Price of oil on the rise as OPEC members eye cuts in production

Saudi Energy Minister Khalid Al-Falih, right, and his UAE counterpart Suhail Al-Mazrouei both said that oil production changes would likely be necessary. (AFP)
Updated 13 November 2018
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Price of oil on the rise as OPEC members eye cuts in production

  • Production cuts of up to 1 million barrels a day may be necessary
  • Suhail Al-Mazrouei, currently the president of OPEC, similarly said ‘changes’ would likely be necessary

LONDON: Oil prices rose on Monday after Saudi Arabia said reduced global demand could lead to a cut in output of a million barrels per day. 

Brent crude oil stood at $71.10 per barrel by 4 p.m. in London on Monday, an increase of 1.4 percent. 

OPEC and its partners saw a need to cut oil supply by as much as 1 million barrels per day compared to October levels to avoid a build-up of unused oil, Saudi Energy Minister Khalid Al-Falih said in Abu Dhabi on Monday. 

The day before, he said Saudi Arabia alone would reduce its oil shipments by half a million barrels a day in December compared to November, because of seasonal lower demand. 

Al-Falih’s made his comments he met fellow OPEC and non-OPEC partners in the UAE capital to discuss the outlook for the market. 

The potential cuts come amid reduced global demand and a consequent fall in the price of oil by about 20 percent over the last month, according to Reuters. The currencies of major buyers such as India and China have weakened against the dollar, which has reduced their purchasing power. 

Crude oil prices hit four-year highs in late September, with production ramped up in anticipation of the impact of renewed US sanctions on Iran. 

Prices then fell again when the US issued sanctions waivers to major importers of Iranian oil. US oil production also started to increase, placing further pressure on prices. 

“Just like positive demand surprises underpinned the oil price rally, intensifying downside risks to global growth are now on the rise, and will weigh on both market fundamentals and sentiment,” said Konstantinos Venetis, senior economist at TS Lombard. 

Jameel Ahmad, global head of currency strategy and market research at broker FXTM, said the looming threat of an economic slowdown could destabilize the oil markets. 

“A reduction in supply next year would be appropriate with the risks of lower economic growth,” he said. 


‘Don’t be too optimistic’: Huawei employees fret at US ban

Updated 26 May 2019
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‘Don’t be too optimistic’: Huawei employees fret at US ban

  • This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei
  • Another critical partner, ARM Holdings, said it was complying with the US restrictions

BEIJING: While Huawei’s founder brushes aside a US ban against his company, the telecom giant’s employees have been less sanguine, confessing fears for their future in online chat rooms.
Huawei CEO Ren Zhengfei declared this week the company has a hoard of microchips and the ability to make its own in order to withstand a potentially crippling US ban on using American components and software in its products.
“If you really want to know what’s going on with us, you can visit our Xinsheng Community,” Ren told Chinese media, alluding to Huawei’s internal forum partially open to viewers outside the company.
But a peek into Xinsheng shows his words have not reassured everyone within the Shenzhen-based company.
“During difficult times, what should we do as individuals?” posted an employee under the handle Xiao Feng on Thursday.
“At home reduce your debts and maintain enough cash,” Xiao Feng wrote.
“Make a plan for your financial assets and don’t be overly optimistic about your remuneration and income.”
This week Google, whose Android operating system powers most of the world’s smartphones, said it would cut ties with Huawei as a result of the ban.
Another critical partner, ARM Holdings — a British designer of semiconductors owned by Japanese group Softbank — said it was complying with the US restrictions.
“On its own Huawei can’t resolve this problem, we need to seek support from government policy,” one unnamed employee wrote last week, in a post that received dozens of likes and replies.
The employee outlined a plan for China to block off its smartphone market from all American components much in the same way Beijing fostered its Internet tech giants behind a “Great Firewall” that keeps out Google, Facebook, Twitter and dozens of other foreign companies.
“Our domestic market is big enough, we can use this opportunity to build up domestic suppliers and our ecosystem,” the employee wrote.
For his part, Ren advocated the opposite response in his interview with Chinese media.
“We should not promote populism; populism is detrimental to the country,” he said, noting that his family uses Apple products.
Other employees strategized ways to circumvent the US ban.
One advocated turning to Alibaba’s e-commerce platform Taobao to buy the needed components. Another dangled the prospect of setting up dozens of new companies to make purchases from US suppliers.
Many denounced the US and proposed China ban McDonald’s, Coca-Cola and all-American movies and TV shows.
“First time posting under my real name: we must do our jobs well, advance and retreat with our company,” said an employee named Xu Jin.
The tech ban caps months of US effort to isolate Huawei, whose equipment Washington fears could be used as a Trojan horse by Chinese intelligence services.
Still, last week Trump indicated he was willing to include a fix for Huawei in a trade deal that the two economic giants have struggled to seal and US officials issued a 90-day reprieve on the ban.
In Xinsheng, an employee with the handle Youxin lamented: “I want to advance and retreat alongside the company, but then my boss told me to pack up and go,” followed by two sad-face emoticons.