Tag: Saudi Arabia

Saudi Arabia-Qatar crisis: A year later, Doha thrives under blockade

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A year ago, four countries of the Gulf Cooperation Council (GCC), led by Saudi Arabia, followed by United Arab Emirates, Bahrain and Egypt, imposed a full land, air and sea blockade on Qatar.

The imposition of the blockade was majorly for diminishing Qatar’s political autonomy and economic independence, as the countries accused Doha of supporting terrorism.

One year later, the crisis does not seem to simmer down.

On Sunday (June 3), in a letter written to French President Emmanuel Macron, Saudi King Salman threatened to take military actions, if Qatar bought surface-to-air S-400 missiles from Russia.

Despite Riyadh having a dominant role in the Gulf region, Qatar will get an upper hand, if it acquires these missiles. Saudi Arabia also fears the deployment of these missiles by the outcast Qatar, said Aleksei Kondratyev, a member of the Russian upper house and the deputy chairman of the committee on Defence and Security.

The diplomatic talks between Moscow and Doha is of a complete selfish nature for the Kremlin, which wants to grow its state budget by selling anti-aircraft missiles to Qatar.

Qatar, An Economy Less Affected:

Qatar National Bank on May 16 reported the current account surplus widened to 6.4% of gross domestic product (GDP) in the fourth quarter on the back of higher oil prices.

Post the blockade, Qatar, one of the richest countries in the world per person, was forced to use its sovereign wealth fund to keep its economy from not sinking.

The effect on the economy from blockade has been limited for Doha, which raised $12 billion in bond issue earlier this year.

International investors have a good vibe about Qatar and don’t hesitate on betting on its future. Financial transactions have shifted from Dubai to New York or London, which has put Qatar at a loss of business volumes.

Qatar is the largest exporter of Liquefied Natural Gas (LNG) and is busy signing new long-term supply deals. The trade links based on LNG exports has helped Qatar to maintain its relationship with a lot of countries, not leaving it isolated post the crisis.

Threats The Mighty Faces:

Saudi Arabia is the largest Gulf country, has the largest population, economy and army and much of the region’s crude oil. It explains why most of its neighbors are consistently preoccupied with the country’s threat.

Qatar, the size of the state of Connecticut, never saw itself as a threat to bigger Gulf countries. However, UAE and Saudi Arabia, were of opposite opinion, forcing Qatar to accept its subordinate status.

UAE and Saudi Arabia withdrew their ambassadors from Doha in 2014 for a brief period of time, to send a message to Qatar that its divergent policies would no longer be tolerated.

Saudi saw Qatar as an emerging global player in areas of energy, financial, investments and property markets and felt threatened on Doha becoming a significant foreign policy player, challenging Saudi Arabia’s position as the Gulf’s dominant diplomatic and political player.

In the present day, the demands coming out of the two biggest Arab countries have not only targeted Qatar’s foreign policy, but also its history, legitimacy and sovereign rights.

The bigger Gulf countries even stopped Qatar Airways flights from using their airspace, blocking the land borders with Saudi Arabia and using ports for Qatar’s ships.

‘LNG’: A Life Saviour:  

source: tradingeconomics.com

The LNG exports have kept the country’s economy stable, as Qatar is one of the largest LNG exporter in the world with a total share of 60% of exports. It is also one of the largest supplier of LNG to India with exports at 27.3% higher from the same period year ago, at QAR 24 billion (Qatari Riyal) in April 2018.

Exports in Qatar averaged QAR 36,979.51 million from 2004 until 2018, reaching an all-time high of QAR 124,265 million in February of 2012 and a record low of QAR 10,709 million in December of 2016.

This is a major source of revenue, which has not been impacted profoundly. It will continue to be a large source of income, provided there is no confrontation with Iran.

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OPEC, non-OPEC discuss around 1 million barrels per day oil output rise

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Saudi Arabia and Russia will discuss raising OPEC and non-OPEC oil output by around 1 million barrels per day (bpd), easing 17 months of strict supply curbs, sources familiar with the matter said.

An increase of about 1 million bpd would bring compliance with global supply curbs down to 100% from around 152%, the sources said.

