Kuwait sees risk of oil supply shortage in 2019 due to Venezuela crisis

The US and major EU nations have been putting pressure to oust Nicolas Maduro as president of Venezuela, which holds the largest proven oil reserves in the world. (AFP)
Updated 05 February 2019

Kuwait sees risk of oil supply shortage in 2019 due to Venezuela crisis

  • The Trump administration has imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA
  • OPEC, Russia and other non-OPEC producers agreed in December to reduce supply from January 1

KUWAIT: The head of state-run Kuwait Petroleum Corp, Hashem Hashem, said on Tuesday that global oil supply could be hit this year by big reductions in exports from Venezuela.
The Trump administration has imposed sweeping sanctions on Venezuelan state-owned oil firm PDVSA, aimed at severely curbing the OPEC member’s crude exports to the United States and at pressuring socialist President Nicolas Maduro to step down.
“One of the known risks of supply shortage in 2019 would include the continuing decline of Venezuelan crude oil production beyond current expectations,” Hashem told an industry conference in Kuwait.
“However, the wild card recently has been market perceptions of potential shortages mainly from geopolitical pressures that have caused supply disruptions in the past and therefore pose a real threat for 2019.”
Hashem also said that the threat of a US-China trade war and mixed messages from the United States on whether it would raise interest rates is causing volatility in the global equity markets and could increase oil price volatility this year.
OPEC, Russia and other non-OPEC producers — an alliance known as OPEC+ — agreed in December to reduce supply by 1.2 million barrels per day (bpd) from Jan. 1.
OPEC’s share of the cut is 800,000 bpd, to be delivered by 11 members — all except Iran, Libya and Venezuela.
Hashem said OPEC+ actions should help re-balance the oil markets this year but he also warned of the impact of underinvestment in the oil industry which could cause a supply crunch by 2025.
“OPEC and the non-OPEC producing countries ... have successfully provided stability to the market since 2017 and reduced volatility in oil prices. The resultant prices, are critical to stimulate investment and growth,” he said.


Africa development bank says risks to continent’s growth ‘increasing by the day’

Updated 40 min 37 sec ago

Africa development bank says risks to continent’s growth ‘increasing by the day’

  • The trade dispute between US and China has roiled global markets and unnerved investors
  • African nations need to boost trade with each other to cushion the impact of external shocks

DAR ES SALAAM: The US-China trade war and uncertainty over Brexit pose risks to Africa’s economic prospects that are “increasing by the day,” the head of the African Development Bank (AfDB) told Reuters.
The trade dispute between the world’s two largest economies has roiled global markets and unnerved investors as it stretches into its second year with no end in sight.
Britain, meanwhile, appears to be on course to leave the European Union on Oct. 31 without a transition deal, which economists fear could severely disrupt trade flows.
Akinwumi Adesina, president of the AfDB, said the bank could review its economic growth projection for Africa — of 4 percent in 2019 and 4.1 percent in 2020 — if global external shocks accelerate.
“We normally revise this depending on global external shocks that could slowdown global growth and these issues are increasing by the day,” Adesina told Reuters late on Saturday on the sidelines of the Southern African Development Community meeting in Tanzania’s commercial capital Dar es Salaam.
“You have Brexit, you also have the recent challenges between Pakistan and India that have flared off there, plus you have the trade war between the United States and China. All these things can combine to slow global growth, with implications for African countries.”
The bank chief said African nations need to boost trade with each other and add value to agricultural produce to cushion the impact of external shocks.
“I think the trade war has significantly impacted economic growth prospects in China and therefore import demand from China has fallen significantly and so demand for products and raw materials from Africa will only fall even further,” he said.
“It will also have another effect with regard to China’s own outward-bound investments on the continent,” he added, saying these could also affect official development assistance.
Adesina said a continental free-trade zone launched last month, the African Continental Free Trade Area, could help speed up economic growth and development, but African nations needed to remove non-tariff barriers to boost trade.
“The countries that have always been facing lower volatilities have always been the ones that do a lot more in terms of regional trade and do not rely on exports of raw materials,” Adesina said.
“The challenges cannot be solved unless all the barriers come down. Free mobility of labor, free mobility of capital and free mobility of people.”