Sanctions and cuts push sour crude prices above Brent

US sanctions on Venezuela and Iran along with output cuts by OPEC have tightened the supply of medium to heavy sour oil. (Reuters)
Updated 12 February 2019
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Sanctions and cuts push sour crude prices above Brent

  • US sanctions on Venezuela have created a strong pull for medium and heavy sour crude from other sources
  • A decision by OPEC and Russia to rein in oil output has also buoyed sour crude prices

SINGAPORE: Middle East oil benchmarks Dubai and DME Oman have nudged above prices for Brent crude, an unusual move as US sanctions on Venezuela and Iran along with output cuts by OPEC tighten supply of medium to heavy sour oil.
Sour crudes, mainly produced in the Middle East, Canada and Latin America, have a high sulfur content and are usually cheaper than Brent, the benchmark for low-sulfur oil in the Atlantic Basin.
But Dubai spot prices and DME Oman crude futures for April have held above ICE Brent at Asia’s market close since the start of February, data from the Intercontinental Exchange (ICE), Dubai Mercantile Exchange and Refinitiv Eikon showed.
“The forceful implementation of US sanctions on Venezuelan crude exports, the greater-than-expected recent Saudi crude output cut ... and the uncertainty over US sanction exemptions on Iranian crude have all served to strengthen sour crudes relative to sweet benchmarks such as Brent,” said Tilak Doshi, a Singapore-based analyst at consultancy Muse, Stancil & Co.
US sanctions on Venezuela created a strong pull for medium and heavy sour crude from other places, said the traders and analysts.
The sanctions, aimed at blocking Venezuelan President Nicolas Maduro’s access to the nation’s oil revenue, will be extended to non-US oil buyers from April 28.
Uncertainty over whether Washington will extend waivers to sanctions on Tehran’s oil exports that it previously granted to top Iranian crude buyers — China, India, Japan and South Korea — is also boosting Middle East oil prices.
A decision by OPEC and Russia to rein in oil output has buoyed sour crude prices as well.


Norway oil firms lower 2019 investment forecast

Updated 21 February 2019
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Norway oil firms lower 2019 investment forecast

  • Investment forecasts for 2019 lowered to $20.06 billion
  • Several plans for development and operation (PDOs) expected to be submitted

OSLO: Oil and gas companies operating in Norway have lowered their investment forecasts for 2019 to 172.7 billion crowns ($20.06 billion) from 175.3 billion crowns seen in November, a survey by the country’s statistics agency (SSB) showed on Thursday.
In 2020, investments are expected to fall to 158.5 billion crowns according to initial forecasts, but the forecasts could be revised upwards in the months to come, it added.
“Several plans for development and operation (PDOs) are expected to be submitted to the government in both 2019 and 2020,” the agency said in a statement.
“If the schedules for these plans are realized, the accumulated investment costs in 2020 from these projects will increase the investment in field development compared to the present estimate.”
Norway’s oil and gas investments have rebounded from a sharp fall as rising crude prices and cost cuts lift industry activity. It was SSB’s fourth release of companies’ forecasts for 2019 and the first for 2020.
Equinor is Norway’s largest oil firm.