Saudi Arabia slashes oil prices after collapse of OPEC+

Saudi Arabia slashes oil prices after collapse of OPEC+
There were big falls on Friday as OPEC failed to get a deal with non-OPEC members to extend output deals. (Saudi Aramco photo)
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Updated 09 March 2020

Saudi Arabia slashes oil prices after collapse of OPEC+

Saudi Arabia slashes oil prices after collapse of OPEC+
  • Latest move to deal a major blow to US shale companies

DUBAI: The eyes of the world will be on the oil markets when the big trading hubs in Europe and North America open following the end of the deal between Saudi Arabia and Russia that has helped to sustain crude at relatively high levels for the past three years.

There were big falls on Friday when ministers from the Organization of the Petroleum Exporting Countries (OPEC) failed to get a deal with non-OPEC members — the so-called OPEC+ — to extend output agreements. Brent oil was down nearly 10 percent at $45.27 going into the western weekend.

Saudi Aramco took immediate action to cut prices after the OPEC+ collapse, offering big discounts for crude deliveries from next month, when the current output restrictions end.

According to a notification sent to customers by Saudi Aramco, seen by Arab News, the Kingdom’s oil giant will cut between $4 and $8 per barrel, with the biggest discounts being offered to buyers in northwest Europe and the US.

Roger Diwan, an oil analyst at consultancy IHS Market, said: “We are likely to see the lowest oil prices of the past 20 years in the next quarter.”

West Texas Intermediate, the US oil benchmark, fell to $28.27 in November 2001.

The move raises the possibility of a “crude war” between the three biggest oil blocs — the US, Russia and the Arabian Gulf. Some analysts believe the American shale industry is more vulnerable to low prices than either the Russians or the Saudis.

Robin Mills, head of the Qamar consultancy, told Arab News: “I don’t think this was premeditated but Saudi Arabia has clearly swung quickly into action to put the Russians under pressure. But the Russians, with low debt and a flexible exchange rate, can cope with a few months of low prices.”

The boom in US shale has made the country the biggest oil producer in the world, but with high financing costs. Lower global prices would put a lot of shale companies out of business.

On the other hand, American motorists, and President Donald Trump, would be pleased to see lower fuel prices in an election year. 

In Moscow, one prominent financier with ties to the Kingdom played down the long-term significance of the Vienna fallout.

Kirill Dmitriev, chief executive of the Russian Direct Investment Fund, told Arab News: “Saudi Arabia is our strategic partner, and cooperation between our two countries will continue in all areas. We will also continue to work within the framework of the Russia-Saudi Economic Council.” 

One Russian official, who asked not to be named, added: “There is a good relationship between Alexander Novak, Russian energy minister, and his Saudi counterpart Prince Abdul Aziz bin Salman, and I am sure they will continue talking to each other less formally.”


Deliveroo raises $180 mln from investors, valued at $7 billion

Deliveroo raises $180 mln from investors, valued at $7 billion
Updated 17 January 2021

Deliveroo raises $180 mln from investors, valued at $7 billion

Deliveroo raises $180 mln from investors, valued at $7 billion
  • Deliveroo is set to hold an initial public offering in the coming months
  • The internet giant's stake is not expected to increase as a result of its participation in the latest round of fundraising

LONDON: British food-delivery company Deliveroo said on Sunday it had raised a further $180 million from existing investors, including minority shareholder Amazon, in a move that values the business at more than $7 billion.
Deliveroo is set to hold an initial public offering in the coming months, in what would be the biggest new share issue in London for three years.
"This investment will help us to continue to innovate, developing new tech tools to support restaurants, to provide riders with more work and to extend choice for customers," Deliveroo founder and chief executive Will Shu said.
Britain's competition regulator approved Amazon's May 2019 purchase of a 16% stake in Deliveroo in August, overruling objections from local competitors Just Eat Takeaway and Domino's Pizza.
The internet giant's stake is not expected to increase as a result of its participation in the latest round of fundraising, which was led by U.S. investors Durable Capital Partners and Fidelity Management & Research.
Deliveroo operates across 12 countries, mostly in western Europe but also in Australia, Hong Kong, Singapore and the United Arab Emirates. It did not state how much each investor had contributed in the latest funding round.
The company said it would spend the $180 million on expanding delivery-only kitchen sites, on-demand grocery deliveries and subscription services, as well as allowing more restaurants to take orders from via own websites.