Global Oil Producers Face Brutal Reckoning After Epic OPEC+ Fail - Bloomberg:
The alliance between Saudi Arabia and Russia was the only thing that kept the world oil market from tumbling into the abyss. Now its collapse threatens to plunge the industry into a generation-defining freefall with few precedents in modern history.
OPEC+ ministers left a fractious meeting in Vienna Friday afternoon with no deal to continue restraining output, raising the specter of a price war just as the coronavirus triggers a drop in demand that could end up the deepest since the 1980s.
“This is going to get nasty,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “OPEC+ is going to pump more, and the world is facing a demand shock. $30 oil is possible.”
The market reaction Friday was as vicious as it was swift. Brent crude, a global benchmark, fell 9.4%, the most since the global financial crisis. The spiral may not be over. Previous collapses in cooperation between OPEC nations since 1960 have triggered punishing slumps that shaped the industry for years.
Friday, 6 March 2020
#Saudi Aramco Share Price Set to Face Renewed Test as Oil Slumps - Bloomberg
Saudi Aramco Share Price Set to Face Renewed Test as Oil Slumps - Bloomberg:
Saudi Aramco’s stock risks dropping below the initial public offering price on Sunday when trading resumes in Riyadh after OPEC+ talks ended in failure and oil prices collapsed.
Shares in the world’s biggest oil producer have largely defied gravity since they were listed in December, not falling below the initial public offering price of 32 riyals ($8.53) even as the coronavirus led to a 30% slump in crude prices since the start of the year. Aramco’s stock has only slipped about 6% in 2020 to close at 33 riyals on Thursday, the last trading day of the week.
With oil falling the most in more than a decade on Friday, Aramco is set to face further selling pressure when trading resumes that could push it below the IPO price. That would be a major blow to the kingdom’s citizens, who were encouraged to invest in the company after global investors largely took the view it was overvalued and so stayed away. It could also hamper plans for further stake sales in the company.
Oil’s fall also illustrates how closely intertwined Aramco’s profitability is with politics in Riyadh. Prices slumped after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the oil producer group to a breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. Russia, which has taken steps to shore up its economy, wanted to use lower prices to help wipe out competition from U.S. shale.
Saudi Aramco’s stock risks dropping below the initial public offering price on Sunday when trading resumes in Riyadh after OPEC+ talks ended in failure and oil prices collapsed.
Shares in the world’s biggest oil producer have largely defied gravity since they were listed in December, not falling below the initial public offering price of 32 riyals ($8.53) even as the coronavirus led to a 30% slump in crude prices since the start of the year. Aramco’s stock has only slipped about 6% in 2020 to close at 33 riyals on Thursday, the last trading day of the week.
With oil falling the most in more than a decade on Friday, Aramco is set to face further selling pressure when trading resumes that could push it below the IPO price. That would be a major blow to the kingdom’s citizens, who were encouraged to invest in the company after global investors largely took the view it was overvalued and so stayed away. It could also hamper plans for further stake sales in the company.
Oil’s fall also illustrates how closely intertwined Aramco’s profitability is with politics in Riyadh. Prices slumped after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the oil producer group to a breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. Russia, which has taken steps to shore up its economy, wanted to use lower prices to help wipe out competition from U.S. shale.
OMV In Talks to Buy $4.7 Billion Borealis Stake from Mubadala - Bloomberg
OMV In Talks to Buy $4.7 Billion Borealis Stake from Mubadala - Bloomberg:
Austria’s OMV AG is in talks to buy a $4.68 billion stake in Borealis AG in a potentially record-breaking acquisition that would shift the state-controlled energy company’s focus to petrochemicals.
OMV may buy a 39% stake in its Vienna-based affiliate from Abu Dhabi’s Mubadala Investment Corp., it said in a statement late Friday. That would increase OMV’s stake in Borealis to 75%, Mubadala would maintain a 25% stake in Borealis. It also owns a quarter of OMV.
“The potential transaction would expand the value chain of OMV in the petrochemical sector and would allow OMV to fully consolidate the resultss,” OMV said. The supervisory board has yet to discuss the transaction and will make a decision as soon as possible, it said.
The move follows years of effort by OMV to gain scale in oil and gas production. Chief Executive Officer Rainer Seele has said in the past he wanted to focus on petrochemicals in the Middle East and Asia, where consumer demand is growing for everything from packaging to mobility.
Austria’s OMV AG is in talks to buy a $4.68 billion stake in Borealis AG in a potentially record-breaking acquisition that would shift the state-controlled energy company’s focus to petrochemicals.
