Saudi Arabia oversees oil agreement on stage 2 of output cuts

Prince Abdul Aziz bin Salman estimated that Saudi Arabia would consume an extra 500,000 barrels per day in the summer months. (Saudi energy ministry)
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Updated 15 July 2020

Saudi Arabia oversees oil agreement on stage 2 of output cuts

  • Saudi-led alliance has restored stability to global crude market
  • Production will increase by 2 million barrels per day

DUBAI: The global oil alliance led by Saudi Arabia and Russia agreed unanimously on Wednesday to the second stage of a historic output agreement that has restored stability to crude markets.

Production will increase by 2 million barrels per day, most of that consumed in OPEC+ countries as their economies recover and domestic energy consumption rises over the summer.

“On the demand side, we see encouraging signs of improvement. Economies around the world are opening up,” said Prince Abdul Aziz bin Salman, the Saudi energy minister and chairman of the ministerial committee that oversees the 23-country alliance.

“As we move to the next phase of the agreement, the extra supply resulting from the scheduled easing of the  production cut will be consumed as demand continues on its recovery path.” 

The minister estimated that Saudi Arabia would consume an extra 500,000 barrels per day in the summer months as domestic demand rose and pandemic restrictions continued to limit foreign travel. The Kingdom’s oil exports will be unchanged in August.

The agreement is phase two of the historic cuts in April that ar4e credited with rebalancing the global oil market. From next month, output cuts will be reduced from 9.6 million barrels per day to 7.7 million until the end of this year.

OPEC+ reported that the compliance level for June — the extent to which its members had adhered to the reduced output targets — was a record 95 per cent. “We had a mood of celebration today, because in 33 years we’ve never achieved 95 per cent,” Prince Abdul Aziz said

Some producers, including Saudi Arabia, the UAE and Kuwait, reduced output even more than required.Countries that had not met compliance levels in the past, such as Iraq and Nigeria, committed themselves to reaching the targets and compensating for past oversupply with further cuts in the summer months.

Prince Abdul Aziz was cautiously optimistic that demand would continue to rise as global economies recovered from the pandemic. “Although this is a cautious and gradual process, and there could be localized or partial lockdowns in some places, the recovery signs are unmistakable,” he said.

His comments were echoed by Alexander Novak, the Russian energy minister, who said the new production levels were “justifiable and in line with market trends.”


Huawei: Smartphone chips running out under US sanctions

Updated 08 August 2020

Huawei: Smartphone chips running out under US sanctions

  • Huawei is at the center of US-Chinese tension over technology and security
  • Washington cut off Huawei’s access to US components and technology last year

BEIJING: Chinese tech giant Huawei is running out of processor chips to make smartphones due to US sanctions and will be forced to stop production of its own most advanced chips, a company executive says, in a sign of growing damage to Huawei’s business from American pressure.
Huawei Technologies, one of the biggest producers of smartphones and network equipment, is at the center of US-Chinese tension over technology and security. The feud has spread to include the popular Chinese-owned video app TikTok and China-based messaging service WeChat.
Washington cut off Huawei’s access to US components and technology including Google’s music and other smartphone services last year. Those penalties were tightened in May when the White House barred vendors worldwide from using US technology to produce components for Huawei.
Production of Kirin chips designed by Huawei’s own engineers will stop Sept. 15 because they are made by contractors that need US manufacturing technology, said Richard Yu, president of the company’s consumer unit. He said Huawei lacks the ability to make its own chips.
“This is a very big loss for us,” Yu said Friday at an industry conference, China Info 100, according to a video recording of his comments posted on multiple websites.
“Unfortunately, in the second round of US sanctions, our chip producers only accepted orders until May 15. Production will close on Sept. 15,” Yu said. “This year may be the last generation of Huawei Kirin high-end chips.”
More broadly, Huawei’s smartphone production has “no chips and no supply,” Yu said.
Yu said this year’s smartphone sales probably will be lower than 2019’s level of 240 million handsets but gave no details. The company didn’t immediately respond to questions Saturday.
Huawei, founded in 1987 by a former military engineer, denies accusations it might facilitate Chinese spying. Chinese officials accuse Washington of using national security as an excuse to stop a competitor to US tech industries.
Huawei is a leader among emerging Chinese competitors in telecoms, electric cars, renewable energy and other fields in which the ruling Communist Party hopes China can become a global leader.
Huawei has 180,000 employees and one of the world’s biggest research and development budgets at more than $15 billion a year. But, like most global tech brands, it relies on contractors to manufacture its products.
Earlier, Huawei announced its global sales rose 13.1 percent over a year ago to $65 billion in the first half of 2020. Yu said that was due to strong sales of high-end products but gave no details.
Huawei became the world’s top-selling smartphone brand in the three months ending in June, passing rival Samsung for the first time due to strong demand in China, according to Canalys. Sales abroad fell 27 percent from a year earlier.
Washington also is lobbying European and other allies to exclude Huawei from planned next-generation networks as a security risk.
In other US-Chinese clashes, TikTok’s owner, ByteDance, is under White House pressure to sell the video app. That is due to fears its access to personal information about millions of American users might be a security risk.
On Thursday, President Donald Trump announced a ban on unspecified transactions with TikTok and the Chinese owner of WeChat, a popular messaging service.