World energy agency warns of calm before sanctions storm as oil steadies

The International Energy Agency (IEA) warns that the global oil market might be experiencing the calm before the storm. (AFP)
Updated 10 August 2018
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World energy agency warns of calm before sanctions storm as oil steadies

LONDON: The International Energy Agency (IEA) has warned that the global oil market might be experiencing the calm before the storm.
While concerns about world trade arising from the tariffs dispute between the US and China have depressed demand expectations, the introduction of sanctions against Iran could pull the market in the other direction, the agency said.
“Sentiment is sandwiched between fears that a US-China trade dispute will hurt oil demand and looming Iranian supply shortages,” Stephen Brennock, analyst at London brokerage PVM Oil Associates, told Reuters.
The IEA did not change its forecast for global demand for oil to increase by 1.4 million barrels per day (bpd).
However, it raised its forecast for demand growth next year to reach 1.5 bpd.
“The recent cooling down of the market, with short-term supply tensions easing, currently lower prices, and lower demand growth might not last,” the IEA said in its monthly report.
“As oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion,” the IEA said.
The Paris-based organization noted that by the time it publishes its next report in mid-September, it will only be six weeks before the US deadline for ceasing purchase of oil from Iran.
Oil prices steadied in afternoon trade in London on Friday, rising by about 20 cents to $72.27 a barrel.
A trade war between the US and China is seen as a negative for the oil price as less energy is required for production.
China has removed crude oil from the list of additional tariffs it plans to impose on the US, worth some $16 billion.
Even so, Chinese imports of US oil are expected to fall dramatically.
At the same time, analysts are watching for the fallout from the introduction of US sanctions against Iran, which are set to include oil from November.
While the EU, China and India do not support the new sanctions against Tehran, they are nonetheless expected to fall into line behind the US.
Global trade tensions have helped to strengthen the dollar in what was a tumultuous week on global currency markets. The Turkish lira plunged on Friday, while the Russian rouble also came under pressure.
Oil is traded in dollars which makes it more expensive for importing countries.
“Oil, like other commodities, is responding to dollar strength,” Harry Tchilinguirian, head of oil strategy at French bank BNP Paribas in London, told the Reuters Global Oil Forum.


Libya’s NOC declares force majeure on El Sharara oilfield

Updated 18 December 2018
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Libya’s NOC declares force majeure on El Sharara oilfield

  • El Sharara — a 315,000 barrels a day field was taken over on Dec. 8 by groups of tribesmen, armed protesters and state guards demanding salary payments
  • Some government officials favor offering quick cash to the occupiers to make them leave, but NOC officials have warned that would set a precedent

TRIPOLI: Libya’s state oil firm NOC has declared force majeure on operations at the country’s largest oilfield, El Sharara, a week after it announced a contractual waiver on exports from the field following its seizure by protesters.

The 315,000 barrels a day field, located in the south of the North African OPEC member country, was taken over on Dec. 8 by groups of tribesmen, armed protesters and state guards demanding salary payments and development funds.

Officials have been unable to persuade the groups, who have been camping on the field, to leave the vast, partly unsecured site amid disagreements how best to proceed, workers on the field said.

Some government officials favor offering quick cash to the occupiers to make them leave, but NOC officials have warned that would set a precedent and encourage more blockades, workers at the oilfield say.

NOC has described the occupiers as militia trying to get on the payroll of field guards, a recurring theme in Libya where many see seizing NOC facilities as an easy way to get heard by the weak state authorities.

Production will only restart after “alternative security arrangements are put in place,” NOC said in a statement.

Operations at the smaller El Feel oilfield continued as normal, engineers said.

“Production at Sharara was forcibly shut down by an armed group — Battalion 30 and its civilian support company — that claimed to be providing security at the field, but which threatened violence against NOC employees,” NOC Chairman Mustafa Sanallah said in the statement.

His comments came after the chief of staff of the Tripoli-based government, Abdulrahman Attweel, criticized some of Sanalla’s previous comments about the protesters as “irresponsible.”

“These people (guards) were there to protect the field without salaries and without any attention to them and their daily needs, not in terms of accommodation, supply, transportation and communication,” Attweel told Al-Ahrar channel late on Monday.

Their demands were legitimate, he said, echoing comments by some southern lawmakers and mayors demanding more jobs and development for the neglected region.
The blockade has been complicated by the presence of tribesmen, who have argued against quick cash payments saying they want funds to improve hospitals and other services, which might take time to deliver.

The shutdown of the El Sharara has not affected the El Feel oilfield, also located in the south. It continued to pump around 70,000 barrels a day, field engineers said.
Its exports were being routed via the Melittah oil and gas port, which like El Feel belongs to a joint venture NOC has with Italian energy company Eni, another engineer said.

A spokesman for NOC did not respond to a request for comment.
El Sharara crude is normally transported to the Zawiya port, also home to a refinery. NOC runs the field with Spain’s Repsol , France’s Total, Austria’s OMV and Norway’s Equinor, formerly known as Statoil.