Oil dropped to around $83 a barrel on Monday, pressured by expectations that some Iranian oil exports will keep flowing after the U.S. reimposes sanctions, easing a strain on supplies.
Two companies in India, a big buyer of Iranian oil, have ordered barrels in November, India’s oil minister said on Monday.
The Trump administration is considering waivers on sanctions, a U.S. government official said on Friday.
“One way or another, it looks as though India is going to take some Iranian crude,” said Olivier Jakob of Petromatrix, adding that the development was helping oil to “retrace some of the price surge we saw last week.”
Brent crude, the international benchmark LCOc1, was down $1.07 to $83.09 per barrel at 0817 GMT. It hit a four-year high of $86.74 last week.
U.S. crude CLc1 was down 93 cents at $73.41.
U.S. sanctions will target Iran’s crude oil exports from Nov. 4, and Washington has been putting pressure on governments and companies worldwide to cut their imports to zero.
“This is one of the single biggest supportive factors for crude,” said analysts at JBC Energy of the U.S. re-imposition of Iran sanctions. “Having said that, it may well be that we are already in the most supportive phase coming from this change and the effect will soon begin to ease.”
Oil also dropped as investors focused on rising output from other producers, such as top exporter Saudi Arabia, to compensate for lower Iranian supplies.
Saudi Arabia said last week it plans to raise production in November from October output of 10.7 million barrels per day (bpd), indicating Riyadh will be boosting its supply to the highest ever level.
“Chatter that Saudi Arabia has replaced all of Iran’s lost oil” is weighing on prices, said Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore.
Concern that the U.S.-Chinese trade war could slow down economic growth and hit oil demand also weighed on the market, traders in Asia said. Chinese equities fell sharply on Monday.
Oil has been supported by concern that the Iranian export loss will leave a thinner margin of unused production capacity to deal with supply shocks. The bulk of spare capacity is held by Saudi Arabia.
These concerns remain supportive.
Innes warned that limited spare production to deal with further supply disruptions meant “the capacity is quickly declining due to Asia’s insatiable demand”.
Tag: Oil
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Oil drops to around $83 on expectations Iran will maintain some exports
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Iran sanctions: Oil price rises, increasing global supply caps market
Oil markets were stable on Wednesday, buoyed by falling supplies from Iran ahead of U.S. sanctions but held in check by rising production outside the Organization of the Petroleum Exporting Countries.
Oil prices were a shade firmer. Brent added 7 cents to 76.05 dollars a barrel, while U.S. crude rose 9 cents to 68.62 dollars .
Earlier sweet Brent crude oil futures were at 76 dollars per barrel at 0030 GMT, up 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 6 cents at 68.59 dollars a barrel.
Traders said crude prices have been supported by the prospect of U.S. sanctions against Iran, which will start to target its oil industry from November.
Bowing to pressure from Washington, many crude buyers have already reduced orders from OPEC’s third-biggest producer.
In spite of Tehran offering steep discounts, the total volume of crude oil, including condensate, to load in Iran this month is estimated at 64 million barrels, or 2.06 million barrels per day (bpd),.
This figure is against Tehran peak of 92.8 million barrels, or 3.09 million bpd, in April, preliminary trade flows data from media showed.
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Shell, Bayelsa community disagree on spill impact
A disagreement in the areas impacted by an oil leak on the Trans Ramos Pipeline within Shell’s oilfield at Aghoro communities in Bayelsa has stalled a joint investigation of the spill.
The News Agency of Nigeria reports that the leak , which occurred on May 17, 2018 discharged a yet to be ascertained volume of crude oil into the environment and polluted the river, farmlands and surroundings.
Shell said a Joint Investigative Visit (JIV) to ascertain the cause of the oil leak had been concluded but that the report was yet to be signed by all the parties.
Mr Bamidele Odugbesan, Media Relations Manager at SPDC, told NAN on Saturday in Yenagoa that the joint investigation was conducted by the oil major, representatives of the host community, government and regulatory agencies.
Odugbesan, however, said that report of the JIV, which commenced early last month was ready and awaiting signing by the communities but declined to give reasons for the delay in releasing the JIV report, adding that the oil firm had commenced clean up of impacted sites.
The JIV report is expected to unravel the cause of the spill, volume of oil discharged and the area adversely impacted, and volume of oil recovered in the spill incident as well as serve as a basis to determine compensation.
