Question marks over Russia’s compliance to OPEC+ cuts

The latest OPEC Monthly Oil Market Report (MOMR) forecasted that Russia will not fully comply with the cuts agreement during the first half of 2019. (AFP)
Updated 27 January 2019

Question marks over Russia’s compliance to OPEC+ cuts

RIYADH: The Brent crude oil price fell slightly to $61.64 per barrel at the end of last week, amid perceptions that Russia might not be able to promptly comply with OPEC+ output cuts agreed in December.
As part of the deal, Russia agreed to cut its production by 230,000 million barrels per day (bpd) from the 11.41 bpd touched in October.
But the latest OPEC Monthly Oil Market Report (MOMR) forecasted that Russia will not fully comply with the cuts agreement during the first half of 2019.
Due to its old oil infrastructure and mature oil fields, Russia cannot promptly decrease oil production — and the market is waiting to see where its output level for the first quarter of 2019 stands.
Unlike in Saudi Arabia — where Aramco is the only state oil producer — Russia has many major oil companies. These include the largest oil producer Rosneft — which produces over 4 million bpd — along with Lukoil, Surgutneftegaz, Gazprom and others.
During the OPEC meeting in Vienna in December 2018, Rosneft announced that its oil output forecasts for the the first six months of 2019 remain unchanged. That is mainly because Rosneft aims to increase production from three new fields it launched in Siberia in 2018. This led some market participants to question not only Russia’s compliance with the new OPEC+ agreement, but also that of other non-OPEC producers.
Market participants are confused by some of the statements from Russia with regard to energy policy and compliance with OPEC+ output cuts. Unlike what is seen with OPEC producers, statements by Russia’s energy minister sometimes vary from those made by executives of the country’s oil companies.
The compliance with the agreed output cuts — in which OPEC members and other large oil producers including Russia agreed to cut their combined crude production by 1.2 million bpd from January to halt a decline in oil prices — will be key to balancing the market in 2019.
Despite question marks over Russia’s compliance with the deal, OPEC in 2018 managed the various challenges successfully and was, as a whole, able to alter its output strategy based on the market needs.

Bank jobs go as HSBC and Emirates NBD reduce costs

Updated 15 November 2019

Bank jobs go as HSBC and Emirates NBD reduce costs

  • Others have also reduced headcount amid economic downturn and property market weakness

DUBAI: HSBC Holdings has laid off about 40 bankers in the UAE and Emirates NBD is cutting around 100 jobs, as banks in the Arab world’s second-biggest economy reduce costs.

The cuts come amid weak economic growth, especially in Dubai, which is suffering from a property downturn.

HSBC’s redundancies came after the London-based bank reported a sharp fall in earnings and warned of a costly restructuring, as interim CEO Noel Quinn seeks to tackle its problems head-on.

HSBC has about 3,000 staff in the UAE, part of a nearly 10,000-strong workforce in the Middle East, North Africa and Turkey.

The cuts at Dubai’s largest lender Emirates NBD came in consumer sales and liabilities, one source said, while a second played down the significance of the move.

HSBC and Emirates NBD declined to comment.

“The cuts are part of cost cutting and rationalizing to drive efficiencies in a challenging market,” the second source said.

Other banks have also reduced staff this year. UAE central bank data shows local banks laid off 446 people in the 12 months until the end of September. Foreign banks added staff in the same period.

Staff at local banks account for over 80 percent of the 35,518 banking employees in the country.

The merger between Abu Dhabi Commercial Bank, Union Commercial Bank and Al Hilal Bank saw hundreds of redundancies.

Commercial Bank International (CBI) said it would offer voluntary retirement to employees in September, which sources said saw over 100 departures. Standard Chartered, too, cut over 100 jobs in the UAE in September.

Rating agency Fitch warned in September a weakening property market would put more pressure on the UAE’s banking sector.