Oil rises for a third day amid escalating Middle East tensions

US crude inventories rose unexpectedly last week to their highest since September 2017, the Energy Information Administration said. (AP)
Updated 16 May 2019

Oil rises for a third day amid escalating Middle East tensions

  • Analysts say oil was drawing support from heightened tensions in the Middle East
  • Supply losses from OPEC members Iran and Venezuela have deepened the impact of the OPEC-led production restrictions

TOKYO: Oil prices rose on Thursday for a third straight session, as the risk of conflict in the Middle East stoked fears of supply disruptions, negating an unexpected rise in US inventories.
Brent crude futures were at $72.16 a barrel at 0349 GMT, up 39 cents, or 0.5 percent, from their last close. Brent closed up 0.7 percent on Wednesday.
US West Texas Intermediate (WTI) crude futures were at $62.41 per barrel, up 39 cents, or 0.6 percent, from their previous settlement. WTI closed up 0.4 percent in the last session.
Analysts said oil was drawing support from heightened tensions in the Middle East, with helicopters carrying US staff from the American embassy in Baghdad on Wednesday out of apparent concern about perceived threats from Iran.
While the gain in US inventories overnight is helping to cap prices, so too is uncertainty about whether OPEC and other producers will maintain into the second half of the year supply cuts that have boosted prices more than 30 percent so far in 2019.
The Organization of the Petroleum Exporting Countries (OPEC) said on Tuesday that world demand for its oil would be higher than expected this year.
“Though supply-side disruptions remain supportive of oil prices, OPEC has yet to release indicative statements on supply plans,” Benjamin Lu, commodities analyst at Phillip Futures in Singapore, told Reuters by email.
Supply losses from OPEC members Iran and Venezuela, now under US sanctions, have deepened the impact of the OPEC-led production restrictions.
The so-called OPEC+ group of producers, which includes Russia, meets next month to review whether to maintain the pact beyond June.
US crude inventories rose unexpectedly last week to their highest since September 2017, while gasoline stockpiles decreased more than forecast, the Energy Information Administration (EIA) said.
Crude stocks swelled by 5.4 million barrels, surprising analysts who had expected a decrease of 800,000 barrels for the week ended on May 10.


Oman’s sultan says government will work to reduce debt

Updated 23 February 2020

Oman’s sultan says government will work to reduce debt

DUBAI: Oman's Sultan Haitham bin Tariq al-Said said on Sunday the government would work to reduce public debt and restructure public institutions and companies to bolster the economy.
Haitham, in his second public speech since assuming power in January, said the government would create a national framework to tackle unemployment while addressing strained public finances.
"We will direct our financial resources in the best way that will guarantee reducing debt and increasing revenues," he said in the televised speech.
"We will also direct all government departments to adopt efficient governance that leads to a balanced, diversified and sustainable economy."
Rated junk by all three major credit rating agencies, Oman's debt to GDP ratio spiked to nearly 60% last year from around 15% in 2015, and could reach 70% by 2022, according to S&P Global Ratings.
The small oil producing country has relied heavily on debt to offset a widening deficit caused by lower crude prices. Also, the late Sultan Qaboos, who ruled Oman for nearly 50 years, held back on austerity measures.
The country has delayed introducing a 5% value added tax from 2019 to 2021, and economic diversification has been slow, with oil and gas accounting for over 70% of government revenues.
Last week, rating agency Fitch said Oman was budgeting for a higher deficit of 8.7% for 2020 despite its expectation of further asset-sale proceeds and some spending cuts.
"We are willing to take the necessary measures to restructure the state's administrative system and its legislation," Haitham said in his first speech since the mourning period for Qaboos ended, without elaborating.
He said there would be a full review of government companies to improve their business performance and competence.
Oman observers have said that if Haitham moves to decentralise power it would signal willingness to improve decision making. Like Qaboos, he holds the positions of finance minister and central bank chairman as well as premier, defence and foreign minister.