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.


Japanese officials cautious on prospects for US trade deal

Updated 17 September 2019

Japanese officials cautious on prospects for US trade deal

  • A long-sought trade pact with Japan was scrapped when Donald Trump withdrew the US from a pan-Pacific trade agreement shortly after taking office in 2017
  • Trump said he preferred that Washington and Tokyo strike a bilateral deal

TOKYO: Officials in Japan appeared wary over the prospects for a trade deal with the US after President Donald Trump said he was prepared to sign a pact soon.
Japan’s chief government spokesman, Yoshihide Suga, said Tuesday that the two sides are still finalizing details after reaching a basic agreement in late August on trade in farm products, digital trade and other industries.
Suga said Trump and Prime Minister Shinzo Abe are considering signing a deal in late September when they attend the UN General Assembly in New York.
“We are accelerating the work that still remains,” he said. “But I decline to comment further because we have not reached a formal agreement.”
Trump’s notice to Congress, released by the White House on Monday, did not mention tariffs on autos and parts, long a sticking point between the two countries.
It said his administration was looking forward to collaborating with lawmakers on a deal that would result in “more fair and reciprocal trade” between the two countries.
Toshimitsu Motegi, who became foreign minister last week after negotiating the deal as economy minister, said Japan must watch carefully to prevent Washington from forcing any last-minute changes, Kyodo News agency reported.
The agricultural minister, Taku Eto, cautioned against letting down Tokyo’s guard until the final agreement is reached, it said.
A long-sought trade agreement with Japan was scrapped when Trump withdrew the US from a pan-Pacific trade agreement shortly after taking office in 2017.
Japan and the other 10 remaining members of the trade pact, the Trans-Pacific Partnership, then renegotiated their own deal without the US
Trump said he preferred that Washington and Tokyo strike a bilateral deal.
That resurrected the longtime issue of tariffs on Japanese car and auto parts exports to the US and of stiffer duties on US exports of farm and other products to Japan.