Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 27 January 2019. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Extremely Disturbing Footage Of Deadly Mexico Pipeline Explosion Surfaces – Mexican authorities have released a Sunday morning casualty update from Friday’s chilling fireball that burst from an illegal gas pipeline tap near a small town north of Mexico City, which occurred just three weeks after Mexican President Andres Manuel Lopez Obrador involved the country’s military in an initiative to combat gas thieves.Authorities have raised the death toll from the blast to 78, while 81 have been hospitalized with injuries.Here’s more from the Associated Press’ latest update: Perez recalls telling his son: “Let’s go … this thing is going to explode.” And it did, with a fireball that engulfed locals scooping up the spilling gasoline and underscored the dangers of an epidemic of fuel theft from pipelines that Mexico’s new president has vowed to fight. By Sunday morning the death toll from Friday’s blaze had risen to 79, with another 81 hospitalized in serious condition, according to federal Health Minister Jorge Alcocer. Dozens more were missing. ‘Perez and his son escaped the flames. On Saturday, he returned to the scorched field in the town of Tlahuelilpan in Hidalgo state to look for missing friends. It was a fruitless task. Only a handful of the remains still had skin. Dozens were burned to the bone or to ash when the gusher of gasoline exploded. Just a few feet from where the pipeline passed through an alfalfa field, the dead seem to have fallen in heaps, perhaps as they stumbled over each other or tried to help one another as the geyser of gasoline turned to flames. Several of the deceased lay on their backs, their arms stretched out in agony. Some seemed to have covered their chests in a last attempt to protect themselves from the blast. A few corpses seemed to embrace each other in death. Lost shoes were scattered around a space the size of a soccer field. Closer to the explosion, forensic workers marked mounds of ash with numbers.
Death toll reaches 85 in Mexico fuel pipeline fire horror – People in the town where a gasoline explosion killed at least 85 people say the section of pipeline that gushed fuel has been a habitual gathering site for thieves, repeatedly damaged and patched like a trusty pair of jeans. On Friday, amid countrywide fuel shortages at gas stations as the government attempts to stem widespread fuel theft, this particular section of pipeline had come back into service after being offline for nearly four weeks when somebody punctured the line again. Word quickly spread through the community of 20,000 people that gas was flowing. Come one, come all. Hundreds showed up at the spigot, carrying plastic jugs and covering their faces with bandanas. A few threw rocks and swung sticks at soldiers who tried to shoo them away. Some fuel collectors brought their children along. At first the gasoline leak was manageable, locals say, emitting a tame fountain of fuel that allowed for filling small buckets at a time. But as the crowd swelled to more than 600, people became impatient. That’s when a man rammed a piece of rebar into a patch, according to Irma Velasco, who lives near the alfalfa field where the explosion took place, and gasoline shot 20 feet (6 meters) into the air, like water from a geyser. A carnival atmosphere took over. Giddy adults soaked in gasoline filled jugs and passed them to runners. Families and friends formed human chains and guard posts to stockpile containers with fuel. For nearly two hours, more than a dozen soldiers stood guard on the outskirts of the field, warning civilians not to go near. Officials say the soldiers were outnumbered and their instructions were to not intervene. Only a week earlier, people in a different town had beaten some soldiers who tried to stop them from gorging on state-owned fuel. The lure of free fuel was irresistible for many: They came like moths to a flame, parking vehicles on a nearby road. The smell of gas grew stronger and stronger as thousands of barrels spewed. Those closest to the gusher apparently became delirious, intoxicated by fumes. Townspeople stumbled about. The night filled with an eerie mist, a mixture of cool mountain air and fine particles of gasoline.The fireball that engulfed those scooping up gasoline underscores the dangers of the epidemic of fuel theft that Mexico’s new president has vowed to fight. By Sunday evening, the death toll blaze had risen to 79, with 58 others hospitalized, federal Health Minister Jorge Alcocer said. Dozens more were listed as missing. Soldiers formed a perimeter around an area the size of a soccer field where townspeople were incinerated by the fireball, reduced to clumps of ash and bones. Officials suggested Sunday that fields like this, where people were clearly complicit with the crime of fuel theft, could be seized by the government. But Attorney General Alejandro Gertz ruled out bringing charges against townspeople who merely collected spilled fuel, and in particular those hospitalized for burns. “Look, we are not going to victimize the communities,” he said. “We are going to search for those responsible for the acts that have generated this tragedy.”
Ninety three dead and dozens in critical condition from Mexico pipeline explosion – At least 93 people have died and dozens were severely wounded in an explosion of a gasoline pipeline with a leak in the community of San Primitivo in the central Mexican state of Hidalgo, just over 50 miles north of downtown Mexico City. The victims are being treated in hospitals across Mexico and the United States, most of them with severe burns and fighting for their lives, according to the Secretary of Health. This includes one 12-year-old boy. Four died from their injuries on Tuesday. The explosion and the enormous human toll are an indictment and a direct result of the reactionary and militaristic policies of the government of Andrés Manuel López Obrador (known as AMLO) to accelerate the privatization of the country’s oil. On Sunday, the state governor, Omar Fayed, announced that most of the remains of those killed in the blast are unidentifiable and will take days or even months to identify by way of genetic samples provided by their families. Hours before the explosion, a leak was reportedly opened deliberately, creating a 22-foot fountain of gasoline that up to 800 neighbors approached during the afternoon to fill bottles for their families to use. At the time of the fire, about 200 people were reportedly in the immediate surroundings. Shortly after, harrowing images appeared everywhere on social media and the news stations showing dozens of men and women running away from what had become a giant wall of fire. Family members nearby, calling out the names of their loved ones and telling people on fire to roll on the ground, captured with their phones the moments victims approached them, pleading, “Help me, I’m dying.” The deadly fire took place in the context of a new supply and distribution system implemented by the recently-elected National Regeneration Movement (Morena) government of López Obrador to prevent the stealing of gasoline from pipelines. The government’s “strategy,” implemented the first week of 2019, has consisted in deploying more than 5,000 members of the military and police to Pemex installations – including six refineries, 39 storage and distribution terminals and others – and closing down 1,050 miles of pipelines until they can be policed by the armed forces or repaired.
AMLO Doubles Down to End Fuel Theft after PEMEX Explosion — Mexico President Andres Manuel Lopez Obrador is doubling down on a controversial strategy to end fuel theft at Petroleos Mexicanos after a pipeline explosion caused by an illegal tap left at least 89 people dead and many injured. He joins a long line of presidents who have tried to fix Mexico’s struggling state oil producer — with little to show for it. The leftist leader who took office on Dec. 1 has sought to combat the $3.5 billion trade in illicit fuel by increasing pipeline surveillance, improving technology and using more tanker trucks to transport gasoline. Lopez Obrador said the explosion won’t sway him from his strategy to end fuel theft. “Rather than stopping the strategy, the fight against the illegality and theft of fuel will be strengthened,” the president, known as AMLO, told reporters following the incident. Hundreds of people ignored orders from soldiers and gathered in Tlahuelilpan, in the central state of Hidalgo, to steal gasoline from a pipeline leak when it caught fire on Friday. The situation swiftly became unmanageable as crowds swelled and the army was unable to control it even after sending in reinforcements. A nearly four-hour lag between the leak alert and the closure of the valves was due to protocols at Pemex, the government said. There is an investigation into whether there was corruption or negligence in Pemex’s downstream control center, Lopez Obrador told reporters during his daily press conference on Monday. ‘Broken’ ModelThe blast is the latest in a series of problems facing Pemex, which has seen oil output decline every year since 2004 and is Latin America’s most indebted borrower. Pemex reports as many as 41 illegal pipeline taps a day and the fact that the blast occurred in spite of the government fuel theft crackdown “continues to show that the model is broken,” said John Padilla, managing director of energy consultant IPD Latin America LLC. “Every administration comes in with their magic bullet solution and they’ve all systematically failed,” he said.
Maduro illegitimacy declaration sparks confusion in US oil sector – The US on Wednesday declared the presidency of Nicolas Maduro illegitimate, and recognized Guaido, the head of Venezuela’s National Assembly, as the country’s legitimate president. Other countries, including Canada, followed the US with similar declarations. Trump administration officials and supporters of the move said it was aimed at cutting off the Maduro regime from oil revenues. What “we’re trying to do today is look at the issues involved in disconnecting the illegitimate Maduro regime from its sources of revenues and finding ways to transfer those revenues to the new, legitimate government” of Guaido, John Bolton, President Trump’s national security adviser, said in an interview with Fox Business Network on Thursday morning. The “natural resources of Venezuela belong to the people of Venezuela not the dictator Maduro,” Senator Marco Rubio, Republican-Florida, tweeted Thursday. “Valero & Chevron should work with President Guaido to make sure payment for oil [reaches] people not Maduro regime.” But sources said the Trump administration has offered no guidance on legal obligations in commercial dealings with Venezuela going forward, complicating crude and refined product trading, joint ventures with PDVSA and investments in the South American country’s oil sector. “Unless there’s some kind of formal sanction, I don’t think it creates legal trouble,” said Joe McMonigle, an analyst with Hedgeye Risk Management. “But, it could present other exposure and risk that private companies just don’t want to take.” Treasury may issue formal guidance on sanctions compliance obligations related to Guaido’s designation. But Treasury is unlikely to issue such guidance if it may be quickly overtaken by potential new sanctions, despite a push from US business interests for additional clarity. “Treasury is very careful and they’re not going to move before they know what is going on, even if they understand there’s a screaming urgency from the financial services and energy community to tell them what is going on,” she said. “If they’re waiting in the wings with a sanctions action, they’re not going to show their cards right now,” one source said Thursday. A Treasury spokesman did not respond to a request for comment. Maduro’s illegitimate status in the US could be particularly problematic for the roughly 500,000 b/d of crude imported by US refineries owned by Chevron, Valero, PBF Energy and Citgo, which is owned by PDVSA. It is also unclear how Chevron’s oil production operations in Venezuela may be impacted, sources said. “Chevron has no comment on the current situation in Venezuela,” Isabel Ordonez, a Chevron spokeswoman, said in a statement. “Chevron operations in Venezuela continue and the company is committed to the country’s energy development in compliance with all applicable laws and regulations.” Spokesmen for Valero, PBF and Citgo did not respond to requests for comment.
