Iran Plans First Oil Export From Gulf of Oman Port Next Week - Bloomberg
Iran plans to ship a cargo of oil from a port in the Gulf of Oman next week, its first crude export from outside the Persian Gulf and beyond the Strait of Hormuz.
“The first vessel has arrived in the Jask region and we expect operations to load heavy crude to start Monday noon,” Vahid Maleki, director of the Jask Oil Terminal, told the state-run Islamic Republic News Agency.
He didn’t elaborate on the size of the cargo or its destination.
The port, which receives oil through the 1,000-kilometer (620 mile) Goreh-Jask pipeline stretching across the Persian Gulf coast, is expected to be able to export 350,000 barrels of oil per day in its first phase.
Most of Iran’s oil exports currently pass through the Strait of Hormuz, a narrow shipping channel in the Persian Gulf that was plunged into crisis after former U.S. President Donald Trump abandoned the 2015 nuclear deal and reinforced sanctions on Iran’s oil sector and wider economy.
Iran’s Oil Minister said this month his country has taken “many measures” to ensure it can raise crude production in “a very short time” if U.S. sanctions are lifted.
World powers have worked for months trying to broker an agreement between Iran and the U.S. that would restore Washington’s membership of the 2015 nuclear accord. A seventh round of talks in Vienna is expected to convene around mid-August, two officials said this week.
OPEC+ Calls Meeting for Sunday After Progress Toward Deal - Bloomberg
OPEC+ has called a meeting on Sunday, delegates said, after the group made significant progress toward resolving a standoff with the United Arab Emirates that had blocked a deal to boost output.
The online conference of ministers is scheduled for 12 p.m. Vienna time, although one delegate cautioned that not every minister had yet confirmed attendance. Ministers from Saudi Arabia, Kuwait, the UAE and Oman met online on Saturday to discuss the matter, delegates said, asking not to be named because the information isn’t public.
The meeting follows signs that tensions between Riyadh and Abu Dhabi were cooling after an unusually public fight. Earlier this month, the Organization of Petroleum Exporting Countries and its allies were forced to abandon a tentative deal to boost oil production in monthly installments of 400,000 barrels a day because of last minute objections from the UAE, which said its output limit was unfairly low.
The collapse of talks briefly sent crude to a six-year high in New York, although prices have dropped since to trade just below $72 a barrel on Friday.
Earlier this week, the two sides were said to be nearing a compromise that could give the UAE a more generous output limit next year and allow the rest of the group to raise production.
If there is a deal on Sunday, it is unclear how quickly additional supplies can be delivered to the market. August sales volumes are largely locked in and most Gulf countries are preparing for an Islamic holiday that will close government offices and businesses for most or all of next week.
Without extra output from OPEC+, the International Energy Agency warned on Tuesday that the oil market will “tighten significantly” and potentially damage the economic recovery.
The UAE’s dispute with OPEC+ centers around its demand for a higher production limit next year, in return for backing an extension of the cartel’s current agreement from April 2022 until December 2022.
At the previous OPEC+ meeting, Abu Dhabi asked to reset the baseline for its production cuts to about 3.8 million barrels a day next year, potentially increasing its production limit by more than 600,000 barrels a day.
Last week, the UAE was ready to set its new baseline at 3.65 million barrels a day, one delegate said. Another delegate said that figure was likely to change.
Oil analysts have warned that the UAE’s demand could open a “Pandora’s Box” for OPEC+ as other members seek better terms to redress grievances of their own. Sure enough, Iraq is also pursuing a higher production baseline, according to a delegate, who didn’t specify the number it’s requesting or when it would take effect.
Like the UAE, Baghdad has bolstered production capacity since the OPEC+ accord began with the assistance of international companies.
Intel Said to Weigh Testing Abu Dhabi Resolve With Chipmaker Bid - Bloomberg
For Intel Corp., a takeover of GlobalFoundries Inc., would jump-start efforts to revitalize faltering manufacturing capabilities -- though it would also invite a clash with an Abu Dhabi owner reluctant to fully part with one of its most promising investments.
