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.


Turkey set to begin oil and gas drilling off Cyprus

Updated 21 February 2019
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Turkey set to begin oil and gas drilling off Cyprus

  • “In the coming days we will start drilling with two ships around Cyprus,” Turkish foreign minister said
  • Turkey and the Cypriot government have overlapping claims of jurisdiction in the eastern Mediterranean

ISTANBUL: Turkey will begin drilling for oil and gas near Cyprus in coming days, state-owned news agency Anadolu reported Foreign Minister Mevlut Cavusoglu saying on Thursday, a move that could stoke tensions with neighboring Cyprus and Greece.
Turkey and the internationally recognized Greek Cypriot government have overlapping claims of jurisdiction for offshore oil and gas research in the eastern Mediterranean, a region thought to be rich in natural gas.
“In the coming days we will start drilling with two ships around Cyprus,” Cavusoglu was quoted as saying in a speech to a business conference in western Turkey’s Aydin province.
“Let those who come to the region from far away, and their companies, see that nothing can be done in that region without us. Nothing at all can be done in the Mediterranean without Turkey, we will not allow that,” Cavusoglu said.
Turkey launched its first drillship “Fatih” in October to drill off the coast of Turkey’s southern Antalya province. It said a second ship that it purchased would operate in the Black Sea, but was diverted to the Cyprus area.
Breakaway north Cyprus, which is supported by Turkey, says any offshore wealth also belongs to them, as partners in the establishment of the Republic of Cyprus in 1960.
The island was divided in 1974 after a Turkish invasion triggered by a brief Greek-inspired coup. Countless peacemaking endeavours have failed, and offshore wealth has increasingly complicated peace negotiations, with Greek Cypriots saying the matter is not up for discussion.