China sees ‘enormous potential’ in Saudi economy as crown prince visits

Chinese Foreign Minister Wang Yi says he sees “enormous potential” in Saudi Arabia’s economy and wants more high-tech cooperation. (AFP)
Updated 22 February 2019
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China sees ‘enormous potential’ in Saudi economy as crown prince visits

  • China supports Saudi Arabia’s efforts to diversify its economy and is willing to strengthen high-tech cooperation, State Councillor Wang Yi said
  • Saudi Aramco is set to sign a pact to build a refinery and petrochemical project in Liaoning province in a joint venture with China’s Norinco

BEIJING: China sees “enormous potential” in Saudi Arabia’s economy and wants more high-tech cooperation, the Chinese government’s top diplomat said, as Saudi Crown Prince Mohammed bin Salman began a two-day trip to Beijing.
The Saudi delegation, including top executives from Saudi Aramco, arrived on Thursday on an Asia tour that has already seen the kingdom pledge investment of $20 billion in Pakistan and seek additional investment in India’s refining industry.
The crown prince will meet President Xi Jinping, who has made stepping up China’s presence in the Middle East a key foreign policy objective, despite its traditional low-key role there.
Meeting Saudi Foreign Minister Adel Al-Jubeir, State Councillor Wang Yi said the main features of their ties were respect, understanding and support for each other, China’s Foreign Ministry said in a statement late on Thursday.
“All countries in the world have the right to develop, and Saudi Arabia is an emerging market country with enormous potential,” the ministry paraphrased Wang as saying.
China supports Saudi Arabia’s efforts to diversify its economy and is willing to strengthen high-tech cooperation, Wang added.
Saudi Aramco, the world’s top oil exporter, will sign a pact to build a refinery and petrochemical project in northeastern Liaoning province in a joint venture with China’s defense conglomerate Norinco, three sources with knowledge of the matter said.
The investments could help Saudi Arabia regain its place as the top oil exporter to China, a position Russia has held for the last three years. Saudi Aramco is set to boost market share by signing supply deals with non-state Chinese refiners.
China has had to step carefully in relations with Riyadh, since Beijing also has close ties with Iran.
On Wednesday, Xi told the speaker of Iran’s parliament that China’s desire to develop close ties with Iran would stay unaltered, regardless of the global situation.
China is also wary of criticism from Muslim countries about its camps in the heavily Muslim far western region of Xinjiang, which the government says are for de-radicalization purposes and rights groups call internment camps.
Wang said both countries face the threats of terrorism and extremism, and should strengthen cooperation to safeguard security and stability.
China was not seeking to play politics in the Middle East, the widely-read state-run tabloid, the Global Times, said in an editorial on Friday.
“China won’t be a geopolitical player in the Middle East. It has no enemies and can cooperate with all countries in the region,” said the paper, published by the ruling Communist Party’s official People’s Daily.
“China’s increasing influence in the Middle East comes from pure friendly cooperation. Such a partnership will be welcomed by more countries in the Middle East.”

 

 


Oil near 2019 highs on OPEC supply cuts, US sanctions

OPEC scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled. (Reuters)
Updated 2 min 42 sec ago
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Oil near 2019 highs on OPEC supply cuts, US sanctions

  • OPEC scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled

SINGAPORE: Oil prices were near 2019 highs on Tuesday, supported by supply cuts led by producer club OPEC.
US sanctions against oil producers Iran and Venezuela are also boosting prices, although traders said the market may be capped by rising US output.
US West Texas Intermediate (WTI) futures were at $59.10 per barrel at 0314 GMT, virtually unchanged from their last settlement and close to the 2019 high of $59.23 reached the previous day.
Brent crude oil futures were up 10 cents at $67.64 per barrel, also close to this year’s peak of $68.14 reached late last week.
In China, Shanghai crude futures, launched in March last year, bounced 4.5 percent from their last close to 467.6 yuan ($69.64) per barrel, also near 2019 highs of 475.7 yuan a barrel reached during a brief spike in February.
In dollar-terms, this pushed Shanghai crude into a premium over Brent.
The Organization of the Petroleum Exporting Countries (OPEC) on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled.
OPEC and a group of non-affiliated producers including Russia, known as OPEC+, started withholding supply to halt a sharp price drop in the second-half of 2018, when markets came under pressure from surging output as well as an economic slowdown.
“The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.
Prices have been further supported by US sanctions against oil exports from Iran and Venezuela, traders said.
Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch further in the future, with May Brent prices currently around $1.20 per barrel more expensive than December delivery Brent.
Outside OPEC, analysts are eyeing US crude oil production, which has soared by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making America the world’s biggest producer ahead of Russia and Saudi Arabia.
Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.
On the demand-side, there is concern that an economic slowdown will erode oil consumption.
Bank of America Merrill Lynch said in a note that economic “risks are skewed to the downside” and that “we forecast global demand growth of 1.2 million bpd year-on-year in 2019 and 1.15 million bpd during 2020.”
The bank said it expected “Brent and WTI to average $70 per barrel and $59 per barrel respectively in 2019, and $65 per barrel and $60 per barrel in 2020.”