Oil, Gas, And Fracking News Reads 18August, 2019 – Part 2

Written by rjs, MarketWatch 666

Here are some more selected news articles about the oil and gas industry from the week ended 18 August 2019. Go here for Part 1.

This is a feature at Global Economic Intersection every Monday evening.

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Another Setback in Landmark Fracking Case as Lawyers Pull Out –Jessica Ernst has spent 12 years and $400,000 pursuing a lawsuit against the Alberta fracking industry and its regulator. Now her Ontario lawyer has let go most of his staff and given up the case.“I was shocked and felt terribly betrayed,” said Ernst. “The legal system doesn’t want ordinary people in it. They don’t want citizens who will not gag and settle out of court for money so corporations and government can continue their abuse.” In 2007, Ernst, then an oil patch consultant with her own thriving business, sued the Alberta government, Alberta’s energy regulator and Encana. She alleged her well water had been contaminated by Encana’s fracking and government agencies had failed to investigate the problems. For more than a decade the case has been bogged down by legal wrangling, legal posturing and constant delays. Three different judges have been involved. The process included a two-year detour to the Supreme Court of Canada, which ruled that Ernst could not sue the regulator because it is given immunity by provincial legislation. The lawsuits against the provincial government and Encana remain before the courts. And still no evidence has been heard on the actual merits of the case. Ernst was represented by high-profile lawyer Murray Klippenstein. He told The Tyee in an email that “major changes in the political climate of the legal profession in Ontario” made it “no longer feasible for me to continue my law firm.” Klippenstein is fighting against a recently adopted Law Society of Ontariostatement of principles that obliges law firms to “promote equality, diversity and inclusion” and perform annual “inclusion self-assessments.” Lawyers “will increasingly be judged more on the basis of ideology, skin colour and sex chromosomes than by their competence, skills, effort and professional contributions” under the rule, he argued.

BC Government Frets Over Climate Change While Heavily Subsidizing Fracking Companies – We’re in a climate crisis. So why did the B.C. government give oil and gas companies $663 million in subsidies last year so they would produce more fracked natural gas? The NDP government hasn’t declared a climate emergency. But it commissioned a report that warns of more severe wildfire seasons, water shortages, heat waves, landslides and more.Despite that, the government handed almost two-thirds of a billion dollars to fossil fuel companies – $130 per person in the province – so they’ll extract more methane, more quickly. (The numbers are all from the always-interesting Public Accounts released last month by the province’s auditor general.)Which is perverse in a time when we’re warned of climate disaster. British Columbians own the oil and gas under the ground. Companies pay royalties to the government for the right to extract and sell it. Since 2003, the B.C. government has been putting natural gas on sale. It has cut royalties to subsidize the industry’s road construction and reward any operators who drilled in the summer. And most significantly, it started offering the gas at a deep discount for companies that drilled “deep wells.” The industry argument was that they were riskier and more expensive; the government had to sell the gas more cheaply to encourage companies to drill. It increased the discounts in 2009 and 2014, giving even bigger breaks to the fossil fuel companies. The discounts – subsidies from taxpayers who have to pay more to make up for the lost revenue – have enriched fossil fuel companies for more than a decade. The theory was that the subsidies were needed to increase drilling. But around 2005, the fracking boom took off in North America and natural gas production exploded. By 2016, 98 per cent of wells being drilled in B.C. were fracked. Deep wells weren’t risky; they were the norm. But 16 years after the credits were introduced – and deep into a climate crisis – the B.C. government is still subsidizing the producers, and not offering any answers on why it’s necessary, how the taxpayer subsidy is justified or the conflict between claiming to want to reduce emissions while making it cheaper to produce polluting natural gas.

Production resumes at Hibernia after oil spill – Production is resuming at the Hibernia platform after an oil spill last month, the Hibernia Management Development Company announced Thursday.The company says a thorough inspection was conducted to ensure the safety and security of the platform. HMDC has had extensive engagement with the Canada-Newfoundland and Labrador Offshore Petroleum Board (C-NLOPB) to complete the plan for return to production. HMDC will take the time necessary to reach full production in a safe and environmentally responsible manner.“We are following a deliberate, staged return to production operations, and carrying out surveillance of the facility throughout the process,” said Scott Sandlin, president of HMDC. “We have the safety of our people and protection of the environment foremost on our minds as we gradually bring production back on line.”On July 17, production at the platform was shut in, following a discharge of oil and water from a storage cell in the gravity base. HMDC has determined that the oil and water interface layer (oil and water emulsion mixture) in the storage cell was the issue. To resolve this issue, HMDC has removed the current interface layer from the storage cell and is revising its procedures to protect against future possible re-occurrence. These revised procedures include revisions to minimum water heights in the cells and only producing into cells without residual interface.

ExxonMobil Looks To Exit UK North Sea Oil & Gas –ExxonMobil has recently discussed with operators selling part or all of its assets in the UK North Sea in a move that could raise up to US$2 billion for Exxon and mark another major U.S. exit from the area, Reuters reported this week, quoting three industry sources familiar with the matter. Exxon has been a major investor in the UK North Sea since 1964, when the first exploration drilling in the area began. The U.S. major holds interests in 40 producing oil and gas fields and produces around five percent of UK oil and gas production, with an average 80,000 barrels of oil and 441 million cubic feet of gas a day. Exxon’s investment in the North Sea is managed through a 50/50 joint operation with Shell. If Exxon sells some or part of its assets in the UK North Sea, it will be yet another major U.S. oil and gas firm to divest interests in this mature area to focus on their current key growth areas, which for Exxon right now are the Permian in Texas and conventional oil production offshore Guyana. While European supermajors Shell, BP, and Total continue to view the North Sea as one of their core assets, U.S. majors have been selling North Sea stakes as many of them are now focused on U.S. shale. Marathon Oil said in February that it would be exiting the UK North Sea as it continues to focus on high-return U.S. shale oil operations. In April, ConocoPhillips sold its UK oil and gas business to Chrysaor Holdings for US$2.675 billion in a deal which Wood Mackenzie described as “another story of the changing corporate landscape in the North Sea – for the first time, a non major is the number one producer in the UK.” Chevron also sold in May its North Sea assets – except for a non-operated stake in the Clair field – for US$2 billion to Ithaca Energy. A sale of assets in the UK would add to Exxon’s plan to sell its assets offshore Norway in what could be a major withdrawal from European offshore production.

Probe after apparent oil spill near North Queensferry – AN APPARENT oil spill is currently being investigated near North Queensferry. Few details have been confirmed however Fife Council’s Service Manager Bill Liddle said they are looking into the issue. “We’re currently working with partners to investigate an apparent oil spill affecting the coastline around the Forth Road Bridge and the Queensferry Crossing,” he said. “The exact extent of the pollution is being determined.” The apparent leak follows an oil spill near Limekilns Beaches in February which saw Limekilns and Charlestown beaches closed off for weeks while a £700,00 clean up took place. The area was closed off to the public and the coastal path route was diverted while oil was cleaned up and investigations into where it came from got underway. The source of the pollutant was not found.

Clean up begins on North Queensferry oil spill – A CLEAN up operation has begun after an oil spill near North Queensferry yesterday (Monday). A probe into the source of the pollution has already started. Fife Council Service Manager Bill Liddle said the area affected is confined to the coastline between the Forth Road Bridge and the Queensferry Crossing. “Our oil spill response team, Briggs Marine, are starting clean-up operations today,” he said. “At this stage we don’t know how long the clean-up will take. “We’re working with partner organisations – SEPA and Forth Ports – to investigate possible sources of the oil spill at North Queensferry.”

The Nord Stream 2 Pipeline And The Dangers Of Moving Too Rashly Toward Renewable Energy – Few Americans likely noticed last week that Denmark refused to grant a permit for finishing construction of the Russian natural gas pipeline Nord Stream 2, but its international significance is enormous. Denmark’s refusal is the latest chapter in a story of how good intentions in fighting climate change go bad. It is a cautionary tale of how a country – in this case, Germany – while seeking to make itself and its energy use cleaner, more efficient and more self-sufficient, can produce the opposite of all three. As climate change becomes more of an issue in America heading into the 2020 election season, Nord Stream 2 provides a case study of the potential peril we face when our desire to switch as rapidly as possible to cleaner energy overwhelms current scientific, technological, political and economic realities. Had it been available, a more attractive and environmentally beneficial choice for Germany would have been imports of abundant, readily available, and above all relatively clean natural gas from the Marcellus Shale region of Pennsylvania, Ohio and West Virginia – at least on an interim basis until renewable energy transition could catch up to the political and economic realities. While there is more than enough gas in Appalachia and Northeastern Pennsylvania to export overseas to places like Germany and not delete supplies for domestic usage, American energy politics have prevented the needed pipeline and export infrastructure from being built. Simply put, without approved pipelines, the gas has no way to get from the point of production to ports where it can be shipped overseas. The Philadelphia area, which could be a center for the energy industry and for breaking Russia’s gas energy monopoly on Europe, remains woefully oblivious even of its possibilities.