OMV may buy a 39% stake in its Vienna-based affiliate from Abu Dhabi’s Mubadala Investment Corp., it said in a statement late Friday. That would increase OMV’s stake in Borealis to 75%, Mubadala would maintain a 25% stake in Borealis. It also owns a quarter of OMV.
“The potential transaction would expand the value chain of OMV in the petrochemical sector and would allow OMV to fully consolidate the resultss,” OMV said. The supervisory board has yet to discuss the transaction and will make a decision as soon as possible, it said.
The move follows years of effort by OMV to gain scale in oil and gas production. Chief Executive Officer Rainer Seele has said in the past he wanted to focus on petrochemicals in the Middle East and Asia, where consumer demand is growing for everything from packaging to mobility.
OPEC+ Talks Collapse, Blowing Hole in Russia- #Saudi Alliance - Bloomberg
OPEC+ Talks Collapse, Blowing Hole in Russia-Saudi Alliance - Bloomberg:
OPEC+ talks ended in dramatic failure, auguring the end of a diplomatic alliance between Saudi Arabia and Russia that has underpinned crude prices and changed the balance of power in the Middle East.
Brent crude, the global benchmark, plunged the most in more than a decade after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the group past breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. But Moscow had a different idea.
The Kremlin’s budget is more resilient to low prices than its Middle Eastern allies. Russia also argued that cheap crude will help wipe out competition from U.S. shale and turn investors against companies that are already struggling, said a person familiar with the discussions.
The outcome is bad for energy giants like Exxon Mobil Corp., resource-dependent countries from Latin America to Central Asia, and companies like BP Plc trying to reinvent themselves as greener producers. Low prices will help some economies though, as a stimulus in the face of the raging virus.
OPEC+ talks ended in dramatic failure, auguring the end of a diplomatic alliance between Saudi Arabia and Russia that has underpinned crude prices and changed the balance of power in the Middle East.
Brent crude, the global benchmark, plunged the most in more than a decade after Russia refused to bend to the will of Saudi Arabia, whose high-stakes gamble pushed the group past breaking point. Riyadh wanted to slash production to offset the hit to demand from the coronavirus. But Moscow had a different idea.
The Kremlin’s budget is more resilient to low prices than its Middle Eastern allies. Russia also argued that cheap crude will help wipe out competition from U.S. shale and turn investors against companies that are already struggling, said a person familiar with the discussions.
The outcome is bad for energy giants like Exxon Mobil Corp., resource-dependent countries from Latin America to Central Asia, and companies like BP Plc trying to reinvent themselves as greener producers. Low prices will help some economies though, as a stimulus in the face of the raging virus.
Oil takes biggest daily dive in over a decade as Russia, OPEC split - Reuters
Oil takes biggest daily dive in over a decade as Russia, OPEC split - Reuters:
Brent slid to its biggest daily loss in more than 11 years on Friday after Russia balked at OPEC’s proposed steep production cuts to stabilize prices hit by economic fallout from the coronavirus, and OPEC responded by removing limits on its own production.
More than 1 million U.S. crude contracts changed hands during the session, as the three-year pact between OPEC and Russia ended in acrimony.
“Prices plunged because the OPEC confab ended up being an epic fail on the part of all involved. Russia has clearly decided to employ a scorched earth approach to the oil market: every country for itself,” said John Kilduff, partner at Again Capital LLC in New York.
Brent futures had their its biggest daily percentage fall since December 2008, down $4.72, or 9.4%, to settle at $45.27 a barrel. It was Brent’s lowest closing price since June 2017.
U.S. West Texas Intermediate crude dropped $4.62, or 10.1%, to $41.28, its lowest close since August 2016 and the largest daily percentage loss since November 2014.
More than 4.58 million U.S. front-month crude contracts changed hands this week, the busiest week ever for that contract.
Brent slid to its biggest daily loss in more than 11 years on Friday after Russia balked at OPEC’s proposed steep production cuts to stabilize prices hit by economic fallout from the coronavirus, and OPEC responded by removing limits on its own production.
More than 1 million U.S. crude contracts changed hands during the session, as the three-year pact between OPEC and Russia ended in acrimony.
“Prices plunged because the OPEC confab ended up being an epic fail on the part of all involved. Russia has clearly decided to employ a scorched earth approach to the oil market: every country for itself,” said John Kilduff, partner at Again Capital LLC in New York.
Brent futures had their its biggest daily percentage fall since December 2008, down $4.72, or 9.4%, to settle at $45.27 a barrel. It was Brent’s lowest closing price since June 2017.
U.S. West Texas Intermediate crude dropped $4.62, or 10.1%, to $41.28, its lowest close since August 2016 and the largest daily percentage loss since November 2014.
More than 4.58 million U.S. front-month crude contracts changed hands this week, the busiest week ever for that contract.
