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.


New Zealand to conduct own assessment of Huawei equipment risk

Updated 18 February 2019
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New Zealand to conduct own assessment of Huawei equipment risk

  • Huawei faces intense scrutiny in the West over its relationship with the Chinese government
  • Several Western countries had restricted Huawei’s access to their markets

WELLINGTON: New Zealand will independently assess the risk of using China’s Huawei Technologies in 5G networks, Prime Minister Jacinda Ardern said on Monday after a report suggested that British precautions could be used by other nations.
Huawei, the world’s biggest producer of telecoms equipment, faces intense scrutiny in the West over its relationship with the Chinese government and US-led allegations that its equipment could be used by Beijing for spying.
No evidence has been produced publicly and the firm has repeatedly denied the allegations, which have led several Western countries to restrict Huawei’s access to their markets.
The Financial Times reported on Sunday that the British government had decided it can mitigate the risks arising from the use of Huawei equipment in 5G networks. It said Britain’s conclusion would “carry great weight” with European leaders and other nations could use similar precautions.
New Zealand’s intelligence agency in November rejected an initial request from telecommunications services provider Spark to use 5G equipment provided by Huawei.
At the time, the Government Communications Security Bureau (GCSB) gave Spark options to mitigate national security concerns over the use of Huawei equipment, Ardern said on Monday.
“The ball is now in their court,” she told a weekly news conference.
Ardern said New Zealand, which is a member of the Five Eyes intelligence sharing network that includes the United Kingdom and the United States, would conduct its own assessment.
“I would expect the GCSB to apply with our legislation and our own security assessments. It is fair to say Five Eyes, of course, share information but we make our own independent decisions,” she said.
Huawei New Zealand did not immediately respond to a request for comment. Spark said it was in discussions with GCSB officials.
“We are working through what possible mitigations we might be able to provide to address the concerns raised by the GCSB and have not yet made any decision on whether or when we should submit a revised proposal to GCSB,” Spark spokesman Andrew Pirie said in an emailed statement.
The Huawei decision, along with the government’s tougher stance on China’s growing influence in the Pacific, has some politicians and foreign policy analysts worried about potential strained ties with a key trading partner.
Ardern’s planned first visit to Beijing has faced scheduling issues, and China last week postponed a major tourism campaign in New Zealand days before its launch.
Ardern said her government’s relationship with China was strong despite some complex issues.
“Visits are not a measure of the health of a relationship they are only one small part of it,” she said, adding that trade and tourism ties remained strong.