Mideast tensions push oil prices toward biggest weekly gain in months

A key Saudi Arabian oil supply hub was knocked out in an attack last weekend. (AP)
Updated 20 September 2019

Mideast tensions push oil prices toward biggest weekly gain in months

  • Saudi-led coalition launches military operation north of Yemen’s port city of Hodeidah
  • Global markets are also keeping an eye on US-China trade negotiations in Washington

SINGAPORE: Oil prices were on track to jump more than 7 percent this week, their biggest weekly rise in months, as early trading on Friday saw gains extended on fresh Middle East tensions after a key Saudi Arabian supply hub was knocked out in an attack last weekend.
A Saudi-led coalition launched a military operation north of Yemen’s port city of Hodeidah, as the United States worked with Middle East and European nations to build a coalition to deter Iranian threats after the Saudi attack.
Brent crude is on track to rise about 7.7 percent this week, the biggest weekly gain since January. The front-month November contract was at $64.75 a barrel, up 35 cents, by 0532 GMT.
US West Texas Intermediate (WTI) crude futures were up 51 cents to $58.64 a barrel, set to post a 7.1 percent gain for the week, the largest weekly rise since June.
“The forward curve remains ‘bid’ as traders are hedging that the initial estimates for the duration of repairs (at damaged Saudi facilities), given the complex nature, could well underestimate the time required,” said Stephen Innes, Asia Pacific market strategist at AxiTrader.
Saudi Arabia’s production dropped by almost half after an attack on Saturday, Sept. 14, crippled a major oil processing facility. Its oil minister has pledged to restore lost production by the end of this month, and bring capacity back to 12 million barrels per day by the end of November.
The United States and Saudi Arabia blame Iran for the assault on Saudi oil facilities. Tehran denies any involvement.
In the United States, meanwhile, torrential rain from Tropical Storm Imelda has forced a major refinery to cut production and to shut a key oil pipeline, terminals and a ship channel in Texas.
Global markets are also keeping an eye on US-China trade negotiations in Washington, as officials from both sides resumed face-to-face talks for the first time in nearly two months on Thursday.


China appeals to Washington for quick end to trade war

Updated 21 min 14 sec ago

China appeals to Washington for quick end to trade war

  • Beijing says it will buy more American goods but has yet to confirm the details
  • Tariff hikes by both sides on billions of dollars of imports have battered factories and farmers

BEIJING: China appealed to Washington for a quick end to their trade war but gave no indication Thursday what additional steps Beijing might want before carrying out what President Donald Trump says is a promise to buy up to $50 billion of American farm goods.
Trump agreed Friday to delay a tariff hike in exchange for Chinese purchases of US exports. Beijing says it will buy more American goods but has yet to confirm the details, leaving companies wondering whether Chinese leaders have other demands including a possible end to punitive US tariffs before that goes ahead.
Negotiators are “striving to reach a consensus on the text of the agreement as soon as possible,” said a Ministry of Commerce spokesman, Gao Feng. “I can’t disclose the specific details.”
US Treasury Secretary Steven Mnuchin told reporters Wednesday that officials were still ironing out details of a preliminary agreement.
Companies welcomed the deal as a small but promising possible step toward breaking a deadlock in the 15-month-old fight over China’s trade surplus and technology ambitions.
Tariff hikes by both sides on billions of dollars of imports have battered factories and farmers, weighing on global economic growth. Trump delayed a tariff due to take effect Tuesday on $250 billion of Chinese goods but another increase on $160 billion of imports still is scheduled for Dec. 15.
Economists warned the truce fails to address more basic complaints about Beijing’s plans for government-led creation of global competitors in robotics and other technologies.
Washington, Europe, Japan and other trading partners say those violate Chinese market-opening commitments and are based on stealing or pressuring companies to hand over know-how.
China wants “economic and trade relations back on the right track at an early date,” Gao said at a weekly news briefing.
Achieving results will “restore market confidence and also is highly significant for stabilizing the global economic situation,” he said.
On Tuesday, a foreign ministry spokesman said China would “further speed up procurement” of American farm exports but gave no scale or time frame.
China has bought 20 million tons of US soybeans and 700,000 tons of pork this year, according to the spokesman, Geng Shuang. China imported about 33 million tons of American soybeans annually before the tariff fight and collapsed to 16.6 million tons last year.