Oil market ‘well balanced’ in 2019, says Saudi adviser

Russia revealed that it will use about $3.3 billion from its National Wealth Fund to pay back oil firms this year as part of a deal to keep down domestic gas and diesel prices. (Reuters)
Updated 20 April 2019

Oil market ‘well balanced’ in 2019, says Saudi adviser

  • Russia expects to use about $3.3 billion from its National Wealth Fund this year to pay back oil
  • OPEC+ countries agreed last year to cut oil production as part of a global program to support crude prices and balance the market

PARIS/MOSCOW: Ibrahim Al-Muhanna, an adviser to the Saudi energy minister, said on Friday he expected the oil market to be “well balanced” this year.
“This year, we have seen the implementation of the OPEC Plus decision. It is possible to extend the cut until the end of the year depending on market conditions,” Al-Muhanna told an oil summit in Paris.
The OPEC+ group agreed last year to cut production, partly in response to increased US shale output.
Meanwhile, it emerged on Friday that Russia expects to use about 210 billion roubles ($3.3 billion) from its National Wealth Fund this year to pay back oil as part of a deal to keep down domestic gasoline and diesel prices.
The government and oil firms agreed to cut wholesale domestic fuel prices last year to keep a lid on petrol and diesel costs, a politically sensitive issue.
Under the deal, which runs from Nov. 1 until June 30, oil companies are allowed only to slowly increase petrol and diesel costs, which started to rise due to stronger global oil prices.
Russia is part of a global agreement to cut oil production aimed at propping up crude prices, a major source of state revenues. But that is hitting it back at home as the cost of gasoline is one of the key factors affecting inflation — and the central bank’s main policy rate.
Alexei Sazanov, head of the nance ministry’s tax department, told reporters that in February alone the state paid oil companies back 20-30 billion roubles for keeping fuel prices under control.
Russia is using the National Wealth Fund (NWF) as a buffer against potential external shocks and to pay out pensions or support some important large projects at home. The spending rules are strict as the state wants to preserve the fund.
Sazanov said that for 2019 as a whole, the payout from the NWF to the oil firms was estimated at 210 billion roubles.
“If we are paying the cash, we want to get a quality service in return. This service should result in the fact that the consumer should see prices at the fuel filling stations based on levels we pay back to the oil companies,” Sazanov said.
Under a “fiscal rule,” any revenue from oil prices higher than $40 per barrel goes into the NWF, which is part of Russia’s gold and foreign exchange reserves, held by the central bank.
The NWF currently stands at $59 billion and is expected to quadruple to over $200 billion, or 12 percent of gross domestic product, in 2021.


US President Trump does not want to do business with China’s Huawei

Updated 19 August 2019

US President Trump does not want to do business with China’s Huawei

  • US Commerce Department expected to extend a reprieve that permits Huawei to buy supplies from US companies to service its customers

WASHINGTON: US President Donald Trump on Sunday said he did not want the United States to do business with China’s Huawei even as the administration weighs whether to extend a grace period for the company.
Reuters and other media outlets reported on Friday that the US Commerce Department is expected to extend a reprieve given to Huawei Technologies Co. Ltd. that permits the Chinese firm to buy supplies from US companies so that it can service existing customers.
The “temporary general license” will be extended for Huawei for 90 days, Reuters reported, citing two sources familiar with the situation.
On Sunday, Trump told reporters before boarding Air Force One in New Jersey that he did not want to do business with Huawei for national security reasons.
He said there were small parts of Huawei’s business that could be exempted from a broader ban, but that it would be “very complicated.” He did not say whether his administration would extend the “temporary general license.”
Speaking earlier on Sunday, National Economic Council director Larry Kudlow said the Commerce department would extend the Huawei licensing process for three months as a gesture of “good faith” amid broader trade negotiations with China.
“We’re giving a break to our own companies for three months,” Kudlow said on NBC’s “Meet the Press.”