BRENT CRUDE OIL FUTURES FALL MORE THAN 5% AFTER RUSSIAN SOURCE SAID MOSCOW WOULD NOT BACK OPEC CALL FOR EXTRA OUTPUT REDUCTIONS - Reuters
BRENT CRUDE OIL FUTURES FALL MORE THAN 5% AFTER RUSSIAN SOURCE SAID MOSCOW WOULD NOT BACK OPEC CALL FOR EXTRA OUTPUT REDUCTIONS - Reuters:
BRENT CRUDE OIL FUTURES FALL MORE THAN 5% AFTER RUSSIAN SOURCE SAID MOSCOW WOULD NOT BACK OPEC CALL FOR EXTRA OUTPUT REDUCTIONS
BRENT CRUDE OIL FUTURES FALL MORE THAN 5% AFTER RUSSIAN SOURCE SAID MOSCOW WOULD NOT BACK OPEC CALL FOR EXTRA OUTPUT REDUCTIONS
OPEC+ On Brink of Failure as Russia Resists Deeper Oil Cuts - Bloomberg
OPEC+ On Brink of Failure as Russia Resists Deeper Oil Cuts - Bloomberg:
Russia resisted pressure from its OPEC allies to make deeper production cuts, pushing the cartel’s high-stakes diplomatic gamble to the brink of failure and sending prices plunging.
Energy Minister Alexander Novak arrived from Moscow on Friday morning and told fellow ministers that he favored maintaining the group’s supply reduction at current levels until June, when they could again consider deeper cuts, according to a person familiar with the matter.
Ministers from the Organization of Petroleum Exporting Countries told Russia on Thursday that if it doesn’t join them in cutting oil output by another 1.5 million barrels a day to offset the impact of the coronavirus, then the cartel could abandon its reductions altogether. Hours later, the group raised pressure on Moscow again, emerging from an informal meeting at the Saudi delegation’s hotel with a proposal to extend the curbs for even longer than initially suggested.
Unless Moscow cuts output, “there will be no deal,” his Iranian counterpart Bijan Namdar Zanganeh said on Thursday.
Russia resisted pressure from its OPEC allies to make deeper production cuts, pushing the cartel’s high-stakes diplomatic gamble to the brink of failure and sending prices plunging.
Energy Minister Alexander Novak arrived from Moscow on Friday morning and told fellow ministers that he favored maintaining the group’s supply reduction at current levels until June, when they could again consider deeper cuts, according to a person familiar with the matter.
Ministers from the Organization of Petroleum Exporting Countries told Russia on Thursday that if it doesn’t join them in cutting oil output by another 1.5 million barrels a day to offset the impact of the coronavirus, then the cartel could abandon its reductions altogether. Hours later, the group raised pressure on Moscow again, emerging from an informal meeting at the Saudi delegation’s hotel with a proposal to extend the curbs for even longer than initially suggested.
Unless Moscow cuts output, “there will be no deal,” his Iranian counterpart Bijan Namdar Zanganeh said on Thursday.
Return of Neutral-Zone Oil Another Supply Headache for OPEC+ - Bloomberg
Return of Neutral-Zone Oil Another Supply Headache for OPEC+ - Bloomberg:
Oil exports from the neutral zone between Kuwait and Saudi Arabia will resume from next month, adding more supply just as OPEC tries to cut output to stem a coronavirus-driven price rout.
Kuwait Petroleum Corp. told customers that production at the Khafji field in the zone has already restarted, with exports on track from April, according to people who had seen a notice sent by the company. That came after the state-owned producer said in mid-February that output from the Wafra field, also in the zone, would start within three months.
The neutral zone can pump a combined 500,000 barrels a day of crude but has been out of action for more than five years due to a spat between Saudi Arabia and Kuwait. The resumption of exports comes as OPEC is trying to limit production, proposing an additional 1.5 million barrels a day of output cuts to offset the economic hit from the virus.
Oil exports from the neutral zone between Kuwait and Saudi Arabia will resume from next month, adding more supply just as OPEC tries to cut output to stem a coronavirus-driven price rout.
Kuwait Petroleum Corp. told customers that production at the Khafji field in the zone has already restarted, with exports on track from April, according to people who had seen a notice sent by the company. That came after the state-owned producer said in mid-February that output from the Wafra field, also in the zone, would start within three months.
The neutral zone can pump a combined 500,000 barrels a day of crude but has been out of action for more than five years due to a spat between Saudi Arabia and Kuwait. The resumption of exports comes as OPEC is trying to limit production, proposing an additional 1.5 million barrels a day of output cuts to offset the economic hit from the virus.
