Russia yet to finalize stance before OPEC+ considers deeper oil cuts

Russia agreed to reduce output by 228,000 barrels per day (bpd) to about 11.18 million bpd in 2019 as part of cuts agreed by the group known as OPEC+. (AFP)
Updated 03 December 2019

Russia yet to finalize stance before OPEC+ considers deeper oil cuts

  • Russia agreed to reduce output by 228,000 barrels per day to about 11.18 million bpd in 2019
  • But it pumped more than its quota in November, producing 11.244 million bpd

MOSCOW: Russian Energy Minister Alexander Novak said on Tuesday he expected this week’s meeting of OPEC oil producers and their allies to be constructive but said Moscow had yet to finalize its position in talks on possible additional supply curbs.
Russia agreed to reduce output by 228,000 barrels per day (bpd) to about 11.18 million bpd in 2019 as part of cuts agreed by the group known as OPEC+. But it pumped more than its quota in November, producing 11.244 million bpd.
The Organization of the Petroleum Exporting Countries, Russia and other producers, which previously agreed to reduce combined output by 1.2 million bpd or 1.2 percent of global demand until March, hold discussions in Vienna on Thursday and Friday.
“I will not tell you anything now as we are still finalizing our position,” Novak told reporters. “Let’s wait ... But I think the meeting, as usual, will be of constructive nature.”
Two sources said on Monday that OPEC+ was discussing cutting output by at least an additional 400,000 bpd, as Riyadh seeks high oil prices to balance its budget and help Thursday’s pricing for Saudi Aramco’s initial public offering (IPO). The Saudis have been lobbying others to deepen cuts.
Novak said Russia’s average cut was 195,000 bpd in November and said Moscow aimed to comply fully with the quota in December.
Russia earlier called for a change to the way its output is measured to exclude gas condensate, which accounts for about 7 percent-8 percent of Russia’s total oil production, or about 800,000 bpd.
Novak told reporters he planned to discuss excluding condensate from Moscow’s quotas at the OPEC+ meeting.
By excluding condensate and only taking into account oil production, Novak said Russia’s output could be about 225,000 bpd to 230,000 bpd less in December.
“That said, we will discuss with our colleagues to take into account our statistics the same way as for OPEC countries — excluding condensate,” the minister said.
Vagit Alekperov, chief executive of Russia’s No.2 oil producer Lukoil, said in comments broadcast on Tuesday that it would not be expedient to deepen global oil production cuts in the winter season, especially for Russia.
Russian data cites production in tons. Reuters uses a conversion rate of 7.33 barrels per ton of oil.


Despite agreement, China purchase of US agriculture lags

Updated 10 August 2020

Despite agreement, China purchase of US agriculture lags

  • The two sides are set to meet on Saturday to discuss the deal, American media says

NEW YORK: Seven months after the United States and China signed a preliminary agreement to temper their trade war, Beijing’s purchases of US agricultural goods have yet to reach the deal’s target.

As President Donald Trump readies for a tough reelection battle in November, US media reported the two sides are set to meet beginning August 15 to discuss the deal, which calls for China to sharply increase buying American goods and services this year and next.

But according to data compiled by the Peterson Institute for International Economics (PIIE), Chinese agricultural purchases at the end of June were far from where they should be at this point in the year.

They had reached only 39 percent of their semiannual target, according to US figures, or 48 percent, based on Chinese figures.

“If we get back to what the level of trade was in 2017, we’ll be lucky,” said Chad Bown, a PIIE senior fellow who authored the study, referring to the year before the trade war began.

Under the deal’s terms, China agreed to increase agricultural imports $32 billion over the next 2 years from 2017 levels.

Chinese orders for corn and soybeans have increased since mid-July, with Beijing buying just over 3 million tons of American oilseeds between July 14 and Aug. 7, according to US Department of Agriculture data.

At the end of July, the United States reported the largest-ever daily order by China for its corn, of 1.9 million tons.

The announcements were a relief to US farmers, who are expecting a bumper crop this year and need to find buyers to take it.

They also came at a time of high political tension between the two countries, after the Trump administration authorized sanctions against several Hong Kong leaders over the rights crackdown in the city, and restrictions on Chinese apps WeChat and TikTok.

The Chinese “realize we’re not being the best of buddies right now, but they need the products and they’re gonna take as much as they need,” said Jack Scoville, agricultural market analyst for Price Futures Group.

It’s possible that Beijing will change its orders from buying this year’s harvest to next year’s.

But analysts warn that any orders could be called off before the ships carrying them leave port.

Brazil and Argentina, two of the world’s largest soybean and corn producers, are starting their harvests next spring, said Brian Hoops, president of the brokerage firm Midwest Market Solutions.

China “could cancel all these purchases they made in July and buy at much cheaper prices if that’s available to them,” Hoops said.

The trade deal dubbed “phase one” and signed in January has managed to survive both the tensions and the sharp global economic downturn caused by the coronavirus pandemic, which has badly hit international trade.

US Trade Representative Robert Lighthizer in June said China would follow through on its commitments, while Washington would also pursue a “phase two” trade deal that “will focus on issues of overcapacity, subsidization, disciplines on China’s state-owned enterprises, and cyber theft.”

Bown said any success in getting China to buy not just farm but also energy and manufactured goods, would aid Trump in his reelection campaign.