oil processing last month also fell to the lowest on a daily basis since May 2020, as independent refiners cut production amid tighter quotas, elevated inventories and falling profits. China is the world’s biggest oil importer. read more

In Japan, the world’s fourth-biggest importer of crude oil, many analysts expect modest economic growth in the current quarter as state of renewed emergency restrictions to deal with record cases of infections weigh on household spending. read more

“We expect (Japan GDP) growth to remain under pressure in the third quarter as spending and production continue to struggle amidst disruptions from the pandemic,” Moody’s said.

The International Energy Agency on Thursday said rising demand for crude oil reversed course in July and was expected to increase at a slower rate over the rest of 2021 because of surging COVID-19 infections from the highly transmissible Delta strain. read more

Money managers reduced their net-long U.S. crude futures and options holdings in the week to Aug. 10, the U.S. Commodity Futures Trading Commission (CFTC) said on Friday.

Speculators also cut their futures and options positions in New York and London by 21,777 contracts to 283,601 over the period, the CFTC said.

Reporting by Aaron Sheldrick; Editing by Richard Pullin and Kenneth Maxwell

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World

Nobody’s running Lebanon, central bank boss says

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  • Central bank decided to end fuel subsidy on Wednesday
  • Central bank chief hits back at criticism of decision
  • The decision angered the government

BEIRUT, Aug 14 (Reuters) – Lebanon’s central bank governor said nobody was running the country, hitting back after government criticism of his decision to halt fuel subsidies that have drained currency reserves.

In an interview broadcast on Saturday, Riad Salameh said the government could resolve the problem quickly by passing necessary legislation.

He denied he had acted alone in declaring an end to the subsidies on Wednesday, and said it was widely known that the decision was coming. read more

“So far you have nobody running the country,” Salameh told Radio Free Lebanon.

The worsening fuel crisis is part of Lebanon’s wider financial meltdown. Hospitals, bakeries and many businesses are scaling back operations or shutting down as fuel runs dry. read more

Deadly violence has flared in fuel lines, protesters have blocked roads, and fuel tankers have been hijacked this week.

The American University of Beirut Medical Center said it was threatened with a forced shutdown as early as Monday because of shortages of fuel used to generate electricity.

“This means that ventilators and other lifesaving medical devices will cease to operate. Forty adult patients and fifteen children living on respirators will die immediately,” the hospital said.

The central bank’s move to end subsidies will mean sharp price increases. It is the latest turn in a crisis that has sunk the Lebanese pound by 90% in less than two years and pushed more than half the population into poverty.

The central bank has effectively been subsidising fuel and other vital imports by providing dollars at exchange rates below the real price of the pound – most recently at 3,900 pounds to the dollar compared to parallel market rates above 20,000. – This has eaten into a reserve which Salameh said now stood at $14 billion.

To continue providing such support, the central bank has said it needs legislation to allow use of the mandatory reserve, a portion of deposits that must be preserved by law.

“We are saying to everyone: You want to spend the mandatory reserve, we are ready, give us the law. It will take five minutes,” Salameh said.

“HUMILIATION OF THE LEBANESE”

The government has said fuel prices must not change. Fuel importers say they cannot import at market rates and sell at subsidised rates, and want clarity.

The central bank and oil authority told importers to sell their stocks at the subsidised rate of 3,900 pounds to the dollar, prioritising hospitals and other essential functions.

Lebanon’s army said on Saturday it had begun raiding closed petrol stations and distributing stored gasoline to citizens.

Critics of the subsidy scheme say it has encouraged smuggling and hoarding by selling commodities at a fraction of their real price.

Salameh said the bank had been obliged to finance traders who were not bringing their product to the market, and that over $800 million spent on fuel imports in the last month should have lasted three months.

Salameh said there was no diesel, gasoline or electricity, adding: “This is humiliation of the Lebanese.”

Lebanese politicians have failed to agree on a new government since Prime Minister Hassan Diab quit last August after a deadly explosion at Beirut port. He has stayed on as caretaker prime minister.

President Michel Aoun expressed optimism a new government would be formed soon.

Salameh said Lebanon could exit its crisis if a reform-minded government took office, adding the pound was “hostage to the formation of a new government and reforms”.