NAN learnt that Shell and representatives of the host communities had a sharp disagreement on the size of areas affected by the spill and hence refused to sign the report, which had disrupted ongoing clean up of the site.
Mr Sunday Benjamin, Chairman, Community Development Committee, Aghoro 1, who participated in the JIV said that the communities had argued that the spill had spread to wider areas and affected more places than the JIV covered.
“The cause of the stalemate is that Shell refused to accommodate satellite communities. They did not allow the JIV to be extensive. They excluded the satellite communities and fishing settlements.
“They only captured Aghoro 1 and 2, leaving other fishing settlements impacted by the crude oil that leaked into the waters. They recorded 33 acres for Aghoro 1 and 113 acres for Aghoro 2.
“We eventually signed our portion because we did not want delays in the process and our land affected was not much but Aghoro 2 people refused to sign that is why the JIV report is delayed.
“Everyone agreed that the spill was traced to ruptured pipeline on three points, due to corrosion on the Trans Ramos Pipeline,” Benjamin said.
Reacting to the development, Dr Peter Idabor, Director-General of the National Oil Spills Detection and Response Agency, told NAN in a telephone interview that the JIV was `‘inconclusive’’, following the disagreements.
“ From the feedback from our officers in Yenagoa, the JIV is inconclusive,” Idabor said.
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Oil, manufacturing sectors got highest credits from banks in second quarter – NBS
The oil and gas and manufacturing sectors got the highest credits from banks to the private sector at N3.45 trillion and N2.02 trillion respectively in the second quarter (Q2) of 2018, the National Bureau of Statistics (NBS) has said.
In its report published on Friday, titled ‘Selected Banking Sector Data – Q2 2018,’ the NBS disclosed that the total value credit allocated to the private sector stood at N15.34 trillion.
This shows that the oil and gas sector got 22.52 per cent of the total value, while manufacturing got 13.16 per cent.
In the first quarter of the year, the two sectors had also received the highest private sector credit from banks.
Compared to the figures recorded in the first quarter (N3.42 trillion for oil and gas, N2,02 trillion for manufacturing), however, there was a slight increase in the amount borrowed in the oil and gas sector but a slight decrease for the manufacturing sector.
Agriculture sector got N503.07billion (3.41 per cent of the total value), while mining and quarrying got N10.17 billion (0.07 per cent).
The power and energy sector got private sector credits worth N414.34 billion, 2.71 per cent of the total value.Compared to the previous quarter where N15.60 trillion was recorded as the total value of credits allocated to private sector, the value decreased by N0.26trillion.
Also documented in the report was data on electric payment channels in the Nigerian banking sector.
A total volume of 509.6 million (509,668,433) transactions valued at N32.90 trillion were recorded in Q2, the report showed.
Of the 506.6 million transactions, Automated Teller Machine (ATM) transactions stood at 217.4 million (217,417,961) valued at N1,603 billion.
On the staff strength of the banking sector, executive staff increased by 30.43 per cent to 210 when compared to Q2 2017. When compared to the first quarter, the figure remained the same.
For senior staff, there was a 1.20 per cent growth to 17,144 in Q2 compared to the 16,941 recorded the previous quarter and a 13.53 per cent decrease compared to the 19,826 recorded fir Q2, 2017.
A percentage growth in the number of Junior staff and contract staff was also recorded in Q2. Junior staff increased by 0.26 per cent to 40,549 compared to the previous quarter and by 20.03 percent compared to the figure recorded in the Q2 2017
For contract staff, there was an increase by 37.30 per cent to 43,955 persons when compared to the previous quarter and a 101.29 per cent growth compared with the figure recorded in Q2 2018.
As at Q2, 2018, the total number of banks’ staffs increased by 13.67% from the 89,608 in Q1 to 101,861.
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OPEC output rises on Nigeria, Kuwait supplies
Oil production from the Organisation of Petroleum Exporting Countries (OPEC) rose in July, despite supply shortfalls from Libya, Iran and Saudi Arabia. Rising output from Nigeria, Kuwait and the UAE offset the drops.
OPEC production averaged 32.32 million barrels per day (bpd) in July, 40,700 higher than June, according to the group’s monthly oil market report, based on secondary source figures.
Production from Nigeria, Kuwait and the UAE offset the drops elsewhere. Kuwait ramped up its output by 78,500 to 2.8 million bpd last month, Nigeria by 70,500 to 1.67 million bpd, and the UAE by 69,200 to 2.96 million bpd.