U.S. sanctions on Venezuela would reroute crude, leave refiners short (Reuters) – Potential U.S. sanctions on Venezuela’s crude oil exports would cut off the nation from Gulf Coast refiners that are among its biggest customers, likely forcing it to send more crude to China, India or other Asian countries, traders said on Wednesday. U.S. refineries that depend on Venezuela’s heavy crude would have even more trouble securing supplies as Canadian and Mexican crudes are often not as discounted and are limited in availability. The United States is considering moves to cripple Venezuela’s oil shipments, which account for nearly all of the country’s exports, in response to the reelection of President Nicolas Maduro that was widely viewed as a sham. Washington has recognized opposition leader Juan Guaido as Venezuela’s president as protests against Maduro erupted across the country. It is also considering sanctions on oil deliveries, a move it has until now resisted, energy company sources told Reuters on Wednesday. Venezuela, on average, exported about 500,000 barrels of crude a day to the United States in 2018, according to U.S. Energy Department data. Those shipments fell in November to an estimated 358,000 barrels per day, however, according to a report by Caracas-based consultancy Gas Energy Latin America seen by Reuters. Those deliveries are being made largely through oil-for-debt repayment structures as output from state-run oil company Petróleos de Venezuela, S.A., known as PDVSA, has slumped to near 70-year lows in a nationwide economic crisis. Venezuela’s output has been cut in half since 2016 to less than 1.2 million bpd, according to figures from OPEC secondary sources. Shipments to the United States account for about 75 percent of the cash Venezuela gets for crude shipments, according to a Barclays research note published last week. In the wake of sanctions, the country could seek additional deals with Turkey, India or other Asian nations, one trader of Venezuelan crude said. “It will be costly for Venezuela but eventually they’ll be able to sell that oil to Asia at a discount. There will be a period in the middle in which they have difficulty selling those barrels,”
Venezuela’s US-Backed Coup Leader Immediately Targets State Oil Company and Requests IMF Money – The right-wing opposition leader that the United States is trying to undemocratically install as Venezuela’s president immediately set his sights on the country’s state-owned oil company, which he is hoping to restructure and move toward privatization. He is also seeking money from the notorious International Monetary Fund (IMF) to fund his unelected government.On January 23, U.S. President Donald Trump recognized the little-known, U.S.-educated opposition politician Juan Guaidó as the supposed “interim president” of Venezuela. Within 48 hours, Guaidó quickly tried to seize control of Venezuela’s major US-based oil refiner and use its revenue to help bankroll his US-backed coup regime.Guaidó is attempting to fire the directors of Citgo Petroleum, which is owned by Venezuela’s state oil company PDVSA, and seeks to appoint his own new board. Reuters described Citgo as “Venezuela’s most important foreign asset”; Bloombergcalls it “the crown jewel of PDVSA’s assets.”Citgo is the largest purchaser of Venezuelan oil, although crippling sanctions imposed by the Trump administration have prevented the company from sending revenue to Venezuela, starving the government of funding.Citing US officials, The Washington Post reported that the Trump administration’s strategy “is to use the newly declared interim government as a tool to deny Maduro the oil revenue from the United States that p rovides Venezuela virtually all of its incoming cash.”The oil reporting agency S&P Global Platts reported that, in the immediate wake of the U.S. anointing Juan Guaidó as Venezuela’s supposed “president,” the opposition leader already drafted “plans to introduce a new national hydrocarbons law that establishes flexible fiscal and contractual terms for projects adapted to oil prices and the oil investment cycle.”This plan would involve the creation of a “new hydrocarbons agency” that would “offer bidding rounds for projects in natural gas and conventional, heavy and extra-heavy crude.” In other words, these are rapid moves to privatize Venezuela’s oil and open the door for multinational corporations.
Public urged to stay away from New Plymouth beach after spill – An investigation is under way after an estimated 100 litres of a diesel-type substance spilled from a stream and into the sea at New Plymouth’s NgÄmotu Beach. Taranaki Regional Council staff at Ngamotu Beach after the spill on Monday morning.Earlier on Monday the Taranaki Regional Council warned the public to stay away from the swimming beach as a clean-up began. The flow of the unidentified hydrocarbon substance has been stopped. Taranaki Regional Council compliance manager Bruce Pope said trained oil spill responders were at the site and deployed booms to contain and recover the material at the stream outlet. Booms were put on the sand as part of the clean-up.Booms were also used in the Breakwater Bay marina area, near the lee breakwater, east of the beach. The council were alerted to the spill by a member of the public around 11.30am on Monday morning, he said. There was no visual evidence of a heavy slick on the water but the material had a strong diesel-like smell, witnesses said. The discharge was stopped late afternoon and the source was being investigated, Pope said. The clean-up will continue into the evening and the public is advised to steer clear of the beach in the meantime.Pope said the response team were assessing the nature of the material and the potential for any wider impacts. The investigation was ongoing and there was no clear evidence of what type of hydrocarbon material, although it was believed to be diesel, had been spilled, he said. The spill came from a small stream which drains at the end of the beach next to Port Taranaki property.
South Korea’s Hyundai Oilbank to receive Iranian South Pars in mid-February – – South Korea’s Hyundai Oilbank will receive its first cargo of Iranian South Pars condensate in mid-February, a company trading source with direct knowledge of the matter said Tuesday. The cargo will arrive in a one million-barrel parcel. Altogether, Hyundai will take delivery of 6-7 million barrels of South Pars condensate from mid-February until end-April, the source said. Hyundai Oilbank’s purchase comes as South Korea’s other main South Pars condensate buyers, Hanwha Total and SK Innovation, are set to or have already taken delivery of their first cargoes of South Pars condensate, S&P Global Platts earlier reported. The Iranian Suezmax vessel Silvia I discharged around 1 million barrels of Iranian South Pars condensate at Incheon on January 19 for SK Innovation’s subsidiary SK Incheon Petrochem, which runs a 100,000 b/d condensate splitter there, an industry source based in Seoul with direct knowledge of the matter said. SK Innovation will take its second delivery of another 1 million barrels of South Pars condensate at Incheon on January 31 onboard the Iranian Suezmax vessel Sana, the source added. Hanwha Total meanwhile is set to take delivery of around 3-5 million barrels of South Pars condensate in February. Price levels for Hyundai Oilbank’s term South Pars cargoes were unclear, though traders said it was likely done at similar levels to where Hanwha Total inked its term South Pars deal, at a discount of around $2.50/b to Platts Dubai crude assessments on a delivered basis.
European fuel oil market boosted by Saudi crude exports, tight supply – The loss of Iranian fuel oil exports is supporting the high sulfur fuel market as Saudi Arabia compensates for the disappearance of Iran in the oil market by exporting its crude and instead running fuel oil in its power generation plants, boosting demand for imports from Europe. Saudi Arabia in November exported its highest volumes of crude oil in two years, the latest figures from the Joint Organizations Data Initiative showed Monday, as the kingdom boosted its supplies to offset the reimposition of sanctions on Iran by the US. Saudi Arabia, the world’s largest crude exporter, shipped 8.235 million b/d of crude in November, a 534,000 b/d increase from October. It was the highest Saudi export volume since November 2016, just before OPEC instituted a production cut deal that began January 2017, according to the JODI data. “Yes, Saudi Arabia is running fuel oil,” a fuel oil trader confirmed Tuesday morning. Refinery runs in November rose to 2.836 million b/d, up 21,000 b/d from October, while direct crude burn for power generation fell to 328,000 b/d, down 5,000 b/d, the JODI data showed. Iranian sour crude produces an ample amount of high sulfur fuel oil when processed in the crude distillation unit, therefore the loss of fuel oil barrels from Iran added to supply concerns. Further supply crunches have come from Russia, Mexico and Venezuela, and this has squeezed cracked fuel oil availability. Falling Russian exports and refinery upgrades in preparation for the International Maritime Organization’s sulfur cap in 2020 tightened the European market in particular, translating into a counter-seasonally strong backwardation on the 3.5% FOB Rotterdam barge curve through 2019.
Saudi Arabia in Talks to Build Refinery in South Africa — Saudi Arabia is in talks to build an oil refinery in South Africa as part of a pledge to invest as much as $10 billion in Africa’s most developed economy. Joint studies for a refinery and petrochemical complex will be conducted by state oil giant Saudi Aramco and South Africa’s Central Energy Fund, energy ministers from the two countries said in Pretoria on Friday. The negotiations mark a step forward in South Africa’s plans to add a refinery, which it has been considering for about a decade. Saudi Arabia made its spending pledge last July as South African President Cyril Ramaphosa sought investment to revive a flagging economy. Although South Africa has struck previous agreements to develop a new refinery — including with China in 2011 — the project is yet to get off the ground. With Saudi Arabia supplying about 40 percent of South Africa’s crude, ties between the two countries are close. South African Energy Minister Jeff Radebe has called for an increase in domestic refining to cut reliance on fuel imports. But the pending introduction of clean-fuel standards has, if anything, prompted refiners to stall rather than expand, with Sasol Ltd. considering selling a plant. Radebe and his Saudi counterpart Khalid Al-Falih signed a declaration of intent Friday to cooperate in oil and gas. Talks between the two have also broached the possibility of Saudi Aramco using the vast oil-storage tanks in Saldanha Bay, a harbor north of Cape Town offering a strategic location for trading. “We believe that South Africa will grow economically” and additional projects may follow those currently under discussion, Al-Falih said, suggesting that Aramco could also help supply South Africa with natural gas.
Saudi Arabia: We’ll Pump The World’s Very Last Barrel Of Oil – Saudi Arabia isn’t buying the peak oil demand narrative. OPEC’s largest producer continues to expect global oil demand to keep rising at least by 2040 and sees itself as the oil producer best equipped to continue meeting that demand, thanks to its very low production costs. Saudi Arabia will be the one to pump the last barrel of oil in the world, but it doesn’t see the ‘last barrel of oil’ being pumped for decades and decades to come. “I don’t see peak [oil] demand happening in 10 years or even by 2040,” Amin Nasser, president and chief executive officer of Saudi oil giant Saudi Aramco told CNN Business’ Emerging Markets Editor John Defterios on the sidelines of the World Economic Forum in Davos this week. “There will continue to be growth in oil demand … We are the lowest cost producer and the last barrel will come from the region,” Nasser told CNN. For several years, Nasser has been saying that peak oil demand is nowhere in sight, that petrochemicals will drive oil demand growth through 2050, and that all the ‘peak oil demand’ and ‘stranded resources’ talk is threatening an orderly energy transition and energy security. Saudi Arabia – which has just announced that its huge oil reserves are slightly higher than previously estimated – looks to diversify its economy away from heavy dependence on crude oil, but one of the goals of its Vision 2030 diversification plan is to use less oil in domestic power generation to free up more barrels for exports.
