Oil drops on Iran sanction exemptions, economic concerns

Oil is in ample availability despite the sanctions against Iran as output from the world’s top-three producers, Russia, the US and Saudi Arabia, is rising. (Reuters)
Updated 06 November 2018
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Oil drops on Iran sanction exemptions, economic concerns

  • Analysts said expectations of an economic slowdown in coming months were weighing on the fuel demand outlook
  • The price pressure on oil has scared off financial traders

SINGAPORE: Oil prices slipped on Tuesday, weighed down by exemptions from Washington that will allow Iran’s biggest oil customers to keep buying from Tehran, as well as concerns that an economic slowdown may curb fuel demand growth.
US West Texas Intermediate (WTI) crude futures were at $62.95 a barrel at 0355 GMT, down 15 cents, or 0.2 percent, from their last settlement.
International Brent crude oil futures were down 28 cents, or 0.4 percent, at $72.89 a barrel.
Analysts said expectations of an economic slowdown in coming months were weighing on the fuel demand outlook, while concerns eased on the supply-side after Washington granted eight importers of Iranian oil sanctions waivers that will allow them to continue purchases.
Washington gave 180-day exemptions to eight importers — China, India, South Korea, Japan, Italy, Greece, Taiwan and Turkey. These are Iran’s biggest buyers, meaning Iran will be allowed to still export some oil for now.
Jameel Ahmad, head of market research at futures brokerage FXTM said the “sanctions on Iran have been ... priced into the oil markets,” and that he would “instead focus more heavily on the global demand outlook because of the ongoing external uncertainties weighing down on economic prospects.”
Ahmad added that he saw a slowdown in economic and fuel demand growth as “more of a risk for oil over the coming months.”
Currency weakness is putting pressure on key growth economies in Asia, including India and Indonesia.
At the same time, the trade dispute between the United States and China is threatening growth in the world’s two biggest economies.
On the supply-side, oil is in ample availability despite the sanctions against Iran as output from the world’s top-three producers, Russia, the US and Saudi Arabia, is rising.
The three countries combined produced more than 33 million barrels per day (bpd) for the first time in October, meaning they alone meet more than a third of the world’s almost 100 million bpd of crude oil consumption.
Amid ample supply, top crude exporter Saudi Arabia has cut its December price for its Arab Light grade for Asian customers by 10 cents per barrel versus November to a premium of $1.60 a barrel to the Oman/Dubai average, state oil company Saudi Aramco said on Monday.
The price pressure on oil has scared off financial traders.
Hedge fund managers were net sellers of petroleum-linked futures and options for a fifth week running last week as concerns about sanctions on Iran evaporated and investors refocused on economic worries.
Portfolio managers have been net sellers of 371 million barrels since the end of September, taking their net long position to the lowest level for 15 months, according to records published by regulators and exchanges.


Ghosn sues Nissan and Mitsubishi for breach of contract: report

Updated 55 min 56 sec ago
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Ghosn sues Nissan and Mitsubishi for breach of contract: report

  • Ghosn is seeking up to $16.8 millions in damages
  • He spent over 100 days jailed in Japan over financial misconduct trials
PARIS: Former auto titan Carlos Ghosn, currently under house arrest in Tokyo, is suing Nissan and Mitsubishi in a Dutch court for “improper termination” of his contract, French newspaper Le Figaro reported Wednesday.
Ghosn is accusing the Japanese manufacturers of breaching his contract as an employee of NMBV, their joint subsidiary based in the Netherlands, and seeking up to $16.8 million in damages, it said.
The big-spending former chief of both Renault and its Japanese partner Nissan is awaiting trial in Japan on charges of financial misconduct.
He was kept behind bars for over 100 days before being granted bail and sacked from all his management roles.
Ghosn is accused of under-reporting millions of dollars in income at Nissan and of using company funds for personal expenses — charges he denies.
His lawyers argue that while Ghosn resigned from Renault-Nissan BV (RNBV), he had not done so from NMBV and “the breach of contract” was unwarranted, Le Figaro said.
Nissan and Mitsubishi argue that Ghosn’s contract was invalid as it would not have been submitted to NMBV’s board, according to the daily.
NMBV had thanked Ghosn after a meeting of his board of directors on March 12, the same day as the announcement of its dissolution.
Ghosn’s spokesperson and his lawyer both declined to comment when contacted by AFP.
Le Figaro said the manufacturers were seeking to recover some $8.79 million paid to Ghosn by NMBV between April and November 2018.
Renault announced in early June it was considering taking action against its former boss after it identified $12.36 million of “questionable expenses” linked to Ghosn at RNBV.
The 65-year-old Ghosn was arrested in Japan in November as he stepped off his private jet at Tokyo airport.
His dramatic downfall stunned the business world and laid bare tensions in the alliance between Renault, Nissan and their smaller Japanese partner Mitsubishi.
Ghosn has not been charged in connection with his activities at NMBV.