Meanwhile, production fell by 57,000 to 600,000 bpd in Libya, by 53,000 to 10.39 million bpd in Saudi Arabia, with output from Venezuela dropping by 48,000 to 1.28 million bpd, according to OPEC.
As for Saudi Arabia, OPEC’s largest oil producer submitted to the group its own data which showed that output slipped by 200,000 to 10.28 million bpd in July.
In addition, OPEC reduced its projection for global oil demand growth for this year by 20,000 to 1.64 million bpd, while lowering the forecast for the next year by 20,000 to 1.43 million bpd. This was attributed to a weaker-than-expected demand in Latin America and the Middle East during the second quarter of the year.
However, OPEC ran out the prospect that trade spat between the US and China to have much impact on the world’s oil demand, unless the rifts reach beyond the world’s largest two economies.
The group also raised its forecasts for supply from rival producers for the rest of the year, predicting that non-OPEC output would total 59.62 million bpd in 2018, 2.08 million bpd increase from the prior year.
Moreover, demand for OPEC crude is set to reach 32.9 million bpd this year, dropping by 600,000 bpd from the previous year.
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Nigeria’s oil exports rise by 1.9 per cent in July
The volume of crude oil exported by Nigeria in the month of July 2018 increased by 1.90 percent compared to last month’s.
According to a report by Bloomberg, the total exports grew to 1.64 million barrels per day (b/d) last month from the 1.61 million b/d recorded the previous month.
The increase in the volume of oil exported by the Africa’s largest market was the highest in four months.
The rise was attributed to Shell’s lifting of export restrictions on key Bonny Light grade during the month of July.
recalls that on Friday, July 14, 2018, barely two months after declaring force majeure on the Bonny Light Export, Shell Petroleum Development Company of Nigeria Limited (SPDC) announced the lifting of the force majeure, indicating resumption of normal loading activities from its Bonny terminal in Rivers State.
SPDC had declared the force majeure on May 17, 2018, following the shutdown of the Nembe Creek Trunkline (NCTL) by the operator, Aiteo Eastern E&P Company Limited.
Aiteo also declared force majeure on the NCTL production which necessitated the subsequent action by SPDC on Bonny Light exports.
The NCTL is one of the two major production lines feeding the Bonny Terminal, the other being the SPDC-operated Trans Niger Pipeline (TNP).
The NCTL is a 97 kilometre, 150,000 barrels of oil per day pipeline constructed by Royal Dutch Shell Plc, but handed over to Aiteo Eastern E&P Company Limited about three years ago.
According to the reports, last month, Akpo condensate shipments, which are not included in the figure above, rose to 123,000 b/d in contrast to 95,000 b/d in June. Combined crude and condensate exports rose to 1.762m b/d from revised 1.688m b/d.
It was gathered that the biggest crude export rises were for Brass, Bonny and Forcados, Bonny Light increased to 127,000 b/d in July from 87,000 b/d in June Forcados flows were 204,000 b/d versus 162,000.
Furthermore, Brass exports rose to 98,000 b/d from 32,000 in June.
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How oil exports, controlled imports aided Nigeria’s exit from recession – NBS
The National Bureau of Statistics (NBS) on Monday said Nigeria’s recovery from economic recession slowly began in the second quarter of 2017 (Q2 2017) mainly because of oil exports and controlled imports.
The bureau disclosed this in a report published on its website titled, Nigerian Gross Domestic Product Report (Expenditure and Income Approach) 2017.
Recall that Nigeria slipped into economic recession in 2016 but returned to positive growth in the second quarter of 2017.
According to the report, “the economic recovery was mainly driven by improved net exports (trade balance), with all other components of real GDP by expenditure remaining negative (except Non-profit Institutions Serving Households (NPISH) consumption, albeit better than 2016.
“This suggests recovery from recession was largely driven by recovery in Nigeria’s main exports which is oil, combined with control in imports, which improved net exports (the only component that grew positively) significantly,” the report stated.
Though there was improvement in the state of the economy in 2017 compared to 2016, the report disclosed that improvements in domestic consumption and business environment are still necessary to further stimulate growth.
The report also showed that real GDP growth turned positive and sustained its acceleration annually from the second quarter of 2017.
Annual real GDP growth rate stood at 0.82 per cent in 2017 signifying economic recovery when compared to –1.58 per cent in 2016.