The initial talks are being led by the energy ministers of Saudi Arabia and Russia at St. Petersburg this week along with their counterpart from the United Arab Emirates (UAE), which holds the OPEC presidency this year, the sources said.

OPEC and non-OPEC ministers meet next in Vienna on June 22-23, and the final decision will be taken there.

Discussions are still ongoing aimed at relaxing record high compliance with the production cuts which reached 152% in April, to just 100%, the sources said, in a bid to cool the market after oil prices rose to $80 a barrel on supply shortage concerns.

The final production number that needs to be added is not set yet as dividing up the extra barrels can be tricky, the sources said.

“The talks now are to bring compliance down to 100% level, more for OPEC rather than for non-OPEC,” one source said.

OPEC may decide to raise oil output as soon as June due to worries over Iranian and Venezuelan supply and after Washington raised concerns the oil rally was going too far, OPEC and oil industry sources told Reuters on Tuesday.

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European powers pledge to uphold Iran N-deal after US exit

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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European leaders have pledged to remain committed to the Iran nuclear deal after US President Donald Trump dumped it as a “horrible, one-sided” agreement rooted in “fiction” and ordered the highest level of economic sanctions against Tehran.

Iran’s Supreme Leader Ayatollah Ali Khamenei on Wednesday called Trump’s Tuesday speech “silly and superficial” and said he was “making a damn mistake”. He also said that he did not trust Britain, France or Germany and would need “guarantees” before continuing the nuclear deal.

Following Trump’s announcement, the UK, France and Germany urged Washington not to obstruct the implementation of the Iran deal, also known as the Joint Comprehensive Plan of Action (JCPOA).

They said they would work with the other signatories to the agreement to stress continuing support for the accord. Iran — in the 2015 pact with China, France, Russia, Britain, the US and Germany plus the EU — had agreed to halt its nuclear programme in return for an easing of economic sanctions.

French Foreign Minister Jean-Yves Le Drian told RTL radio that “the deal is not dead. There’s an American withdrawal from the deal but the deal is still there”.

“President Emmanuel Macron would also speak to his Iranian counterpart, Hassan Rouhani, about our wish to stay in the agreement,” he said, adding that there would be a meeting between France, Britain, Germany and Iran on Monday.

France also said it would do everything possible to protect European businesses after Trump warned he would seek to hit European firms that continued to trade with Tehran.

EU Foreign Ministers will meet their Iranian counterpart Mohammad Javad Zarif next week to offer personal reassurances they will take practical steps to protect the deal from sweeping US Treasury sanctions due to come into force over the next 180 days.

The Iranian President said his government remained committed to the nuclear deal with world powers, despite the US withdrawal. But he warned that Iran “was also ready to resume uranium enrichment if the accord no longer offered benefits”.

In the Iranian Parliament, members burned an American flag.

Iranian Leader Khamenei said: “Trump, I tell you on behalf of the Iranian nation: You are making a damn mistake and you cannot do anything.”

India called on all parties to “engage constructively” to resolve all contentious issues.

In a televised address, Trump said the US would withdraw from the “horrible, one-sided deal that should have never, ever been made” and that economic sanctions against Tehran would be reinstated.

Rather than protecting the US and its allies, he said it had placed “very weak limits on the regime’s nuclear activity and no limits at all on its other malign behaviour, including its sinister activities in Syria, Yemen and other places”.

Trump called the agreement “decaying and rotten” and “defective at its core”.

The EU moved to protect the nuclear agreement by vowing to take steps to immunise European firms doing business with Tehran from any US sanctions. EU foreign policy chief Federica Mogherini said Europe will abide by the JCPOA.

Russia said it was “deeply disappointed” by Trump’s decision. A meeting is scheduled between France, Britain, Germany and Iran on Monday.

Trump’s predecessor Barack Obama, under whose administration the deal was signed, said Trump’s announcement was “misguided” and “a serious mistake”.

But the move was welcomed by Iran’s major regional rivals, Saudi Arabia and Israel.

