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.


SoftBank to launch Vision Fund 2 mega-venture

Updated 13 min 2 sec ago
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SoftBank to launch Vision Fund 2 mega-venture

  • Vision Fund 2 will aim to pull in existing investors such as the Public Investment Fund in Saudi Arabia and Mubadala in the UAE
  • Vision Fund 2 is expected to at least equal the original fund’s $97 billion fund, and could reach $150 billion

LONDON: The global mega-investor SoftBank Vision Fund is preparing to launch another giant investment venture.
Vision Fund 2 will aim to pull in existing investors such as the Public Investment Fund in Saudi Arabia and Mubadala in the UAE, the biggest investors in the original fund along with SoftBank, the Japanese group run by Masayoshi Son.
Sources told Arab News that Vision Fund 2 is expected to at least equal the original fund’s $97 billion fund, and could reach $150 billion — which would make it the largest private investment fund in history.
A team from SoftBank Investment Advisers led by its chief executive Rajeev Misra and Masayoshi Son have been in preliminary discussions with potential investors for several months.
They have been talking to sovereign wealth funds in the Middle East and elsewhere, as well as big global corporates, some of which were also investors in the first fund.

*** Read our full interview with CEO Rajeev Misra here: SoftBank Vision Fund stands shoulder to shoulder with Saudi Arabia — CEO Rajeev Misra ***
Investment is also expected from global banks, insurance companies and pension funds, and SoftBank is expected to put up about $40 billion.
The first phase of the launch is due to end “in the next few months,” with a final close around 12 months later.
The original fund plans to return profits to existing investors over the next few months, including big partners such as PIF, Mubadala and SoftBank. If they see healthy returns they may be more likely to invest heavily in the new fund.
The interests of Saudi Arabia and the Vision Fund align as the Kingdom diversifies away from reliance on oil, Misra told Arab News. “Our commitment is to support the creation of tens of thousands of jobs in Saudi Arabia, high-tech jobs not blue collar, over the next few years,” he said.