Sanctions-hit Rosneft requests payment in euros in naphtha tender (Reuters) – Russian state oil company Rosneft has for the first time asked buyers to use the euro as the default currency in a spot tender to sell naphtha, an official Rosneft document shows. The tender, for naphtha loading from ports in Russia’s Far East, is the first time Rosneft has requested euros in an oil product tender and reflects the company’s attempts to offset any potential negative impact of U.S. sanctions on Russia, three traders said. “The default payment currency should be euro,” the tender document published on Rosneft’s website showed. For years, Rosneft used U.S. dollars as a default currency in contracts. Rosneft said in the document it may consider accepting payment in U.S. dollars or Russian roubles as well, but such a payment should be made ‘only upon mutual agreement between the parties’. Rosneft was included in a list of some U.S. sanctions imposed on Russian companies in 2014, although those sanctions do not limit U.S. dollar usage in Rosneft tenders.

Australia is on track to become world’s largest LNG exporter – Australia is on track to surpass Qatar as the world’s largest liquefied natural gas (LNG) exporter, according to Australia’s Department of Industry, Innovation, and Science (DIIS). Australia already surpasses Qatar in LNG export capacity and exported more LNG than Qatar in November 2018 and April 2019. Within the next year, as Australia’s newly commissioned projects ramp up and operate at full capacity, EIA expects Australia to consistently export more LNG than Qatar. Australia’s LNG export capacity increased from 2.6 billion cubic feet per day (Bcf/d) in 2011 to more than 11.4 Bcf/d in 2019. Australia’s DIIS forecasts that Australian LNG exports will grow to 10.8 Bcf/d by 2020 – 21 once the recently commissioned Wheatstone, Ichthys, and Prelude floating LNG (FLNG) projects ramp up to full production. Prelude FLNG, a barge located offshore in northwestern Australia, was the last of the eight new LNG export projects that came online in Australia in 2012 through 2018 as part of a major LNG capacity buildout. Starting in 2012, five LNG export projects were developed in northwestern Australia: onshore projects Pluto,Gorgon, Wheatstone, and Ichthys, and the offshore Prelude FLNG. The total LNG export capacity in northwestern Australia is now 8.1 Bcf/d. In eastern Australia, three LNG export projects were completed in 2015 and 2016 on Curtis Island in Queensland – Queensland Curtis, Gladstone, and Australia Pacific – with a combined nameplate capacity of 3.4 Bcf/d. All three projects in eastern Australia use natural gas from coalbed methane as a feedstock to produce LNG. Most of Australia’s LNG is exported under long-term contracts to three countries: Japan, China, and South Korea. An increasing share of Australia’s LNG exports in recent years has been sent to China to serve its growing natural gas demand. The remaining volumes were almost entirely exported to other countries in Asia, with occasional small volumes exported to destinations outside of Asia.

Fracking, ports and oil pipeline project worth $77b proposed for west Kimberley – A network of oil wells that involve fracking in the Great Sandy Desert, connected by pipelines to new and existing ports, may become Australia’s biggest oil-producing project. Documents on the website of privately owned Theia Energy, some of which have since been removed, say they have found as much as 57 billion barrels of oil in the desert location 150 kilometres south-east of Broome.The oil find is described as “unconventional”, meaning it is locked in dense rock that will need hydraulic fracturing, or fracking, to allow the oil to flow to the surface.Theia Energy, a small Perth-based company, was created in 2018 when Finder Exploration split into Finder Energy for its offshore projects and Theia Energy for its onshore Great Sandy Desert project.Theia Energy is in negotiations with the Karajarri traditional owners of the area to gain permission to confirm commercial flow rates of oil by fracking rock over a kilometre underground.Leading the negotiations on behalf of traditional owners is Karajarri Traditional Lands Association chairman Thomas King.“It will probably end up being the biggest oil project in Australia,” Mr King said. “I envisage there will be a huge benefit in such a huge project like this, but whether Karajarri people feel that is something they want to entertain still remains to be decided.”A project factsheet produced by Theia Energy and dated 2018 suggested that of the tens of billions of barrels of oil estimated to be locked in the shale rock, six billion barrels were recoverable.This could be worth $250 billion in tax revenue and $55 billion in royalties to government and would require a $77 billion capital investment, the document said.

South Africa: What Appeal Court’s Fracking Judgment Means – Anti-fracking activists won their appeal to the Supreme Court of Appeal (SCA) last month. The legal victory of Treasure the Karoo Action Group (TKAG) and others means that environmental regulation of mining activities has been taken out of the hands of the Department of Mineral Resources (DMR). For years, civil society organisations like the Centre for Environmental Rights, have pointed to the problems created by mining companies, unlike other industries, not being required to comply with national environmental legislation. Instead of environmental authorities having oversight over mines, it was handled by the DMR, the authority mandated to promote mining. In response a number of Karoo farmers, the TKAG and AfriForum launched reviews of the regulations in different high courts, arguing that the Minister of Mineral Resources did not have the authority to make regulations. While the Eastern Cape High Court agreed that the regulations were unlawful, the Pretoria High Court found for the DMR. The two matters were consolidated before the SCA. The SCA noted that fracking has the potential to cause significant environmental impacts. It involves deep vertical drilling into the shale rock layer and horizontal drilling deep underground to maximise contact with the pores in the rock layer where the shale is found. Then, a mixture of water and chemicals is pumped into the drilled wells at high pressure, “fracturing” the rock layer. “Once the pressure is reduced,” the court noted, “the water, mixed with heavy or radioactive metals from the rock formation, reflows to the surface, together with the shale gas”. The biggest potential negative impact of fracking on the environment, the parties before the SCA agreed, is the emission of pollution and the contamination of both surface and groundwater. Given the water scarcity of the Karoo, the contamination of the groundwater “may, in particular, be disastrous” says the judgment. Remarkably, both the Ministers of Mineral Resources and of Environmental Affairs sought to convince the SCA that the Minister of Mineral Resources did have a mandate to make these regulations. The SCA rejected their arguments. While the implementation of the One Environmental System may be limping along, the SCA judgment has made it clear that the ministers implicated cannot wish it away.

For Guimaras, sea tragedy worse than 2006 oil spill — More than a decade after experiencing the country’s worst oil spill disaster, there is again suffering in the island province of Guimaras after the August 3 sea tragedy that killed 31 people. “This is worse than the August 2006 oil spill. The oil spill was an environmental disaster that did not take away a human life. This is a human tragedy,” said Guimaras Gov. Samuel Gumarin, referring to the capsizing of three pumpboats in waters between Iloilo City and Guimaras. Gumarin told Manila Bulletin the people of Guimaras never thought that the province’s two major disasters can both happen in August. Sunday marked the 13th year after the oil tanker M/T Solar 1 sank off Nueva Valencia town in southern Guimaras. The spillage of half a million liters of the 2 million liters the oil tanker was carrying is still considered the biggest oil spill disaster in the country. The remaining 1.5 million liters was later siphoned from the sunken oil tanker. But aside from the loss of lives, the August 3 disaster “is now hurting our economy and our everyday lives,” Gumarin said. The Philippine Coast Guard has indefinitely suspended the 15-minute boat trips between the island province and Iloilo City. Only ferries and roll-on, roll-off (RoRo) ships are allowed to sail and carry passengers and goods. The fare, however, is more expensive and trips are limited. Guimaras is highly dependent on Iloilo City for its food supply, employment and health care. “We are slowly being isolated. We source out 80 percent of ours needs from Iloilo and our people work in Iloilo,” Gumarin said. Guimaras is also anticipating a backlash on its tourism industry, which is one of the economic drivers of the island province with only five towns. It has pristine beaches that have been pushed as alternative to the popular Boracay Island as a beach destination, especially among travelers coming to Iloilo. There are also inland resorts while its long winding roads have attracted bikers during the weekend.

Coast Guard warns of oil spill from stranded vessel –The Indian Coast Guard has warned of a possible oil spill from a Malaysian cargo vessel that ran aground at Khirisahi coast off Chilika last week. Deputy Inspector General, Coast Guard, IJ Singh in a letter to Malaysian firm GIMHWAK Enterprises, that owns the vessel Jin Hwa 32, has asked the latter to take necessary measures immediately to prevent any leakage of oil from the vessel. The firm has been asked to carry out the salvage operation through a local agent or a professional salvor. “Non compliance of the same will entail this headquarters to take action as per the provisions of Indian Merchant Shipping Act 1958,” the letter from the Coast Guard DIG read. Chief Secretary in Odisha Government and State Pollution Control Board and the Director General of Shipping in Mumbai have also been informed.Jin Hwa 32 with eight crew members, ran aground at Khirisahi coast off Puri, near to Chilika, after its engine developed technical glitch on August 7. The vessel has around 30,000 litres of diesel, 1,000 litres lube oil and 200 litre hydraulic oil. The Coast Guard DIG has stated that it poses serious risk to the eco-sensitive coastal zone of Chilika. He also stated that threat of oil spill from the stranded vessel has increased due to ongoing south west monsoon.