The government has said ending subsidies must wait until prepaid cash cards for the poor are rolled out. Parliament approved these in June, with financing from the mandatory reserve, Salameh said, but they have yet to materialise.

Reporting by Nafisa Eltahir/Laila Bassam; Writing by Tom Perry; Editing by Kirsten Donovan and Timothy Heritage

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Business

U.S. calls on OPEC and its allies to pump more oil

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Aug 11 (Reuters) – U.S. President Joe Biden’s top aides are pressuring OPEC and its allies to boost oil output to tackle rising gasoline prices that they see as a threat to global economic recovery.

Biden’s national security adviser Jake Sullivan criticized the world’s major oil producers, including Saudi Arabia, for what he said were insufficient crude production levels in the aftermath of the global COVID-19 pandemic.

“At a critical moment in the global recovery, this is simply not enough,” he said in a statement.

The unusual statement ratcheted up international pressure and comes as the administration tries to contain a range of rising prices and supply bottlenecks across the economy that have fueled inflation concerns.

Biden has made recovering from the economic recession triggered by the pandemic a key priority for his administration.

The message also underscored the new dynamic between Washington and OPEC since Biden’s predecessor, Donald Trump, broke with prior practice in demanding specific policy changes to lower prices. Trump had threatened to withdraw military support from OPEC’s leader Saudi Arabia.

The Biden administration’s push for lower fuel prices comes even as it seeks global leadership in the fight against climate change by encouraging a broad transition away from fossil fuels toward cleaner energy sources and electric vehicles.

Biden’s administration is pressing countries within OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other big producers, “on the importance of competitive markets in setting prices,” Sullivan said. “Higher gasoline costs, if left unchecked, risk harming the ongoing global recovery,” he added. “OPEC+ must do more to support the recovery.”

U.S. retail gasoline prices are running at about $3.18 a gallon at the pumps, up more than a dollar from last year at this time, according to the American Automobile Association.

International benchmark Brent crude was trading at just under $70 a barrel on Wednesday, down 1%.

That is lower than the prices above $77 in early July, but still represents an increase of nearly a third from the beginning of the year.

OPEC+ has been gradually easing a record output cut of 10 million barrels per day, about 10% of world demand, made in 2020 as oil use and prices recover from the pandemic-induced slump. As of July, the cut had been eased to about 5.8 million bpd.

At a meeting held in July, OPEC+ agreed to boost output by 400,000 bpd a month starting in August until the rest of the 5.8 million bpd cut is phased out. OPEC+ is scheduled to hold another meeting on Sept. 1 to review the situation.

The White House on Wednesday also directed the Federal Trade Commission (FTC), which polices anti-competitive behavior in domestic U.S. markets, to investigate whether illegal practices were contributing to higher U.S. gasoline prices.

“During this summer driving season, there have been divergences between oil prices and the cost of gasoline at the pump,” Biden’s top economic aide, Brian Deese, wrote in a letter to FTC chair Lina Khan.

He encouraged the FTC to “consider using all of its available tools to monitor the U.S. gasoline market and address any illegal conduct.”

Reporting by Trevor Hunnicutt; Additional reporting by Susan Heavey and Aakriti Bhalla; Editing by David Evans and Alexander Smith

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Business

Oil slides on China COVID-19 curbs, strengthening U.S. dollar

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  • Brent, WTI hit 2-1/2 week lows
  • China reports rise in new COVID-19 cases
  • China’s July crude imports down 20% on-year

MELBOURNE, Aug 9 (Reuters) – Oil prices fell nearly 2% on Monday, extending last week’s steep losses on the back of a rising U.S. dollar and concerns that new pandemic curbs in Asia, especially China, may set back the global recovery in fuel demand.

Brent crude futures slid by $1.27, or 1.8%, to $69.43 a barrel by 0434 GMT, after having slumped 6% last week, their biggest weekly loss in four months.

U.S. West Texas Intermediate (WTI) crude futures fell $1.29, or 1.9%, to $66.99 a barrel, after having slumped nearly 7% last week in their steepest weekly decline in nine months.

“Concerns about potential global oil demand erosion have resurfaced with the acceleration of the Delta variant infection rate,” RBC analyst Gordon Ramsay said in a note.