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Saudi Arabia will not act alone to fill any Iran oil shortfall, says OPEC source

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Saudi Arabia is monitoring the impact of the US withdrawal from the Iran nuclear deal on oil supplies and is ready to offset any shortage but it will not act alone to fill the gap, an OPEC source familiar with the kingdom’s oil thinking said.

On Tuesday, US President Donald Trump abandoned a nuclear deal with Iran and announced the “highest level” of sanctions against the OPEC member. The original agreement had lifted sanctions in exchange for Tehran limiting its nuclear programme.

Iran is the third-largest oil producer in the Organisation of the Petroleum Exporting Countries, after Saudi Arabia and Iraq.

“People shouldn’t take it for granted that Saudi Arabia will produce more oil single-handedly. We need to assess first the impact if there is any, in terms of disruption, in terms of a reduction of Iran’s production,” the OPEC source told Reuters on Wednesday.

“We have managed to put together this new alliance between OPEC and non-OPEC. Saudi Arabia will not in any way act independently of its partners.”

Riyadh is working closely with the United Arab Emirates (UAE), which holds OPEC’s presidency in 2018, and non-OPEC producer Russia for “coordination and market consultations,” the OPEC source said.

He said any action would be taken in coordination with all OPEC and non-OPEC partners, if needed.

Kuwait’s oil minister said on Wednesday his country would work with OPEC and non-OPEC producers to limit the impact of any possible oil disruption.

OPEC’s oil supply-cutting deal with non-OPEC producers such as Russia has helped to clear a global oil supply glut and boost prices. The agreement is due to expire at the end of 2018.

OPEC officials from Saudi Arabia, the UAE and Russia along with a few other producers in the pact are due to meet in Saudi Arabia on May 22-23 as part of a monthly meeting for the Joint Technical Committee which monitors the oil market.

Saudi Arabia, the world’s largest oil exporter, is concerned about any negative impact from the potential oil supply shortage for oil-consuming countries, the OPEC source said.

But Saudi Arabia has enough oil production capacity — currently 12 million barrels per day (bpd) — to maintain oil market stability, the OPEC source added.

Iran produces about 3.8 million bpd. Since the Iran nuclear deal went into effect, its exports have risen to about 2.5 million bpd, from less than 1 million bpd. A majority goes to Asia, with Europe receiving about 600,000 bpd.

Analysts now expect Iran’s supplies to fall by between 200,000 bpd and 1 million bpd, depending on how many other countries fall in line with Washington.

Trump And Oil Prices

Oil market have rallied over the past weeks on expectations that US sanctions could limit Iranian oil exports. Brent crude was trading above $77 at a 3-1/2 year high on Wednesday, raising concerns that prices were going too high too fast.

Trump accused OPEC last month of “artificially” boosting oil prices in a message on Twitter, the first time he has mentioned OPEC on social media.

His tweet was seen by OPEC sources as a way to appease a domestic audience unhappy about a rise in gasoline prices.

A key US ally, Saudi Arabia welcomed Trump’s decision to withdraw from the nuclear agreement.

Riyadh’s comment that it would work with OPEC and non-OPEC to lessen the impact of oil shortages was a clear indication that it has been coordinating with Washington ahead of time, sources familiar with the matter said.

“You need to work with your partners in dealing with any potential effect on supply,” the OPEC source said. “But it should be done in a collective coordinated way and that can only happen when you start to be able to assess what would be the impact.”

OPEC and non-OPEC meet next in June and they are widely expected to keep supply curbs in place until the end of 2018.

But a drop in Iranian exports due to US sanctions, plus supply disruptions in other OPEC members, such as Venezuela, could reduce supply more than planned, leading to a potential price spike.

But the OPEC source said a rise in prices due to the market’s worries about supply should not be the parameter for OPEC to adjust output.

The OPEC source said any decision in June to raise output “should be driven by a potential physical shortage or reduction in production from any oil supply source not only Iran.”

“You only handle (output) when you have a semi-clear idea of what would be the potential impact. It is too early now to do that,” the source said.

He also said Saudi Arabia did not expect any physical impact on the oil market from the US sanctions on Iran until the third or fourth quarter of this year.