Global motor manufacturing slump hits oil demand- Kemp – (Reuters) – Global vehicle production is falling at the fastest rate since the financial crisis – depressing manufacturing output, freight and the consumption of oil and other commodities. Global motor vehicle output declined last year by 1%, the first annual decrease since 2009 and only the third fall in 20 years, according to data from the International Organization of Motor Vehicle Manufacturers (OICA). But output is on course to drop much faster in 2019, with production up so far in Japan, but down slightly in the United States and plunging in other major auto manufacturing centres, including China, India and Germany. Motor manufacturing is one largest and most networked of all global value chains, making it central to the global economy (https://tmsnrt.rs/2YKSEYj). Motor manufacturers are among the world’s largest consumers of energy and raw materials, intermediate products such as plastic, steel and aluminium, and services such as marketing and advertising. The industry is a crucial source of demand for durable capital goods, a generator of high-value exports, and a provider of high-wage middle-class employment in most countries. And its dispersed supply and marketing chains are a major driver of domestic and international freight demand, and by extension transportation fuels, especially diesel. Growth in the worldwide vehicle fleet is the most important driver of consumption of refined fuels, and consequently crude oil. Motor manufacturing therefore lies at the heart of the global energy system. Right now, the industry’s problems, with output falling for two years in a row, help explain the severe slowdown in oil consumption growth since the middle of 2018.

Saudi Arabia is dramatically changing its oil exports to China and the US – Saudi Arabia has seriously ramped up its oil exports to China in recent months. How dramatic is the change? Take a look at this graph, which uses data from oil tanker tracking firm TankerTrackers.com. The Saudi Kingdom’s crude shipments to China have doubled in the span of a year. During the same period, its oil exports to the U.S. have dropped by nearly two-thirds. According to TankerTrackers.com, which tracks oil tankers and shipments based on satellite imagery and ships’ automatic identification systems, Saudi Arabia exported a whopping 1,802,788 barrels per day (bpd) to China in July, compared to 921,811 bpd in August of 2018. By contrast, exports to the U.S. in July were 262,053 bpd, nearly 62% down from 687,946 bpd in August of last year. U.S. sanctions on Iranian oil have helped the shift. Major Asian energy importers like China have been forced to shift business away from the Islamic Republic – OPEC’s third-largest producer – and start buying more Saudi barrels to make up for that shortfall. The U.S. is now more self-reliant than ever, thanks to its own shale oil revolution, which helped it become the world’s largest oil producer by the end of last year. But the numbers also signal a mix of short-term tactics and long-term strategy for the Saudis, industry experts told CNBC. Saudis ‘slam on the brakes’ to the U.S. “Saudi Arabia learned from the last OPEC production cut in 2017 that they got the biggest bang for their buck by cutting flows to the largest, most transparent and most timely market – the U.S.,” said Matt Smith, director of commodity research at commodities analytics firm ClipperData, referring to the coordinated production cut that OPEC and its allies orchestrated to put a floor under falling oil prices. “Choking back on flows to the U.S. was the best way to draw down inventories and turn around bearish sentiment, and they are employing the same tactic once again.”

China Prepares Its “Nuclear Option” In Trade War Oil …As the trade war with the U.S. continues to escalate, China has re-engaged with Iran on three key projects and is weighing the use of what both Washington and Beijing term the ‘nuclear option’, a senior oil and gas industry source who works closely with Iran’s Petroleum Ministry told OilPrice.com last week. For the first of these projects – Phase 11 of the supergiant South Pars non-associated gas field (SP11) – last week saw a statement from the chief executive officer of the Pars Oil and Gas Company (POGC) that talks had resumed with Chinese developers to advance the project. Originally the subject of an extensive contract signed by France’s Total before it pulled out due to re-imposed U.S. sanctions on Iran, talks had been well-advanced with the China National Petroleum Corporation (CNPC) to take up the slack on development. As per the original contract, CNPC had been assigned Total’s 50.1 percent stake in the field when the French firm withdrew, giving it a total of 80.1 percent in the site, with Iran’s own Petropars Company holding the remainder. At the same time, Iran was desperate to increase the pace of development of the fields in its oil-rich West Karoun area, including North Azadegan, South Azadegan, North Yaran, South Yaran, and Yadavaran, in order to optimise oil flows ahead of further clampdowns on exports by the U.S. China agreed a trade-off with the U.S. that in exchange for it halting active development of SP11 it would be allowed to continue its activities in North Azadegan and would be able to go ahead with its development of Yadavaran – the second of China’s major Iran projects. China told the U.S. that its continued involvement in North Azadegan could easily be justified to anyone else who might be interested – such as the mainstream media – on the basis that it had already spent billions of dollars developing the second phase of the 460 square kilometre field. Similarly, China said at the time, its ongoing activities on Yadavaran could be justified by dint of the fact that the original contract had been signed in good faith in 2007, way before the U.S. withdrawal from the nuclear deal in May 2018 and thus, legally speaking, it had every right to go ahead. The third of China’s major as yet unfinished projects in Iran was the build-out of the Jask oil export terminal, which – crucially, particularly in the current security situation – does not lie within the Strait of Hormuz or even in the Persian Gulf, but rather in the Gulf Of Oman. Even before the new U.S. sanctions, the Kharg export terminal was not ideal for use by tankers as the narrowness of the Strait of Hormuz means that they have to go very slowly through it. With the new sanctions in place and tit-for-tat tanker seizures regularly occurring, China would have little choice but to put at least a couple of its own warships into the Gulf to safeguard their passage or stop buying Iranian oil entirely, neither of which Beijing particularly wants to do.

Oil Sector Going from Gloomy to Gloomier – The oil market is going from “gloomy” to “gloomier”, according to Rystad Energy. In a statement sent to Rigzone on Friday, the energy research company said recent developments in the sector had sent “cold shivers” through its oil market team and called into question the organization’s temporary bullish view for the first part of 2020. “Economic recession risk and further escalation of the U.S.-China trade war are key concerns in the near term. How long OPEC+ is willing to continue to manage production adds uncertainty,” Bjornar Tonhaugen, head of oil market analysis at Rystad Energy, said in the statement. “Continued worsening of U.S.-China trade relations could lower demand growth by 200,000 barrels per day (bpd) to 1 million bpd in 2020,” he added. In the statement, Tonhaugen said the company sees a clear downside risk to 2020 prices due to excessive supply growth. “We still believe the market does not recognize the positive effect on crude demand that IMO 2020 will bring. However, if the IMO effect on crude demand is less than expected, OPEC intervention may be needed as early as the first quarter of 2020 to avoid imbalances in the oil market,” he added. Last week, the International Energy Agency (IEA) lowered its oil demand growth estimates to 1.1 million barrels per day (MMbpd) in 2019 and 1.3MMbpd in 2020.“The outlook is fragile with a greater likelihood of a downward revision than an upward one,” the IEA said in an organization statement on Friday. In June, the IEA cut its 2019 oil demand growth forecast from 1.3MMbpd to 1.2MMbpd. That was the IEA’s second consecutive oil demand growth forecast cut, following a decrease from 1.4MMbpd to 1.3MMbpd in May.

Column- Hedge funds polarised on oil by economy and supply threats (Reuters) – Hedge fund managers remain deeply divided about what matters more for the future direction of oil – intensifying fears about a global recession or Saudi Arabia’s production cuts and other supply disruptions. Hedge funds and other money managers sold futures and options equivalent to 25 million barrels in the six most important contracts linked to petroleum prices in the week to Aug. 6. But the fund sales essentially reversed purchases of 20 million barrels the previous week and there has been little change in the net position since the middle of June (https://tmsnrt.rs/2MVVbI9). The most recent week saw portfolio managers sell Brent (-13 million barrels), U.S. gasoline (-8 million), U.S. heating oil (-1 million) and European gasoil (-13 million) while buying NYMEX and ICE WTI (+9 million). In most cases the net position is more or less the same as it was seven weeks ago; the one exception is U.S. heating oil, where a small net short position has been transformed into a small net long one. Position changes have probably been dampened by the seasonal absence of senior trading staff during the summer holidays across North America and Europe. More generally, the hedge fund community is unsure about what matters more – the slowdown in consumption growth resulting from the U.S.-China trade war or the slowdown in production growth resulting from OPEC+ cuts. Funds hold bullish long positions equivalent to 833 million barrels, down from a recent high of more than 1 billion barrels in April, but up from less than 700 million barrels at the start of the year. But portfolio managers also hold 256 million barrels of bearish short positions, the largest number of bets on a further fall in prices since January. From a positioning perspective, the balance of risks is roughly equal, with the potential for a liquidation-driven fall in prices more or less matched by the risk of a short-covering rally. If structural long and short positions in petroleum futures and options are excluded from the analysis, hedge fund managers hold a roughly zero active position overall (https://tmsnrt.rs/2YIs3LM). Views are likely to remain bifurcated until either the extent of the trade war economic risk or the impact of U.S. sanctions on some supplier countries becomes clearer.

