Brent crude oil futures pare gains after Qatar energy minister says agreed output freeze with Saudi Arabia, Russia, Venezuela
GRAPHIC: From Beirut to Damascus currencies take a battering
Lebanon’s president this week ordered the central bank governor to open an investigation into currency speculation, after the Lebanese pound plunged to record lows on the black market.
But the battered Lebanese pound is not alone among regional currencies that have been decimated by the impact of the pandemic and other factors.
The Syrian pound also fell to a record low on the black market this week, dragged down by its close commercial and banking ties with Lebanon.
“Businessmen and traders are fretting over fears of a free-fall in coming days and watching if unrest grows in Lebanon and its impact on dealings since Lebanon is our lifeline to the outside world,” said one Damascus-based trader told Reuters, who requested anonymity.
Oil prices rise after Saudi minister urges caution on market
- OPEC and allies meet today
- Oil price rises ahead of meeting
LONDON Oil prices rose more than $1 per barrel on Thursday after Saudi Energy Minister Prince Abdul Aziz bin Salman urged caution and vigilance at the beginning of a meeting of OPEC ministers and their allies about the future of supply cut
Brent crude futures were up $1.11, or 1.7 percent, at $65.18 a barrel while U.S. West Texas Intermediate (WTI) crude rose $1.07, or 1.8 percent to $62.35.
Ministers from OPEC members and their allies started a meeting to discuss the future of an oil output cut at 1300 GMT.
Analysts and traders say a four-month price rally from below $40 a barrel is now out of step with demand and that physical sales are not expected to match supply until later in 2021.
In the United States, despite a record surge of more than 21 million barrels in crude oil stockpiles last week, gasoline stocks fell by the most in 30 years as refining plunged to a record low because of the Texas freeze.
Saudi energy minister: Recovery in oil demand related to speed of COVID-19 vaccine distribution
LONDON: The recovery in oil demand is related to the speed of COVID-19 vaccine distribution, Saudi Arabia’s energy minister said on Thursday.
Speaking at the opening of a meeting of the Organization of the Petroleum Exporting Countries, Russia and its allies, a group known as OPEC+, Prince Abdulaziz bin Salman said that the Kingdom has “contingency and backup plans in case unforeseen things happen,” Al-Ekhbariya reported.
He added that the situation in the oil market had improved but the outlook for a recovery in demand remained uncertain.
Ministers from OPEC members and their allies started a meeting to discuss the future of an oil output cut at 01:00 P.M. GMT.
Abu Dhabi’s Etihad Airways reports $1.7 billion loss in 2020
- Regional carriers hit hard by pandemic
- CEO says airline stood firm in face of downturn
ABU DHABI: Etihad on Thursday reported core operating losses of $1.7 billion in 2020, reflecting the severe toll of the coronavirus pandemic on the long-troubled airline that has lost billions in recent years.
Etihad reported revenues of $2.7 billion in 2020 compared to $5.6 billion the year before, a precipitous decline it attributed to “drastically fewer people traveling” as the surging pandemic crippled air travel.
But the airline, one of the Middle East’s top carriers, struggled with financial losses long before the pandemic wiped out the global aviation industry. Since 2016, Etihad has lost a total of $5.62 billion as it has aggressively bought up stakes in airlines from Europe to Asia to compete against the region’s other leading airlines, Dubai-based Emirates and Qatar Airways.
With cost-cutting measures, the company was just starting to recover from the economic pain early last year. It announced the sale of 38 aircraft to an investment firm in an attempt to bolster profits, in a deal valued at $1 billion.
Then, the pandemic struck. Last March, the United Arab Emirates halted flights to stem the spread of the virus. Passenger traffic plummeted to just 4.2 million travelers from 17.5 million the year before, the airline said. Total passenger capacity on planes dropped 64 percent. The carrier lost $758 million over the first half of 2020 alone. The losses rippled across the company, forcing the airline to cut 33% of its workforce and slash salaries by 25-50 percent.
