Oil steady on lower Iran exports, rising US supply

A pump jack operates in the Permian Basin oil production area near Wink, Texas U.S. August 22, 2018. (Reuters)
Updated 29 August 2018
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Oil steady on lower Iran exports, rising US supply

  • Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017
  • Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran

LONDON: Oil prices steadied on Wednesday, supported by news of a fall in Iranian crude supplies as US sanctions deter buyers, but held back by evidence of a rise in US inventories.
Benchmark Brent crude oil was unchanged at $75.95 a barrel by 0905 GMT. US light crude was 5 cents higher at $68.58 a barrel.
Iran’s crude oil and condensate exports in August are set to drop below 70 million barrels for the first time since April 2017, well ahead of the Nov. 4 start date for a second round of US economic sanctions, preliminary trade flows data on Thomson Reuters Eikon show.
Bowing to pressure from Washington, many crude buyers have already reduced orders from Iran, OPEC’s third-biggest producer.
Although Tehran is offering steep discounts, Iran’s August crude oil and condensate loadings are estimated at 2.06 million bpd, versus a peak of 3.09 million bpd in April.
“US sanctions toward Iran are now increasingly kicking in which will help to dry up the physical crude oil market,” said SEB Markets commodities analyst Bjarne Schieldrop.
US crude inventories rose by 38,000 barrels to 405.7 million barrels in the week to Aug. 24, the American Petroleum Institute said on Tuesday.
Official US fuel inventory and crude production data will be published later on Wednesday by the Energy Information Administration (EIA).
Traders said reports of potential investment in Venezuela’s struggling oil production also affected markets. Venezuelan crude exports have halved since 2016 to below 1 million barrels per day (bpd).
To stem tumbling output, Venezuelan state-run oil firm PDVSA said on Tuesday it had signed a $430 million investment agreement to increase production by 640,000 bpd at 14 oilfields, although some analysts doubted whether this investment would go through given the instability in the country.
Despite the risk of disruption, especially from OPEC-countries like Venezuela, Iran, Libya and Nigeria, Bank of America Merrill Lynch said global supply could climb toward the end of the year.
“Heading into 4Q18, we expect rising non-OPEC oil production as supply outages abate and greenfield projects ramp up,” the US bank said. “Non-OPEC supply outages are at a 15-month high of 730,000 bpd. However, nearly half of these volumes are in the process of being restored.”
Adding to that will be new production in Canada, Brazil and the United States, which the bank said “should provide a substantial boost to non-OPEC supplies” during the second half of the year “taming upside pressures on Brent crude oil prices.”


‘Substantial progress’ made on major China trade deal that excludes US

Updated 14 November 2018
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‘Substantial progress’ made on major China trade deal that excludes US

SINGAPORE: Substantial progress has been made on hammering out a China-backed trade deal, Singapore’s leader said Wednesday, driving ahead the world’s largest commercial pact which the United States is excluded from.
World leaders gathered in the tropical city state this week for a summit where a massive Beijing-backed agreement covering half the world’s population has dominated discussions.
Diplomats have been trying to nail down details as Beijing entices its neighbors to join a commercial alliance seen as an antidote to President Donald Trump’s “America First” protectionist trade policy.
The US has imposed tariffs on roughly half of what it imports from China, prompting Beijing to retaliate with its own levies.
Beijing’s leaders have recast themselves as the defenders of global commerce — with the United States under Trump relegated to the sidelines.
China, Japan and India are among 16 Asia-Pacific countries negotiating the Regional Comprehensive Economic Partnership (RCEP).
“Substantial progress has been made this year to advance the RCEP negotiations,” Singaporean Prime Minister Lee Hsien Loong said Wednesday evening, adding talks were now “at the final stage.”
“With the strong momentum generated this year, I am pleased to note that the RCEP negotiations are poised for conclusion in 2019,” he added.
But he cautioned any further delays could risk “losing credibility” for a deal — which has already taken six years to negotiate.
This week’s meetings are the biggest in a series of annual gatherings organized by regional bloc the Association of Southeast Nations (ASEAN), and are attended by 20 leaders.
RCEP was given extra impetus after US President Donald Trump pulled the US out of the rival Trans-Pacific Partnership (TPP) in early 2017.
That deal was spearheaded by his predecessor Barack Obama and aimed to bind fast-growing Asian powers into an American-backed order to counter China.
The TPP is still alive even without Washington — and will come into effect in December — but RCEP, if realized, will be the world’s biggest trade deal.
However, the Beijing-backed pact is much less ambitious than the TPP in areas such as employment and environmental protection.
Beijing had hoped to have the meat of the deal done by the end of this year, but the timetable has now slipped to 2019.
However, this has not stopped Chinese leaders from basking in the progress already made.
During a meeting with Southeast Asia leaders, Chinese Premier Li Keqiang said he was hopeful talks would “break through the ceiling” and take regional trade “to new heights.”
Trump is not at the Singapore summit, nor will he attend a subsequent gathering of world leaders in Papua New Guinea at the end of the week, having sent Vice President Mike Pence instead.
National Security Adviser John Bolton, however, told reporters in Singapore that the president’s no-show should not be seen as a lack of commitment toward the region.
He blamed a “schedule crunch” after a particularly frenetic few weeks that included the midterm elections, attending the World War I armistice commemorations in France and preparing for the G20 in Argentina later this month.
There are still major sticking points in RCEP talks — with regional rival India particularly nervous about giving Chinese companies greater access to its markets, and wealthier nations wanting to see more progress on labor reforms.
Disagreements on intellectual property rights, goods tariffs and financial services are also on a long list of issues that still need to be concluded.
Also, the spectre of possible leadership changes with several general elections scheduled early next year — India, Thailand and Indonesia — have also complicated the timeline for a deal.
Aaron Connelly, an expert on Southeast Asian politics at the International Institute for Strategic Studies, said the fact that RCEP negotiations were not concluded at this year’s ASEAN could indicate China has some way to go to convince neighbors to sign up.
“It’s interesting that when Beijing is at its most vulnerable on trade, with US tariffs biting, they weren’t willing to concede enough to their neighbors in terms of market access to get a deal done,” he told AFP.
At the same time, trade ministers across Asia Pacific have sounded a largely positive tone this week, saying they expect the pact to be agreed sooner rather than later.
“The future lies in RCEP,” Indian trade minister Suresh Prabhu told reporters earlier in the week.