Oil Prices Fall As Trump Says He is “Not Ready to Make a Deal” With China – Oil prices fell on Monday in Asia after U.S. President Donald Trump said that he is “not ready to make a deal” with China, stoking fears of weakening oil demand. U.S. Crude Oil WTI Futures dropped 0.3% to $54.34 by 12:54 AM. International Brent Oil Futures fell 0.2% to $58.41.“China wants to do something, but I’m not doing anything yet,” Trump said on Friday. “Twenty-five years of abuse. I’m not ready so fast.”The president added that it would be “fine” if U.S.-China negotiations planned for next month were called off.“Oil continues to be sensitive to trade war rhetoric,’’ Alfonso Esparza, a senior market analyst at Oanda Corp., said in a note cited by Bloomberg.“Saudi Arabia is willing to do more to prevent a free fall, but hard to imagine what that would look like. The prolonged trade war has been a negative factor for global growth estimates.’’On Friday, the International Monetary Fund (IMF) warned Chinese economic growth will slow further if the trade war with the U.S. drags on.The IMF also trimmed its forecasts for oil demand growth in 2019 and 2020 to 1.1 million and 1.3 million barrels per day respectively. In a note released over the weekend, Goldman Sachs also warned that fears of the trade war leading to a recession were increasing.

Oil rises despite fears of a global economic downturn – Oil prices rose on Monday despite worries about a global economic slowdown and the ongoing U.S.-China trade war, which has reduced demand for commodities such as crude. International benchmark Brent crude futures were at $58.65 a barrel, up 10 cents from their previous settlement. U.S. West Texas Intermediate (WTI) futures were at $54.74 per barrel, up 22 cents from their last close. Both benchmarks had fallen earlier in the day, with Brent hitting a session low of $57.88 and WTI a session low of $53.54. “What we have noticed recently is a different perception of risk in different geographies,” said Emily Ashford, executive director of energy research at Standard Chartered. “Often the price reactions during Asia or London trading are reversed during U.S. trading. Prices seem to be following that pattern today.”The third quarter is fundamentally the strongest season for oil demand as drivers take to the roads for summer holidays, but the trade dispute between the United States and China has weakened demand and pressured oil prices. U.S. President Donald Trump said on Friday he was not ready to make a deal with China and even called a September round of trade talks into question. Germany’s Ifo economic institute said its quarterly survey of nearly 1,200 experts in more than 110 countries showed that its measures for current conditions and economic expectations have worsened in the third quarter. However, Kuwait’s Oil Minister Khaled al-Fadhel said fears of a global economic downturn were “exaggerated” and global crude demand should pick up in the second half, helping to gradually reduce oil inventories.

Oil steadies as Saudi, Kuwait signals offset demand fears (Reuters) – Oil prices were little changed on Monday as expectations that major producers would continue to reduce global supplies ran into worries about sluggish growth in crude demand due to the U.S.-China trade war. International benchmark Brent crude settled at $58.57 a barrel, up 4 cents. West Texas Intermediate (WTI) futures settled at $54.93, up 43 cents. Investors were torn between forecasts of slowing global oil demand growth and chatter about renewed efforts by major producers to curtail output and support prices, analysts said. The Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, have agreed to cut 1.2 million barrels per day (bpd) since Jan. 1. Kuwait was “fully committed” to the OPEC+ agreement, Oil Minister Khaled al-Fadhel said, adding that Kuwait has cut its own output by more than required by the accord. He said fears of a global economic downturn were “exaggerated,” and said global demand for crude should pick up in the second half, helping reduce the surplus in oil inventories gradually. Analysts said in a sign that de-facto OPEC leader Saudi Arabia intends to support prices, state-run Saudi Aramco is ready to launch what could be the world’s largest initial public offering. The Saudi government will decide when the IPO will take place based on its perception of “what would be the optimum market condition,” senior Aramco executive Khalid al-Dabbagh said in an analyst call. The official said Saudi Aramco has signed a letter of intent with India’s Reliance to potentially buy a stake in its refining and petrochemicals business. “The Saudis will need a higher price for oil for its IPO, and this confirms they’ll do whatever it takes to get oil prices up,” Analysts said more reductions were needed to support prices as forecasters and government agencies issue gloomy predictions for the global economy and oil demand growth. The economic outlook has deteriorated worldwide as the trade dispute between the United States and China escalates, Germany’s Ifo economic institute said in its quarterly survey of nearly 1,200 experts in more than 110 countries. “It’s going to take the market far longer to come back into balance, which has forced OPEC and non-OPEC producers to continue with their production cuts,”

Oil Soars As The U.S. Delays Trade War Tariffs – Oil shot up more than 4 percent on Tuesday after the U.S. said it would delay the 10 percent tariff on some Chinese products, including laptops and cell phones. The move eased fears over the fallout from the trade war. . Saudi Aramco held its first earnings call with investors on Monday, and also reported profits of $46.9 billion for the first six months of 2019. That was down 12 percent from the same period a year earlier, the result of lower oil prices. However, that figure still makes Aramco the world’s most profitable company. Still, as investors gauge the company, one of the biggest uncertainties is how Aramco pays dividends to the Saudi government. “We still don’t really have clarity on the dividend policy,” Willem Visser, a credit strategist at T. Rowe Price, told Bloomberg. Going forward “it will probably be in line with other oil companies at about 50% of net income.” Meanwhile, Aramco said it would invest $15 billion in India’s Reliance Industries. India’s vehicle sales in July plunged at the steepest rate in nearly two decades, part of a worldwide slowdown in auto sales. India’s GDP growth rate may be decelerating to a five-year low, according to Reuters. Meanwhile, China’s car sales continued to show weakness, with sales down 3.9 percent in July from a year earlier. That was the 13th consecutive monthly decline. China is expected to slash its imports of oil from the U.S. as the trade war escalates. “I think it is a virtual shoo-in that volumes will slow to a trickle and may even grind to a complete halt,” Stephen Brennock, oil analyst at PVM Oil Associates, told CNBC via email. Exxon is considering a full exit from the North Sea, where it has been operating for more than 50 years. Exxon is hoping to raise $2 billion by selling off its assets in the British North Sea, as the oil major hopes to shift its focus to U.S. shale and other projects. The Houston Chronicle reported on the unusual transformation that a struggling oil and gas company made. Facing bankruptcy, Black Ridge exited oil and gas altogether and made itself into a video game company. China has promised tens of billions of dollars of investment in oil, gas and petrochemical projects in the U.S., particularly in Alaska, the Gulf Coast and Appalachia. But the trade war may prevent those investments from being realized, according to the Houston Chronicle.

Oil Prices Back on the Upswing – West Texas Intermediate (WTI) and Brent crude oil futures showed strong gains Tuesday, buoyed by a new twist in the ongoing trade saga between the United States and China. The September WTI added $2.17, ending the day at $57.10 per barrel. The benchmark traded within a range from $54.21 to $57.47. Also posting a healthy increase Tuesday was the October Brent contract, which gained $2.73 to settle at $61.30 per barrel. “Oil prices are experiencing some of their greatest volatility ever as the trade war yanks crude around like a yo-yo,” said Barani Krishnan, senior commodities analyst at Investing.com. “Tuesday’s rally on the Trump administration’s decision to delay tariffs on some Chinese imports is a classic.” In the latest development in U.S./China trade tensions, the Office of the U.S. Trade Representative (USTR) announced Tuesday that the administration would delay by 3.5 months the imposition of a 10-percent tariff on certain Chinese imports. Moreover, citing “health, safety, national security and other factors,” USTR stated that other Chinese products will not be subject to additional duties. “On any other day, oil prices would have slammed through the floor on fears that the trade war was worsening, not mending,” continued Krishnan. “This proves that, fundamentally, oil barely makes a difference on its own as a tradable commodity, without the additional trade and geopolitical baggage.” Krishnan also predicted that OPEC’s ability to influence the oil market will diminish. “Notwithstanding weekly (U.S.) Energy Information Administration inventory data, OPEC cuts will have limited impact on the market going forth as the Saudis overuse the theme of supply squeezes while U.S. production continues ramping,” he said. Reformulated gasoline (RBOB) moved in the same direction as crude oil Tuesday. September RBOB futures settled at $1.74 per gallon, reflecting a seven-cent increase. Henry Hub natural gas for September delivery finished the day higher as well, adding four cents to close at $2.15

