Page 13 - MEOG Week 16

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US senator accuses Russia,
Saudi of manipulating oil
prices
The US Senator for Oklahoma, Jim Inhofe (R), sent a letter to the US Secretary of Commerce Wilbur Ross on April 20, calling for an investigation and sanctions on Russia and Saudi Arabia and accusing them of “flooding the market” with oil in an effort to “manipulate prices” and “crush the US shale industry.”
“Russia and Saudi Arabia continue to flood the global oil market - what I view as an effort to crush American oil and gas producers.
I sent a letter to Secretary Ross today requesting he continue to investigate their anticompetitive practices,” Jim Inhofe said in a tweet on April 20.
Oil prices have collapsed following Russia’s decision to renew the so-called OPEC+ production cut deal on March 6. Despite a new OPEC++ production cut deal that will reduce production of oil by 9.7mn barrels
per day (bpd) agreed on April 13, oil price volatility has remained high and has led to the price of the US WTI blend falling to below zero on April 20 for the first time in history due to the lack of storage space for May contracts.
The oil glut on world markets has
been made a lot worse by the concurrent appearance of the coronavirus (COVID-19) pandemic, which has depressed demand
for oil by 30mn barrels – equivalent to the combined daily output of Russia, the US and Saudi Arabia.
US politicians have raced to blame external forces for the collapse of oil prices to around $25, a level at which almost the entire US oil industry ceases to be viable.
“China is the one that is out of control. We will not let you destroy this country,” FOX commentator Jeanine Pirro said on her show this week. “We fought too long to lose it to a Wuhan virus – that is what I said – that China knew about, openly lied about, said it couldn’t be transmitted from human to human and protected Chinese citizens from the virus, but allowed that virus to be released, putting the rest of the world at risk.”
The implication in Pirro’s comments that China somehow weaponised the COVID-19 virus and “protected” its own citizens, while “releasing” it on the rest of the world has been denied by both the Chinese authorities and scientists, who point out it is impossible to manipulate a pandemic in any sort of controlled way by definition.
Inhofe’s letter plays on the same conspiratorial themes.
“I remain concerned by the continued flooding of oil by Russia and Saudi Arabia. Despite recently agreed production cuts
by Russia, Saudi Arabia and members of
the Organization of Petroleum Exporting Countries (OPEC), the global oil market is still well oversupplied, as the price of oil has failed to stabilise. It remains clear that the Saudis and Russians continues to flood the global oil market in what I view as an effort
to crush American oil and gas producers
and capture their market share.... I continue to believe the Trump administration must utilise all of its authorities, including tariffs on imported oil from Saudi Arabia and Russia, to punish this unacceptable behaviour.”
US President Donald Trump has placed himself at the centre of the recent efforts to broker a new OPEC++ deal in an effort to save US jobs in the oil and gas sector ahead
of the US presidential elections. however, his efforts have blown up in his face following this week’s collapse of WTI prices on the futures market.
Low prices have already caused one
prominent US shale producer to go bust and if oil prices remain at the current circa $25 many more will follow.
As NewsBase reported, Whiting Petroleum has filed for Chapter 11 bankruptcy protection on April 8, becoming the first US shale producer – and first publicly traded oil company – to fall victim to the crude price collapse last month. Whiting was quickly identified as one of the two shale producers most at risk as a result of the new downturn, so its bankruptcy filing came as no surprise. Most of the US shale producers are not viable at $25 oil.
neWsbase
Turkey holding swap talks with central banks
Turkey is holding talks with central banks on new swap agreements, the country’s central bank governor Murat Uysal said on April 19.
Ankara is short of funds to counter
the economic impact of the coronavirus (COVID-19) outbreak. At the weekend, Turkey overtook Iran to become the Middle East country with the most coronavirus infections, with the total exceeding 80,000.
While contending with the economic upheaval caused by the pandemic, Turkey also has $170bn in foreign debt to repay this year. The central bank's net hard currency reserves have fallen to an 11-month low of $27bn. The Erdogan administration has ruled out going to the IMF for a bailout.
“We have had ongoing swap agreements with some countries for a long time to support trade in local currencies. With that, we are also holding talks with central banks to achieve new swap agreements and strengthen our existing cooperation,” Uysal told state- owned news service Anadolu Agency.
he gave no details, but a week ago officials said Turkey lately held talks with the US about securing a swap line from the Federal Reserve in addition to other funding options. One Turkish official was cited by Reuters as saying talks were also held with the Bank of England.
April 19 also saw Turkish President Recep Tayyip Erdogan and US counterpart Donald Trump agree in a phone call “to continue their close cooperation against the threats that the coronavirus pandemic poses to public health and our economies,” the Turkish presidency said.
In a swap, the Fed accepts other currencies in exchange for dollars.
The central bank saw a slowing of the decline in consumer spending in Turkey this month as a sign that the worst of that slump has been reached, Uysal said.
Week 16 22•April•2020
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