ANZ analysts pointed to new restrictions in China, the world’s second largest oil consumer, as a major factor clouding the outlook for demand growth.

The curbs include flight cancellations, warnings by 46 cities against travel, and limits on public transport and taxi services in 144 of the worst hit areas.

On Monday, China reported 125 new COVID-19 cases, up from 96 a day earlier. In Malaysia and Thailand, infections continue to hit daily records of more than 20,000. read more

“While the number of cases (in China) is low, it comes just as the summer travel season peaks,” ANZ commodity analysts said in a note. “This has overshadowed signs of strong demand elsewhere.”

China’s crude oil imports dipped slightly on a daily basis in July to 9.71 million barrels per day (bpd), a fourth month in a row of imports below 10 million bpd and sharply down on a record 12.94 million bpd in June 2020 when refiners were stocking up on cheap crude, data released on Saturday showed. read more

China’s export growth slowed more than expected in July following outbreaks of COVID-19 cases and floods, while import growth was also weaker than expected, pointing to a slowdown in the country’s industrial sector in the second half. read more

A rally in the U.S. dollar to a four-month high against the euro also weighed on oil prices, after Friday’s stronger-than-expected U.S. jobs report spurred bets that the Federal Reserve may move more quickly to tighten U.S. monetary policy.

A stronger U.S. dollar makes oil more expensive for holders of other currencies.

Trading was quiet with holidays in Japan and Singapore.

Reporting by Sonali Paul; Editing by Clarence Fernandez and Richard Pullin

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Business

Oil prices fall on worries over China economy and higher crude output

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A petrol station attendant prepares to refuel a car in Rome, Italy, January 4, 2012. REUTERS/Max Rossi/File Photo

  • China July factory activity grows at slowest pace since Feb 2020
  • OPEC July oil output hits 15-month high -survey
  • U.S. will not lock down despite coronavirus surge, Fauci says

SINGAPORE, Aug 2 (Reuters) – Oil prices fell on Monday on worries over China’s economy after a survey showed growth in factory activity slipped sharply in the world’s second-largest oil consumer, with concerns compounded by a rise in oil output from OPEC producers.

Brent crude oil futures slid by 74 cents, or 1%, to $74.67 a barrel by 0653 GMT, after dropping to a low of $74.10 earlier in the day.

U.S. West Texas Intermediate (WTI) crude futures dropped 70 cents, or 1%, to $73.25 a barrel after slipping to a session low of $72.77.

“China’s been leading economic recovery in Asia and if the pullback deepens, concerns will grow that the global outlook will see a significant decline,” said Edward Moya, senior analyst at OANDA.

“The crude demand outlook is on shaky ground and that probably will not improve until global vaccinations improve.”

China’s factory activity growth slipped sharply in July as demand contracted for the first time in more than a year, in part on high product prices, a business survey showed on Monday, underscoring challenges facing the world’s manufacturing hub.

The weaker results in the private survey, mostly covering export-oriented and small manufacturers, broadly aligned with those in an official survey released on Saturday that showed activity growing at the slowest pace in 17 months. read more

Also weighing on prices, a Reuters survey found that oil output from the Organization of the Petroleum Exporting Countries (OPEC) rose in July to its highest since April 2020, as the group further eased production curbs under a pact with its allies while top exporter Saudi Arabia phased out a voluntary supply cut. read more

While coronavirus cases continue to climb globally, analysts said higher vaccination rates would limit the need for the harsh lockdowns that gutted demand during the peak of the pandemic last year.

The United States will not lock down again to curb COVID-19 but “things are going to get worse” as the Delta variant fuels a surge in cases, mostly among the unvaccinated, top U.S. infectious disease expert Dr. Anthony Fauci said on Sunday. read more

India’s daily gasoline consumption exceeded pre-pandemic levels last month as states relaxed COVID-19 lockdowns while gasoil sales were low, signalling subdued industrial activity in July. read more

The United States and Britain said on Sunday they believed Iran carried out an attack on an Israeli-managed petroleum product tanker off the coast of Oman on Thursday that killed a Briton and a Romanian, and pledged to work with partners to respond. read more

Reporting by Jessica Jaganathan; Editing by Kenneth Maxwell and Edmund Klamann

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