Russia seals position as top crude oil supplier to China, holds off Saudi Arabia (Reuters) – Russia came in as China’s largest crude oil supplier in December, cementing the top spot for all of 2018 for a third year in a row ahead of rival Saudi Arabia, customs data showed on Friday. Imports from Russia reached 7.04 million tons, or 1.658 million barrels per day, in December, up 40 percent from 5.03 million tons a year earlier, according to the data from the General Administration of Customs. For the full year, Russian imports rose to 71.49 million tons, or 1.43 million bpd, up 19.7 percent from 59.7 million tons in 2017. Demand for Russian crude was supported by a rise in throughput by China’s private refiners, who favor Russian grades such as ESPO, while geopolitical uncertainties also forced China to import less from countries such as Iran and Venezuela. Russian oil giant Rosneft has also marketed its ESPO grade more aggressively, signing new long term supply deals with state oil companies such as ChemChina and PetroChina. Saudi Arabia supplied China with 6.97 million tons in December, or 1.64 million bpd, up 48 percent from 4.71 million tons a year earlier. For 2018, OPEC’s top supplier boosted shipments to China by 8.7 percent to 56.73 million tons, or 1.135 million bpd. That means Russia’s lead over Saudi Arabia in supplying China almost doubled to 295,000 bpd in 2018 from 150,000 bpd a year earlier. U.S. shipments to China – which have been hit by a trade war between the two nations – came in at zero in December. Imports for 2018 were up 24.8 percent from 2017 at 245,616 bpd. Chinese oil trader Unipec plans to resume U.S. crude shipments to China by March, Reuters reported in December. Venezuelan supplies to China tumbled 24 percent in 2018 to 16.63 million tons, or 332,600 bpd, after the OPEC member’s production fell to a seven-decade low amid a lack of investment, mismanagement and fleeing workers. Iranian imports were at 2.14 million tons in December, or 503,896 bpd, down 12 percent from a year earlier. Full year Iranian imports dropped to 29.274 million tons, or 585,475 bpd, down 20 percent from 2017 after the United States imposed sanction on Tehran over its disputed nuclear program.
China’s CNOOC boosts spending target to 5-year high, increases domestic drilling (Reuters) – China’s state-owned offshore oil and gas producer CNOOC Ltd said it is confident of achieving its spending target this year, the highest since 2014, as its responds to a call to build up the nation’s petroleum output and reserves. The company plans to spend 70 billion to 80 billion yuan ($10.3 billion to $11.8 billion) on exploration and production, CNOOC said in a press release on Wednesday, compared with an expected 63 billion yuan in capital spending for 2018. Beijing has called on the state oil giants to increase domestic exploration to help meet strong crude demand and counter falling output from maturing fields. This came after President Xi Jinping urged oil companies in August to improve national security by boosting domestic production and reserves. In response to the government’s call, CNOOC pledged last week to double its exploration activities and proven oil and gas reserves in China over the next seven years. The company is allocating more spending this year on domestic exploration and production, which will make up 62 percent of total expenditures versus last year’s 51 percent. “Our main focus will be exploring for large- to medium-sized oil and gas fields … and will speed up exploration of natural gas,” the company said in a presentation of its plans published on its website. Domestic exploratory drilling will take up 12 billion yuan, or 76 percent of total exploration spending, while overseas work will account for the remaining 24 percent. The 12 billion yuan compares with 10 billion yuan estimated in 2018 and is nearly double to that of 2016. In global exploration, CNOOC will speed up spending on the Stabroek block offshore Guyana, where an Exxon Mobil-led consortium that includes the Chinese company has tapped recoverable reserves of 5 billion barrels of oil equivalent.
China’s CNOOC to double proven reserves, exploration by 2025 (Reuters) – China’s CNOOC Group said it aims to double its exploration projects and proven oil and gas reserves in seven years, the company said on Friday via its official Wechat account. The announcement was a direct response to President Xi Jinping’s call to improve the country’s national security by boosting domestic production and reserves, CNOOC said in the post. The offshore producer is expected to make a record investment to boost exploration projects and reach its target, according to CNOOC’s chairman Yang Hua. The company is due to release details of its production target and capital expenditure at the strategic outlook meeting on Jan. 23. “We faced adverse geological conditions as offshore oil and gas fields age. More exploration projects are being moved to deep water area, but these are both risky and costly,” said Xie Yuhong, head geologist, CNOOC, adding that the volatility in global oil prices added pressure on CNOOC to rein in expenses. The oil and gas explorer reported 2.613 billion barrels of oil equivalent in net total reserves by 2017-end, the best level seen since 2008.
IEA Sees Oil Demand Growth Defying Slowing Economy— Global oil demand remains on course to be stronger this year than in 2018 as a boost from lower fuel prices counters slowing economic activity, according to the International Energy Agency. “We have seen prices fall very significantly since the peak at the beginning of October, and that is providing some relief to consumers,” Neil Atkinson, head of the IEA’s oil industry and markets division, said in a Bloomberg television interview on Friday. Still, in its monthly report the agency acknowledged “the mood music in the global economy is not very cheerful” and the outlook could change. Crude prices remain almost 30 percent below the four-year peak reached in October amid concerns over economic growth in China and the U.S., the world’s two biggest oil users, who remain locked in a trade dispute. To prevent markets tipping into oversupply, the OPEC cartel and its partners have announced substantial production cuts. Oil consumption will expand by 1.4 million barrels a day — about 1.4 percent — in 2019, slightly higher than last year’s expansion of 1.3 million, according to the Paris-based IEA, which advises most of the world’s major economies on energy policy. Brent crude traded near $62 a barrel in London on Friday, having surpassed $86 in October. Faltering manufacturing and slumping exports have stirred concerns that China’s economy, the oil market’s engine of growth for more than a decade, is slowing. A prolonged trade battle with the administration of U.S. President Donald Trump is only darkening the outlook. “Our expectation for slightly faster global demand growth in 2019 is maintained even though economic growth is likely to be slower than in 2018,” the agency said. “The impact of higher oil prices in 2018 is fading, which will help offset lower economic growth.”
Hedge funds buy oil amid greater optimism on economy: Kemp – (Reuters) – Hedge funds have started to accumulate bullish positions in crude oil and diesel once more, amid rising optimism about the outlook for the global economy in 2019. Hedge funds and other money managers increased their net long position in Brent crude futures and options by 15 million barrels to 173 million barrels in the week to Jan. 15. Portfolio managers have raised their net long position in Brent in five of the last six weeks, by a combined 36 million barrels since Dec. 4, according to exchange data. Funds also boosted their net long position in European gasoil by 6 million barrels to 11 million barrels, the second small weekly increase in a row, after twelve large consecutive declines (tmsnrt.rs/2S2rQP2). In both cases, most of the new buying came from the closure of existing short positions rather than opening fresh long ones. It follows the largest sell-off ever recorded in crude and gasoil during the fourth quarter and suggests many fund managers sense prices have found a floor, at least temporarily. The new wave of buying in crude and gasoil is still small and net positions are still a fraction of the 500 million barrels of Brent and 126 million barrels of gasoil held in September. But it comes amid increasing optimism among investors about a future trade deal between the United States and China that could help avert a feared recession. The same optimism that has boosted the U.S. S&P 500 share index by 14 percent since Dec. 26 and South Korea’s trade-exposed KOSPI-100 index by 8 percent since Jan. 4 is helping reverse some of the recent losses in oil prices.
Rig Count Sensitivity And WTI Crude Price Fluctuations – WTI crude prices averaged $66.77 per barrel over the first three quarters of 2019 and peaked at around $75 per barrel at the opening of 4Q18. But as we all know, prices were punished over the rest of the quarter shedding about $30 per barrel (from the peak) by the year’s end as traders began to worry that global crude production appeared to be on a near term trajectory to outpace demand. A growing question culminating from the recent slump in prices is, “How will producers adjust their drilling campaigns now that the price environment has changed so dramatically?” Anecdotally we note that recent press releases by Diamondback and Chesapeake both announced these companies’ intentions to reduce the size of their drilling fleets in 2019. Plans for drilling by other publicly traded producers will likely also get announced in the weeks ahead as companies report their financial results for the fourth quarter. In the meantime, the introductory table provides a rough sensitivity analysis of how rig demand may shape up under certain crude pricing conditions over the next year. Comparing domestic crude prices alongside rig activity illustrates a strong linkage (i.e. correlation) between oil prices and rig counts. Without adjusting for lag (i.e. thetypical span before rig activity reacts to the change in price), the correlation between the rig count and the WTI crude price was 0.8796, which is already a strong relationship. However, factoring in a three month lag, improves the relationship by +855 basis points to a correlation of 0.9651 adjusted.
To boost confidence in oil cut, OPEC issues quota list – OPEC on Friday published a list of oil production cuts by its members and other major producers for the six months to June, an effort to boost confidence in the move designed to avoid a supply glut in 2019. In a statement, an OPEC and non-OPEC ministerial panel also called on participating members of the Organization of the Petroleum Exporting Countries and allies to “redouble their efforts in the full and timely implementation” of the move. In the first half of 2019, OPEC and its allies will cut oil output by 1.195 million bpd to 43.874 million bpd. The full OPEC+ group will meet on April 17-18 in Vienna to decide whether to extend the agreement beyond June. The list of quotas is the same as one seen by Reuters and other news services in December and is as listed below. For the six months to June 2019:
Algeria 1,057 -32 = 1,025
Angola 1,528 -47 = 1,481
Congo 325 -10 = 315
Ecuador 524 -16 = 508
Eq. Guinea 127 -4 = 123
Gabon 187 -6 = 181
Iraq 4,653 -141 = 4,512
Kuwait 2,809 -85 = 2,724
Nigeria 1,738 -53 = 1,685
Saudi Arabia 10,633 -322 = 10,331
UAE 3,168 -96 = 3,072
Azerbaijan 796 -20 =776
Bahrain 227 -5 = 222
Brunei 131 -3 = 128
Kazakhstan 1,900 -40 = 1,860
Malaysia 627 -15 = 612
Mexico 2,017 -40 = 1,977
Oman 995 -25 = 970
Russia 11,421 -230 = 11,191
Sudan 74 -2 = 72
South Sudan 132 -3 = 129
Total OPEC 26,749 -812 = 25,937
Non-OPEC 10 18,320 -383 = 17,937
Total 45,069 -1,195 = 43,874
Oil firms as China’s economic slowdown was not as big as some expected – Oil rose on Monday, reversing earlier losses, as investors latched on to positive supply-side drivers for the market, although concern about the wider economy simmered in the background after data pointed to a slowdown in China. Brent crude oil futures were up 12 cents at $62.82 a barrel by 1520 GMT, while U.S. crude futures were up 9 cents at $53.89 a barrel.Analysts said a more robust backdrop for financial markets, together with the prospect of slower crude production growth, were the major drivers behind the rally in oil.”The stock market performance is one of the reasons why oil keeps marching higher. There also seems to be a general belief that the agreed cut in OPEC+ production will be sufficient to balance the market,” PVM Oil Associates said in a note.Global equities fell after data pointed to a slowdown in Chinese economic growth in 2018 to a 28-year low. The numbers fed concern that the outlook for global growth may be darkening, particularly given U.S.-China trade tensions. But stocks are still up nearly 8 percent so far this month, which in turn has given oil investors more confidence to bet aggressively on a rise in crude prices.
