Oil edges higher toward $66 as OPEC-led cuts in view

An oil platform in the Bouri Oilfield some 70 nautical miles north of the coast of Libya. Putting a dampener on the market was the restart of the country’s El Sharara oilfield. (Reuters)
Updated 05 March 2019
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Oil edges higher toward $66 as OPEC-led cuts in view

  • Market balanced OPEC-led efforts to tighten supply with the restart of Libya’s biggest oilfield and the prospect of weaker demand
  • To support prices, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million barrels bpd since the start of the year

LONDON: Oil edged higher toward $66 a barrel on Tuesday as the market balanced OPEC-led efforts to tighten supply with the restart of Libya’s biggest oilfield and the prospect of weaker demand.
Supply curbs by the Organization of the Petroleum Exporting Countries and allies have helped to drive a 20 percent gain for Brent crude this year. Russia plans to speed up its output cuts this month, the energy minister said on Monday.
Brent, the international benchmark, rose 8 cents to $65.75 a barrel as of 1212 GMT. US West Texas Intermediate crude added 23 cents to $56.82.
“It appears that Saudi Arabia and Russia would be happy with crude oil prices of between $60 and $70 for the rest of this year,” said Ole Hansen of Saxo Bank.
A Brent price of $70, he added, “can be reached quite soon,” citing OPEC cuts, US sanctions against OPEC members Iran and Venezuela, and slowing USshale oil production growth.
Putting a dampener on the market was the restart of Libya’s El Sharara oilfield, where the aim is to reach initial output of 80,000 barrels per day. The field had been closed since December.
“This will increase the oil production of Libya, and thus of OPEC, by more than 300,000 barrels per day,” said Commerzbank in a report. “The oil market will then be slightly oversupplied again unless production is cut further or unscheduled outages occur elsewhere.”
Expectations that the latest round of US inventory reports will show rising crude stockpiles also limited the upside. Six analysts polled by Reuters estimated, on average, that crude stocks rose 400,000 barrels in the week to March 1.
The first supply report is due at 2130 GMT from the American Petroleum Institute (API), an industry group, followed by the government’s official figures on Wednesday.
Concern about a slowdown in oil demand growth has weighed on prices.
China’s government said it is targeting economic growth of 6.0 to 6.5 percent in 2019, less than 6.6 percent growth reported last year and raising the prospect of slowing fuel demand.
To support prices, OPEC and its allies, an alliance known as OPEC+, have been cutting output by 1.2 million barrels bpd since the start of the year.
The actual cut has exceeded the pledged amount because of the sanctions on Iran and Venezuela, plus unrest in Libya that had prompted the closure of El Sharara, giving an additional tailwind to prices.


For Iranians, economic crisis looms larger than US tensions

Updated 19 May 2019
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For Iranians, economic crisis looms larger than US tensions

  • Iran’s 80 million people struggle to buy meat, medicine and other staples of daily life
  • Many pointed to the economy, not the possible outbreak of war

TEHRAN: Across Iran’s capital, the talk always seems to come back to how things may get worse.
Battered by US sanctions and its depreciating rial currency, Iran’s 80 million people struggle to buy meat, medicine and other staples of daily life.
Many pointed to the economy, not the possible outbreak of war, as Iran’s major concern. Iran’s rial currency traded at 32,000 to $1 at the time of the 2015 nuclear deal. Now it is at 148,000, and many have seen their life’s savings wiped out.
Nationwide, the unemployment rate is 12 percent. For youth it’s even worse, with a quarter of all young people unemployed, according to Iran’s statistic center.
“The economic situation is very bad, very bad. Unemployment is very high, and those who had jobs have lost theirs,” said Sadeghi, the housewife. “Young people can’t find good jobs, or get married, or become independent.”
Sores Maleki, a 62-year-old retired accountant, said talks with the US to loosen sanctions would help jumpstart Iran’s economy.
“We should go and talk to America with courage and strength. We are able to do that, others have done it,” Maleki said. “We can make concessions and win concessions. We have no other choice.”
But such negotiations will be difficult, said Reza Forghani, a 51-year-old civil servant. He said Iran needed to get the US to “sign a very firm contract that they can’t escape and have to honor.” Otherwise, Iran should drop out of the nuclear deal.
“When someone refuses to keep promises and commitments, you can tolerate it a couple of times, but then certainly you can’t remain committed forever. You will react,” Forghani said. “So I don’t think we should remain committed to the deal until the end.”
Yet for Iran’s youth, many of whom celebrated the signing of the 2015 nuclear deal in the streets, the situation now feels more akin to a funeral. Many openly discuss their options to obtain a visa — any visa — to get abroad.
“Young people have a lot of stress and the future is unknown,” said Hamedzadeh, the 20-year-old civil servant. “The future is so unknown that you can’t plan. The only thing they can do is to somehow leave Iran and build a life abroad.”