Page 12 - MEOG Week 13

MEOG
neWs In brIeF
MEOG
PolICy
S&P revises Bahrain’s
outlook to stable from
positive
Ratings agency S&P has revised Bahrain’s outlook to stable from positive on the low oil price environment, while reaffirming the rating at B+/B.
The stable outlook primarily reflects
the agency’s view that, despite ongoing reforms aimed at reducing the fiscal deficit, expenditure flexibility remains low and revenue is dependent on oil prices, leaving the government vulnerable to oil price shocks.
S&P forecasts a fiscal deficit of 9.9% of GDP in 2020, compared with a previously estimated 5.1% deficit, largely due to
the fall in oil revenues coupled with the government’s inability to implement large
cuts to expenditures due to their political sensitivity. In addition, the expected increase in the current account deficit could decrease foreign-exchange reserves, weakening Bahrain’s external resilience. Bahrain's gross international reserves increased to about $3.5 billion in January 2020, compared with about $1.9 billion at year-end 2018, largely due to GCC financial support. GCC countries have committed to provide Bahrain $10bn
in extraordinary support over several years
to reform its economy and this support is expected to continue to be forthcoming.
S&P estimates that real economic growth with deteriorate to 1.5% in 2020 compared to 2.1% in 2019 with low oil prices weighing on consumer demand and key sectors such as tourism.
reuters
OPEC rift widens as
group fails to set date for
emergency talks
A rift in the Organization of the Petroleum Exporting Countries (OPEC) has widened after members failed to agree unanimously on an emergency low-level meeting to discuss a market collapse that has seen global oil prices hit 18-year lows.
OPEC president Algeria, which has been instrumental in organizing the producer group’s efforts to support the market, had been among the members pushing for a gathering of OPEC’s Economic Commission Board (ECB) in April.
But at least four members, including OPEC’s de facto leader Saudi Arabia, the United Arab Emirates, Kuwait and Nigeria, have made clear they see no need for such a meeting, four sources with knowledge of the matter said on condition of anonymity.
One OPEC source said Kuwait had not received an official invitation to join the meeting, and does not consider a meeting necessary.
Another OPEC source said it was best to stick to a previous arrangement to hold the ECB meeting in June rather than earlier given the extent of uncertainty over the market’s direction.
The meeting could be agreed by a simple majority of OPEC’s 13 members, but the absence of leading nations, notably Saudi Arabia, would mean the meeting had no power to act. The Kingdom accounts for a third of the group’s oil output.
FInanCIal Post
ComPanIes
Tupras cuts runs at Izmir due to pandemic
Turkey’s largest refiner Tupras has reportedly cut runs at its Izmir refinery by 50% due
to weak fuel demand brought about by the coronavirus (COVID-19) pandemic.
Four trading sources described the situation to Reuters on March 30.
Tupras has also reduced runs at its Izmir refinery by 20% and its Kirikkale refinery by 50%, they were also cited as saying.
Tupras started to cut refinery runs around the middle of March, two of the sources were further quoted as saying, but it was not clear when exactly the runs were reduced at each refinery.
Tupras is a big consumer of Mediterranean oil grades such as Russian Urals and Siberian Light as well as Kazakhstan’s CPC Blend, which it normally purchases via tenders.
“They’ve cut purchases a lot. There were no buy tenders for over a month now,” said one quoted trader in the Mediterranean oil market.
bnI
oIl
Oil prices take another tumble
Oil prices plunged again on March 30, with global benchmarks Brent and West Texas Intermediate (WTI) hitting their lowest levels in almost two decades.
Brent had fallen 12.2% to trade as of 16:30 GMT on March 30 to $21.89 per barrel, a level not seen since 2002. Meanwhile WTI had dropped 7.3% to $19.93 per barrel, after hitting $19.85 earlier in the trading session – also an 18-year low.
Efforts to slow down the spread of the coronavirus (COVID-19) have caused fuel demand to evaporate, with experts predicting that global oil consumption could slump by as much as 20mn barrels per day (bpd) in April as lockdowns come fully into force.
At the same time, three years of production cuts by Russia, Saudi Arabia and other OPEC+ producers are due to expire on
April 1, after which point they will be able to produce as much as they please.
Hopes that a supply war could be averted were dashed on March 27, when Saudi officials said no talks were underway with Moscow.
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Week 13 01•April•2020