Oil Prices Steady Following China GDP Data; OPEC Supply Cuts Remain in Focus – Oil prices steadied on Monday in Asia after official data showed China’s economic slowdown was in line with expectations and not as sharp as some analysts had feared. China’s economy grew 6.4% in the fourth quarter of 2018 from a year earlier, as expected, official data from the National Bureau of Statistics showed. In 2018, the country’s economic growth came in at 6.6%, also in line with expectations. Oil prices firmed following the release of the data, with Brent Oil Futures trading at $62.83 per barrel at 1:06 AM ET (06:06 GMT), up 0.2% from their last close, while Crude Oil WTI futures were at $54.2 a barrel, up 0.3%.Meanwhile, traders are awaiting further news on U.S.-China trade frictions. Oil futures rallied around 3% on Friday following reports suggesting both countries were considering concessions ahead of a Washington visit from Chinese Vice Premier Liu He on Jan. 30 and 31 for talks aimed at resolving the ongoing trade standoff between the two countries.Elsewhere, Baker Hughes reported Friday that the number of domestic rigs drilling for oil fell by 21 to 852 in the week to Jan. 11.It was the third straight weekly decline in the rig count and the largest weekly drop since February 2016, suggesting a slowdown in domestic crude production. That followed a report Thursday from the Organization of the Petroleum Exporting Countries, which revealed that the group‘s output fell by 751,000 barrels to 31.6 million barrels a day in December.
Oil prices edge down as global growth worries threaten demand – Oil prices fell more than 1 percent on Tuesday on signs that an economic slowdown in China was spreading, stoking concerns about global growth and fuel demand. The gloomy news from the world’s second-largest economy and top importer of oil pulled down financial markets across Asia. International Brent oil futures were at $61.94 per barrel at 0950 GMT, down 80 cents or 1.28 percent. U.S. West Texas Intermediate (WTI) crude futures were at $53.16 per barrel, down 1.19 percent or 64 cents. China reported the lowest annual economic growth in nearly 30 years on Monday. Its state planner warned on Tuesday that falling factory orders pointed to a further drop in activity in coming months and more job losses. While China’s oil imports have so far defied the economic slowdown, hitting a record above 10 million barrels per day (bpd) in late 2018, many analysts believe the country has reached peak energy growth, with its thirst set to wane. “Slowing manufacturing activity in China is likely weighing on demand,” said Singapore-based tanker brokerage Eastport, adding that industrial slowdowns tended to be leading indicators that fed gradually into lower demand for shipped oil products. In a sign of spreading economic weakness, growth in South Korea’s export-oriented economy slowed to a six-year low of 2.7 percent in 2018, official data showed on Tuesday. The International Monetary Fund on Monday trimmed its 2019 global growth forecast to 3.5 percent, from 3.7 percent in last October’s outlook. “This was the second downturn revision in three months, and we can still see further downgrades in the near future if trade tensions escalate, the UK exits with a no-deal from the EU, or China’s economic growth drops more sharply,” Despite the darkening outlook, oil prices have been getting some support from supply cuts since the beginning of this month by the Organization of the Petroleum Exporting Countries.
Oil prices drop on renewed global growth fears – Oil futures traded sharply lower Tuesday, under pressure after a warning from the International Monetary Fund and weak economic data out of China underlined concerns about global economic growth and energy demand. West Texas Intermediate crude for February delivery fell $1.93, or 3.6%, to $51.87 a barrel on the New York Mercantile Exchange. The contract expires at the day’s settlement. March WTI CLH9, -2.72% which becomes the front-month contract, traded at $52.17, down $1.87, or 3.5%. March Brent lost $1.94, or 3.1%, to trade at $60.80 on ICE Futures Europe.“Oil prices are under pressure due to new economic concerns. The IMF yesterday lowered its forecast for global economic growth this year, particularly because of the less dynamic growth expected in Europe. The NDRC, the state planning agency in China, sees a risk of a further cooling of the Chinese economy,” wrote analysts at Commerzbank, in a note.The IMF on Monday said it expects the global economy to grow 3.5% in 2019, down from a previous forecast of 3.7% in October and a growth rate of 3.7% in 2018. The fund cited growing trade tensions and rising U.S. interest rates. Earlier Monday, China reported its economy expanded by 6.6% in 2018, the slowest pace since 1990.Most U.S. financial markets were closed Monday for the Martin Luther King Jr. Day holiday. Brent crude rose 4 cents Monday in London.The Commerzbank analysts noted the International Energy Agency late last week confirmed its forecast for global oil demand despite an increasingly gloomy economic outlook, calling for demand to increase by 1.4 million barrels a day in 2019 thanks to the positive impact of lower prices.“If demand develops as the IEA predicts, the oil market will become gradually rebalanced during the course of the year. For this to happen, OPEC+ will need to consistently implement the agreed production cuts. OPEC has now published a detailed breakdown of the contribution required from each country,” they said. In other energy trading, March natural-gas futures NGH19, -7.59% dropped 9.6% to $3.148 per million British thermal units, continuing to see high volatility on the back of changing weather forecasts.
What’s Driving Oil Prices Down? – Oil prices started Tuesday down on gloomy economic news, with mounting fears that economic growth will slow in 2019. The International Monetary Fund warned on Monday that economic growth could slow this year. “While global growth in 2018 remained close to post-crisis highs, the global expansion is weakening and at a rate that is somewhat faster than expected,” the Fund said. The IMF lowered its global growth estimate to 3.5 percent this year, down 0.2 percent from its October estimate. The Fund said that the downward revision is modest, but that downside risks are rising. “While financial markets in advanced economies appeared to be decoupled from trade tensions for much of 2018, the two have become intertwined more recently, tightening financial conditions and escalating the risks to global growth.” After hitting a two-month high in recent days, oil prices have taken a breather on renewed concerns of an economic slowdown generally, and in China more specifically. On Monday, China reported its 2018 GDP growth rate at 6.6 percent, the weakest in nearly three decades.. Oil price discounts in Midland have narrowed sharply, converging towards WTI in Houston. The discount is now at its smallest since March 2018. Discounts once traded nearly $20 per barrel below WTI in Midland, but the discount has now fallen to roughly $2.25. Some midstream capacity has been added in recent months, while production growth hit a rough patch this month because of cold weather. Schlumberger saw its share price jump over the last few trading days after reporting upbeat guidance for 2019. However, the oilfield services giant also said that its fourth quarter revenue fell by 12 percent quarter-on-quarter, the result of slowing drilling activity in the U.S. shale patch. “We could be facing a more moderate growth in U.S. shale production in coming years,” Schlumberger’s CEO Paal Kibsgaard told investors on an earnings call.
US shale’s full impact still hasn’t hit oil markets, IEA director says – Shale oil’s impact will have “huge implications” for global energy markets for many years, Fatih Birol, executive director at the International Energy Agency, told CNBC on Tuesday.Oil prices have been trading sharply lower amid growing concerns that an economic slowdown in China could temper demand. And even as some producers cut their output, prices have been put under further pressure by a growing supply from the United States.”(If) anybody thinks we have seen the full impact of the shale revolution in the United States, then he or she is making a big mistake,” Birol told CNBC’s Steve Sedgwick at the World Economic Forum in Davos, Switzerland.”We will see huge implications of shale, both for oil and gas, for many years to come.”OPEC and its production allies have officially implemented a fresh round of supply cuts, which will see 1.2 million barrels per day removed from the market from the start of January.Birol said that despite those cuts, prices in 2019 should face renewed pressure with Permian Basin output in western Texas and southeastern New Mexico set to ramp up. “A huge amount of pipeline capacity is coming in the Permian, 66 percent growth compared to previous years, so the U.S. oil industry’s ability to react to the market is much faster and bolder now,” he said.
Oil Holds Losses Near $53 — Oil held its losses from Tuesday at near $53 a barrel as pessimism over the prospects for a U.S.-China trade deal clouded the global economic outlook. Futures in New York were little changed after falling on Tuesday, when they dropped with risk assets including global equities. The swoon was sparked by concerns that tensions between the world’s biggest economies will persist even after President Donald Trump’s top economic adviser denied a report that the U.S. has canceled preliminary talks with Chinese officials. The concerns over the world economy were exacerbated by disappointing U.S. housing data and the International Monetary Fund cutting its global growth forecasts this week. That’s threatening oil’s rally after prices got off to their best start to a year since 2001 on hopes the OPEC+ group of producers will cut enough output to shrink a global glut. While Mohammad Barkindo, the secretary general of the Organization of Petroleum Exporting Countries, said the group and its allies are beginning to make “very sharp reductions,” the energy ministers of Saudi Arabia and Russia both canceled their plans to attend and hold a bilateral meeting at the World Economic Forum in Davos, skipping an opportunity to reassure investors. West Texas Intermediate crude for March delivery traded 20 cents up at $53.21 a barrel on the New York Mercantile Exchange at 7:46 a.m. in London. The February contract expired on Tuesday after slumping 2.3 percent to $52.57. Brent for March settlement was 32 cents higher at $61.82 a barrel on the London-based ICE Futures Europe exchange after dropping 2 percent on Tuesday. The global benchmark crude was at an $8.56 premium to WTI.
Oil prices steady as slowdown worries offset outlook for lower supply – The oil market gave up early gains on Wednesday as a widespread economic slowdown, which may dent growth in demand for fuel, weighed on energy prices. Crude futures earlier got a boost from hopes that Japan and China would take fiscal stimulus measures to stem the slowdown. Prices got further support from expectations that U.S. crude stockpiles fell last week and official data indicated slowing growth in U.S. shale oil output in the coming years. International Brent crude oil futures dipped 6 cents to $61.44 per barrel at 10:55 a.m. ET (1555 GMT). U.S. West Texas Intermediate crude futures 15 cents lower at $52.86 per barrel. Oil prices fell by 2 percent on Tuesday as financial markets reeled from concerns about a global economic slowdown and the heavy losses spooked investors into safe-haven assets such as government bonds or gold. A litany of poor economic data worldwide sapped Asian markets, though some optimism emerged as China and Japan said they would use fiscal spending to boost growth. Chinese finance ministry officials on Wednesday said that the government would step up spending to support its economy, which last year registered its lowest growth rate since 1990. The Bank of Japan said it would keep the ultra-easy monetary settings that have been running since 2013. Oil prices have been supported by production cuts led by OPEC to rein in an emerging supply glut. Whether OPEC’s efforts will be successful depend in part on the development of oil production in the United States.