“Real Household Consumption and Government Consumption Expenditures generally declined in 2017 at –0.99 per cent but improved compared to 2016 at -5.71per cent. Domestic demand was still weak.
“Net Exports grew significantly in real terms in 2017, which was mainly driven by the strong performance in the third quarter. However, this was slower than 2016 at 22 per cent.
“National Disposable Income declined by 1.52 per cent in 2017, majorly due to the continuous decline in the largest component— Operating Surplus which recorded a negative annual growth rate, of –2.11 per cent. Compensation of Employees performed strongly in 2017, at 11.14 per cent annual growth rate,” the NBS added.
The Gross Domestic Product (GDP) can be derived as the value of all goods and services available for final uses and export. GDP at market prices includes net taxes on products; taxes are subtracted to obtain basic price GDP.
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Oil prices fall as Saudi, Russian output rises
Oil prices fell on Monday as supplies from Saudi Arabia and Russia rose while economic growth stumbled in Asia amid an escalating trade dispute with the U.S.
Benchmark Brent crude oil LCOc1 fell 1.24 dollars a barrel to a low of $77.99 before recovering to $78.40, down 83 cents, by 7.35 GMT.
U.S. light crude CLc1 was 50 cents lower at 73.65 dollars.
Oil prices rose strongly in June, with the U.S. crude contract hitting its highest in years and a hafd years at 74.46 dollars.
But a flurry of U.S. announcements over the weekend unsettled oil markets.
U.S. president, Donald Trump tweeted on Saturday that Saudi Arabia’s King, Salman bin Abdulaziz Al Saud had agreed to pump more oil, “maybe up to 2,000,000 barrels”.
The White House later walked back on the comments.
Saudi Arabia’s output is up by 700,000 barrels per day (bpd) from May, a Reuters survey showed, and close to its 10.72 million bpd record from November 2016.
Russian output rose to 11.06 million bpd in June from 10.97 million bpd in May, the Energy Ministry said on Monday.
U.S. production C-OUT-T-EIA has soared 30 per cent in the past two years, to 10.9 million bpd, meaning the world’s three biggest oil producers now churn out almost 11 million bpd each, meeting a third of global oil demand.
Also weighing on oil demand are trade disputes between the United States and other major economies including China, the European Union, India and Canada.
Asia’s main economic hubs of China, Japan and South Korea reported a slowdown in export orders in June amid escalating trade disputes with the United States.
“Recurring salvos in the trade war and falling asset prices raise the question of how much tariffs could damage the global economy,” U.S. bank JPMorgan said.
The bank said a “medium-intensity (trade) conflict would likely reduce global economic growth by at least 0.5 per cent, “before accounting for tighter financial conditions and sentiment shocks”.
In spite of the relief from Saudi Arabia and Russia, oil markets remain tense because of unplanned outages from Canada to Venezuela and Libya.
Looming U.S. sanctions against Iran further contribute to expected tightness.
Mr Trump threatened in an interview that aired on Sunday to put sanctions on European companies that do business with Iran.
“The Trump administration’s plan for Iran sanctions is now abundantly clear. They seek to push Iranian exports of crude, condensate, and oil products to zero,” energy consultancy FGE said in a note.
(Reuters/NAN)
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Oil price falls to $74 as Nigeria’s exports suffer
The international oil benchmark, Brent crude, on Tuesday continued its biggest losing streak since February, falling below $75 per barrel.
The downturn in oil prices came on the heels of worries that Saudi Arabia and Russia could pump more crude to compensate for a potential supply shortfall, with hedge funds reducing bullish positions in crude.
Brent, against which Nigeria’s crude oil is priced, dropped to $74.89 per barrel as of 6:40pm Nigerian time, while the United States’ West Texas Intermediate slumped by $1.50 to $66.38 per barrel.
Following the rally in crude oil prices, the National Assembly increased the oil benchmark price for the 2018 budget to $51 per barrel from $45 proposed by the Executive.
The Brent price has fallen nearly seven per cent since hitting $80.50 on May 17, its highest since November 2014.
“Investors have started pricing in the likelihood of Saudi Arabia and Russia increasing crude oil production. However, doubt remains, with any agreement to be finalised at the June OPEC meeting,” Reuters quoted ANZ Bank as saying in a note.
Ahead of the Organisation of the Petroleum Exporting Countries’ meeting in Vienna on June 22, concerns that Saudi Arabia and Russia could boost output have exerted downward pressures on oil prices, along with rising oil production in the United States.
