Archives for November 2021

When President Biden announced last week that the federal government would be releasing 50 million barrels of crude from the strategic petroleum reserve, perhaps those around him expected prices to go down significantly and stay down. Instead, prices rose, and OPEC+ gave a heavy hint it might cut supply. By Friday, oil prices fell sharply, but that was due to a new wave of Covid-19 fears and has little if anything to do with Biden’s announcement that oil would be unleashed from emergency stockpiles. 

But what comes next could send oil to $100.

READ MORE: Biden backtracks on oil drilling ban

Energy analysts warned that a release of SPR may not have the desired effect. They explained that however many barrels the US or its partners in Asia and the UK release, OPEC could withhold more and for longer. They explained that the SPR crude is sour, and refiners don’t like it because it needs additional processing to reduce the sulfur content—a process that requires natural gas, which is also expensive currently. These explanations fell on deaf but determined ears. Now, analysts are warning about $100 Brent.

“It’s not going to work simply because the strategic petroleum reserve — any country’s strategic petroleum reserve is not there to try to manipulate price,” said Stephen Schork, editor of the Schork Report, speaking to CNBC earlier this week. “There’s a considerable amount of bets out there that we will see $100 a barrel oil,” he added.

John Kilduff of Again Capital put it even more bluntly: “The battle lines are being drawn,” he told Bloomberg this week. “Certainly, OPEC and the Saudis can win this in that they are holding all the cards. They can keep more oil off the market than a SPR release can put on the market. If you see WTI get under $70, then I would expect a response from OPEC+.”

Read more on Oilprice.com: Oil nations are selling billions in green bonds

What’s more, the planned release of these 50 million barrels will not happen overnight. It won’t happen over a week, either. In fact, the plan is, per an Argus report, to offer long-term loans of up to 32 million barrels of crude from the SPR—sour crude, at that—and to sell another 18 million barrels over several months. For starters, there is no guarantee about the degree of uptake of the oil loans. For seconds, 18 million barrels over a few months amounts to less than 1 million barrels per day on average.

Meanwhile, OPEC is preparing for a worst-case scenario that involves the release of a total of 66 million barrels in January and February. The cartel itself seems to be aware that the chances of that sort of oil flood happening are next to non-existent, given the US plans, but the important thing is that it is preparing. And, according to OPEC sources who spoke to Argus, while most in the extended OPEC+ group feel they don’t need to tweak the original agreement of adding 400,000 bpd to daily output, there is a stipulation that allows for a three-month pause in these additions.

READ MORE: Trump praises himself after Biden taps oil reserves

OPEC alone accounts for 40% of global crude oil production. The US—the world’s largest single producer—accounts for about 18.6%. And then there’s Russia, with about 12% of global oil supply, which is a partner of OPEC. So, together, OPEC and Russia, without even counting the Central Asian producers, account for half the world’s oil production. They are, indeed, holding all the cards.

Oil prices, CNBC notes in a recent report, have added about 50% since the start of the year as demand rebounded much more quickly and strongly than anyone seems to have expected, while supply remained tight as the industry treaded the new pandemic landscape cautiously. 

Last week, prices fell dramatically on the news that a new variant of the coronavirus was identified in South Africa, but it is unlikely that this news will have a lasting effect. 

Meanwhile, true to itself, the International Energy Agency has berated OPEC for what its head, Fatih Birol, has called “artificial tightness”.

“[A] factor I would like to underline that caused these high prices is the position some of the major oil and gas suppliers, and some of the countries did not take, in our view, a helpful position in this context,” Birol said this week, as quoted by CNBC.

“In fact, some of the key strains in today’s markets may be considered as artificial tightness … because in oil markets today we see close to 6 million barrels per day of spare production capacity lies with the key producers, OPEC+ countries,” Birol added.

READ MORE: Biden’s bid to lower oil prices fails

The IEA was set up as a monitor of oil markets with the purpose of avoiding a repeat of the severe shortage that hit the West after much of the Middle East imposed an oil embargo on Israeli allies there. Since then, however, especially in recent years, the agency has focused increasingly on the green energy transition, earlier this year calling for the suspension of all new oil investment, only to urge producers a few months later to invest more in new production.

