Saudi Arabia urges OPEC to cut oil output to low end of target

Energy, Industry and Mineral Resources Minister Khalid Al-Falih.
Updated 18 November 2016

Saudi Arabia urges OPEC to cut oil output to low end of target

RIYADH/DOHA: Saudi Energy Minister Khalid Al-Falih said on Thursday he was optimistic about OPEC’s deal to limit oil output and mentioned the lower end of a previously agreed production target, helping spur a rally in the price of crude.
The Organization of the Petroleum Exporting Countries, at a meeting in Algeria in September, made a preliminary deal to limit oil output. The details are meant to be finalized when OPEC ministers gather in Vienna on Nov. 30.
Al-Falih told Al-Arabiya TV that the oil market was on a path toward becoming balanced and that “reaching (a decision) to activate that ceiling of 32.5 million barrels per day (bpd) will speed up the (market) recovery and will benefit producers and consumers.”
OPEC agreed on Sept. 28 to limit supply to between 32.5 million and 33 million bpd, with special conditions given to Libya, Nigeria and Iran, whose output has been hit by wars or sanctions.
Al-Falih and other ministers have said previously that OPEC would reduce output to that range, without specifying the higher or lower end.
Oil prices climbed above $47 a barrel on Thursday as comments from Al-Falih and other ministers boosted expectations that OPEC would complete the deal.
“I’m still optimistic that the consensus reached in Algeria for capping production will translate, God willing, into caps on states’ levels and fair and balanced cuts among countries,” he said.
A number of OPEC energy ministers, including Al-Falih, are expected to meet informally in Doha on the sidelines of a gas exporters’ conference to try to build consensus.
Algeria’s Energy Minister Nouredine Bouterfa said the issue of Iran’s production would not undermine a deal.
“There is strong consensus among OPEC producers for a freeze,” he told Reuters.
“Iran is not a problem. Iran is a particular situation and needs particular treatment. They will not have the same rule for the reduction. We will study what the best solution is for Iran.”
Qatar’s Energy Minister Mohammed Al-Sada said Iran and Iraq — which has also sought special treatment in any supply cut — were being asked to freeze output at current levels.
“We are discussing with both countries on that and we are looking at various ways and means of coming to a mutual understanding,” Sada told reporters.
Non-OPEC exporter Russia is ready to support OPEC’s decision on an output freeze and sees a good chance that it can agree terms by Nov. 30, Russian Energy Minister Alexander Novak said on Wednesday.
Al-Falih told Al-Arabiya that he hoped an agreement with Russia to cooperate on market stability would correspond with OPEC’s meeting on Nov. 30.


American Airlines threatens to cancel some Boeing 737 MAX orders

Updated 11 July 2020

American Airlines threatens to cancel some Boeing 737 MAX orders

  • American’s stand comes as airlines are finding financing increasingly difficult and expensive
  • Airlines have canceled orders for more than 400 MAX planes so far this year

DALLAS: American Airlines is warning Boeing that it could cancel some overdue orders for the grounded 737 MAX unless the plane maker helps line up new financing for the jets, according to people familiar with the discussions.
American’s stand comes as airlines are finding financing increasingly difficult and expensive as the coronavirus pandemic has crippled their operations.
American had 24 MAX jets before they were grounded in March 2019. It has orders for 76 more but wants Boeing to help arrange financing for 17 planes for which previous financing has or will soon expire, according to three people who spoke Friday on condition of anonymity to discuss private talks between the companies.
If the companies can’t reach an agreement, American could use MAX financing that is about to expire to pay for jets from Boeing’s archrival Airbus, one of the people said.
Chicago-based Boeing said in a statement that it is working with customers during “an unprecedented time for our industry as airlines confront a steep drop in traffic,” but did not comment on the talks with American. The Fort Worth, Texas-based airline declined to comment.
News of American’s threat to cancel some orders was first reported by The Wall Street Journal.
The situation underscores the strain facing airlines during the coronavirus pandemic. It has grown more difficult and expensive for them to finance planes. American’s negotiating stance doesn’t reflect a loss of confidence in the plane’s safety, the sources said.
The MAX was Boeing’s best-selling plane before crashes in Indonesia and Ethiopia killed 346 people and led regulators around the world to ground all MAX jets.
The coronavirus pandemic has compounded Boeing’s problems by causing a sharp drop in air travel and a loss of interest in new planes. Nearly 40 percent of the world’s passenger jets are idled, according to aviation data supplier Cirium, as most airlines have more planes than they need until travel recovers.
That has made it more difficult to finance planes. United Airlines and Southwest Airlines found foreign lenders who agreed in April and May to buy MAX jets and lease them to the airlines, but those carriers are in stronger financial situations than American.
The 17 planes in dispute were supposed to have been delivered to American at least a year ago. That has given the airline the option of canceling the order without penalty and recovering its down payments now, according to one of the people familiar with the matter. The deliveries have been delayed while Boeing works to fix a flight-control system suspected of playing a role in the crashes.
Airlines have canceled orders for more than 400 MAX planes so far this year, and 320 are no longer certain enough to count in Boeing’s backlog. Some were dropped because the airline buyer ran into financial problems, while others were swapped for different Boeing planes. The company had taken 4,619 orders through May.
Air travel in the US fell about 95 percent from the beginning of March until mid-April. Traffic has recovered slightly since then, but remains down more than 70 percent from a year ago. With little revenue coming in, airlines are slashing spending and preparing to furlough thousands of workers this fall.
American has accepted $5.8 billion in federal aid to pay workers through Sept. 30, reached tentative agreement on a $4.75 billion federal loan, and lined up billions more in available cash from private lenders to survive the travel downturn.