OPEC+ says it will ensure oil prices do not plunge again

The head of OPEC has said that demand for oil is recovering more slowly than expected as an increasing number of countries are reimposing curfews and lockdowns. (AFP)
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Updated 16 October 2020

OPEC+ says it will ensure oil prices do not plunge again

  • Secretary general said group would take stock of its policy at the ministerial meeting next month

LONDON: The OPEC+ alliance will ensure oil prices do not plunge steeply again when it meets to set policy at the end of November, OPEC’s secretary general said on Thursday, adding that demand has been recovering more slowly than expected.

“I want to assure you that the OPEC, non-OPEC partnership will continue to do what it knows best, by ensuring that we don’t relapse into this almost historic plunge that we saw,” Mohammad Barkindo said.

Barkindo was answering a question at the Energy Intelligence Forum on whether there was room for a planned increase in oil output from January by OPEC+, a grouping that includes OPEC states, Russia and other allies.

“We have to be realistic that this recovery is not picking up pace at the rate that we expected earlier in the year,” he said. “Demand itself is still looking anaemic.”

A technical OPEC+ committee meeting is taking place on Thursday to discuss compliance with oil cuts and market fundamentals.

The group had 102 percent compliance with its cuts in September, two OPEC+ sources told Reuters.

Countries such as Iraq, Nigeria and the UAE, which had fallen short of their commitments, have been asked to make additional cuts until the end of the year to compensate for the shortfalls.

Barkindo said the compensation scheme was working well.

OPEC+ is due to taper production cuts by 2 million barrels per day (bpd), from 7.7 million bpd currently, in January.

Barkindo said when OPEC+ holds its ministerial meetings on Nov. 30 and Dec. 1 it will take stock of the whole year to inform any decision to stay the course or amend its policy.

On Tuesday, the energy minister from the United Arab Emirates told the same event that OPEC+ will stick to their plans to taper oil production cuts from January.

It comes as some European countries are reviving curfews and lockdowns to try to contain the rise in new coronavirus cases, with Britain expected to impose tougher COVID-19 restrictions on London from midnight on Friday.

A third of France’s population has been placed under nightly curfew to tackle climbing infections.

India, the world’s third biggest oil consumer, is on track to overtake United States with the world’s most COVID-19 infections, and is bracing for a surge of cases in coming weeks as it heads into its main holiday season.

“If demand weakens noticeably, OPEC+ will have no choice but to call off its production increase if it does not want to risk a renewed oversupply and another price slide,” Commerzbank said.


Japan’s export credit agency to lend $2 billion to Nissan for US sales financing

Updated 53 min 57 sec ago

Japan’s export credit agency to lend $2 billion to Nissan for US sales financing

  • The money should help the Japanese company sell cars in the world’s second-biggest automarket after China

TOKYO: Japan’s state-owned export credit agency has agreed to give Nissan Motor Co. up to $2 billion as part of a credit agreement to help it finance car sales in the United States.
The money is part of a $4.1 billion credit agreement for Nissan Motor Acceptance Corporation, a unit of Nissan North America, Japan Bank of International Cooperation (JBIC) said in a press release on Wednesday.
The money should help the Japanese company sell cars in the world’s second-biggest automarket after China by allowing it to provide customers with loans that they can repay in monthly instalments, the export credit agency added in the statement.
The United States “is an important market for Japanese automobile manufacturers. Sales finance has become an important tool in business strategy,” JBIC said.
“This case provides financial support for Nissan’s overseas business development,” it added.
JBIC has provided loans for overseas sales financing to other automakers, including a $78 million October agreement with Honda Motor Co. in Brazil, and one in September for Toyota Motor Corp. in South Africa. JBIC did not disclose the amount for that deal.
The latest agreement with Nissan is more than three times as much as a $582 million loan extended by JBIC in July to help it finance car sales in Mexico.
A JBIC spokesman said the government export credit agency applied the same lending standards as private banks.
Nissan, Japan’s third-largest automaker, is focusing on key markets as it pulls back from the rapid expansion led by ousted Chairman Carlos Ghosn.
It is looking to raise market share with new models in the United States, China and Japan as they rebound from a demand slump triggered by the COVID-19 pandemic.
“We have financing from a variety of different ways and JBIC is one of them,” a Nissan spokeswoman said.
This month, Nissan cut its operating loss forecast for the year to March 2021 by 28 percent, albeit still to a record of about $3.2 billion, helped by a rebound in demand, particularly in China.