Intel has studied the feasibility of buying U.S.-based GlobalFoundries, people familiar with the matter said, asking not to be identified because deliberations are private. But no formal takeover approach has been made to GlobalFoundries owner Mubadala Investment Co., the Abu Dhabi wealth fund, and the two sides are not engaged in active talks, the people said.
Meanwhile, Mubadala continues to work with advisers on plans to list the business at a value of around $30 billion by the end of the year, or early in 2022, the people said.
To convince Mubadala to sell instead, Intel would need to embark on its largest takeover to date and offer a price that captures the future upside for the business, given the current semiconductor shortage, the people said. Mubadala, which has been undergoing a review of its holdings, traditionally prefers to sell minority stakes in its businesses.
Despite this, several analysts reacted positively to the potential transaction, after the Wall Street Journal reported on Thursday that Intel is in talks to buy GlobalFoundries for about $30 billion, citing people familiar with the matter.
A spokesperson for GlobalFoundries said there are no talks with Intel. Representatives for Intel and Mubadala declined to comment.
Intel Chief Executive Officer Pat Gelsinger announced a plan in March to spend $20 billion to build two new semiconductor fabrication plants in Arizona. While those sites aren’t expected to ramp up meaningful production until 2023, a deal for GlobalFoundries would “significantly accelerate” Intel’s plans to become a chip manufacturer for other companies, according to analysts at KeyBanc Capital Markets Inc.
Buying GlobalFoundries would also give Intel “significant” experience and leadership in operating a third-party services, which it lacks, along with an established customer base to which it can potentially sell other services, KeyBanc analysts wrote in a note Friday.
Contract chipmakers like GlobalFoundries fabricate chips for large technology companies such as Apple Inc., Nvidia Corp. and Amazon.com Inc. that design their own silicon. Intel’s deliberations come as numerous industries complain about a lack of semiconductor chip supply and GlobalFoundries’ biggest rivals, Taiwan Semiconductor Manufacturing Co. and Samsung Electronics Co., struggle to keep up with demand.
Gelsinger, who took over as Intel’s chief executive officer in February, has pledged to restore the company to its dominant role in manufacturing and computer processors after losing ground to TSMC and others.
GlobalFoundries was created when Mubadala bought Advanced Micro Devices Inc.’s manufacturing facilities in 2009 and later combined them with Singapore’s Chartered Semiconductor Manufacturing Ltd.
Kuwait Credit Rating Cut for Second Time in Two Years by S&P - Bloomberg
Kuwait was downgraded by S&P Global Ratings for a second time in less than two years after a fall in oil revenue and increased spending pressured the Persian Gulf nation’s fiscal outlook.
The sovereign credit rating was cut one level to A+ from AA-, the fifth-highest investment-grade level, according to a statement Friday. S&P now rates Kuwait two notches lower than Fitch Ratings and on par with Moody’s Investors Service, which lowered its own assessment of the country last year for the first time . S&P’s outlook for Kuwait is negative.
“The downgrade reflects the persistent lack of a comprehensive funding strategy despite the central government’s ongoing sizable deficits,” according to S&P analysts. “We consider that these persistent delays could ultimately leave Kuwait more vulnerable to potential future terms-of-trade shocks.”
The rating agency downgraded the sovereign in March 2020, citing materially lower oil prices. Although crude rebounded this year to more than $70 per barrel, a delay to proposed laws that would allow the government to borrow or withdraw from its $700 billion Future Generations Fund has left the treasury cash-strapped amid increased spending during the pandemic and delayed reforms.
Kuwait’s economy will grow by only 0.5% in real terms in 2021, following a 8.9% contraction last year on oil production cuts and pandemic effects, according to S&P. It expects Kuwait’s central government deficits will average 17% of GDP over 2021-2024.
Kuwait’s government has been unable to borrow since its debut Eurobond in 2017, forcing it to rely on its General Reserve Fund instead. Liquid assets there are close to being depleted, forcing the Finance Ministry to push through other measures to meet spending needs.