OPEC’s objective its still to reduce global oil inventories to an acceptable level and any adjustment in production targets should be done in a coordinated way, the OPEC source said.

“This way you do not disrupt a mechanism that we have worked hard to put together and to sustain, just to address a short-term issue,” the source said.

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

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Gulf Arab allies hail Trump after US quits Iran deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Saudi Arabia and its Gulf allies basked on Wednesday in what they saw as a political victory over Iran, their rival for regional influence, after Washington withdrew from the international nuclear accord with Tehran.

Saudi Arabia, the United Arab Emirates (UAE) and Bahrain swiftly backed US President Donald Trump’s decision to reimpose sanctions on Tehran, reflecting their concern about Iran’s ballistic missile programme and support for militant groups.

“Paris and London may not like Trump’s decision, but how would the French or British feel if their capital cities came under direct threat by the Iranians?” editor-in-chief Faisal Abbas wrote in Saudi Arabia’s English-language Arab News daily next to a headline that read: “The deal is dead.”

In a coffee shop, Saudi businessman Ziad said the kingdom’s leadership was correct to challenge a deal that had eased sanctions in exchange for Tehran taking measures that would prevent it being able to make a nuclear weapon.

“Every couple of days, we have missiles coming from Yemen and we see evidence that they are made by Iran … It is interfering in Syria, Yemen, Morocco. Other countries may accept that, but here in Saudi Arabia we don’t,” he said.

An hour later, at least four loud blasts rocked Riyadh. Authorities said they had intercepted two ballistic missiles fired from Yemen, where a Saudi-led coalition is fighting to oust the Iran-aligned Houthi movement from the capital and large parts of the country.

Proxy Wars

The Sunni Muslim kingdom has been at loggerheads with Shi’ite Iran for decades, fighting a long-running proxy war in the Middle East and beyond that has influenced conflicts in Iraq, Syria, Lebanon and Yemen.

The Saudi Foreign Ministry accused Iran of using economic gains from the lifting of sanctions to develop ballistic missiles and support militants. It called for a “comprehensive view that is not limited to its nuclear programme but also includes all hostile activities”.

Anwar Gargash, UAE Minister of State for Foreign Affairs, tweeted that Iran had been emboldened by the nuclear deal, and “its ballistic missile program became both offensive & exportable”.

Trump has employed similar arguments, criticising the accord for failing to address Iran’s ballistic missile program, its nuclear activities beyond 2025, or its role in regional wars.

“He is supporting us not because we are Saudi Arabia or because we have oil, but because he thinks we are right,” said Mohammed, another Saudi businessman.

Oman, which orchestrated secret US-Iran contacts that helped pave the way for the deal in 2015, was more measured.

“We believe the United States and the Islamic Republic of Iran are interested in realising peace and stability in the region, and the choice of confrontation is not in the interest of either side,” its foreign ministry said.

Kuwait said in a statement that it “understands and respects” Trump’s decision.

Qatar, locked in a dispute with Saudi Arabia and other Arab states, meanwhile cautioned against a potential nuclear arms race in the region.

“It is in the interest of all parties to exercise restraint, wisdom and patience and to try to resolve differences through dialogue,” its foreign ministry said.

Saudi Arabia, the UAE, Bahrain and Egypt imposed a trade and transport boycott on Qatar in June, accusing it of financing militant groups and cosying up to Iran — charges it denies.

“Sinister Activities”

“The Omani, Qatari, and Kuwaiti governments have all sought to maintain pragmatic relations — economic more than political — with Iran,” said Kristian Coates Ulrichsen from the Texas-based Rice University’s Baker Institute.

“There is likely to be a feeling of jubilation in Riyadh and Abu Dhabi that the Trump administration — or at least the White House — has now come round to their thinking on Iran’s threat to regional security.”

In his speech on Tuesday, Trump condemned Iran’s “sinister activities” including backing armed Islamist groups such as Hezbollah in Lebanon and Hamas in the Palestinian Gaza Strip.

Abdulaziz al-Sager, head of the Jeddah-based Gulf Research Centre, said the message was significant in that it reflected Gulf concerns. “We’ve always said our concern about this agreement in 2015 was that Iran should not take it as ‘carte blanche’ to go and expand its territorial influence.”

