2019: Oil price rise low amid supply cuts, Saudi attack

News Network
December 30, 2019

New York/Singapore, Dec 30: Oil prices rose more than 20% this year but there were no sharp spikes and crude futures barely sniffed $70 a barrel despite attacks on the world's biggest oil producer, sanctions that crippled crude exports of two OPEC members and gigantic supply cuts from big oil-producing countries.

The price gains in crude oil benchmarks were all in the first quarter of 2019, even as the next several months featured supply shocks that in the past would probably have propelled crude past the $100 mark.

Prices are likely to remain rangebound in 2020 as swelling supplies, particularly from the United States, offset cuts from the Organization of the Petroleum Exporting Countries and weakening worldwide demand, brokers and analysts said.

U.S. crude oil is on track to end 2019 roughly 35% higher. Since the end of March, it is up just 3%, after rallying early in the year after the United States introduced sanctions on Venezuela. Brent has gained 26% but is off by 1% since the first quarter. (GRAPHIC: https://tmsnrt.rs/361XDnj)

Investors and analysts say U.S. production and weak demand kept prices under control. The United States is on track to be a net petroleum exporter on an annual basis for the first time in 2020. The output is expected to average 13.2 million bpd, an increase of nearly a million bpd from 2019.

"Demand growth cratered while U.S. production continued to barrel along at high rates and geopolitical risk eased," Bob McNally, president of Rapidan Energy Group.

"And now, at the end of the year, weary investors are looking to next year and seeing a tsunami of oil."

Investor concern over peak oil demand is expected to weigh on prices next year, particularly as the urgency around action against climate change has increased. Also, a long-term resolution of the U.S.-China trade war seems elusive, keeping market watchers wary of predicting energy demand growth in the world's two largest economies.

"There is growing concern around the long-term sustainability of U.S. oil and gas companies for investors in an ESG (environmental, social and governance) driven world," said Greg Sharenow, portfolio manager at PIMCO, who co-manages more than $15 billion in commodity assets.

The U.S. Energy Information Administration expects average crude oil prices will be lower in 2020 than in 2019 because of rising inventories. Outside the United States, production is expected to continue to grow in Brazil, Norway, and Guyana.

Prices did spike, but only briefly after drone attacks on Saudi Arabia's biggest oil facility and U.S. sanctions on Venezuela and Iran. September attacks on Aramco facilities briefly pushed Brent above $72 a barrel, but within 10 days, oil prices sank back as Aramco brought production back online.

Notably, the market barely wavered in its view of where prices would end up. Implied volatility, a sign of how the market prices future gyrations in WTI and Brent futures, was largely muted in 2019 after a see-saw 2018, a sign that investors focused on broader supply trends.

Both Brent and U.S. West Texas Intermediate (WTI) futures were locked in a $22-$23 a barrel range during the year, well below last year's levels.

While the rate of annual U.S. production growth is expected to slow, the country should still account for about 85% of the increase in global oil production to 2030, according to the International Energy Agency. PIMCO's Sharenow said U.S. crude supply would need to slow for the price outlook to brighten.

"If we can move down to supply growth in a much more sustainable way of about 500,000-600,000 bpd, then all of a sudden the world is much better in 12 months," Sharenow said.

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News Network
April 24,2020

Riyadh, Apr 24: As many as eleven Indian nationals have died due to COVID-19 in Saudi Arabia.

"As per information available with the Embassy as of April 22, eleven Indian nationals (four in Madinah, three in Makkah, two in Jeddah, one in Riyadh and one in Dammam) have passed away due to COVID-19 in Saudi Arabia," the Embassy of India in Saudi Arabia said in a press release on Wednesday.

It urged the Indian community to remain calm and avoid spreading of rumours amid the COVID-19 crisis.

"The Embassy also reiterates the need for the community to remain calm and avoid spreading of rumours that may create panic. It is important that social media is not used to disseminate false messages and spread hatred along communal lines that can vitiate the atmosphere," the Embassy said.

"As stated by Prime Minister Narendra Modi, COVID-19 does not see race, religion, colour, caste, creed, language or borders before striking, and our response and conduct should attach primacy to unity and brotherhood," it said.

Moreover, several measures on the supply of food, medicines and other emergency assistance to Indians in need are being implemented across the Kingdom.

Earlier, Indian Ambassador to Saudi Arabia, Ausaf Sayeed on April 22 had interacted with Indian community volunteers from the smaller towns all across the Kingdom to discuss the impact of the COVID-19 situation, and evaluate the implementation of various measures to ensure the welfare of Indian nationals.

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News Network
July 23,2020

Beirut, Jul 23: The pandemic will exact a heavy toll on Arab countries, causing an economic contraction of 5.7% this year, pushing millions into poverty and compounding the suffering of those affected by armed conflict, a U.N. report said Thursday.

The U.N.'s Economic and Social Commission for Western Asia expects some Arab economies to shrink by up to 13%, amounting to an overall loss for the region of $152 billion.

Another 14.3 million people are expected to be pushed into poverty, raising the total number to 115 million — a quarter of the total Arab population, it said. More than 55 million people in the region relied on humanitarian aid before the COVID-19 crisis, including 26 million who were forcibly displaced.

Arab countries moved quickly to contain the virus in March by imposing stay-at-home orders, restricting travel and banning large gatherings, including religious pilgrimages.