WTI Slides After 2nd Surprise Crude Build In A Row – Oil prices spiked most in seven months today following the China tariff delay headlines on optimism of a deal (or easing in tensions). “Some of the pessimism about oil demand and the trade war is being washed out of the market by these announcements,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. API

• Crude +3.7mm (-2.5mm exp)
• Cushing -2.5mm – biggest draw since June 2018
• Gasoline
• Distillates -1.3mm

The surprise build in crude stocks last week broke a 7-week streak of draws, and analysts expected a return to draws in the latest week. However, API reported a surprise build of 3.7mm barrels. Notably, Cushing saw a 2.5mm draw – the largest since June 2018.WTI hovered around $57 the figure, but started sliding notably ahead of the data and tumbled further on the 2nd surprise build in a row (Of course, WTI is still up on the day)…

Oil soars near 5% as US delays tariffs on some Chinese goods – (Reuters) – Oil prices on Tuesday jumped by the most so far this year after the United States said it would delay imposing a 10% tariff on certain Chinese products, easing concerns over a global trade war that has pummeled the market in recent months. The Chinese products include laptops and cellphones. The tariffs had been scheduled to start next month. “The U.S.-China trade war has caused energy demand growth to take a big hit. Any glimmer of hope revives the prospects for a more positive demand landscape,” s Brent futures rose $2.73, or 4.7%, to settle at $61.30 a barrel, while U.S. West Texas Intermediate (WTI) crude gained $2.17, or 4.0%, to settle at $57.10. That was the biggest daily percentage gain for Brent since December when the contract gained 7.9%. Oil prices pared some of their gains in post-settlement trade after data from industry group the American Petroleum Institute (API) showed U.S. crude stocks unexpectedly rose last week. Crude inventories climbed 3.7 million barrels to 443 million, compared with analysts’ expectations for a decrease of 2.8 million barrels, the API said. U.S. government data on crude stocks is due on Wednesday morning. Since falling to their lowest levels since January on Aug. 7, Brent has gained 9% and WTI 12%. That bigger gain in WTI over the past four days briefly cut Brent’s premium over WTI to its lowest since March 2018.

WTI Erases Tariff-Delay Gains, Crude Inventories Show Surprise Build – Oil prices have plunged overnight, erasing the spike gains from yesterday’s trade-tariff-delay headlines thanks to API reporting a surprise crude (and gasoline) build as well as ugly German GDP data.“Yesterday was an eye opener on how much global growth fear hides in oil prices,” “The trade conflict has escalated and the latest batch of tariffs will bear economic costs.” DOE:

• Crude (-2.5mm exp)
• Cushing
• Gasoline (-1.5mm exp)
• Distillates

Analysts expected a crude draw this week (despite last week’s surprise build and API) but like API, DOE reporteed a surprise crude build (the 2nd week in a row) of 1.58mm barrels. Cushing saw stocks decline as did Gasoline and Distillates. “Trade tariffs are slowing global consumption, so perhaps foreign refiners are less in need of U.S. crude right now,” said Kyle Cooper,director of research at IAF Advisors. “Exports have been down for a few weeks, so I will be looking at whether they have rebounded back” Production was flat on the week as rig counts continue to decline…WTI has roundtripped into the DOE data as API triggered the start of a reversal that erased all of the tariff delay gains. WTI hovered at $55 ahead of the DOE data… and rallied modestly on the print (presumably on a smaller than API build and draws in gasoline)

Oil Prices Slide On Surprise Crude Build – The Energy Information Administration reported a 2.4-million-barrel build in crude oil inventories for the week to August 2, shattering expectations of another sizeable draw. Analysts had expected a draw of 3.13 million barrels after last week the authority reported a hefty 8.5-million-barrel decline in inventories that sent West Texas Intermediate soaring. The American Petroleum Institute reported yesterday another weekly decline in oil inventories, of 3.4 million barrels, but this time the figure failed to impress. With EIA rejecting it, chances are the slide in oil prices will now accelerate. The EIA’s figures are also unlikely to reverse the drop in oil prices, which started this week with the spike in now chronic trade tensions between the United States and China, with Washington accusing Beijing of manipulating its currency to its advantage, after the yuan dropped on Monday to the lowest against the greenback in more than 10 years. The EIA also reported an increase in gasoline inventories, which will not help prices, either. After a 1.8-million-barrel decline for the week to July 26, last week these added 4.4 million barrels. Gasoline production averaged 10.4 million bpd, a modest increase from last week’s average daily production rate. In distillate fuels, the EIA reported an inventory build of 1.5 million barrels, which compared with a decline of 900,000 barrels for the previous week. Distillate fuel production averaged 5.3 million bpd, compared with 5.2 million bpd a week earlier. At the time of writing, Brent crude traded at US$57.39 a barrel and West Texas Intermediate changed hands for US$52.00 a barrel, both benchmarks down from yesterday’s close by over 2 percent.

WTI Erases Tariff-Delay Gains, Crude Inventories Show Surprise Build – Oil prices have plunged overnight, erasing the spike gains from yesterday’s trade-tariff-delay headlines thanks to API reporting a surprise crude (and gasoline) build as well as ugly German GDP data.“Yesterday was an eye opener on how much global growth fear hides in oil prices,” “The trade conflict has escalated and the latest batch of tariffs will bear economic costs.” DOE:

• Crude (-2.5mm exp)
• Cushing
• Gasoline (-1.5mm exp)
• Distillates

Analysts expected a crude draw this week (despite last week’s surprise build and API) but like API, DOE reporteed a surprise crude build (the 2nd week in a row) of 1.58mm barrels. Cushing saw stocks decline as did Gasoline and Distillates. “Trade tariffs are slowing global consumption, so perhaps foreign refiners are less in need of U.S. crude right now,” said Kyle Cooper,director of research at IAF Advisors. “Exports have been down for a few weeks, so I will be looking at whether they have rebounded back” Production was flat on the week as rig counts continue to decline…WTI has roundtripped into the DOE data as API triggered the start of a reversal that erased all of the tariff delay gains. WTI hovered at $55 ahead of the DOE data… and rallied modestly on the print (presumably on a smaller than API build and draws in gasoline)

Oil prices drop as data shows surprise climb in US inventories – Oil prices fell on Wednesday after industry data showed U.S. crude inventories unexpectedly rose last week, erasing some gains from the last session that were stoked after Washington said it would delay tariffs on some Chinese goods. The move by U.S. President Donald Trump sent commodities, stocks and other assets higher because of optimism the effects of the trade war, already being felt in economies across the world, will be blunted. Oil prices surged by as much as nearly 5 percent. Brent crude was down 35 cents, or 0.6%, at $60.95 a barrel at 0116 GMT, after rising 4.7% on Tuesday, the biggest percentage gain since December. U.S. oil was down 46 cents, or 0.8%, at $56.64 a barrel, having risen 4% the previous session, the most in just over a month. Markets had been pummeled in recent weeks amid tough talk from Trump on trade and they remain on tenterhooks due to the unpredictably of the U.S. president. It is “becoming more difficult by the day to figure out what President Trump will do other than to say he will favor his own interests and then at times seem to work against them,” China’s commerce ministry said in a statement on Tuesday that U.S. and Chinese trade officials spoke on the phone and agreed to talk again within two weeks. Data from industry group the American Petroleum Institute (API) showed U.S. crude stocks unexpectedly rose last week. Crude inventories increased by 3.7 million barrels to 443 million, compared with analyst expectations for a decrease of 2.8 million barrels, the API said. Apart from signs that the U.S.-China trade tensions may be easing, analysts said prices were propped up by a belief that Saudi Arabia would stick with production cuts. Saudi Arabia, the biggest producer among the Organization of the Petroleum Exporting Countries (OPEC), said last week it aims to keep its crude exports below 7 million barrels per day (bpd) in August and September to help siphon off global oil stocks. OPEC and its allies, known as OPEC+, agreed to cut 1.2 million bpd of production from the beginning of this year.