Saudi Crown Prince Mohammed bin Salman, who serves as Saudi defence minister, told CBS News in March that his country would “without a doubt” develop nuclear weapons if Iran did so.

Iran had ruled out renegotiating the accord and threatened to retaliate if Washington withdrew.

It could do so by undermining the interests of Washington and its allies in the Middle East, perhaps by increasing support for Yemen’s Houthis. The Saudi Arabia and Emirati forces fighting the Houthis both receive military backing from the United States and other Western allies.

“There is a real risk of escalation, especially between Iran and Israel. While the Gulf states may want to see the US and Israel try to cut Iran to size, I don’t think they want to get dragged into a direct confrontation themselves. The consequences could be severe,” said Joost Hiltermann, Program Director, Middle East and North Africa at the International Crisis Group.

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Saudi Arabia hints it may raise oil output after US quits Iran nuclear deal

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Saudi Arabia indicated on Wednesday that it could raise its oil output to offset any potential supply shortage as a result of new sanctions on Tehran, after US President Donald Trump said Washington was withdrawing from the Iran nuclear deal.

Oil prices had been supported by expectations that Trump would pull out of the deal, which could hit Iranian crude exports and feed geopolitical tensions in the Middle East, home to one-third of the world’s daily oil supply.

Trump said on Tuesday that the United States was reimposing the “highest level of economic sanctions” on Iran, but he did not provide details. The original 2015 agreement had lifted sanctions in exchange for Tehran limiting its nuclear programme.

Saudi Arabia “will work with major producers and consumers within and outside OPEC to limit the impact of any supply shortages,” a Saudi energy ministry official said on Wednesday, according to state news agency SPA.

“Following the US decision to withdraw from the nuclear agreement with Iran, Saudi Arabia is committed to supporting the stability of oil markets for the benefit of producers and consumers and the sustainability of the global economic growth,” the official said.

US crude settled down $1.67 at $69.06 per barrel and Brent settled down $1.32 at $74.85.

It was the busiest day in US front-month contracts since August, and for Brent the busiest in almost a month.

The Organization of the Petroleum Exporting Countries is in the midst of an oil supply-cutting deal with non-OPEC producers such as Russia that has helped erase a global glut and boosted oil prices above $75, the highest since 2014.

OPEC meets next in June, where it is widely expected to continue with the supply cuts until the end of 2018.

But a drop in Iranian exports due to a return of U.S. sanctions, plus involuntary supply losses in other OPEC members such as Venezuela, would mean the supply cut would be significantly larger than intended. That raised worries of a quick rise in oil prices.

Iran produces about 3.8 million barrels per day (bpd) and the country is OPEC’s third-biggest producer, behind Saudi Arabia and Iraq. Its production accounts for about 4 percent of the world’s oil supplies.

Since the Iran nuclear deal went into effect, its exports have risen to about 2.5 million bpd, from less than 1 million bpd. A majority goes to Asia, with Europe receiving about 600,000 bpd.

Last month, Trump accused OPEC in a tweet of “artificially” boosting oil prices.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

First Saudi cinema opens with popcorn and ‘Black Panther’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The lights dimmed and the crowd of men and women erupted into applause and hoots Wednesday evening as Hollywood’s blockbuster “Black Panther” premiered in Saudi Arabia’s first movie theater.

Though it was a private, invitation-only screening, for many Saudis it marked one of the clearest moments of change to sweep the country in decades. It’s seen as part of a new era in which women will soon be allowed to drive and people in the kingdom will be able to go to concerts and fashion shows, and tuck into a bucket of popcorn in a cinema.

“It’s a new era, a new age. It’s that simple. Things are changing, progress is happening. We’re opening up and we’re catching up with everything that’s happening in the world,” said Rahaf Alhendi, who attended the showing.

Authorities said the public would be able to purchase tickets online Thursday for showings starting Friday. But there may be delays.

Movies screened in Saudi cinemas will be subject to approval by government censors, and Wednesday night’s premiere was no exception. Scenes of violence were not cut, but a final scene involving a kiss was axed.