Experts pinpoint 2022 for #Dubai property market recovery - Arabianbusiness
Experts pinpoint 2022 for Dubai property market recovery - Arabianbusiness:
Property prices in Dubai are forecast to stabilise in 2022, according to a poll of analysts and real estate experts.
Price declines in the emirate are set to slow to 4 percent this year and 1.3 percent next year, said the poll conducted by Reuters.
This compares to several reports from consulting firms which showed average Dubai property values dropped by more than 10 percent last year.
Analysts said they are optimistic about prospects relating to Expo 2020, which Dubai will host for six months from October.
But according to 11 of the 15 poll respondents, a surplus of existing properties for sale could still weigh on the real estate market's recovery.
Property prices in Dubai are forecast to stabilise in 2022, according to a poll of analysts and real estate experts.
Price declines in the emirate are set to slow to 4 percent this year and 1.3 percent next year, said the poll conducted by Reuters.
This compares to several reports from consulting firms which showed average Dubai property values dropped by more than 10 percent last year.
Analysts said they are optimistic about prospects relating to Expo 2020, which Dubai will host for six months from October.
But according to 11 of the 15 poll respondents, a surplus of existing properties for sale could still weigh on the real estate market's recovery.
OPEC seeks big oil cut in crunch talks with Russia amid virus outbreak - Reuters
OPEC seeks big oil cut in crunch talks with Russia amid virus outbreak - Reuters:
OPEC holds crunch talks with its allies on Friday after the group told Russia and others it wanted an additional 1.5 million barrels per day (bpd) of oil cuts until the end of 2020, saying a big move was needed to deal with the impact of coronavirus.
OPEC’s proposal effectively presents an ultimatum to Moscow, which has so far been reluctant to back extra curbs on supply, even though oil prices have plunged more than 20% since the start of the year, trading below $50 a barrel on Friday.
Saudi Arabia had been pushing for a big oil cut ahead of this week’s talks in Vienna between OPEC, Russia and other producers, a group known as OPEC+.
But OPEC ministers, who met on Thursday, backed a proposal for an even larger reduction than expected.
OPEC holds crunch talks with its allies on Friday after the group told Russia and others it wanted an additional 1.5 million barrels per day (bpd) of oil cuts until the end of 2020, saying a big move was needed to deal with the impact of coronavirus.
OPEC’s proposal effectively presents an ultimatum to Moscow, which has so far been reluctant to back extra curbs on supply, even though oil prices have plunged more than 20% since the start of the year, trading below $50 a barrel on Friday.
Saudi Arabia had been pushing for a big oil cut ahead of this week’s talks in Vienna between OPEC, Russia and other producers, a group known as OPEC+.
But OPEC ministers, who met on Thursday, backed a proposal for an even larger reduction than expected.
Oil drops on demand doubts, fears that producer output cuts not yet agreed - Reuters
Oil drops on demand doubts, fears that producer output cuts not yet agreed - Reuters:
Oil slid 1% on Friday as worries about global oil demand and economic growth slowdown caused by the coronavirus outbreak were heightened by concern over non-OPEC crude producers not yet having agreed to cut output further to support prices.
Brent crude fell 49 cents, or 0.98%, to $49.50 per barrel by 0735 GMT, while U.S. West Texas Intermediate (WTI) was down 46 cents, or 1%, at $45.44 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) on Thursday pushed for crude output by OPEC and associated producers - a group known as OPEC+ - to be cut by an extra 1.5 million barrels per day (bpd) in total until the end of 2020. The call came ahead of an OPEC+ meeting scheduled for Friday in Vienna.
Non-OPEC states were expected to contribute 500,000 bpd to the overall extra cut, OPEC ministers said. But Russia and Kazakhstan, both members of OPEC+, said they had not yet agreed to the deeper cut, raising the risk of a collapse in cooperation that has propped up crude prices since 2016.
Oil slid 1% on Friday as worries about global oil demand and economic growth slowdown caused by the coronavirus outbreak were heightened by concern over non-OPEC crude producers not yet having agreed to cut output further to support prices.
Brent crude fell 49 cents, or 0.98%, to $49.50 per barrel by 0735 GMT, while U.S. West Texas Intermediate (WTI) was down 46 cents, or 1%, at $45.44 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC) on Thursday pushed for crude output by OPEC and associated producers - a group known as OPEC+ - to be cut by an extra 1.5 million barrels per day (bpd) in total until the end of 2020. The call came ahead of an OPEC+ meeting scheduled for Friday in Vienna.
Non-OPEC states were expected to contribute 500,000 bpd to the overall extra cut, OPEC ministers said. But Russia and Kazakhstan, both members of OPEC+, said they had not yet agreed to the deeper cut, raising the risk of a collapse in cooperation that has propped up crude prices since 2016.