WTI Extends Losses After Big Surprise Crude Build – Crude prices fell to the lowest level in almost a week as China warned of “serious challenges” to the global economy and the U.S. government shutdown cast a pall over growth.“You still have the same old things hanging over us, particularly the question of a trade deal between the U.S. and China,” said Michael Hiley, head of OTC energy trading at LPS Futures in New York. API:
- Crude +6.551mm (-500k exp)
- Cushing +359k
- Gasoline +3.635mm
- Distillates +2.573mm
After three weeks of dramatic product builds (and modest crude draws), it appears a record high production finally caught up with demand as API reported a major surprise crude build of 6.551mm barrels. WTI was hovering around $52.60 ahead of the API data and extended the day’s losses on the print…
Oil slips as EU seeks to trade with Iran, U.S. gasoline prices fall (Reuters) – Oil prices slipped on Wednesday as the European Union seeks to circumvent U.S. trade sanctions against Iran, and on weaker U.S. gasoline prices. Brent futures fell 36 cents, or 0.6 percent, to settle at $61.14 a barrel, while the most active U.S. West Texas Intermediate (WTI) crude contract for March fell 39 cents, or 0.7 percent, to settle at $52.62. France’s foreign minister said he expected a European-backed system to facilitate non-dollar trade with Iran and bypass fresh U.S. curbs imposed after Washington quit a landmark nuclear deal, would be established in coming days. Peter Cardillo, chief market economist at Spartan Capital Securities in New York said that EU announcement “knocked the wind out of oil prices.” Analysts also said falling U.S. gasoline prices and rising crude output in the United States were also pressuring the crude market. “We are paying particular attention to weakening NYMEX crack spreads where an increasingly heavy gasoline market is providing a limiter on near term WTI gains,” Jim Ritterbusch, president of Ritterbusch and Associates in Chicago, said in a report. The crack, or spread, between U.S. gasoline futures and WTI crude RBc1-CLc1 fell to $5.97 a barrel, its lowest since 2013. Both U.S. crude and product futures extended their losses in post-settlement trade after an industry report showed that U.S. crude stockpiles rose sharply last week, while gasoline and distillate inventories built. [API/S] Data from the American Petroleum Institute showed crude inventories increased 6.6 million barrels, compared with analysts’ expectations for a decrease of 42,000 barrels. Gasoline stocks rose by 3.6 million barrels, compared with analysts’ expectations in a Reuters poll for a 2.7 million-barrel gain. Distillate fuels stockpiles gained by 2.6 million barrels, compared with expectations for a 229,000-barrel drop, the API data showed.
U.S. oil firms tell OPEC their growth will slow (Reuters) – U.S. oil producers sought on Wednesday to soothe OPEC’s worries about losing market share, telling the group that investors in the U.S. firms wanted a reduction in growth and higher payouts. The Organization of the Petroleum Exporting Countries and non-OPEC allies such as Russia have cut output since 2017 to support oil prices, while watching producers in the United States, which is not party to the cuts, drive up production. The United States has overtaken Russia and Saudi Arabia to become the world’s biggest crude producer. Output is approaching 12 million barrels per day (bpd). OPEC’s forecasts and even U.S. government predictions have repeatedly underestimated U.S. output growth. The bosses of U.S. firms Occidental Petroleum and Hess Corp, attending a session at the World Economic Forum in Davos, said that growth of U.S. shale oil output would slow. The session was a rare occasion when U.S. producers and an OPEC representative, OPEC Secretary-General Mohammed Barkindo, sat on the same panel. “I believe not as much money will be pouring into the Permian basin this time. I believe investors will hold companies accountable for returns and a lot of this didn’t happen previously,” Occidental Chief Executive Vicki Hollub said. Echoing her comments, Hess Corp founder and Chief Executive John Hess said shale production now accounted for about 6 percent of global production. “It will probably go up to 10 percent by mid-decade but then it flattens out,” he said. But he added that U.S. resources would start to degrade. “Shale is not the next Saudi Arabia. It is an important short-cycle component,” he said. Barkindo said OPEC aimed to balance supply and demand and had helped the United States by rescuing its oil industry from ultra-low oil prices. “The oil industry is under siege globally,” Barkindo said, adding that OPEC wanted to talk more regularly to U.S. producers to understand their industry better even if they could not participate in any OPEC-led production cuts.
Oil prices fall on worries fuel demand to stall amid slowing global growth – Oil prices fell on Thursday as concern over the global economy reasserted itself, reversing earlier gains on the potential for U.S. sanctions on Venezuela. Brent crude futures were down 46 cents at $60.68 a barrel around 8:30 a.m. ET (1330 GMT), while U.S. West Texas Intermediate futures fell 26 cents to $52.36. An unexpected rise in U.S. crude inventories reported the day before eclipsed possible U.S. sanctions on the Venezuelan oil sector. The American Petroleum Institute said on Wednesday U.S. crude inventories rose by 6.6 million barrels in the latest week, versus expectations for a fall of 42,000 barrels. The U.S. Energy Information Administration reports official figures later on Thursday. “The chances for another down-day are not bad at all if you believe the confirmation of last nights (U.S. inventory) stats by the EIA this afternoon will actually put further downward pressure on prices. According to the API, all major categories built,” PVM Oil Associates strategist Tamas Varga said. Investors at present perceive oil supply to be fairly tight relative to demand. But given concern over the longer-term outlook for global economic growth, bullish drivers have been short-lived in the last couple of weeks. Earlier, oil hit a session high of $61.38 after the United States said it could impose sanctions on Venezuela’s crude exports as the Latin American country descends further into turmoil.
Oil Algos Go Wild After Gasoline Inventories Hit Record High – Crude prices edged higher overnight amid Venezuela disruption concerns after falling to the lowest level in almost a week after a surprisingly large crude build reported by API and as China warned of “serious challenges” to the global economy and the U.S. government shutdown cast a pall over growth.The White House recognized Juan Guaido as the interim president of Venezuela on Wednesday, a move that carries the risk of further disruption to the nation’s oil exports.“With the U.S. now clearly taking sides with the opposition, changes might be in the making,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London. “This would deal a further blow to U.S. refiners that rely on whatever Venezuelan oil is still available and as such would be short-term bullish.” DOE:
- Crude +7.97mm (-750k exp)
- Cushing -190k
- Gasoline +4.05mm
- Distillates -617k
The API reported a build across the board on nationwide crude, Cushing, gasoline and distillate inventories. We already saw large builds last week in products and that continued with crude also seeing an even bigger build than API… and Gasoline’s 8th weekly build in a row pushed it to a record high… Production hit a new record high last week as the number of US oil rigs tumbled most in years. WTI crude futures chopped around between $52 and $53 ahead of the DOE data and kneejerked lower after the big surprise crude build…
U.S. oil up one percent on Venezuela turmoil, but hefty stock build weighs – (Reuters) – U.S. oil prices rose by 1 percent on Thursday, boosted by the U.S. threat of sanctions on Venezuela, but gains were capped by record high gasoline inventories and an unexpected big build in crude stocks in the United States. U.S. West Texas Intermediate (WTI) crude (CLc1) futures rose 51 cents to settle at $53.13 a barrel, a 0.97 percent gain. Brent crude (LCOc1) futures fell 5 cents to settle at $61.09 a barrel. Washington signaled it could impose sanctions on Venezuela’s crude exports as Caracas descends further into political and economic turmoil. The threat to reduce supplies supported futures prices. The United States, the top importer of Venezuelan crude, is seeking to ensure that the OPEC member’s oil revenue goes to opposition leader Juan Guaido, who swore himself in as interim president, and to cut off money from President Nicolas Maduro, a top U.S. official said on Thursday. “The breakdown in diplomatic relations was interpreted as upping the possibility of a U.S. sanction on Venezuelan oil that would likely force U.S. refiners to seek alternative supplies at higher prices, hence the WTI gains,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. Venezuelan oil is predominantly heavy crude, which requires extensive refining. It is frequently blended with lighter crudes to give refiners higher-value products. With Iran already crippled by U.S. sanctions, a drop in Venezuelan exports could squeeze global supply further. Geneva-based Petro-Logistics said on its website that Iranian crude and condensate exports in December “fell steeply” from November to less than 1 million barrels per day (bpd) due to U.S. sanctions – lower than some other estimates. Both Brent and WTI are both backed by light, sweet crudes, and are not directly linked to Venezuelan oil. But concern about the supply of heavy crudes is apparent in the U.S. physical market, where the price for Mars Sour (WTC-MRS), a medium crude, shot to its highest since early 2011. For graphic on Venezuela’s crude exports and US crude prices, click https://tmsnrt.rs/2S57l4p
Oil prices climb as US threatens sanctions against Venezuela – Oil prices rose on Friday as turmoil in Venezuela triggered concerns that its crude exports could soon be disrupted. Washington on Thursday signalled it could impose sanctions on Venezuela’s oil exports as Caracas descends further into political and economic turmoil. Brent crude oil futures were at $61.62 a barrel at 0755 GMT, 53 cents, or 0.9 percent, above their last close. At one point earlier on Friday, the international benchmark crude rose as high as $61.92 a barrel. Brent, however, has shed about 1.8 percent this week and was on track to post its first week of losses in four weeks. U.S. West Texas Intermediate (WTI) crude futures were at $53.70 per barrel, up 57 cents, or 1.1 percent. Amid violent street protests, Venezuela’s opposition leader Juan Guaido declared himself interim president earlier this week, winning backing from Washington and large parts of Latin America, prompting Nicolas Maduro, the country’s leader since 2013, to break relations with the United States. “The oil market is partially pricing in the risk to Venezuela’s crude production, which has been plummeting in recent years and currently languishes just above 1 million barrels per day,” Vandana Hari of Vanda Insights said in a note on Friday. Fundamentally, however, global oil markets are still well supplied, thanks in part to surging output in the United States, where crude production rose by more than 2 million barrels per day (bpd) last year to a record 11.9 million bpd. Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain’s Barclays on Thursday said in a note. The bank cut its 2019 average Brent crude oil forecast to $70 a barrel, down from $72 previously.
Oil Prices Unmoved By Venezuela Turmoil – Oil was up in early trading on Friday and could close out the week with a slight gain, but benchmark prices were remarkably flat given the turmoil raging in Venezuela. Venezuela has been rocked by turmoil this week, with the Maduro regime teetering on the brink of collapse. The U.S., clearly seeking regime change in Venezuela, recognized the head of the national assembly, Juan Guaidó, as the rightful president on Wednesday, which corresponded with massive nation-wide protests. However, by Thursday, the military stuck by President Maduro, which will provide the leader a lifeline. In the meantime, Venezuela’s oil production is expected to continue to decline. Guaidó has offered some details on new plans for the oil sector, including new picks to head up Citgo and PDVSA. He is trying to obtain control of the country’s oil assets, but with the military backing Maduro for now, there is no sign of an imminent downfall. Billions of dollars’ worth of investment from Russia and China are on the line. News reports suggest that the Trump administration is mulling harsh sanctions targeting Venezuela’s oil sector. It is unclear if the administration will follow through, but if it did, sanctions would hit U.S. Gulf Coast refiners that depend on heavy oil from Venezuela, including Citgo, Valero, Chevron and PBF Energy.. Russia was China’s largest oil supplier in 2018 for the third year in a row, cementing its top spot ahead of Saudi Arabia for. Russia sent 1.43 million barrels per day to China last year, up 19.7 percent from a year earlier. China’s private refineries stepped up processing, while at the same time, China had to turn to Russia to replace lost barrels from Iran and Venezuela. Freight rates for dry-bulk container ships have declined sharply over the last six months, a sign of flagging trade and a broader global economic slowdown. The Baltic Dry Index, which measures ship transport costs, has fallen by 47 percent since mid-2018, according to Reuters. “The global economy and dry-bulk shipping market are showing us very real signs of distress,” said Jeffrey Landsberg, managing director of commodity consultancy Commodore Research.
Modest Rig Count Gain Caps Oil Prices – Baker Hughes reported modest rise in the number of active oil and gas rigs in the United States this week. The total number of active oil and gas drilling rigs rose by 9 rigs, according to the report, with the number of active oil rigs increasing by 10 to reach 862 and the number of gas rigs decreasing by 1 to reach 197. The oil and gas rig count is now 112 up from this time last year, 103 of which is in oil rigs. WTI prices were trading up earlier on Friday as the crisis in oil-rich Venezuela deepens as opposition leader Juan Guaidó seeks to grab power from current president Nicolas Maduro, garnering him a backing from the United States to the ire of Maduro. Gains were capped, however, by the previous day’s EIA report that showed a major buildup in crude oil inventories for the week at 8 million barrels, bringing the total to 9% above seasonal limits. At 12:16pm EST, the WTI benchmark was trading up $0.52 (+0.99%) at $53.65 – nearly flat week on week, with Brent crude trading up $0.40 (+0.65%) at $61.49 per barrel – down nearly $1 per barrel on the week. Canada’s oil and gas rigs increased by 23 rigs this week, after climbing by 25 rigs last week. Canada’s total oil and gas rig count is now 232, which is 106 fewer rigs than this time last year. The EIA’s estimates for US production for the week ending January 18 shows an increase at an average rate of 11.9 million bpd – a record for the US – for the second week in a row.. By 1:06pm EDT, WTI had increased by 0.87% (+$0.46) at $53.59 on the day. Brent crude was trading up 0.61% (+$0.37) at $61.46 per barrel.
Oil climbs on Venezuelan crisis despite surging US supply – The United States signaled on Thursday it may impose sanctions on Venezuelan exports after recognizing opposition leader Juan Guaido as interim president this week, prompting President Nicholas Maduro to cut ties with Washington. But the ongoing U.S.-China trade dispute and broader gloom over world economic growth put a check on prices. Brent crude oil futures ended the session at $61.64 a barrel, up 55 cents, or 0.9 percent. Brent, however, has shed about 1.7 percent since the start of trade on Monday and is on track to post its first week of losses in four weeks. U.S. West Texas Intermediate (WTI) crude futures settled at $53.69 per barrel, up 56 cents, or 1.05 percent. WTI futures fell about 0.2 percent on the week, also posting the first week of declines in four weeks. RBC Europe predicted that U.S. sanctions could nearly double projected output shortfalls from Venezuela. “Venezuelan production will decline by an additional 300,000-500,000 barrels per day (bpd) this year, but such punitive measures could expand that outage by several hundred thousand barrels,” it said. Still, some analysts said the possibility of immediate sanctions were unlikely. “We view a blockade on Venezuelan imports as low probability and a last resort measure that is likely weeks if not months away should it materialize,” Jim Ritterbusch, president of Ritterbusch and Associates, said in a note. “The evolving situation in Venezuela appears capable of delaying our expected test of $50 support.” Global oil markets are still well supplied, however, thanks in part to a spike in U.S. output. Record U.S. production would likely offset any short-term disruptions to Venezuelan supply due to possible U.S. sanctions, Britain’s Barclays said in a note. The bank cut its 2019 average Brent forecast to $70 a barrel, from $72 previously.
Analysis- OPEC cuts amplify supply side imbalances in crude oil – – Despite seemingly well supplied global crude oil inventories, prices for heavier, sour grades are starting to show a more nuanced dynamic in the oil market — the imbalance between light and heavy crude oil supplies is growing, and price spreads between the two types of crude have narrowed as a result. There is an “assumption that oil is a homogeneous market. It is not,” an analyst at a European refiner, who spoke on condition of anonymity, said. Output complications from Iran, Venezuela, Mexico and other producers of heavy sour crude oil barrels were thought to have been more than sufficiently offset by higher production from the US, Russia and OPEC, guiding perceptions of oversupply. However, the latter have released more volumes of lighter crude oil grades in the global market in recent months, compounding the disequilibrium between light and heavy crude supply. “At the moment, OPEC is cutting heavy crude, [while supply from] Mexico, Venezuela is lower, the European analyst said, adding that light crude supply from the US, and the North Sea as well as the Mediterranean in Europe was growing. As a result, the price premiums that lighter, sweeter crude grades typically command over heavier, higher sulfur ones has narrowed steadily in recent months. The disconnect can be seen most evidently in the Middle East crude oil price benchmarks, notably Dubai and Oman. Most crudes sold by Middle East producers, which make up the core of OPEC, are priced using one or both of these benchmarks as the underlying bases. The Dubai crude complex — the spread between prompt Dubai swap and cash — remained steadily in backwardation through the last quarter of 2018, despite both Brent and WTI seeing deep contango in their respective market structures during the same period. The spread between Brent futures and Dubai swaps averaged $2.58/b in Q3 of 2018, according to Platts data. The same spread narrowed to $1.86/b over Q4, and has narrowed even further to $1.16/b to date in January. A narrow Brent/Dubai EFS spread implies that medium to heavy sour Dubai-linked crude grades are getting relatively pricier compared to lighter, sweeter Brent-linked crude grades. Saudi energy minister Khalid al-Falih and his OPEC counterparts have not detailed how they are distributing their output cuts across the different grades of oil that they produce, though heavier, sour grades typically get the first axe, given that they tend to trade at discounts to lighter, sweet crudes. But Falih acknowledged at the December OPEC meeting, in which the supply accord was agreed, that “the premium we used to get on lighter grades is falling fast,” as differentials decline due to competition from ultralight US shale oil.
Saudi Ritz-Carlton Purge “Creative and Efficient,” Says Morgan Stanley Boss – The detention of scores of Saudi royals and businessmen in Riyadh’s Ritz-Carlton, where some were reportedly tortured, may be one of the most creative and efficient ways of tackling corruption, Morgan Stanley’s James Gorman said on Thursday.Speaking on a panel at the World Economic Forum in Davos, Gorman, CEO and chairman of the major investment bank, said businesses should not be dissuaded from engaging with Saudi Arabia despite the murder of journalist Jamal Khashoggi.“The murder of Jamal Khashoggi in the Saudi consulate in Istanbul was utterly unacceptable,” Gorman said as he responded to questions on a panel.“But what do you do? What part do you play in the process of economic and social change?”When probed about the detentions in the Ritz-Carlton, where more than 200 of the kingdom’s elite were held until they agreed to hand over a proportion of their assets to the government, Gorman said he did not judge any country’s attempts to root out corruption.Many of the country’s most powerful and successful businessmen were held in the luxury hotel, including Prince Alwaleed bin Talal, who has long had investments in major projects across the globe.Some of those detained were members of a branch of the Saudi royal family deemed a rival to the one in power.Prince Miteb bin Abdullah, the son of the late King Abdullah and once seen as a possible crown prince, was tortured and beaten alongside other royals and businessmen, sources told Middle East Eye at the time.One Saudi general was reportedly tortured to death. Though framed as an anti-corruption drive, much of the cash raised from the detainees has flowed into the direct control of Crown Prince Mohammed bin Salman, according to the New York Times.
Women detainees ‘being sexually assaulted and flogged’ in secret Saudi prisons – Female rights activists in Saudi Arabia have been sexually assaulted, tortured with electric shocks and flogged so hard they cannot stand,Amnesty has reported, as British MPs ratcheted up pressure on Riyadhto grant them access to the detainees. At least 10 rights defenders have been tortured, including being made to kiss each other while interrogators watched, Amnesty said in a report released on Friday. One woman activist was wrongly told by an interrogator that her family members had died, a lie she was made to believe for an entire month. Others held in the secret prisons were tortured with electric shocks, flogged so hard they could not stand, or waterboarded, the human rights group said. Among the women, who have all been held since a wave of arrests in May, are prominent rights activists such as Loujain al-Hathloul and Aziza al-Youssef, who campaigned for women’s right to drive and against the Kingdom’s oppressive male guardianship system which controls its female citizens. None has been officially charged or referred to trial, and most have no legal representation.The alarming reports come as a group of cross-party British MPs and international lawyers gave Saudi Arabia until the end of the month to grant them access to the women.
Satellite Imagery Reveals First Ever Saudi Domestic Ballistic Missile Program – Is an arms race between enemies Saudi Arabia and Iran on the horizon? Saudi Arabia has been long dependent on the US and UK to import all of its weaponry, however, new satellite images suggest Riyadh has established its first ever ballistic missile factory, according to weapons analysts who spoke to The Washington Post. Jump-starting a new domestic ballistic missile program has international observers worried this could be a major step towards a future Saudi nuclear program – especially given the Saudis have long worried their Shia rivals across the Persian Gulf are hiding a nuclear program. Though Iran has long advanced its own domestic missile production capabilities, it’s come under intense scrutiny over the past decade, whereas it’s more likely that any Saudi aspirations would draw little attention. Despite multiple billion dollar weapons deals with the US over the past years, there’s no evidence that Washington has ever sold ballistic missiles to Riyadh over fears it would be “destabilizing for the region”. This has resulted in the Saudis increasingly looking to China and Pakistan for such procurement. Saudi Arabia may further be feeling the heat to acquire its own freedom of production amidst the war in Yemen, which has seen short-range missiles launched by Iran-backed Houthis, in addition to wanting to check the threat of Tehran’s own ballistic missiles and launch tests. According to The Washington Post the newly constructed Saudi production facility is located near an established missile base in al-Watah, southwest of Riyadh. One leading expert at the Middlebury Institute of International Studies at Monterey, California, which first discovered the satellite evidence for the facility, worried, “The possibility that Saudi Arabia is going to build longer-range missiles and seek nuclear weapons – we imagine that they can’t. But we are maybe underestimating their desire and their capabilities.”
EU Adds Saudis To Terror-Funding List (As Iran-Sanction-Evading SPV Reaches Advanced Stage )Reuters reports that, according to two sources, the European Commission has added Saudi Arabia to an EU draft list of countries that pose a threat to the bloc because of lax controls against terrorism financing and money laundering.The move comes amid heightened international pressure on Saudi Arabia after the murder of Saudi journalist Jamal Khashoggi in the kingdom’s Istanbul consulate on Oct. 2.The EU’s list currently consists of 16 countries, including Iran, Iraq, Syria, Afghanistan, Yemen and North Korea, and is mostly based on criteria used by the Financial Action Task Force (FATF), a global body composed by wealthy nations meant to combat money laundering and terrorism financing.Saudi Arabia missed out on gaining full FATF membership in September after it was determined to fall short in combating money laundering and terror financing.The government has taken steps to beef up its efforts to tackle graft and abuse of power, but FATF said in September that Riyadh was not effectively investigating and prosecuting individuals involved in larger scale money laundering activity or confiscating the proceeds of crime at home or abroad.The provisional decision to add Saudi Arabia needs to be endorsed by the 28 EU states before being formally adopted next week.And this is where we get a little confused… because while Europe lists Iran as a state sponsor of terror, it is also, reportedly, at an “advanced stage” of completion of its special purpose vehicle to help European companies bypass U.S. sanctions on Iran.Citing three European diplomats, Bloomberg reports that the European Commission said it’s seeking to launch “very soon” with the official unveiling could come as early as Monday.“The SPV preparations have progressed; they are at an advanced stage,” the spokeswoman, Maja Kocijancic, told reporters in Brussels.“I hope that we can announce the launch very soon.”Progress had been slow as the EU, led by France, Germany and the U.K., has struggled to find a government willing to host the vehicle, which risks drawing criticism from the American administration.
Pentagon Still Denies Training UAE Pilots Despite Their Own Documents – Newly released Pentagon documents confirm that the United States’ role in the Saudi coalition bombing of Yemen has long been much deeper than previously acknowledged by defense officials. In fact they show that the repeated Pentagon line that the US is “not a participant in the civil war in Yemen nor are we supporting one side or the other,” as was stated just last month by Gen. Joseph Dunford, chairman of the Joint Chiefs of Staff, is a flat lie to shield the public from the truth. The new government documents, obtained from Air Force Central Command via FOIA and published days ago by national security reporter Nick Turse reveal the US has been training the Saudi-UAE coalition pilots conducting the air war over Yemen, which has resulted in tens of thousands of civilian deaths, as documented by the UN and other international monitoring organizations. This even as the Pentagon attempted to appease Congressional critics last November by announcing it would cease aerial refueling of coalition aircraft conducting airstrikes in Yemen. It was further found out that due to “accounting errors” the fuel was being provided to the Saudis and Emirates free of charge, or rather it was being shouldered by the unknowing American taxpayer. According to Turse’s report on the files he unearthed, they reveal the following: “U.S. and allied pilots – “assisted 150 airmen in challenging ex[ercise] to prepare for combat ops in Yemen.” . “Unit fighter personnel advanced the UAE’s F-16 fighter pilot training program; 3 pilots flew 243 instructor sorties/323 hrs that created 4 new instructors & 29 combat wingmen who immediately deployed for combat operations in Yemen.” But amazingly the Pentagon has stood firm in its denials even after the internal Air Force command documents came to light. A Central Command spokesperson told Yahoo News when asked to comment on the damning military files that it has not “conducted exercises with members of the [Saudi-led coalition] to prepare for combat operations in Yemen.”
Iran’s General Soleimani Ramping Up Efforts To Counter Trump In Iraq And Syria – “Trump will pull out US forces in 30 days”… “Trump won’t withdraw now”… “Trump will pull out from Syria in four months”… “The US forces began withdrawing military equipment but not the personnel”… “Trump will maintain a 20 mile buffer zone in Syria”…All these contradictory announcements have come from the White House in the last month or so, indicating some combination of the current occupant of the White House’s lack of experience in foreign policy, or lack of control of his own administration. Nobody in the Middle East believes Trump. Only President Erdogan confirmed the serious intention of the US to withdraw from Syria but was knocked down by Trump’s threat to “cripple the Turkish economy if Turkey attacks the Kurds”. But soon after Trump’s threat to Erdogan, he again changed his mind and suddenly announced a new plan for a buffer zone “to protect the Kurds”, Turkey’s worse enemies in the Levant. Trump is signaling a high degree of confusion about his intention to stay or leave Syria. It doesn’t matter if the world doesn’t understand what Trump’s plan is. There is no point in trying to analyse and predict the next step because Trump himself doesn’t seem to know what to do next. He wakes up with one decision and seems to change it hours later or the following day.Nevertheless, Trump’s continuously changing plans are not preventing his adversary the Iranian General Qassem Soleimani – the head of the Iranian Revolutionary Guard Corps in the al Quds Brigade which perceives itself responsible for supporting all movements of the oppressed peoples in the world, mainly the Lebanese Hezbollah, Iraqi, Palestinian and Afghan groups, but others as well – from making plans to counter Trump in Syria and Iraq.Well informed sources say “Soleimani is holding meetings with various of his allies’ groups in the Middle East to stand against US forces and push them away from Iraq and Syria”. According to these sources, neither Iran nor Russia believe in Trump’s declared intention to withdraw and both are convinced that at least some US forces will remain in the Levant. Soleimani is planning to move more aggressively with his allies once the last ISIS stronghold east of the Euphrates is reconquered.
Iran Ready To Eliminate Israel From The Earth ; IDF Trolls Tehran Over Twitter – The head of Iran’s air force said on Monday that the Islamic Republic’s pilots are looking forward to facing Israel, and will “eliminate it from earth” after Israeli airstrikes on alleged Iranian targets inside Syria killed 11 people, including four Syrian soldiers. Brigadier General Aziz Nasirzadeh, commander of the Islamic Republic of Iran Air Force (IRIAF) made the comments to the Young Journalist Club news agency following Israel’s strike on munition storage facilities within Damascus International Airport, a military training camp and an Iranian intelligence site, according to The Independent. “The young people in the air force are fully ready and impatient to confront the Zionist regime and eliminate it from the Earth,” said Nasirzadeh.Israel claims it launched the strikes in retaliation for a surface-to-surface rocket fired on Sunday by Iran’s Quds Force from within Syria at a ski resort in the Israeli-occupied Golan Heights, which was intercepted by Israeli air defenses. “That’s a civilian site and there were civilians there,” said Israeli army spokesman Lt. General Jonathan Conricus Monday morning, adding “We saw that as an unacceptable attack by Iranian troops, not proxies in Syria.” “In addition to that, the area from which the Iranians fired their missile is an area we have been promised that the Iranians would not be present in. We know it was not done in the spur of the moment, it was a premeditated attack.”
Inside Israel’s Secret Program to Back Syrian Rebels – Israel secretly armed and funded at least 12 rebel groups in southern Syria that helped prevent Iran-backed fighters and militants of the Islamic State from taking up positions near the Israeli border in recent years, according to more than two dozen commanders and rank-and-file members of these groups. The military transfers, which ended in July of this year, included assault rifles, machine guns, mortar launchers and transport vehicles. Israeli security agencies delivered the weapons through three gates connecting the Israeli-occupied Golan Heights to Syria – the same crossings Israel used to deliver humanitarian aid to residents of southern Syria suffering from years of civil war. Israel also provided salaries to rebel fighters, paying each one about $75 a month, and supplied additional money the groups used to buy arms on the Syrian black market, according to the rebels and local journalists. The payments, along with the service Israel was getting in return, created an expectation among the rebels that Israel would intercede if troops loyal to President Bashar al-Assad tried to advance on southern Syria. When regime forces backed by Russian air power did precisely that this past summer, Israel did not intervene, leaving the rebel groups feeling betrayed. “This is a lesson we will not forget about Israel. It does not care about … the people. It does not care about humanity. All it cares about it its own interests,” said Y., a fighter from one of the groups, Forsan al-Jolan. Israel has tried to keep its relationship with the groups a secret. Though some publications have reported on it, the interviews Foreign Policy conducted with militia members for this story provide the most detailed account yet of Israel’s support for the groups.
Israeli Warplanes Launch New Airstrikes on Damascus – Israel’s military said it carried out strikes on Iranian targets in Syria early Monday after it intercepted a rocket fired from Syrian territory hours before. It said in a statement earlier that it was “currently striking” the Iranian Quds Force in Syria and warned Syria’s military against “attempting to harm Israeli territory or forces”, AFP said. It provided no further details on the raids.The Quds Force is in charge of Iran’s Revolutionary Guards’ overseas operations.Syrian state media cited a Syrian military source as saying Israel launched an “intense attack through consecutive waves of guided missiles”, but that Syrian air defences destroyed most of the “hostile targets”. Multiple explosions over #Damascus this evening as Syrian air defense attempts to respond against Israeli Air Force attacks on Iranian al-Quds sites. #Syria #Israel#Iranpic.twitter.com/RxdZkvXkrU – Witnesses in Damascus said loud explosions rang out in the night sky for nearly an hour. The overnight strikes followed cross-border attacks on Sunday in which Syria said it repelled an Israeli air attack, Reuters reported. Israel then said it intercepted a rocket fired at the Golan Heights. “We have a permanent policy, to strike at the Iranian entrenchment in Syria and hurt whoever tries to hurt us,” Israeli Prime Minister Benjamin Netanyahu said on Sunday. The Israeli army said a popular winter sports site on Mount Hermon in the Israeli-controlled Golan Heights would be shut for the day. It added that otherwise things remained “routine” along the frontier with Syria.
Israel Destroyed Eight Syrian Military Targets, Killed at Least 11 Troops – Despite claiming that their Sunday night airstrikes against Syria were exclusively targeting Iran’s Quds Force, Israeli airstrikes against Syria appear to have almost exclusively hit Syrian military targets, particularly the nation’s air defenses around Damascus airport.Israeli strikes destroyed eight Syrian air defense batteries, and killed at least 11 troops in the strikes. The batteries were mostly aging Soviet designs, the sort Syria has traditionally favored for targeting incoming Israeli missiles.The Syrian systems had some success, too, with Russia reporting that the Syrians had successfully intercepted more than 30 Israeli missiles during the attack. Conspicuously absent from the engagement, however, were the Russian S-300 systems recently provided to Syria.A highly advanced air defense system designed to control a much longer range, the S-300s have so far not been deployed in these Israeli attacks. Analysts say that Syria’s priority is intercepting missiles, and not engaging the attacking warplanes, which is where the S-300s would clearly be a vast improvement over the older systems. Yet as Israel continues to escalate strikes in Syria, and is clearly going after Syrian military targets no matter what they claim about Iran. This may ultimately convince Syria that they have to engage the Israeli warplanes just to achieve some deterrent from constant Israeli attacks.
Syria threatens to attack Ben-Gurion, return to ‘occupied’ Golan – Syria threatened to attack Ben-Gurion Airport in response to Israel’s aerial strike against a weapons storage site at Damascus International Airport earlier this week. The Syrian Ambassador to the United Nations, Bashar Ja’afari, warned of the possibility of such a retaliatory attack, when he spoke Tuesday at the UN Security Council’s monthly meeting on the Middle East in New York. “Isn’t it high time for this council to take the necessary measures to stop the repeated Israeli aggression against the territories of my country?” he asked. “Or should we attract the attention of the war makers in this council, by exercising our legitimate right to self-defense and respond to the Israeli aggression against the Damascus International Civil Airport by launching an aggression against the Tel Aviv airport.” Ja’afari complained of the repeated Israeli aerial attacks against his country. Israel has executed repeated airstrikes in Syria to prevent Iranian military entrenchment in that country. The UNSC’s failure to act against Israel and the support it receives from permanent members of the UNSC has encouraged such “aggressions,” Ja’afari added. “These acts were not condemned. There were no calls to halt such acts by this UNSC, in light of the position of the US, Britain and France, who are partners and supporters of Israel in such aggression. He said that those countries “continue to play the role of false witness and prevent the UNSC from undertaking its responsibility.” Syria intends to exercise its right to self-defense and to work to take back the Golan Heights, Ja’afari said. Israel captured the Golan Heights from Syria during the Six Day War in 1967 and has since annexed it. Israel has asked the Trump administration to recognize its sovereignty over that area.
Israel Demands for U.S. Base Are a Hitch in Trump’s Syria Plans – U.S. troops in one small outpost in the south of Syria may be preparing for a longer stay, even as administration and military officials try to work out the details of President Donald Trump’s plan to withdraw.The American base at Al-Tanf, originally established as a southern foothold against Islamic State and a training ground for Syrian rebels, has become one of the main obstacles to the president’s plan to leave. Israeli and some U.S. officials argue that a continued American presence there is critical to interrupting Iran’s supply lines into Lebanon, where Hezbollah — Iran’s proxy and Israel’s enemy — has been building up its arsenal.U.S. troops at the base established a 55-kilometer “deconfliction zone” including part of the strategic Damascus-to-Baghdad highway. The surrounding territory is controlled by forces loyal to Syrian President Bashar al-Assad, who’s backed by Iran and Russia. The debate over what to do with Al-Tanf reveals U.S. goals in Syria that go beyond the official rationale of defeating Islamic State — complicating Trump’s desire to exit. The administration also wants to constrain Iran’s influence, including by limiting its ability to use Syria as a launching point for operations against Israel. “It all depends on Trump,” “He ordered U.S. forces to leave Syria. There have been efforts to pare that back and to treat Tanf as separate from the northeast, but it’s unclear if the president will be convinced.”
Russia calls on Israel to stop ‘spontaneous’ Syria strikes – Russia has urged Israel to stop its “spontaneous” airstrikes on Syria, days after the Israeli military carried out fresh strikes against targets near the Syrian capital, Damascus. Israel has repeatedly attacked Syrian government positions under the pretext that it’s attacking Iranian military advisers, who are in the country on a request from President Bashar al-Assad to assist the Syrian Army in their fight against foreign-backed terrorists. “The practice of spontaneous strikes on the territory of a sovereign state, in this case Syria, must end,” Russian Foreign Ministry spokeswoman Maria Zakharova said Wednesday, according to Russia’s TASS state news agency. Zakharova (pictured below) said such moves by Tel Aviv only fueled tensions in the region and harmed the long-term interests of all regional players, including Israel itself. “We should prevent turning Syria, which has suffered over the past years of the armed conflict, into an arena of settling geopolitical scores,” she added. “And we urge everyone to think about the possible consequences of causing more chaos in the Middle East.”
The YPG Is Expected to Negotiate With Damascus “Within Days” – – The head of the Syrian Kurdish YPG militia believes talks with the government over the future of the northeast region will begin in days after a “positive” reaction from Damascus.Any deal between the YPG and President Bashar al-Assad’s state could piece together the two biggest chunks of a nation splintered by eight years of conflict.Dialogue attempts have revived in the wake of US President Donald Trump’s decision to withdraw troops from the Kurdish-led region. “There are attempts to carry out negotiations … the Syrian government stance was positive,” the YPG commander Sipan Hemo told Reuters. “We believe they will start in the coming days.” Hemo said there had been no direct talks with the state since, but Damascus had received the proposal, which focused on preserving Kurdish and minority rights, including education, as well as self-rule.
Syria Ceasefire On Brink Of Collapse As Russia Blames Turkey For Terrorist Growth – Four months after Syria and Russia agreed to call off its joint attack on HTS/al-Qaeda held Idlib province, opting amidst US threats to cut a ceasefire deal mediated with Turkey, Moscow now says Ankara has failed to live up to its end of the bargain, which included agreeing to clear Idlib of terrorists and extremist groups. This means a joint Syrian Army-Russia assault on Idlib could again be on the horizon, which was a major source of tension and threats with the United States previously in September. The collapse of the prior ‘deescalation’ agreement comes at a time when the White House has vowed to stick to the planned US pullout, however, this could be yet a another major development to complicate or delay any possible withdrawal timeline. FT described current Turkish-Russian talks in Moscow as follows: Russia has accused Turkey of failing to live up to a promise to clear Syria’s Idlib of extremist militant groups and admitted that a landmark ceasefire agreement made last September had failed. Ahead of crunch talks between the leaders of the two countries in Moscow on Wednesday, Russia’s foreign ministry said the Islamist extremist group Hayat Tahrir al-Sham (HTS) had “full control” of Syria’s last remaining major opposition stronghold. The damning assessment came four months after Moscow agreed to postpone a planned military assault on the city in exchange for a promise from Turkish president Recep Tayyip Erdogan to clear it of militants.
Former US Envoy: Most ISIS Support Comes From Turkey-Syria Border – “I probably spent most of my time in our first year on the job … in Ankara because most of the material coming to fuel the ISIS war machine frankly was coming across the border from Turkey to Syria,” said former US envoy to the international anti-ISIS coalition Brett McGurk, the Rudaw new website reported. He was interviewed by CNN’s Christiane Amanpour on Monday evening. The United States wanted to work more closely with Turkey to ensure the lasting defeat of the Islamic State in Iraq and Syria (ISIS) in Syria but found Ankara’s plans to be unrealistic, and it was impossible for the coalition to work with fighters Turkey backed in Syria linked to al-Qaeda, McGurk added.“Our interests in Syria in many fundamental ways really diverge,” he said. “And when President [Recep Tayyip] ErdoÄŸan puts on the table proposals that might look good in concept, every time we send our best people, our best planners, to really dig into what we can actually do together, it never really pans out.” When Barack Obama was US president, Washington and Ankara both had covert and overt programs to oust Syrian President Bashar al-Assad. The United States shifted to an ISIS-centric approach and abruptly ended its covert program against Assad after Donald Trump became president in 2016. When ISIS quickly exploited the complexities in war-ridden Syria in 2014, McGurk began forming the international coalition, of which Turkey was not a party. The coalition supported the establishment of the Syrian Democratic Forces (SDF) which are primarily composed of the predominately-Kurdish Peoples’ Protection Units (YPG). Ankara refuses to work with the SDF.“The opposition groups that Turkey supports that you, for example, would send into a safe zone are simply not groups the United States have currently worked with. They are very closely tied with extremist groups,” said McGurk. McGurk, who has worked in the Middle East since the US invasion of Iraq, abruptly left the Department of State in December, following Trump’s announcement that US forces would withdraw. “All the border crossings are controlled by al-Qaeda. It’s a very serious problem,” he added.
Putin, Erdogan hash over Syria and US meddles in Venezuelan presidency TASS – Wednesday’s talks in the Kremlin between Turkish and Russian Presidents Recep Tayyip Erdogan and Vladimir Putin confirmed that Moscow and Ankara are determined to play a crucial role in achieving peace in Syria amid Washington’s decision to scale down its presence there. That said, Iran should become the third guarantor of the Syrian settlement, Kommersant writes. At the talks, the two leaders agreed on holding a new summit in the Astana format (Russia, Turkey and Iran) and also try to step up cooperation with Western partners, which are taking steps to sabotage the Astana group’s efforts, as Putin noted. The Turkish leader focused on the role of Russia and Turkey in ensuring security in Syria, calling the US planned withdrawal from Syria “a positive step.” However, Head of the Political Research at the Center for Modern Turkish Studies Yuri Mavashev told Kommersant that Washington’s exit from Syria would stonewall the efforts of Russia, Turkey and Iran as part of the Astana trio. “From the very beginning, the war in Syria has been a story of shifting responsibility onto others. Now the sides won’t be able to share responsibility with anyone and this is a very important moment. Cooperation between Russia, Turkey and Iran will be complicated. If earlier they were allied against someone, now they will have to make efforts in order not to ruin this format,” Mavashev said. Meanwhile, the two leaders signaled that there is no such threat at Wednesday’s talks. One of the intrigues at the Kremlin-hosted negotiations was whether the two sides could agree on a possible military operation against terrorists in Idlib, the paper says. After the talks, Putin praised his counterpart for Turkey’s major efforts to eliminate the terrorist threat in Idlib. At the same time, he signaled that no terms have been outlined for a military operation, which Russia seeks to carry out jointly with Assad’s forces. The Russian and Turkish defense ministers will continue drawing up additional joint measures, he said.
US Airstrike Kills at Least 52 in Somalia – Following reported al-Shabaab attacks on a pair of southern Somalia army bases, the US carried out an airstrike against a target in Jilib, near the site of the attacks, and is claiming to have killed 52 people, all described as “al-Shabaab extremists.” If confirmed, this is the deadliest US strike in Somalia since October. The US has been escalating attacks against targets inside Somalia since President Trump took office, and those strikes seem to remain on the upswing. Though the initial assumption was that the strike was connected to the recent al-Shabaab attack in neighboring Kenya, the Africom statement makes clear this was direct retaliation for the strikes on the Somali military bases, not for the Nairobi incident. Al-Shabaab issued its own statement on those attacks, claiming to have killed at least 41 Somali soldiers in the course of raiding two bases near the port city of Kismayo. Somalia has not commented on the casualties.
Taliban kill ‘more than 100 people’ in attack on Afghan military base – The Taliban have launched a major attack on an Afghan military compound in central Maidan Wardak province, officials have said, with some putting the death toll at more than 100 people. Monday’s incident at a campus of the National Directorate of Security (NDS) is the latest in a series of deadly attacks in recent months by the Taliban, which has seized control of about half of Afghanistan. The Afghan authorities said the attack started on Monday morning, when a US-made armoured Humvee vehicle was driven into the compound and blown up. Gunmen also opened fire, before being killed by security forces. Government officials, speaking on condition of anonymity, have given differing estimates of the death toll. One said it could be as high as 126 people and another said yet more were thought to have been wounded. “Eight special commandos are among the dead,” said a senior member of Kabul’s defence ministry. An official from the Afghan public health ministry said the total of killed and wounded could be about 140 people. However, others offered a more conservative estimate. A senior NDS official in Kabul said at least 50 people were killed or wounded. Abdurrahman Mangal, a spokesman for the provincial governor in Maidan Wardak, said 12 people were killed and 12 were injured when the car bomb exploded near the Afghan special forces unit.
Taliban Rejects Call to Meet US Negotiator in Islamabad – While the Pakistani media were reporting on Friday that a deal was in place to host the next round of Afghan peace talks in Istanbul, the Taliban was quick to correct the record over the weekend, saying that they have no intention of taking part in these talks. Talks between the US and Taliban have been on a rough footing, with US requests for long-term bases in post-war Afghanistan angering negotiators, as the previous condition was a US pullout. Which might’ve been reason enough that the Taliban were reticent to get back on board with direct talks with Zalmay Khalilzad, though Taliban officials say it is the plan to include the Afghan government that is derailing it. The Taliban has long insisted that there is no point to include the Afghan government in the talks, because they are not able to meet any demands. The US has at times insisted Afghan participation is essential, though recent talk has been that the US was planning to offer the Taliban representation in a new Afghan government.
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