Oil prices edge down from near 2-1/2 year high

Equipment used to process carbon dioxide, crude oil and water is seen at an Occidental Petroleum Corp. enhanced oil recovery project in Hobbs, New Mexico, US. (Reuters/Ernest Scheyder/File Photo)
Updated 07 November 2017
0

Oil prices edge down from near 2-1/2 year high

TOKYO: Oil prices edged lower on Tuesday after posting the biggest gains in six weeks a day earlier, buoyed by moves by Saudi Arabia’s crown prince to tighten his grip on power and rising tensions between the kingdom and Iran.
US West Texas Intermediate (WTI) crude slipped 10 cents, or 0.2 percent, to $57.25 a barrel by 0231 GMT. The contract surged 3 percent on Monday, the biggest percentage gain since late September.
Brent crude futures were down 19 cents, or 0.3 percent, at $64.08. On Monday, they closed 3.5 percent higher, also their biggest percentage gain in about six weeks.
Both benchmarks hit their highest since mid-2015 during the session.
Saudi Crown Prince Mohammed bin Salman moved to shore up his power base with the arrest of royals, ministers and investors, including billionaire Alwaleed bin Talal and the powerful head of the National Guard, Prince Miteb bin Abdullah.
The arrests, which an official described as part of “phase one” of the crackdown, are the latest in a series of dramatic steps by Prince Mohammed to tighten his grip at home.
Tensions between Saudi Arabia and Iran also rose further. The Saudi Arabia-led military coalition fighting against the Houthi movement in Yemen said on Monday it was closing all Yemeni air, sea and land crossings.
The move came after a missile was fired toward Riyadh on Saturday. Saudi Arabia and its Gulf allies have said they see Iran as responsible for the Yemen conflict and, on Monday Saudi Foreign Minister Adel Al-Jubeir said his country reserves the right to respond to Iran’s “hostile actions.”
Iranian Foreign Minister Mohammad Javad Zarif said Saudi Arabia was blaming Tehran for the consequences of its own “wars of aggression.”
“A potential conflict could limit significant supply out of the region,” Shane Chanel, equities and derivatives adviser at ASR Wealth Advisers, said in an email. “We see WTI above $60 and may even see Brent above $70 by the end of the year.”
Despite the moves by the Saudi heir, analysts said they do not see Saudi Arabia, the world’s largest oil exporter, changing its policy of boosting crude prices for now.
Saudi Energy Minister Khalid Al-Falih said that while there is “satisfaction” with a production-cutting deal between the Organization of the Petroleum Exporting Countries and other producers led by Russia, the “job is not done yet.”
OPEC is expected to extend a cut of around 1.8 million barrels per day into the whole of 2018.
US drillers cut eight oil rigs last week, the biggest reduction since May 2016, helping to support prices.
While supplies are tightening, analysts said demand remains strong.
Speculators increased their bets on gains in the price of Brent to a record high.


French state-owned bank drops plan to aid trade with Iran

Updated 53 min 25 sec ago
0

French state-owned bank drops plan to aid trade with Iran

  • US-imposed sanctions sanctions iare making trade with Iran increasingly difficult for European companies - such as Volvo
  • US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers

PARIS: French state-owned bank Bpifrance has abandoned its plan to set up a mechanism to aid French companies trading with Iran, in the face of US sanctions against Tehran.
Earlier this year, the bank had said it was working on a project to finance French companies that wished to export goods to Iran despite US sanctions.
“It’s put on hold,” said Nicolas Dufourcq, Bpifrance’s chief executive. “Conditions are not met (...) Sanctions are punitive for companies.”
Bpifrance was working on establishing euro-denominated export guarantees to Iranian buyers of French goods and services. By structuring the financing through vehicles without any US link, Bpifrance thought it was possible to avoid the extraterritorial reach of US legislation.
Dufourcq’s latest comments show how the scope of the sanctions is making trade with Iran increasingly difficult for European companies.

Swedish truckmaker Volvo has been forced to stop assembling trucks in Iran as it can no longer get paid with US sanctions taking bite.
Volvo spokesman Fredrik Ivarsson said due to the sanctions Volvo could no longer get paid for any parts it shipped and therefore had taken the decision to not operate in Iran.
"With all these sanctions and everything that the United States put.. the bank system doesn't work in Iran. We can't get paid... So for now we don't have any business (in Iran)," he said.
The US is renewing sanctions on Iran after withdrawing from a nuclear deal forged in 2015 between Tehran and world powers. Washington reimposed some of the financial sanctions from Aug. 6, while those affecting Iran’s petroleum sector will come into force from Nov. 4.
Even though several European countries have said they are seeking to protect their companies from the sanctions, several major companies including oil company Total, Air France-KLM and British Airways have announced they would suspend activities in Iran.
German officials have in recent weeks advocated for the creation of an independent system for cross-border payments to make trade with Iran possible even with the US sanctions.
European Union diplomats have said US President Donald Trump’s positions on trade and on Iran were fueling a rethink about the EU’s dependency on the US financial system.
However, European countries appear to be struggling to find or agree on effective options to tackle the issue.