Oil Prices Erase Gains – Much of the $2-plus in value that West Texas Intermediate (WTI) and Brent crude oil futures each gained Tuesday disappeared during Wednesday’s trading. Equity and commodity markets – including the petroleum sector – took a dramatic turn downward Wednesday when the 10-year U.S. Treasury Note yield fell below the two-year Treasury Note yield for the first time in 12 years. “This action is viewed as a potential indicator for the risk of recession,” explained Steve Blair, senior account executive with the RCG Division of Marex Spectron. “Oil markets are also under pressure as economic data out of China and Germany missed expectations, giving further credence to thoughts of softening demand for oil.” The September WTI contract price lost $1.87 during the midweek session, settling at $55.23 per barrel. The light crude marker peaked at $56.85 and bottomed out at $53.97. “September WTI had rallied from a low of $51.94 last Thursday to a high of $57.47 yesterday after the President deferred the new trade tariffs that were scheduled to be implemented on September 1,” said Blair. “This put prices right near the major resistance at these levels.” Daily and daily continuation charts provided by Blair’s firm put the WTI price levels into context. “The realization this morning that 10-year Treasury yields had fallen below the two-year Treasury yields, and the subsequent realization that this could be a sign of recession, put intense pressure on the petroleum complex along with the other market signs of softer global demand for crude,” continued Blair. “Major support seen around the $53.59 level with further at $52.62 and then at $50.90. Major resistance seen at the recent $57.47 higher and then around $59.80.” Brent crude for October delivery settled at $59.48 per barrel, reflecting a $1.82 loss.

Oil prices fall on weak economic data from Europe and China – (Reuters) – Oil prices shed 3% on Wednesday after fresh Chinese and European economic revived global demand fears and U.S. crude inventories rose unexpectedly for the second week in a row. Brent crude LCOc1 settled at $59.48 a barrel, shedding $1.82, or 3%, losing some of the previous session’s sharp gains after the United States moved to delay tariffs on some Chinese products. The global benchmark rose 4.7% on Tuesday, its biggest daily percentage gain since December. U.S. West Texas Intermediate (WTI) crude futures CLc1 settled at $55.23 a barrel, falling $1.87, or 3.3%, after having risen 4% the previous session, the most in just over a month. China reported disappointing data for July, including a surprise drop in industrial output growth to a more than 17-year low, underlining widening economic cracks as the trade war with the United States intensifies. The global economic slowdown, amplified by tariff conflicts and uncertainty over Brexit, is also hitting European economies. A slump in exports sent Germany’s economy into reverse in the second quarter, data showed. The euro zone’s GDP barely grew in the second quarter of 2019. “The data out of China, the potential recession brewing in Germany, all of that is playing into global demand worries,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “Today, we’re back in fear mode.” The U.S. Treasury bond yield curve inverted for the first time since 2007, in a sign of investor concern that the world’s biggest economy could be heading for recession

Oil slides 1.4% on recession fears, China’s trade threats — Oil prices fell more than 1% on Thursday, extending the previous session’s 3% drop, pressured by mounting recession concerns and a surprise boost in U.S. crude inventories. In a sign of investor concern that the world’s biggest economy could be heading for recession, weighing on oil demand, the U.S. Treasury bond yield curve inverted on Wednesday for the first time since 2007. China’s threat to impose counter-measures in retaliation for the latest U.S. tariffs on $300 billion of Chinese goods also weighed on oil prices. Brent crude fell as much as 3%, to $57.67 a barrel. The international benchmark was 2.4% lower at $58.05 and West Texas Intermediate crude (WTI) was down 1.4%, to $54.47. “Oil is getting whacked again as risk-aversion again kicks in and fears of a trade war inflicted slowdown grip traders,” said Craig Erlam, senior market analyst at OANDA.“WTI had enjoyed a decent rebound over the last week but failed at the first hurdle, running into resistance around the mid-July lows before plunging once again.”The price of Brent is still up 10% this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries and allies such as Russia, a group known as OPEC+.In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices. A Saudi official on Aug. 8 indicated more steps may be coming, saying “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year.”

Oil rises more than 1% as recession fears recede – Crude oil prices rose more than 1% on Friday following two days of declines, buoyed after data showing an increase in retail sales in the United States helped dampen concerns about a recession in the world’s biggest economy. Brent crude was up 68 cents, or 1.2%, at $58.91 a barrel at 0650 GMT, after falling 2.1% on Thursday and 3% the previous day. U.S. crude was up 63 cents, or 1.2%, at $55.10 a barrel, having dropped 1.4% the previous session and 3.3% on Wednesday. U.S. retail sales rose 0.7% in July as consumers bought a range of goods even as they cut back on motor vehicle purchases, according to data that came a day after a key part of the U.S. Treasury yield curve inverted for the first time since June 2007, prompting a sell-off in stocks and crude oil. An inverted Treasury yield curve is historically a reliable predictor of looming recessions.. “Overall, U.S. data continues to be a bright spot in a dark economic universe.” Gains are likely to be capped after a week of data releases including a surprise drop in industrial output growth in China to a more than 17-year low, along with a fall in exports that sent Germany’s economy into reverse in the second quarter. “The broader story around global economic growth has been a weak one, or a weakening one and expectations (are for) further weakening,” The price of Brent is still up nearly 10% this year thanks to supply cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and allies such as Russia, a group known as OPEC+. In July, OPEC+ agreed to extend oil output cuts until March 2020 to prop up prices. “At what point will further output cuts be needed at the back end of this year from OPEC and Russia to keep things going the way they are?” Zeibell said, pointing to the broader economic outlook. A Saudi official on Aug. 8 indicated more steps may be coming, saying: “Saudi Arabia is committed to do whatever it takes to keep the market balanced next year.” But the efforts of OPEC+ have been outweighed by worries about the global economy amid the U.S.-China trade dispute and uncertainty over Brexit, as well as rising U.S. stockpiles of crude and higher output of U.S. shale oil.

U.S. oil futures tally gains for the session and week – Oil futures finished higher Friday, helping to contribute to a weekly gain for the commodity, as traders weighed weakening demand against supply uncertainties linked to the Middle East and OPEC production. “Today’s rise reflected some reluctance to go home short over the weekend given the uncertainties in the Persian Gulf…,” said Marshall Steeves, energy markets analyst at IHS Markit. “Overall, the market is range bound with these supply uncertainties offset by weakening demand. So while there was a rise today and for the week, there remains a longer-term downtrend.”West Texas Intermediate crude for September delivery rose 40 cents, or 0.7%, to settle at $54.87 a barrel after trading as high as $55.67 during the session on the New York Mercantile Exchange. October Brent crude added 41 cents, or 0.7%, to $58.64 a barrel on ICE Futures Europe.Front-month WTI futures scored a 0.7% weekly rise, while Brent edged up by 0.2% from the week-ago finish, according to Dow Jones Market Data.“Brent prices whipsawed this week on tariff news and recessionary concerns, and we expect that demand risks will dominate crude market sentiment in the near term,” said Jason Gammel, analyst at Jefferies, in a note. In its monthly report released Friday, the Organization of the Petroleum Exporting Countries slightly lowered its forecast for world oil-demand growth in 2019 by 40,000 barrels a day to 1.1 million barrels. It left its 2020 forecast unchanged at 1.14 million barrels a day. OPEC also cut its outlook for non-OPEC supply growth in 2019 and 2020. “The wider picture is revealing that the economy will still struggle into 2020 and the confidence is weakening amongst many,” said Mihir Kapadia, chief executive officer of Sun Global Investments, in emailed comments. Production “curbing policies by OPEC will be needed to help balance the oil markets but with other factors such as the trade dispute still continuing, it will be a very difficult period for oil.”

OPEC sees bearish oil outlook for rest of 2019, points to 2020 surplus (Reuters) – OPEC delivered a downbeat oil market outlook for the rest of 2019 on Friday as economic growth slows and highlighted challenges in 2020 as rivals pump more, building a case to keep up an OPEC-led pact to curb supply. In a monthly report, the Organization of the Petroleum Exporting Countries cut its forecast for global oil demand growth in 2019 by 40,000 barrels per day (bpd) to 1.10 million bpd and indicated the market will be in slight surplus in 2020. The bearish outlook due to slowing economies amid the U.S.-China trade dispute and Brexit could press the case for OPEC and allies including Russia to maintain a policy of cutting output to support prices. Already, a Saudi official has hinted at further steps to support the market. “While the outlook for market fundamentals seems somewhat bearish for the rest of the year, given softening economic growth, ongoing global trade issues and slowing oil demand growth, it remains critical to closely monitor the supply/demand balance and assist market stability in the months ahead,” OPEC said in the report. It is rare for OPEC to give a bearish forward view on the market outlook and oil LCOc1 pared an earlier gain after it was released to trade below $59 a barrel. Despite the OPEC-led cut, oil has tumbled from April’s 2019 peak above $75 pressured by trade concerns and an economic slowdown. OPEC, Russia and other producers have since Jan. 1 implemented a deal to cut output by 1.2 million bpd. The alliance, known as OPEC+, in July renewed the pact until March 2020 to avoid a build-up of inventories that could hit prices. OPEC left its forecast for 2020 oil demand growth at 1.14 million bpd, up slightly from this year. But OPEC added that its forecast for 2020 economic growth faced downside risk.