Still, it’s a stark reversal for a country where public movie screenings were banned in the 1980s during a wave of ultraconservatism that swept Saudi Arabia. Many Saudi clerics view Western movies and even Arabic films made in Egypt and Lebanon as sinful.

Despite decades of ultraconservative dogma, Crown Prince Mohammed bin Salman has pushed through a number of major social reforms with support from his father, King Salman, to satiate the desires of the country’s majority young population.

“This is a historic day for your country,” Adam Aron, CEO of AMC Entertainment, told the crowd at the screening. “It’s been about 37 years since you’ve been able to watch movies the way movies are meant to be watched in a theater, together on a big screen.”

U.S.-based AMC, one of the world’s biggest movie theater operators, only two weeks earlier signed a deal with Prince Mohammed to operate the first cinema in the kingdom. AMC and its local partner hurriedly transformed a concert hall in the Saudi capital, Riyadh, into a cinema complex for Wednesday’s screening.

Aron said the company plans to rip out the current concert-style seats and replace them with plush leather recliners and build three more screens in the complex to accommodate up to 5,000 movie-goers a day.

Samer Alsourani traveled from Saudi Arabia’s Eastern Province for the event. He commended the crown prince for following through on his promises to modernize the country.

“This is the first time that we really see something that’s really being materialized,” he said.

The social reforms undertaken by the 32-year-old heir to the throne are part of his so-called Vision 2030, a blueprint for Saudi Arabia that aims to boost local spending and create jobs amid sustained lower oil prices.

The Saudi government projects that the opening of movie theaters will contribute more than 90 billion riyals ($24 billion) to the economy and create more than 30,000 jobs by 2030. The kingdom says there will be 300 cinemas with around 2,000 screens built by 2030.

AMC has partnered with a subsidiary of Saudi Arabia’s sovereign wealth fund, known as the Public Investment Fund, to build up to 40 AMC cinemas across the country over the next five years.

Saudi Arabia had already started gradually loosening restrictions on movie screenings in the past few years, with local film festivals and screenings in makeshift theaters. For the most part, though, until now Saudis who wanted to watch a film in a movie theater had to drive to nearby Bahrain or the United Arab Emirates for weekend trips to the cinema.

In the 1970s, there were informal movie screenings but the experience could be interrupted by the country’s religious police, whose powers have since been curbed.

Jamal Khashoggi, a dissident Saudi writer, describes the theaters of the 1970s as being “like American drive-ins, except much more informal.” In an opinion piece for The Washington Post, he wrote that a friend once broke his leg at a screening in Medina when he jumped off a wall to escape the religious police and avoid arrest.

By the 1980s, movie screenings were largely banned unless they took place in private residential compounds for foreigners or at cultural centers run by foreign embassies.

Access to streaming services, such as Netflix, and satellite TV steadily eroded attempts by the government to censor what the Saudi public could view. By 2013, the film “Wadjda” made history by becoming the first Academy Award entry for Saudi Arabia, though it wasn’t nominated for the Oscars.

To adhere to the kingdom’s norms on gender segregation, certain screenings may be held for families and others for male-only crowds. But, generally movie theaters will not be gender segregated with “family sections” for women and related men and separate “single sections” for male-only crowds as is customary at restaurants and cafes.

Saudi Minister of Culture and Information Awwad Alawwad told The Associated Press the government aims to strike a balance between the country’s Islamic mores and people’s movie experiences.

“We want to ensure the movies are in line with our culture and respect for values. Meanwhile, we want to provide people with a beautiful show and really enjoy watching their own movies,” he said.

The new movie theater also came equipped with prayer rooms to accommodate the daily Muslim prayer times.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil rises 2% as Saudi Arabia aims at $100 per barrel, US stockpiles fall

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil futures jumped more than 2% on Wednesday on a decline in US crude inventories and after sources signalled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel.

OPEC’s new price hawk Saudi Arabia would be happy for crude to rise to $80 or even $100, three industry sources said, a sign Riyadh will seek no changes to a supply-cutting deal even though the agreement’s original target is within sight.

