Oil edges up on Saudi output cut and Iran sanctions

Saudi Arabia’s production cuts come in anticipation of a slowdown in oil demand. (Reuters)
Updated 14 August 2018
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Oil edges up on Saudi output cut and Iran sanctions

  • The cut comes amid expected export declines from Iran once the US re-imposes sanctions on Tehran
  • The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018

SINGAPORE: Oil prices inched up on Tuesday after a report from OPEC confirmed that top exporter Saudi Arabia had cut production to avert looming oversupply, although concerns over a slowdown in economic growth kept a lid on markets.
Front-month Brent crude oil futures were at $72.85 per barrel at 0658 GMT, up 25 cents, or 0.3 percent, from their last close.
US West Texas Intermediate (WTI) crude futures were up 25 cents, or 0.4 percent, at $67.45 per barrel.
In July, Saudi Arabia told the producer group of the Organization of the Petroleum Exporting Countries (OPEC) that it had curbed production by 200,000 barrels per day (bpd) to 10.288 million bpd.
The cut comes amid expected export declines from Iran once the US re-imposes sanctions on Tehran’s petroleum industry from November.
OPEC’s monthly report published on Monday, which uses data from secondary sources, confirmed the Saudi cut, which traders said triggered crude’s upward move early on Tuesday.
That came despite the Saudi move coming in anticipation of a slowdown in oil demand.
The OPEC report said it expected world oil demand to grow by 1.43 million bpd in 2019, down from 1.64 million bpd in 2018.
OPEC said the demand slowdown would come on the back of potentially lower economic growth as a result of trade disputes between the United States and China as well as emerging market turmoil.
China’s economy is showing further signs of cooling as the US prepares to impose even tougher trade tariffs, with investment in the first seven months of the year slowing to a record low and retail sales softening, data showed on Tuesday.
“Data from China failed to meet market expectations, which could be another signal that the world economy is slowing down,” said Sukrit Vijayakar.


Italy endorses China’s Belt and Road plan in first for a G7 nation

Updated 24 March 2019
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Italy endorses China’s Belt and Road plan in first for a G7 nation

ROME: Italy endorsed China’s ambitious “Belt and Road” infrastructure plan on Saturday, becoming the first major Western power to back the initiative to help revive the struggling Italian economy.
Saturday’s signing ceremony was the highlight of a three-day trip to Italy by Chinese President Xi Jinping, with the two nations boosting their ties at a time when the United States is locked in a trade war with China.
The rapprochement has angered Washington and alarmed some European Union allies, who fear it could see Beijing gain access to sensitive technologies and critical transport hubs.
Deputy Prime Minister Luigi Di Maio played down such concerns, telling reporters that although Rome remained fully committed to its Western partners, it had to put Italy first when it came to commercial ties.
“This is a very important day for us, a day when Made-in-Italy has won, Italy has won and Italian companies have won,” said Di Maio, who signed the memorandum of understanding on behalf of the Italian government in a Renaissance villa.
Taking advantage of Xi’s visit, Italian firms inked deals with Chinese counterparts worth an initial 2.5 billion euros ($2.8 billion). Di Maio said these contracts had a potential, future value of 20 billion euros.
The Belt and Road Initiative (BRI) lies at the heart of China’s foreign policy strategy and was incorporated into the ruling Communist Party constitution in 2017, reflecting Xi’s desire for his country to take a global leadership role.
The United States worries that it is designed to strengthen China’s military influence and could be used to spread technologies capable of spying on Western interests.
WARM WELCOME
Italy’s populist government, anxious to lift the economy out of its third recession in a decade, dismissed calls from Washington to shun the BRI and gave Xi the sort of red-carpet welcome normally reserved for its closest allies.
Some EU leaders also cautioned Italy this week against rushing into the arms of China, with French President Emmanuel Macron saying on Friday that relations with Beijing must not be based primarily on trade.
There was not even universal backing for the BRI agreement within Italy’s ruling coalition, with Deputy Prime Minister Matteo Salvini, who heads the far-right League, warning against the risk of China “colonialising” Italian markets.
Salvini did not meet Xi and declined to attend a state dinner held in honor of the visiting leader on Friday.
Di Maio, who leads the 5-Star Movement, says Italy is merely playing catch up, pointing to the fact that it exports significantly less to China than either Germany or France.
Italy registered a trade deficit with China of 17.6 billion euros last year and Di Maio said the aim was to eliminate the deficit as soon as possible.
After talks with Italian Prime Minister Giuseppe Conte and Di Maio in the morning, Xi flew to the Sicilian city Palermo for a private visit on Saturday afternoon.
He is due to head to Monte Carlo on Sunday before finishing his brief tour of Europe in France, where he is due to hold talks with Macron and German Chancellor Angela Merkel.