Saudi Arabia and Russia have discussed raising OPEC and non-OPEC oil production by one million barrels per day to counter potential supply shortfalls from Venezuela and Iran.
Meanwhile, loading delays at Nigeria’s Forcados terminal have pushed above two weeks, according to market sources, with no official new loading programme for June or July released by the terminal’s operators, Platts reported on Tuesday.
Flows to the Forcados terminal reportedly resumed last week after repairs were made to correct a minor leak on the Trans-Forcados pipeline. But sources said delays had continued to mount, which had, in turn, impacted the release of a fresh schedule for June or a firm schedule for July.
A tentative rescheduling of the June cargoes has been making the rounds in the market, showing delays of up to two weeks. But trading sources said it seemed unlikely that the new dates would actually hold and actual delays were expected to be longer.
“Forcados is taking a bit of a battering reputationally,” a trader said. “Bigger buyers will always find a home for cargoes even with some uncertainty over cargo loading dates. But value can be affected as more marginal buyers look elsewhere to [minimise] their risk.”
Last Friday, Shell Petroleum Development Company of Nigeria Limited said it shut down production following the discovery of leaks on its 24-inch Trans-Ramos Pipeline in the swamps of western Niger Delta.
The pipeline, which supplies crude oil to the Forcados export terminal, has a capacity of around 100,000 barrels per day.
The shutdown of the Trans-Ramos pipeline followed the declaration of force majeure by the oil major on exports of Bonny Light crude, one of the country’s major sources of oil revenue, the previous week.
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Oil prices jump after U.S. abandons Iran deal, plans ‘highest level’ sanctions
Oil prices rose more than two per cent on Wednesday, with Brent hitting a 3-1/2-year high, after U.S. President Donald Trump abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member.
Ignoring pleas by allies, Trump on Tuesday pulled the U. S. out of an international nuclear deal with Iran that was agreed in late 2015, raising the risk of conflict in the Middle East and casting uncertainty over global oil supplies amid an already tight market.
Brent crude oil futures at one point touched their highest since November 2014 at 76.75 dollars per barrel.
They were still at 76.52 dollars per barrel at 0628 GMT, up 1.67 dollar or 2.2 per cent, from their last close.
U.S. West Texas Intermediate (WTI) crude futures were up 1.43 dollars per barrel, or 2.1 per cent, at 70.49 dollars a barrel, near highs also last seen in late 2014.
In China, the biggest single buyer of Iranian oil, Shanghai crude futures hit their strongest in dollar terms since they were launched in late May, above 73.20 dollars per barrel.
Analysts said the soaring prices were the result of an expected fall in Iranian oil exports.
“Iran’s exports of oil to Asia and Europe will almost certainly decline later this year and into 2019 as some nations seek alternatives in order to avoid trouble with Washington and as sanctions start to bite,” said Sukrit Vijayakar, director of energy consultancy Trifecta.Iran re-emerged as a major oil exporter in 2016 after international sanctions against it were lifted in return for curbs on its nuclear program, with its April exports standing above 2.6 million barrels per day (bpd).
That made Iran the third biggest exporter of crude within the Organization of the Petroleum Exporting Countries (OPEC), behind Saudi Arabia and Iraq.
Walking away from the deal means that the United States will likely re-impose sanctions against Iran after 180 days, unless some other agreement is reached before then.
ANZ bank said Trump’s decision “puts into place a scenario that could see the crude oil market tighten significantly in H2 2018 and into next year”.Several refiners in Asia told Reuters they were already seeking alternatives to supplies from Iran.
“There are worries that Iran’s oil exports could fall by about one million barrels per day (bpd) from current levels,” said Tomomichi Akuta, senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.
“The oil supply/demand balance is roughly in balance now, but it could turn to a complete supply shortage (in case of new supply curbs).
“Oil prices could rise at least 10 dollars (a barrel), with Brent approaching near $90,” Akuta said.
All key crude oil futures contracts saw traded volumes jump as speculators took on new positions in the hope of profiting from rising prices, and as refiners hedged to protect themselves from higher feedstock oil prices.
Stephen Innes, head of trading for Asia-Pacific at futures brokerage Oanda in Singapore, said the climb in traded crude futures volumes was so high it was “causing clearing delays”.Trying to ease market concerns, Saudi Arabia on Wednesday said it would work with other producers to lessen the impact of any shortage in oil supplies.
The country has been leading efforts since 2017 to withhold production to prop up prices.
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