OPEC+ has so far resisted all calls for more oil production. The cartel has clearly signaled  that it will do what it decides and will not defend anyone else’s interests. Right now, OPEC+ is interested in higher oil prices. The group seems worried about more flare-ups of Covid and has cited this risk as a demand constraint that justifies their moderate production boost. Now, on top of that worry, they have those 50 million US barrels of crude coming in. The next OPEC+ meeting might bring a nasty surprise to large oil consumers, and this nasty surprise could push prices higher.

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Article source: https://www.rt.com/business/541633-biden-blunder-sends-oil-higher/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Beijing Skyrizon Aviation, along with several other Chinese investors, has submitted the application to the Permanent Court of Arbitration in The Hague.

The plaintiffs have demanded compensation for unfair treatment of Chinese investors by Ukraine, which has resulted in significant losses in both Ukraine and China, Skyrizon announced in a WeChat post.

READ MORE: Trump reviews Ukraine aid to ensure it’s being used in US’ interests – report

Chinese investors claim Ukrainian authorities have continually implemented illegal measures against the company, and say they are ready to use all possible legal tools to defend their legitimate rights.

In 2016, Skyrizon offered to purchase a 56% share in Zaporizhzhia-based Motor Sich, one of the world’s leading engine producers for airplanes and helicopters. The deal was aimed to help China fill a gap in aircraft engine manufacturing and for Ukraine to restart its own production.

Beijing Skyrizon Aviation had reportedly agreed to invest $250 million in the Ukrainian plants, and to set up an assembly and servicing plant in the southwest Chinese municipality of Chongqing.

In early 2018, the Security Service of Ukraine launched a criminal probe into Motor Sich over allegations the enterprise’s equipment had been exported to China. Trading of Motor Sich shares on the Ukrainian stock exchange was halted, and the register of shareholders was seized. As a result, the previously agreed deal failed to be completed. A court in Ukraine has also frozen 41% of Motor Sich shares controlled by the Chinese firm.

In January 2021, Kiev introduced sanctions against Chinese investors. The penalties included the blocking of assets, reduction of trade operations, partial or complete termination of transit of resources, and flights and transportation through the territory of Ukraine.

In March, a court in Kiev seized the entire assets and all the shares of the aerospace company. The company was reportedly transferred to a government body responsible for managing assets obtained through corruption and other crimes. Later, Ukrainian President Volodymyr Zelensky signed an ordinance to nationalize Motor Sich.

According to a statement issued by China’s Skyrizon in January, the enterprise was illegally deprived of legal rights as a shareholder of Motor Sich and as a result suffered a huge economic loss shortly after the sanctions were imposed.

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Article source: https://www.rt.com/business/541603-china-sues-ukraine-hague-court/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Brent crude oil futures had gained 4% to reach $75.63 per barrel by 07:39 GMT, after dropping below $73 on Friday. Meanwhile, US West Texas Intermediate crude was up 4.81%, at $71.43 per barrel, recovering from Friday’s low of $68.

Omicron news triggers bloodbath in crypto market

The Friday price plunge – the worst since April 2020 – occurred shortly after the World Health Organization warned about the latest Covid-19 variant, Omicron, forcing investors to weigh the risks of potential virus-related restrictions.

While uncertainty about the group’s potential steps in response to a reserves release by the US and several major oil-consuming states remains, speculations abound that rising Omicron cases would prompt OPEC to suspend the previously agreed production increase of 400,000 barrels per day in January.

“With the potential demand hit, we believe the group could take a pause in its current supply increases. This would be consistent with the cautious approach OPEC+ has taken since the initial outbreak of Covid-19,” ING Group said, as cited by Reuters.

OPEC and the allied oil producers led by Russia, known as OPEC+, have postponed technical meetings until later this week to assess the impact of the new variant on global demand for crude.

“OPEC delaying meetings is not good for oil prices. But outside the formal meetings, OPEC can still make statements. We’ll just have to wait and see,” Lukman Leong, analyst at Jakarta-based Deu Calion Futures told the agency.