By comparison, Etihad lost $870 million in 2019. The airline reported losses of $1.28 billion in 2018 and $1.52 billion for 2017.
While rollout of coronavirus vaccines has stoked hopes for a global return to travel, the industry is not expected to see meaningful recovery for months, until vaccines are widely administered.
Still, Etihad CEO Tony Douglas struck an optimistic tone in the earnings announcement.
“While nobody could have predicted how 2020 would unfold,” he said, “Etihad stood firm and is ready to play a key role as the world returns to flying.”
India merchants almost halt exports to Iran as its rupee reserves fall
- Under US sanctions, Tehran is unable to use US dollars to transact oil sales
- The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India
MUMBAI/ DUBAI: Indian merchants have almost entirely stopped signing new export contracts with Iranian buyers for commodities such as rice, sugar and tea, due to caution about Tehran’s dwindling rupee reserves with Indian banks, six industry officials told Reuters.
“Exporters are avoiding dealing with Iran since payments are getting delayed for months,” said a Mumbai-based dealer with a global trading house.
Iran’s rupee reserves in India’s UCO and IDBI Bank , the two lenders authorized to facilitate rupee trade, have depleted significantly and exporters are not sure whether they would be paid on time for new shipments, the dealer said.
Under US sanctions, Tehran is unable to use US dollars to transact oil sales.
Iran previously had a deal to sell oil to India in exchange for rupees, which it used to import critical goods, including agricultural commodities, but New Delhi stopped buying Tehran’s oil in May 2019 after a US sanctions waiver expired.
Tehran continued using its rupees to buy goods from India, but after 22 months of no crude sales, Iran’s rupee reserves have fallen, said the sources, who asked not to be named, citing business privacy.
Iran’s reserves have reduced significantly and “will be over soon probably because trade has stopped,” said a senior official with IDBI Bank.
The Islamic Republic was buying mainly basmati rice, tea, sugar, soymeal and medicines from India.
“Rice exporters are concerned about the current payment mechanism,” said Vijay Setia, a rice exporter and former president of the All India Rice Exporters’ Association (AIREA).
“There was too much of delay in payments from last year’s shipments. Exporters received payments six months after shipments,” Setia said.
In the first quarter of 2020 Iran imported nearly 700,000 tons of basmati rice from India, but in the same period this year shipments would be “very negligible,” Setia said.
Last year, Iran was the biggest buyer of India’s basmati rice and sugar. Iran fulfils more than one-third of its sugar and rice demand through imports, traders estimate.
Iran’s trade ministry and Central Bank of Iran declined to comment on the matter.
“We are in talks with Indian government and Indian traders to resolve these payment issues and I believe it will be resolved soon,” said a senior Iranian official, who asked not to be named due to the sensitivity of the matter.
“The delay in payments are due to US sanctions on Iran’s financial system that has made such payments very difficult,” he said.
As rupee reserves have depleted and dollar trade is not allowed, sugar exporters are exploring options to conduct trade in euros, Rahil Shaikh, managing director of MEIR Commodities India, said.
Sugar exporters are focusing on other destinations like Indonesia and Sri Lanka, as Iran is unlikely to buy significant quantities this year, said Shaikh.
India’s overall exports to Tehran fell 42% in 2020 from a year ago to $2.2 billion, the lowest in over a decade, said an official with India’s Ministry of Commerce and Industry.
The fall is continuing in 2021 and in January this year exports more than halved from a year ago to $100.20 million, the official said.
India’s ministry of commerce and industry did not immediately respond to a request for comment.
Trading houses and exporters were hoping new US President Joe Biden could reverse sanctions imposed by his predecessor Donald Trump on the oil-rich country.
“Exports would rebound even if Biden administration provides a few concessions to Iran like allowing oil trade in rupees,” said a Mumbai-based dealer with a global trading firm.