Tanker attack pushes prices but oil market still in oversupply

OPEC Secretary General Mohammad Barkindo said a deeper cut in oil supplies could be considered by OPEC and its allies. (AFP)
Updated 12 October 2019

Tanker attack pushes prices but oil market still in oversupply

  • Missile strike on Iranian ship comes as IEA cuts forecast for global oil demand by 100,000 barrels per day
  • The Iranian Suezmax crude tanker Sabiti was ablaze and suffered heavy damage after being hit by two missiles, Iranian media reported

LONDON: Oil prices rose as high as $60.65 a barrel on Friday after Iranian media said a state-owned oil tanker had been struck by missiles in the Red Sea near Saudi Arabia, but bearish oil demand forecasts soon pulled crude off session highs.

The Iranian Suezmax crude tanker Sabiti was ablaze and suffered heavy damage after being hit by two missiles, Iranian media reported.

Both oil benchmarks recorded their biggest daily rise since Sept. 16, the first trading day after the attacks on Saudi installations knocked out more than half of the Kingdom’s crude output and temporarily pushed oil prices up by about 20 percent.

International benchmark Brent crude futures were up 98 cents at $60.08 a barrel in early trade before paring gains later in the day.

“The market still has fresh memories of the Saudi Arabia attacks and the very quick price reversals afterwards. The price results of attacks this year have not been sustained in terms of risk premium,” said Petromatrix analyst Olivier Jakob.

Earlier, the International Energy Agency cut its forecast for oil demand growth by 100,000 bpd to a “still solid” 1.2 million bpd.

Rising supply growth from the US, Brazil and Norway would help reduce the demand for OPEC crude to 29 million bpd next year, the IEA said, which could prompt the exporter group to keep restraining supply in 2020.

“The expected crude oil oversupply ... could provide additional support for refining margins,” the report said.

The Organization of the Petroleum Exporting Countries, Russia and other producers, an alliance known as OPEC+, have since January implemented a deal to cut oil output by 1.2 million bpd to support the market.

The pact runs to March 2020 and the producers meet to set policy on Dec. 5-6.

A deeper cut in oil supplies is among options for OPEC and its allies to consider at the gathering, OPEC Secretary-General Mohammad Barkindo said this week.

Saudi Arabia, the world’s top oil exporter, has ramped production back up after the greatest single outage to global supply in modern times, the IEA said.

“Oil markets in September withstood a textbook case of a large-scale supply disruption,” the Paris-based agency said in a monthly report, in a section headed “Business as usual.”

“Prices fell back as it became clear that the damage, although serious, would not cause long-lasting disruption to markets.”


Trump calls for World Bank to stop lending to China

Updated 07 December 2019

Trump calls for World Bank to stop lending to China

WASHINGTON: US President Donald Trump on Friday called for the World Bank to stop giving loans to China, one day after the institution adopted a lending plan to Beijing over Washington’s objections.
The World Bank on Thursday adopted a plan to aid China with $1 billion to $1.5 billion in low-interest loans annually through June 2025. The plan calls for lending to “gradually decline” from the previous five-year average of $1.8 billion.
“Why is the World Bank loaning money to China? Can this be possible? China has plenty of money, and if they don’t, they create it. STOP!” Trump wrote in a post on Twitter.
Spokespeople for the White House and the World Bank did not immediately respond to requests for comment.
The World Bank loaned China $1.3 billion in the fiscal 2019 year, which ended on June 30, a decrease from around $2.4 billion in fiscal 2017.
But the fall in the World Bank’s loans to China is not swift enough for the Trump administration, which has argued that Beijing is too wealthy for international aid.