Arab countries as a whole have reported more than 830,000 cases and at least 14,717 deaths. That equates to an infection rate of 1.9 per 1,000 people and 17.6 deaths per 1,000 cases, less than half the global average of 42.6 deaths, according to the U.N.

But the restrictions exacted a heavy economic toll, and authorities have been forced to ease them in recent weeks. That has led to a surge in cases in some countries, including Lebanon, Iraq and the Palestinian territories.

Wealthy Gulf countries were hit by the pandemic at a time of low oil prices, putting added strain on already overstretched budgets. Middle-income countries like Jordan and Egypt have seen tourism vanish overnight and a drop in remittances from citizens working abroad.

War-torn Libya and Syria have thus far reported relatively small outbreaks. But in Yemen, where five years of civil war had already generated the world's worst humanitarian crisis, the virus is running rampant in the government-controlled south while rebels in the north conceal its toll.

Rola Dashti, the head of the U.N. commission, said Arab countries need to “turn this crisis into an opportunity” and address longstanding issues, including weak public institutions, economic inequality and over-reliance on fossil fuels.

“We need to invest in survival, survival of people and survival of businesses,” she said.

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News Network
April 5,2020

Beirut, Apr 5: The novel coronavirus has put global trade on hold, placed half of the world population in confinement and has the potential to topple governments and reshape diplomatic relations.

The United Nations has appealed for ceasefires in all the major conflicts rocking the planet, with its chief Antonio Guterres on Friday warning "the worst is yet to come". But it remains unclear what the pandemic's impact will be on the multiple wars roiling the Middle East.

Here is an overview of the impact so far on the conflicts in Syria, Yemen, Libya and Iraq:

The COVID-19 outbreak turned into a pandemic just as a ceasefire reached by the two main foreign power brokers in Syria's nine-year-old war -- Russia and Turkey -- was taking effect.

The three million people living in the ceasefire zone, in the country's northwestern region of Idlib, had little hope the deal would hold.

Yet fears the coronavirus could spread like wildfire across the devastated country appear to have given the truce an extended lease of life.

According to the Syrian Observatory for Human Rights, the month of March saw the lowest civilian death toll since the conflict started in 2011, with 103 deaths.

The ability of the multiple administrations in Syria -- the Damascus government, the autonomous Kurdish administration in the northeast and the jihadist-led alliance that runs Idlib -- to manage the coronavirus threat is key to their credibility.

"This epidemic is a way for Damascus to show that the Syrian state is efficient and all territories should be returned under its governance," analyst Fabrice Balanche said.

However the pandemic and the global mobilisation it requires could precipitate the departure of US-led troops from Syria and neighbouring Iraq.

This in turn could create a vacuum in which the Islamic State jihadist group, still reeling from the demise of its "caliphate" a year ago, could seek to step up its attacks.

The Yemeni government and the Huthi rebels initially responded positively to the UN appeal for a ceasefire, as did neighbouring Saudi Arabia, which leads a military coalition in support of the government.

That rare glimmer of hope in the five-year-old conflict was short-lived however and last week Saudi air defences intercepted ballistic missiles over Riyadh and a border city fired by the Iran-backed rebels.

The Saudi-led coalition retaliated by striking Huthi targets in the rebel-held capital Sanaa on Monday.

Talks have repeatedly faltered but the UN envoy Martin Griffiths is holding daily consultations in a bid to clinch a nationwide ceasefire.

More flare-ups in Yemen could compound a humanitarian crisis often described as the worst in the world and invite a coronavirus outbreak of catastrophic proportions.

In a country where the health infrastructure has collapsed, where water is a rare commodity and where 24 million people require humanitarian assistance, the population fears being wiped out if a ceasefire doesn't allow for adequate aid.

"People will end up dying on the streets, bodies will be rotting in the open," said Mohammed Omar, a taxi driver in the Red Sea port city of Hodeida.

Much like Yemen, the main protagonists in the Libyan conflict initially welcomed the UN ceasefire call but swiftly resumed hostilities.

Fierce fighting has rocked the south of the capital Tripoli in recent days, suggesting the risk of a major coronavirus outbreak is not enough to make guns fall silent.

Turkey has recently played a key role in the conflict, throwing its weight behind the UN-recognised Government of National Accord.

Fabrice Balanche predicted that accelerated Western disengagement from Middle East conflicts could limit Turkish support to the GNA.

That could eventually favour forces loyal to eastern-based strongman Khalifa Haftar, who launched an assault on Tripoli one year ago and has the backing of Russia, Egypt and the United Arab Emirates.

Western countries have been hit hardest by the pandemic, which could prompt them to divert both military resources and peace-brokering capacity from foreign conflicts.

A report by the International Crisis Group said European officials had reported that efforts to secure a ceasefire in Libya were no longer receiving high-level attention due to the pandemic.

Iraq is no longer gripped by fully-fledged conflict but it remains vulnerable to an IS resurgence in some regions and its two main foreign backers are at each other's throats.

Iran and the United States are two of the countries most affected by the coronavirus but there has been no sign of any let-up in their battle for influence that has largely played out on Iraqi soil.

With most non-US troops in the coalition now gone and some bases evacuated, American personnel are now regrouped in a handful of locations in Iraq.

Washington has deployed Patriot air defence missiles, prompting fears of a fresh escalation with Tehran, whose proxies it blames for a spate of rocket attacks on bases housing US troops.

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