Page 8 - MEOG Week 49

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OPEC+ agrees to deepen cuts
oPeC
DUrING last week’s meeting in Vienna, OPEC members and their non-OPEC partners agreed to reduce combined output by an additional 500,000 barrels per day during the first quarter of 2020. This takes their collaborative cut to 1.7mn bpd, around 1.7% of worldwide production.
The market received a boost when the group announced a surprise voluntary addition to the cuts from “mainly Saudi Arabia”, bringing the total reduction to more than 2.1mn bpd.
The group did not agree to extend the cuts beyond March despite calls to lengthen until June or December amid fears of economic slow- down from member states, but Iraqi Oil Minister Thamer al-Ghadban said that an extraordinary meeting would be held in March.
Announcement of the agreement came from russian Energy Minister Alexander Novak, who told gathered press: “We really do see some risks of oversupply in the first quarter due to lower seasonal demand for refined products and for crude oil.”
He added that the details of the deal and the distribution of cuts would still need to be ratified. The announcement came after six hours of talks on December 5, after which, Kuwait’s Oil Minister Khaled al-Fadhel would not provide any details and his Saudi counterpart Prince Abdulaziz bin Salman said that no deal could be confirmed until the OPEC and non-OPEC groups OPEC could not say it had an agreement until it met with non-OPEC producers on Friday. reuters quoted sources as saying that the lat- est deal was a compromise between russia and Saudi, with Moscow not having been keen to deepen the cuts and riyadh supportive of cutting
further and extending the agreement.
While Saudi has claimed to the contrary, riyadh’s desire for deeper cuts is seen emanat- ing from intention to support the initial public offering of state oil firm Saudi Aramco, which last week raised $25.6bn, making it the largest ever listing ahead of trading beginning later in
December.™
Iran releases updated resistance budget including Russian loan
iran
IrANIAN President Hassan rouhani submitted to the parliament a draft “budget of resistance” against US sanctions for the next Persian year (starts March 20), IrIB reported.
According to documents published on the website of the Plan and Budget Organization (PBO), the budget will be about $39bn (at the free market rate) and aims to officially remove oil sales as much as possible from its income generation.
“Next year, as this year, our budget is a budget of counteraction and resistance to sanctions,” said rouhani, whose words are quoted on his official website. He openly said that the budget was developed with the removal from reliance on oil revenues in the face of severe US sanctions.
“This budget announces to the world that despite sanctions we will manage the country, especially in terms of oil,” he added.
The Iranian President also noted that Tehran expects to receive a loan from Moscow of $5bn to act as part of the income.
According to him, the parties managed to
complete the loan for more than two billion dollars, the rest of the investments will be made out in 2020. He added that russia is not the only country whose investment the Iranian authori- ties are counting on.
Earlier, the Iranian Minister of Energy said that a total loan of $ 5 billion is planned to be directed to 6 energy and transport projects.
Last year, the United States unilaterally with- drew from a nuclear deal with Iran and rein- troduced sanctions against Tehran, including secondary level sanctions, that is, against other countries doing business with Iran.
At the same time, China, India, Italy, Greece, Japan, South Korea, Taiwan and Turkey were given exceptions until May 2, 2019, that is, the States undertook not to impose sanctions against them for the purchase of certain volumes of Ira- nian oil.
However, the White House did not extend these exceptions, hoping that thanks to this deci- sion, the export of Iranian oil would be reduced to zero.™
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w w w . N E W S B A S E . c o m Week 49 11•December•2019