Crude drops as trade war rumbles on and output swells

An oil terminal in Novorossiysk, Russia. Oil prices fell by 2 percent on Tuesday, weighed down by rising OPEC and Russian oil output. (Reuters)
Updated 04 September 2019

Crude drops as trade war rumbles on and output swells

LONDON: Oil prices fell by 2 percent on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted US-China trade dispute that has dragged on the global economy. US crude was down $1.26 at $53.84 a barrel while Brent crude was down 96 cents at $57.70 in
afternoon trade.

The US this week imposed 15 percent tariffs on Chinese goods and China began to impose new duties on a $75 billion target list in a trade war that has rumbled on for more than a year. Though the trade conflict has intensified, US President Donald Trump said both sides would meet for talks this month.

Meanwhile, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the US-China dispute, central bank data showed on Tuesday.

FASTFACT

Russian oil production in August rose to 11.294 million barrels per day (bpd) hitting its highest since March.

A move on Sunday by Argentina to impose capital controls also cast a spotlight on emerging market risks. “Oil will struggle to make substantial headway topside this week with no progress on trade talks or meetings even, soft data from Asia and a possible cracking of OPEC’s resolve to control production,” said Jeffrey Halley, senior market analyst at OANDA.

Output OPEC rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by US sanctions on Iran. Russian oil production in August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday.

“What’s bad for the outlook for global growth is bad for oil at the moment and only big draws in inventories can delay that drift lower,” said Greg McKenna, strategist at McKenna Macro.


Emirates trims Boeing shopping list amid 777X delays

Updated 20 November 2019

Emirates trims Boeing shopping list amid 777X delays

  • The Middle East’s largest airline in 2017 signed an initial agreement to buy 40 Boeing 787-10s in a deal worth $15.1 billion
  • But Emirates’s purchases overhaul reduces the order to 30 planes

DUBAI: Emirates Airline on Wednesday slimmed down its purchasing plans with Boeing amid delays in delivering an order of 156 of the new long-range 777X aircraft, substituting instead 30 of its 787-9 Dreamliners.
The Middle East’s largest airline in 2017 signed an initial agreement to buy 40 Boeing 787-10s in a deal worth $15.1 billion, but the overhaul reduces that to 30.
At the same time, Emirates is cutting its 156-strong order of the larger 777X to 126 planes.
The restructuring means that the carrier now has just 156 aircraft ordered from Boeing, compared to 196 previously in both firm orders and initial agreements, an airline spokeswoman confirmed to AFP.
“Emirates reduced its 777X order of 156 to 126 and substituted them with the Dreamliners,” Emirates president Tim Clark told a news conference at the Dubai Airshow.
Boeing said the airline will update its order book “by exercising substitution rights and converting 30 777 airplanes into 30 787-9s.”
Emirates said in a statement that for the 777X, it “will enter into discussions with Boeing over the next few weeks on the status of deliveries.”
Emirates in 2013 signed a $76-billion contract for 150 Boeing 777X twin-engine aircraft, powered by GE’s new GE9X engine, in what was the single largest order by value in the history of US commercial aviation.
The order was subsequently increased to 156 planes.
The 777X was originally scheduled to take off on its first test flight this summer, however its development has been slowed by issues with the engine and Boeing has pushed back the timeframe to early 2021.
The delays also hit as Boeing is in the process of completing changes required by regulators on the 737 MAX, which has been grounded worldwide after two crashes that resulted in 346 deaths.