Opec needs another 1 million bpd cut to boost oil prices – In the current gloomy market sentiment, OPEC would need to deepen the production cuts by 1 million barrels per day (bpd) if the cartel wants to move up the price of oil, Emma Richards, senior industry analyst at Fitch Solutions, told CNBC on Thursday.The oil market has recently become “incredibly sensitive to any kind of bearish indicator,” Richards said, adding that it doesn’t take a lot to see a big downward movement and it’s really difficult to get oil prices to move upwards.Oil prices plunged on Wednesday as new worrying signals about the global and U.S. economy flashed. Early on Thursday, both benchmarks continued the downward move, with WTI Crude down 1.21 percent at $54.56 at 10:15 a.m. EDT, and Brent Crude down 2.07 percent at $58.25.At the start of last week, the U.S.-China trade war and a looming currency war rattled oil markets, while two days later Saudi Arabia rushed to contain the price slide by saying that despite what it sees as healthy demand in all regions, it continues to keep its exports below the 7-million-bpd mark and will do so at least through September.Also last week, reports emerged that Saudi Arabia had approached other members of OPEC to discuss possible steps they can take to arrest a slide in oil prices that have brought them to the lowest in seven months. Asked whether the Saudis would really push for some kind of action, Richards told CNBC that it’s possible, and that at the moment, OPEC’s de facto leader is just trying to talk up the market.

Saudi Arabia And Russia Unlikely To Agree On New Oil Cuts –Arguably the collaboration between the world’s two largest exporters of oil, Russia and Saudi Arabia, is a significant development caused by and comparable to the shale revolution in the U.S. A decade ago, a partnership between Moscow and Riyadh would have seemed impossible due to contradicting interests. Recent developments have somewhat aligned the countries into what has been dubbed OPEC+. However, this doesn’t mean that Russian and Saudi exporters aren’t competitors anymore. In fact, the oil behemoths are contending more than ever for market share in Asian markets such as China. Also, Moscow and Riyadh take into consideration the relative position of their competitor and partner during further talks on production cuts to bolster prices. One of the measures, which is indicative of the bargaining position of the participating country, is the size of the respective Central Bank’s wealth in terms of money, gold, and other securities. Russia’s relative wealth has been increasing in recent years, while Saudi Arabia’s has been decreasing. This development says two things: first, the state of the economy, and second, the respective country’s choice of strategy and consequential bargaining position. The diverging wealth gap between Saudi Arabia and Russia is a consequence of internal and external developments leading to a build-up or spending of oil wealth. In Moscow’s case, the Western sanctions of 2015 and the lower revenue from oil sales have caused severe economic damage. Russia was able to maintain relative economic stability due to its savings (see the above figure for the drop in relative wealth after 2015). Although Russia is battered after several years of sanctions with a strong dependence on its energy sector, the Eurasian giant is still home to a sizeable diversified economy. Saudi Arabia’s, in contrast, has a higher degree of dependence on oil production. Therefore, decreasing income from energy exports needs to be compensated by spending the country’s savings.Also, Saudi Arabia is engaged in a costly quagmire in Yemen where its forces are not able to defeat the Houthi rebels, which are supported by arch-enemy Iran. Furthermore, Saudi Crown Prince MBS has set the country on a path of diversification, which is partly funded with national resources.

Saudi Plans for Biggest-Ever IPO Are Back On – WSJ — Saudi Arabia’s oil company is reviving plans for an initial public offering with the aim of accomplishing what would be the world’s biggest listing as soon as early next year, according to people familiar with the discussions.The IPO process for Saudi Arabian Oil Co., known as Saudi Aramco, is being accelerated as government officials hope to capitalize on the positive market reaction to the state-owned company’s debut bond sale in April, which raised $12 billion, people close to the talks said.Saudi officials also believe international outrage over the murder of dissident journalist Jamal Khashoggi in the kingdom’s consulate in Istanbul is easing, according to people familiar with the matter.The Saudi government needs the proceeds from the IPO to finance social and military spending, and to direct toward Neom, a futuristic city it is building at a cost of $500 billion. Higher public spending will boost Saudi Arabia’s budget deficit to 7% of gross domestic product in 2019, well above the government’s forecast of 4.2%, the International Monetary Fund said in May.In an unprecedented move, Aramco plans to host an earnings call to showcase its first-half results to the financial community. The business has been largely a closed book since Saudi Arabia nationalized the once-American-run company more than three decades ago. The call scheduled for Monday is seen as a staging for the company’s listing, which had been previously put offbut has been recently gaining support from government officials and the royal family.The financial results are expected to show that Aramco remains the world’s most profitable business, outstripping the likes of Apple Inc. and Exxon Mobil Corp. Still, the company may not be keeping pace with last year because of lower oil prices and reduced output, Aramco executives familiar with the matter said. Other oil giants have seen their earnings hit by falling energy prices.Before an Aramco IPO was all but shelved last year, it was meant to be the centerpiece of a Saudi plan – championed by Crown Prince Mohammed bin Salman – to open up the economy and give investors access to the kingdom’s flagship company. Prince Mohammed had announced plans to list 5% of Aramco in 2018 at a valuation of roughly $2 trillion for the entire company. Even that small portion would constitute the world’s largest IPO at around $100 billion.

Saudi Aramco tells investors it’s ready to go public – Saudi Aramco’s CFO, in the company’s first-ever conference call, on Monday told investors that the company is ready to go public, but that the timing will be up to its owner, the Kingdom of Saudi Arabia. “Basically, the company is ready for the IPO. Now the timing of the IPO itself, this is a shareholder’s issue, and they will announce it depending on their perception of what would be the optimum market condition,” said Khalid al-Dabbagh, chief financial officer, reiterating the company’s previous stance. Sources have said that the Saudi government, encouraged by the success of Aramco’s $12 billion debt offering, would like to move its plans for the IPO forward, and issue stock in 2020. The offering is expected to be the largest new issue ever, and represent just a small portion of the company’s equity. Saudi Crown Prince Mohammed bin Salman would like to see Aramco valued at $2 trillion, about $500 billion more than bankers are currently estimating, according to sources. The company faces tough markets, where oil prices are volatile and near the 2019 low. Brent crude futures were trading below $60 a barrel Monday, and are down 18% over the past year. At the same time, energy stocks have underperformed, with the S&P energy sector up just 1.7% year to date, making it the worst-performing sector and well behind the S&P 500′s 2019 gain of about 16%. “We, in Saudi Aramco, have delivered strong and unmatched financial results, despite lower oil prices and volatile market conditions. This is really a testament to our resilience,” said al-Dabbagh, noting the talks are in the early stages. Saudi Aramco earlier reported first-half net profit of $46.9 billion, down from $53 billion last year due to the impact of lower oil prices. Free cash flow rose 6.7% to $38 billion, and it is that cash flow that some sources believe could help Aramco propel its valuation to $2 trillion.

Saudi Aramco’s first-half net income falls 12% on lower oil prices — Saudi Aramco, the world’s top oil producer, reported first-half net income of $46.9 billion on Monday, down from $53.02 billion a year earlier. By comparison, Apple Inc, the world’s most profitable listed company, made $31.5 billion in the first six months of its financial year. Aramco said total revenues including other income related to sales were at $163.88 billion in the first half of this year, down from $167.68 billion a year earlier, on lower oil prices and reduced production. In its earnings report, Aramco partly attributed the decline in net income to a 4% fall in the average realized price of crude oil compared to the same period in 2018, from $69 to $66 per barrel. Aramco President and CEO Amin Nasser said the company had continued to deliver on its “downstream growth strategy” through acquisitions both domestically and in international markets. “These acquisitions are expected to enhance dedicated crude placement, increase refining and chemicals capacity, capture value from integration and diversify our operations,” Nasser said. India’s Reliance Industries announced Monday that it will sell a 20% stake in its oil and chemicals business to Saudi Aramco, in one of the largest ever foreign investments into India. Reliance Chairman Mukesh Ambani said the deal values the business at $75 billion including debt. The Aramco report also showed earnings before interest and taxes (EBIT) came in at $92.5 billion for the period, compared to $101.3 billion for the first half of 2018. The company increased its dividend payments from $32 billion at the halfway point of last year to $46.4 billion, bolstered by a $20 billion special dividend paid earlier this year as a result of its “exceptionally strong financial performance” in 2018, the report highlighted.

