Middle East tensions to support Brent near $70 this year, says poll

UAE Navy boats patrol near a tanker moored off the Port of Fujairah. (Reuters)
Updated 31 May 2019

Middle East tensions to support Brent near $70 this year, says poll

  • A monthly survey of 43 economists and analysts forecast that Brent crude will average $68.84 per barrel in 2019
  • US sanctions on Venezuela, tensions between the United States and Iran — also under tightened sanctions — and supply curbs by OPEC have all propped up prices

LONDON: Brent crude prices are likely to hold near $70 a barrel in the remainder of the year as elevated supply risks in the Middle East offset risks to demand from the US-China trade spat, a Reuters survey showed on Friday.
A monthly survey of 43 economists and analysts forecast that Brent crude will average $68.84 per barrel in 2019, little changed from the previous poll’s $68.57 consensus but above the $66.80 average for the international benchmark so far this year.
“Geopolitical tensions in the Middle East are supporting the risk premium currently incorporated in crude prices, with disruptions to crucial trade routes being the most significant risk to global crude markets,” Intesa Sanpaolo analyst Daniela Corsini said.
Brent has slid to just below $65 a barrel this week, falling back to levels not seen since early March. It surged earlier this year to a near six-month peak of $75.60 in April, up about 50% from a near one-and-a-half year low hit in December.
US sanctions on Venezuela, tensions between the United States and Iran — also under tightened sanctions — and supply curbs by the Organization of the Petroleum Exporting Countries (OPEC) have all propped up prices.
However, any boost has been capped by higher output from the United States and concerns about the impact of the festering US-China trade dispute on global growth and fuel demand.
“A prolonged trade conflict without parties being able to reach an agreement could weigh on global growth prospects, and thus put downward pressure on oil demand and prices,” said Adria Morron Salmeron, an economist at CaixaBank Research.
Analysts polled expect global oil demand to grow by around 1.2–1.4 million barrels per day (mbpd) in 2019, compared with the US Energy Information Administration’s forecast earlier this month of 1.38 mbpd.
They warned that oil prices are unlikely to rise to levels seen earlier this year, as any supply gap could be met by OPEC and abundant US oil output.
OPEC and its allies including Russia are scheduled to meet on June 25-26, where analysts expect the producers to extend their pact on limiting output. Two OPEC sources said earlier this month the meeting could be postponed to July 3-4.
“We remain of the view that despite continued supply risks in countries like Iran, Libya and Venezuela, demand-risk will remain at the fore in 2019,” said Cailin Birch, an analyst at the Economist Intelligence Unit.
“Given the current level of market supplies, strong US production growth and concerns about flagging demand, we do not expect prices to show sustained growth in 2019 as a result of these tensions.”
US light crude, meanwhile, is seen averaging $60.62 per barrel this year, compared with $60.23 forecast in April, according to the survey. WTI prices have averaged about $58 so far this year.


France ready to take Trump’s tariff threat to WTO

Updated 08 December 2019

France ready to take Trump’s tariff threat to WTO

  • Macron government will discuss a global digital tax with Washington at the OECD, says finance minister

PARIS: France is ready to go to the World Trade Organization to challenge US President Donald Trump’s threat to put tariffs on French goods in a row over a French tax on internet companies, its finance minister said on Sunday.

“We are ready to take this to an international court, notably the WTO, because the national tax on digital companies touches US companies in the same way as EU or French companies or Chinese. It is not discriminatory,” Finance Minister Bruno Le Maire told France 3 television. Paris has long complained about US digital companies not paying enough tax on revenues earned in France.

In July, the French government decided to apply a 3 percent levy on revenue from digital services earned in France by firms with more than €25 million in French revenue and €750 million ($845 million) worldwide. It is due to kick in retroactively from the start of 2019.

Washington is threatening to retaliate with heavy duties on imports of French cheeses and luxury handbags, but France and the EU say they are ready to retaliate in turn if Trump carries out the threat. Le Maire said France was willing to discuss a global digital tax with the US at the Organization for Economic Cooperation and Development (OECD), but that such a tax could not be optional for internet companies.

“If there is agreement at the OECD, all the better, then we will finally have a global digital tax. If there is no agreement at OECD level, we will restart talks at EU level,” Le Maire said.

He added that new EU Commissioner for Economy Paolo Gentiloni had already proposed to restart such talks.

France pushed ahead with its digital tax after EU member states, under the previous executive European Commission, failed to agree on a levy valid across the bloc after opposition from Ireland, Denmark, Sweden and Finland.

The new European Commission assumed office on Dec. 1.