Brent crude futures were up $1.54 at $73.12 by 11:14 a.m. EDT [1514 GMT], while US West Texas Intermediate crude futures gained $1.63 to $68.15, having hit $68.45 earlier in the session, their highest since late 2014.

Prices were supported as US oil stockpiles fell across the board last week with gasoline and distillates drawing down more than expected on stronger demand, according to data from the US Energy Information Administration.

Crude inventories dropped by 1.1 million barrels as a result of a decline of 1.3 million barrels per day in net crude imports.

“This may be one of the most bullish reports in some time, with the across-the-board declines in inventories,” said John Kilduff, a partner at Again Capital Management in New York.

“Beyond the headlines, gasoline demand was very strong, virtually summer-like, and crude oil exports are climbed back toward 2 million bpd at 1.75 million.”

Buying in anticipation of the report started late Tuesday, said Brian LaRose, a technical analyst with United-ICAP.

The market also found support in expectation that the Organisation of the Petroleum Exporting Countries’ production cuts will be sustained. OPEC and 10 rival producers have curbed output by a joint 1.8 million bpd since January 2017 and pledged to do so until the end of this year.

OPEC’s ministerial committee tasked with monitoring the group’s supply-cutting deal with non-OPEC countries, led by Russia, meets in the Saudi city of Jeddah on Friday.

“Despite an oil price of over $70 per barrel and the fact that the oversupply has been eliminated, a phase-out of the production cuts will not be on the agenda,” Commerzbank oil analyst Carsten Fritsch said.

Oil has been supported by the perception among investors that tensions in the Middle East could lead to supply disruptions, including renewed U.S. sanctions against Iran, as well as falling output in crisis-hit Venezuela.

Dutch bank ING said in a note to clients that Brent had risen back above $70 in April “due to geopolitical risks along with some fundamentally bullish developments in the market”.

It raised its average 2018 price forecast for Brent to $66.50 from $60.25, and its 2018 WTI forecast to $62.50 from $57.75.

For next year, however, ING expects lower prices due to rising US crude output, which has jumped by a quarter since mid-2016.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil dips from three-year highs but OPEC supply draw supports

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oil prices edged off highs last reached in late 2014, pressured by a stronger dollar, but crude futures still drew support from mounting political tension in the Middle East and shrinking global oil inventories.

Brent crude futures were at $71.67 a barrel at 11:48 a.m. EDT (1548 GMT), down 39 cents. US WTI crude futures were down 13 cents at $66.68.

“The dollar index is the biggest factor in prices today,” said Phillip Streible, analyst at RJO Futures in Chicago. The US dollar was up 0.3% against a basket of major currencies, making purchases in other currencies more expensive.

The Organisation of the Petroleum Exporting Countries said the global oil stocks surplus was close to evaporating due to healthy demand and its own supply cuts.

The group is producing oil below its targets, meaning the world needs to use stocks to meet rising demand. OPEC said in its monthly report oil stocks in the developed world fell by 17.4 million barrels in February to 2.854 billion barrels, around 43 million barrels above the latest five-year average.

OPEC Secretary-General Mohammad Barkindo told Reuters in New Delhi the global oil glut has effectively shrunk by nine-tenths since the start of 2017.

“We have seen an accelerated shrinkage of stocks in storage from unparalleled highs of about 400 million barrels to about 43 million above the five-year average,” Barkindo said.

OPEC, Russia and several other non-OPEC producers began trimming supply in January 2017. Their pact runs until the end of the year and OPEC meets in June to decide on its next course of action.

“There is growing confidence that the declaration of cooperation will be extended beyond 2018,” Barkindo told Reuters. “Russia will continue to play a leading role.”

On Wednesday, both Brent and WTI hit their highest since late 2014, $73.09 for Brent and $67.45 a barrel for US crude, after Saudi Arabia said it intercepted missiles over Riyadh and US President Donald Trump warned of military action in Syria.

The geopolitical developments more than offset pressure from a US government report showing crude oil inventories rose by 3.3 million barrels, while domestic production hit a record 10.53 million barrels per day (bpd).

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow