Saudi Arabia’s King Salman and Trump affirm support for the global oil market stability

Saudi Arabia's King Salman holds phone meeting with US President Donald Trump on the need to preserve oil market stability. (SPA)
Updated 01 July 2018
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Saudi Arabia’s King Salman and Trump affirm support for the global oil market stability

  • King Salman of Saudi Arabia assured the US that the Kingdom will increase oil production
  • Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran

RIYADH: Saudi King Salman and US President Donald Trump emphasised the need to preserve oil market stability and the efforts of oil-producing countries to compensate for any potential shortage, in a phone call reported by Saudi state media on Saturday.
The statement did not mention any intention by Saudi Arabia, the world’s top oil exporter, to raise production to 2 million barrels per day. Trump said in a tweet he had asked the king for such an increase and the king had agreed.

During the phone call, they also discussed the distinguished relations between the two countries, as well as regional and international developments. 

Oil prices have edged higher as the Trump administration has pushed allies to end all purchases of oil from Iran following the US pulling out of the nuclear deal between Tehran and world powers. Oil prices also have risen with the ongoing unrest in Venezuela, as well as with fighting in Libya over control of that country’s oil infrastructure.
Last week, members of the Organization of the Petroleum Exporting Countries cartel led by Saudi Arabia and non-cartel members agreed to pump 1 million barrels more crude oil per day, a move that should help contain the recent rise in global energy prices. However, summer months in the US usually lead to increased demand for oil, pushing up the price of gasoline in a midterm election year. A gallon of regular gasoline sold on average in the US for $2.85, up from $2.23 a gallon last year, according to AAA.
Trump’s comments came Saturday as global financial markets were closed. Brent crude stood at $79.42 a barrel, while US benchmark crude was at $74.15.
Saudi Arabia currently produces some 10 million barrels of crude oil a day. Its record is 10.72 million barrels a day. 

China is the largest importer of Iranian oil with 24 percent, followed by India with 18 percent. Turkey stood at 9 percent and Italy at 7 percent.


Bank lending for ‘real economy’ key to boost China growth: central bank official

Updated 27 min 33 sec ago
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Bank lending for ‘real economy’ key to boost China growth: central bank official

  • ‘The central bank doesn’t wish to use administrative methods to require banks (to lend)’
  • Quantitative easing is neither necessary nor possible at the moment

SHANGHAI: China should encourage its banks to support smaller, private firms in the real economy, rather than forced lending or policies such as quantitative easing, a state newspaper quoted a central bank official as saying on Saturday.
“The central bank doesn’t wish to use administrative methods to require banks (to lend),” Sun Guofeng, head of the monetary policy department at the People’s Bank of China (PBOC), told the Financial News, a bank publication.
“It wants to establish positive encouragement mechanisms though monetary policy tools to encourage banks to actively increase their support for the real economy, especially toward smaller and privately-owned firms,” Sun said.
The comments come a month after Sun wrote a commentary in which he argued that problems with timely capital replenishment, bank liquidity gaps and poor rate “transmission” are three major constraints on banks’ supply of credit.
In the interview with the Financial News, Sun said monetary policy transmission had “noticeably improved,” showing that steps to enhance transmission mechanisms had been effective.
He said the central bank would increase the strength of innovation in monetary policy tools.
Perpetual bond issuance “is only one breakthrough” in reducing capital constraints on banks, Sun said, adding that “other methods” could be used in the future.
He said that quantitative easing was neither necessary nor possible at the moment, noting that under China’s financial system the significance of the central bank buying Chinese treasury bonds on the secondary market is limited, and that the PBOC is barred from buying the instruments on the primary market.
China’s banks made the most new loans on record in January following a series of moves to boost lending as authorities try to prevent a sharp slowdown in the world’s second-largest economy.