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Article source: https://www.rt.com/business/541596-oil-price-recovers-coronavirus/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The ambitious multi-trillion-dollar BRI, also known as the New Silk Road, was announced by President Xi Jinping in 2013, aiming to boost connectivity and cooperation between East Asia, Europe, and East Africa. The major project is expected to significantly expand global trade, cutting trading costs in half for the countries involved.

G7 nations seek to counter China’s Silk Road projects with ambitious infrastructure plan 

Eritrea is seen as strategically important due to its access to the Red Sea and the Suez Canal, as well as to waters in the Persian Gulf, and thus to the Indian Ocean. 

Meanwhile, the Atlantic Ocean nation of Guinea-Bissau is expected to boost China’s maritime interests along the West African coast. The country is a member of the African Continental Free Trade Agreement (AfCFTA) that removed border tariffs between African nations. 

China has committed to building a $184 million biomass plant in Guinea-Bissau, and is reportedly involved in several redevelopment projects in the country. Beijing is reportedly supporting a $48-million project aimed at renovating the antiquated telecommunications system and highway construction. Chinese investors have also expressed interest in the logging sector, deepwater fisheries and oil exploration.

Beijing is planning to help Eritrea to bring back trained labor, to develop infrastructure in the country, and “wean it off an agricultural base to a higher standard of industrialization.” Back in 2019, the China Shanghai Corporation for Foreign Economic and Technological Cooperation (SFECO) began construction of part of the 500km road between the country’s port city of Massawa and Assab harbor, both of which possess special economic zones.

The two African states inked the Memorandum of Understanding days before the forthcoming FOCAC Ministerial Forum in the Senegalese capital of Dakar, which kicks off on November 29.

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Article source: https://www.rt.com/business/541557-silk-road-eritrea-guinea-bissau/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“Russian counter-sanctions have bashed Greek exports, which have been cut in half since 2014. This is especially the case for fresh fruit, vegetables, fish and dairy products,” Varvitsiotis Miltiadis, Greece’s alternate minister of foreign affairs, said in an interview with TASS. 

Europe’s imports of Russian goods soar 50% in 2021 despite lingering sanctions – Eurostat

According to the official, Greek manufacturers are currently ramping up their efforts to increase the share of the country’s products in the Russian market by boosting sales of other goods that are not subject to sanctions.

The Russian authorities placed an import ban on a number of food products from EU member states in 2014, after relations between Moscow and Brussels dramatically declined as a result of economic sanctions introduced by the EU against Russia. The step has drawn harsh criticism from citizens and companies in both Russia and the EU, and sparked a wave of protests among European farmers.

“Tourism is of particular importance to us since it helps to reduce the vast trade deficit we have with Russia, our traditional source of energy and grains,” Miltiadis said.

The diplomat added that Greece couldn’t welcome as many Russian visitors as it used to in recent years, due to Covid-related restrictions. However, the country’s hoteliers hope for a swift recovery in tourist numbers from Russia.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/541545-greece-exports-trade-russia-sanctions/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The price of bitcoin fell below $54,000, marking a daily drop of nearly 8%. The slide to $54,321 brought it to its lowest level since early October.

‘Mutant’ virus attacks global oil

Other cryptocurrencies were also down, with ether, the second-biggest, dropping over 10% to $4,059, and XPR falling 9.9% to under 95 cents. Others, such as dogecoin, dropped 8.3%, while shiba inu is down nearly 5%.

The major drop is attributed to a new, heavily mutated variant of the coronavirus. The new strain, named Omicron, was first reported to the World Health Organization on Wednesday.

Mounting concerns over the new variant promptly evoked strict travel bans across the globe, with flights from South Africa and several neighboring states being barred by a growing number of nations.

The news also triggered selloffs in riskier assets, with stock markets around the world registering a decline earlier this week. US Treasury yields moved sharply lower, while bond yields moved inversely to prices. European stocks endured their worst session in more than a year, while US stock futures were sharply down.

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Article source: https://www.rt.com/business/541542-omicron-bloodbath-crypto-markets-bitcoin/?utm_source=rss&utm_medium=rss&utm_campaign=RSS