Page 14 - MEOG Week 16

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Turkey still had “a very wide and flexible set of tools” to address the challenge, he added.
Many economists expect Turkey to suffer its second recession in two years, but Uysal said the country would bounce back quickly. “The central bank’s growth projections point to a rapid recovery in the second half of the year, once daily life and business return to normal in our country after a weak
trend in the second quarter,” he said.
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Somo cuts May gasoline and gasoil imports
Iraq’s state-owned oil marketer Somo will import no gasoline in May, and will cut imports of gasoil by around a third, because of falling demand for transport and power generation fuels caused by measures to combat Covid-19.
Somo awarded term tenders late last year to import 2.673mn t (61,000 b/d) of 95 Ron gasoline and 1.836mn t (37,500 b/d) of 0.05pc (500ppm) and 0.25pc sulphur gasoil into
the southern port Khor al-Zubair this year. But lockdowns imposed by the government since mid-March have dampened demand. A mutual agreement was reached between Somo and the sellers in order to reduce the monthly quantity, although further details could not be confirmed.
Somo awarded its gasoline tender to South Korean refiner GS Caltex and Russian trading firm Litasco, at a $4/bl premium to Mideast Gulf spot 95 Ron assessments, and its gasoil tender to Litasco and Italian refiner Iplom at a premium of $4.46/bl to Mideast Gulf spot assessments.
Iraq has been gradually tightening restrictions on movement and public gatherings since the nationwide lockdown began on 22 March. The government initially said this would last until 28 March, but it
has since been extended on more than one occasion and restrictions are now in place until 23 April. These policies have been implemented both in Iraq and in the northern
semiautonomous Kurdistan region.
Schools, universities, shopping centers and
other large gathering places are closed until further notice, as are airports.
The Iraqi authorities yesterday said that infections in the country were 1,574, and that 82 people have died.
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China goes on a discount oil buying binge
China is ramping up oil purchases amid record-breaking demand destruction caused by the Covid-19 pandemic and a supply overhang that has knocked prices and futures contracts down to levels not seen in decades.
The Middle Kingdom’s oil imports rose 4.5% in March year on year to 9.68 million barrels per day (bpd), China’s General Administration of Customs data shows.
China’s January and February oil imports averaged 10.47 million bpd, while its first quarter (Q1) oil imports averaged some 10.2 million bpd, representing a 5% year on year rise.
The rise in imports comes amid the worst global health crisis in over a century, causing China to post its weakest Q1 economic performance since at least 1992 at -6.9% compared to the same period a year earlier.
China, the world’s largest oil importer,
is nonetheless seizing the opportunity
of plunging prices to fill up its strategic petroleum reserves and commercial stockpiles, buying that may help or may not help a further collapse in Brent crude oil prices until global demand is expected to start to resuscitate in the third quarter (Q3).
Prices for global oil have collapsed by more than 60% since the start of the year due to a one month long oil price war between Russia and Saudi Arabia, the world’s second and third largest oil producers. Covid-19 lockdowns affecting around one-third of the world’s population, meanwhile, have killed
demand for the fuel.
The lockdowns will result in around 25-30
million barrels bpd of oil demand being wiped out this month, with slightly lower projections for May and June as certain countries are expected to start to exit their lockdowns. In 2019, global oil demand averaged around 99.5 million bpd.
To complicate market matters but sweetening the deal for Chinese stockpiling, Saudi Arabia last week offered deep discounts to its customers in Asia, its largest market.
The discount offers came just days after it agreed to an historic OPEC+ oil cut deal that will remove nearly 10 million bpd from global oil markets in May and June, with lower agreed cuts for the rest of the year and into 2021.
Oil benchmark Brent crude has recently traded in the upper $20s per barrel, while on Monday US oil bench mark NYMEX-traded West Texas Intermediate (WTI) saw futures contract prices fall for the first time into negative territory as US producers run out of storage facility space.
It marked the first time in history WTI futures dropped below zero, continuing the US crude benchmark’s super contango momentum. Most of China’s oil, however, is imported from Saudi Arabia, Russia, and other OPEC producers, so it will not immediately benefit from WTI’s price collapse.
In 2019, China’s crude oil imports from Saudi Arabia stood at 1.7 million bpd, or 16% of total crude oil imports, according to the US Energy Information Administration (EIA). Russia, for its part, was the largest non- OPEC source of China’s oil imports in 2019, averaging 1.6 million bpd, or 15% of its total imports. Brazil overtook Oman as the second biggest non-OPEC source of China’s oil imports, increasing by less than 0.2 million bpd to average 0.8 million bpd for the year.
Moreover, China’s crude oil imports from Saudi Arabia, rose 26% in the first two months of 2020 from a year earlier, while oil purchases from Russia gained 11%.
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Redline to provide connectivity in Saudi
Redline Communications Group Inc.
has announced today that it, along with
its premier certified partner Al-Rushaid Technologies, has been selected by one of the world’s largest oil companies to provide
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Week 16 22•April•2020