Kingdom promises not to shock oil markets

Khalid Al- Falih, minister of energy, industry and mineral resources, arrives at OPEC headquarters in Vienna, Austria. (AP)
Updated 03 June 2016

Kingdom promises not to shock oil markets

VIENNA: Saudi Arabia has promised not to flood the oil market with extra barrels even as OPEC failed to agree on output policy, with Iran insisting on the right to raise production steeply.

Saudi Arabia moved to soothe market fears that failure to reach any deal would prompt OPEC’s largest producer to raise production further and gain additional market share.
“We will be very gentle in our approach and make sure we don’t shock the market in any way,” said Energy, Industry and Mineral Resources Minister Khalid Al-Falih.
“There is no reason to expect that Saudi Arabia is going to go on a flooding campaign,” Al-Falih said when asked whether Saudi Arabia could accelerate production.
OPEC also decided unanimously to appoint Nigeria’s Mohammed Barkindo as its new secretary-general.
Saudi Arabia and its Gulf allies had tried to propose OPEC set a new collective ceiling in an attempt to repair the group’s waning importance.
But Thursday’s meeting ended with no new policy or ceiling amid resistance from Iran.
Iran’s Oil Minister Bijan Zanganeh said Tehran would not support any new collective output ceiling and wanted the debate to focus on individual-country production quotas, effectively abandoned by OPEC years ago.
“Without country quotas, OPEC cannot control anything,” Zanganeh said.
He insisted Tehran deserved a quota — based on historic output levels — of 14.5 percent of OPEC’s overall production.
OPEC is pumping 32.5 million barrels per day (bpd), which would give Iran a quota of 4.7 million bpd — well above its current output of 3.8 million, according to Tehran’s estimates, and 3.5 million, based on market estimates.

‘BENIGN DEAL’

At its previous meeting in December 2015, OPEC effectively allowed its 13 members to pump at will.
As a result, prices crashed to $27 per barrel in January, their lowest in over a decade, but have since recovered to around $50 due to global supply outages. On Thursday, Brent prices eased 1.5 percent to $49 per barrel.
That OPEC could not agree on a benign deal is a sign that political differences are undermining the organization, said Gary Ross, founder of US-based PIRA consultancy.
“It is bearish short-term for oil prices. But what is also important is that Saudi Arabia is not planning to flood the market,” Ross added.
Zanganeh made a few conciliatory remarks, saying he was happy with the meeting and received no signals from other producers that they planned to increase output.
For Amrita Sen of Energy Aspects, who like Ross traveled to Vienna to meet OPEC officials, the meeting sent an encouraging signal about the state of the organization. “It actually restores market confidence that Saudi Arabia is committed to OPEC. This is a success compared to three days ago when people had been expecting Al-Falih to walk out of the OPEC room,” said Sen.
Al-Falih was the first OPEC minister to arrive in Vienna this week, signalling he takes the organization seriously despite fears among fellow members that Riyadh is no longer keen to have OPEC set output.
“There could be shorter-term situations in which, in our view, OPEC might intervene and yet other situations — such as long-term growth of marginal barrels — in which case it should not,” Al-Falih told Argus Media ahead of the meeting.


Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

Updated 2 min 27 sec ago

Trump advisers urge delisting of US-listed Chinese companies that fail to meet audit standards

  • Growing pressure to crack down on Chinese companies that avail themselves of US capital markets but do not comply with rules
WASHINGTON: Trump administration officials have urged the president to delist Chinese companies that trade on US exchanges and fail to meet US auditing requirements by January 2022, Securities and Exchange Commission and Treasury officials said on Thursday.
The remarks came after President Donald Trump tasked a group of key advisers, including Treasury Secretary Steve Mnuchin and SEC Chairman Jay Clayton, with drafting a report with recommendations to protect US investors from Chinese companies whose audit documents have long been kept from US regulators.
It also comes amid growing pressure from Congress to crack down on Chinese companies that avail themselves of US capital markets but do not comply with US rules faced by American rivals.
“We are simply leveling the playing field, holding Chinese firms listed in the US to the same standards as everyone else,” a Treasury official told reporters in a briefing call about the report.
The US Senate unanimously passed legislation in May that could prevent some Chinese companies from listing their shares on US exchanges unless they follow standards for US audits and regulations.
Democratic Senator Chris Van Hollen, who sponsored the bill described the recommendations as “an important first step,” but said that “without the added teeth of our bill, this report alone does not implement the requirements necessary to protect everyday American investors.”
The administration’s recommendations, if implemented via an SEC rulemaking process, would give Chinese companies already listed in the United States until Jan. 1, 2022, to ensure the US auditing watchdog, known as the PCAOB, has access to their audit documents.
They can also provide a “co-audit,” for example, performed by a US parent company of the China-based affiliate tasked with auditing the Chinese firm. However, companies seeking to list in the United States for the first time will need to comply immediately, the officials said.
A State Department official told Reuters the administration plans soon to scrap a 2013 agreement between US and Chinese auditing authorities to set up a process for the PCAOB to seek documents in enforcement cases against Chinese auditors.
China said on Friday that the two countries have “good cooperation” in monitoring publicly listed firms.
“The current situation is that some US monitoring authorities are failing to comply with their obligations, and what they are doing is political manipulation — they are trying to force Chinese companies to delist from US markets,” foreign ministry spokesman Wang Wenbin told a media briefing.
The PCAOB has long complained of China’s failure to grant requests, giving it scant insight on audits of Chinese firms that trade on US exchanges.
The report also recommends requiring greater disclosure by issuers and registered funds of the risk of investing in China, as well as mandating more due diligence by funds that track indexes and issuing guidance to investment advisers about fiduciary obligations surrounding investments in China.
The moves come amid rising tensions between Washington and Beijing over China’s handling of the coronavirus and its moves to curb freedoms in Hong Kong, among other issues.