Oil prices fall as US storm threat eases, but Iran sanctions loom

Prices had jumped the previous day as dozens of US oil and gas platforms in the Gulf of Mexico were shut in anticipation of damage from tropical storm Gordon. (Reuters)
Updated 05 September 2018
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Oil prices fall as US storm threat eases, but Iran sanctions loom

  • Prices had jumped the previous day as dozens of US oil and gas platforms in the Gulf of Mexico were shut in anticipation of damage from tropical storm Gordon
  • There was also a typhoon hitting Japan’s east coast overnight, with some damage to oil refineries in the Osaka region

SINGAPORE: Oil prices fell on Wednesday as a tropical storm hit the US Gulf coast with high winds and heavy rain, but the impact on production was not as strong as initially expected.
US West Texas Intermediate (WTI) crude futures were at $69.31 per barrel at 0517 GMT, down 56 cents, or 0.8 percent, from their last settlement.
International Brent crude futures fell 37 cents, or 0.5 percent, to $77.80 a barrel.
Prices had jumped the previous day as dozens of US oil and gas platforms in the Gulf of Mexico were shut in anticipation of damage from tropical storm Gordon.
However, the storm had shifted eastward by Wednesday, reducing its threat to producers on the western side of the Gulf.
Stephen Innes, head of trading for Asia/Pacific at futures brokerage OANDA, said many crude futures traders were “caught long and wrong over the past 24 hours due to tropical storm buying frenzy,” adding that “prices pulled back considerably as the magnitude of the storm suggests production losses will be limited.”
There was also a typhoon hitting Japan’s east coast overnight, with some damage to oil refineries in the Osaka region, although operator JXTG said its operations were not significantly affected.
Innes said the price outlook for crude was still bullish, in large part because of US sanctions targeting Iran’s oil sector from November.
“With the anticipation of up to 1.5 million barrels per day affected by the US sanctions on Iran, one would expect prices to move higher in the weeks ahead.”
Other voices, however, cautioned on the risks to oil demand if turmoil in emerging markets starts hitting economic growth.
“My sense is that the big issue going forward, if this emerging market crisis morphs into something more troubling, is not just (oil) demand growth but total demand,” said Greg McKenna, chief market strategist at futures brokerage AxiTrader.
Emerging markets are a key driver of global oil demand growth, but several of them — especially Turkey and Argentina but also Indonesia and South Africa — have seen their currencies and stock markets come under pressure in recent months amid inflation, a strong US-dollar and escalating global trade disputes.
“If emerging markets get worse ... that will impact crude markets,” he said.
Striking a balance between maximizing revenue and keeping a lid on prices in order not to stall demand, top crude exporter Saudi Arabia is managing its own supply with a goal to keep crude prices in a range between $70 and $80 per barrel, OPEC and industry sources told Reuters this week.


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.