Reliance to sell 20% stake in oil-to-chemicals arm to Saudi Aramco –(Reuters) – India’s Reliance Industries (RELI.NS) is set to sell a 20% stake in its oil to chemicals business to Saudi Aramco, helping the Indian conglomerate to cut debt and giving Aramco better access to a fast growing market. While terms of the deal are yet to be finalised, Reliance will get roughly $15 billion, including some debt adjustments for the 20% stake, P.M.S. Prasad, Executive Director of Reliance Industries said on Monday, adding the two companies aim to close the deal by March 2020.The deal will see Reliance buy up to 500,000 barrels a day of crude oil from Aramco, Prasad told media after the company’s annual general meeting (AGM), noting this would more than double the volumes that Reliance currently purchases from Aramco.The deal ties in with Aramco’s push to expand its refining and marketing footprint globally by signing new deals and boosting the capacity of its plants to secure new markets for its crude oil.Aramco is boosting its refining and petrochemicals business, particularly in Asia, and sees growth in chemicals as central to its downstream expansion strategy to reduce risk as oil demand slows.

Yemen Separatists Have Taken Effective Control of the Port City of Aden — Separatists in southern Yemen have seized all government military camps and the presidential palace in the port city of Aden, according to security sources and witnesses, amid heavy fighting that has killed and wounded scores of people. A spokesman for the Security Belt, a militia aligned with the United Arab Emirates-backed Southern Transitional Council, told AFP news agency on Saturday that fighters from the group met no resistance when they seized the all-but empty presidential palace from forces loyal to President Abd-Rabbu Mansour Hadi’s government. The announcement came hours after a government official and local sources said the separatists had also wrested control of all government military camps in Aden, the city temporarily hosting Hadi’s government, after clashes that killed dozens. “We took the Maashiq palace from presidential [guard] forces without a fight,” a spokesman from the separatist-dominated Security Belt force told AFP. Witnesses confirmed the move to AFP and Reuters. The moves put the separatists in effective control of Aden, and Hadi’s government accused the STC of staging a coup. “What is happening in the temporary [government] capital of Aden by the Southern Transitional Council is a coup against institutions of the internationally recognised government,” the foreign ministry said in a Twitter post. As Aden clashes continue, Yemen’s war becomes more complicated (2:32) Hadi, who was swept from power in 2014 when Houthi rebels overran Yemen’s capital, Sanaa, is currently based in Saudi Arabia’s capital, Riyadh. The combatants in Aden are nominal allies in the Saudi-led coalition that has been battling the Houthis in northern and western Yemen since March 2015, but they have rival agendas for the country’s future.

Saudi-led coalition calls for immediate Aden ceasefire: Reports – The Saudi-led coalition fighting in Yemen has called for an immediate ceasefire in Aden after southern separatists seized the presidential palace and other key sites in the city. “The coalition calls for an immediate ceasefire in the Yemeni temporary capital Aden starting from 1am on Sunday (22:00 GMT on Saturday), and asserts that it will use military force against anyone who violates it,” Saudi Arabia‘s state news agency SPA quoted a spokesman as saying.The coalition also called on all military groups to immediately return to their positions and retreat from areas that have been seized over the past few days.Residents said there had been no clashes overnight after four consecutive days of fighting that the United Nations said has killed some 40 people and injured 260 others, including civilians. However, the coalition on Sunday said that it had targeted a “direct threat” to the Yemeni government. “The coalition targeted an area that poses a direct threat to one of the important sites of the legitimate government,” a coalition statement said, reiterating calls for fighters to withdraw from positions seized in Aden or face further attacks.

Yemen rebel drone attack targets remote Saudi oil field — Drones launched by Yemen’s Houthi rebels attacked a massive oil Opens a New Window. and gas field deep inside Saudi Arabia’s sprawling desert on Saturday, causing what the kingdom described as a “limited fire” in the second such recent attack on its crucial energy Opens a New Window. industry. The attack on the Shaybah oil field, which produces some 1 million barrels of crude oil a day near the kingdom’s border with the United Arab Emirates, again shows the reach of the Houthis’ drone program. Shaybah sits some 1,200 kilometers (750 miles) from Houthi-controlled territory, underscoring the rebels’ ability to now strike at both nations, which are mired in Yemen’s yearslong war. The drone assault also comes amid heightened tensions in the wider Mideast between the U.S. and Iran, whose supreme leader hosted a top Houthi official days earlier in Tehran. State media in Saudi Arabia quoted Energy Minister Khalid al-Falih as saying production was not affected at the oil field and no one was wounded in the attack Saturday. The state-run Saudi Arabian Oil Co., known widely as Saudi Aramco, issued a terse statement acknowledging a “limited fire” at a liquid natural gas facility at Shaybah. …

Is the Saudi-Led Coalition in Yemen Collapsing? – The Saudi-led coalition in Yemen intervened on Sunday in the port of Aden, where southern separatists had seized military bases and surrounded the vacant presidential palace. The coalition officially backs the government of President Abd-Rabbu Mansour Hadi, who resides in Saudi Arabia.The separatists have been part of the Saudi-led coalition against the Houthis but are also at odds with Hadi’s government. While a ceasefire has been called, the separatist forces – who have benefited from thesupport of the United Arab Emirates – have not retreated from the military camps they seized on Saturday. At least 40 people were killed during the fighting, which coincided with the Muslim holiday of Eid al-Adha.A fractured coalition? The seizure of Aden has exposed cracks within the Saudi-led coalition, which has been battling the Iran-aligned Houthis in Yemen since 2015. The conflict between the UAE-backed southern separatists and government forces has been simmering for months. Moreover, the UAE began todraw down its troops in Yemen last month in an effort to aid talks with the Houthis. “It is becoming increasingly obvious that the UAE and Saudi Arabia do not share the same end goals in Yemen, even though they share the same overarching goal of pushing back the perceived influence of Iran,” the Yemen scholar Elisabeth Kendall told the Washington Post. Saudi Arabia has called an emergency meeting on the developing situation in Aden, where the ceasefire remains fragile. Meanwhile, peace talks with the Houthis in the port city of Hodeidah are stalled. After the events in Aden, the Houthis’ deputy foreign minister said on Saturday that the seizure of Aden was further proof that Hadi’s government is not fit to lead.

Zarif: US arms sales make Gulf into ‘tinderbox ready to blow up’ – Iran’s Minister of Foreign Affairs Mohammad Javad Zarif has warned against an arms race in the Middle East, saying recent US weapons sales have turned the Gulf region into a “tinderbox ready to blow up”. In an exclusive interview with Al Jazeera on Monday, Zarif said more warships in the Gulf would only lead to more insecurity. “The US [sold] $50bn worth of weapons to the region last year. Some of the countries in the region with less than a third of our population spend $87bn on military procurement,” Zarif told Al Jazeera in Qatar’s capital, Doha. “Let’s make a comparison; Iran spent last year $16bn on all its military with almost one million people in the army. The UAE with a total population of one million spent $22bn, Saudi Arabia spent $87bn,” he continued. “If you are talking about threats coming from the region, the threats are coming from the US and its allies who are pouring weapons in the region, making it a tinderbox ready to blow up.” Zarif’s comments come after the United States announced it is working to form a military coalition to protect commercial shipping in the Gulf following suspected attacks on oil tankers near the Strait of Hormuz. Tensions have soared in recent months around the strategic waterway, where about 20 percent of the world’s oil passes through. The friction is rooted in US President Donald Trump’s decision in May 2018 to unilaterally withdraw Washington from a landmark nuclear deal signed in 2015 between world powers and Iran. Since then, the US has reinstated sweeping sanctions against Tehran as part of a “maximum pressure” campaign and has also increased its military presence in the region. Tensions between the two nations escalated again in May, when Washington accused Iran of sabotaging tankers in the shipping route, allegations denied by Iran.

U.S. Sanctions Turn Iran’s Oil Industry Into Spy vs. Spy – NYT – They change offices every few months and store documents only in hard copy. They scan their businesses for covert listening devices and divert all office calls to their cellphones. They know they are under surveillance, and assume their electronics are hacked. They are not spies or jewel thieves but Iran’s oil traders, and they are suddenly in the cross hairs of international intrigue and espionage. “Sometimes I feel like I am an actor playing in a thriller spy movie,” said Meysam Sharafi, a veteran oil trader in Tehran. Since President Trump imposed sanctions on Iranian oil sales last year, information on those sales has become a prized geopolitical weapon – coveted by Western intelligence agencies and top secret for Iran. And the business of selling Iranian oil, once a safe and lucrative enterprise for the well connected, has been transformed into a high-stakes global game of espionage and counterespionage.Last month, Iran said it had dismantled a spy ring and arrested 17 Iranians it said were working for the C.I.A. The Iranian government was vague on the target of the espionage, for which some of the suspects were sentenced to death, but it now appears that it involved clandestine efforts to gather intelligence on oil sales. President Trump denied that the suspects worked for the C.I.A., a highly unusual statement from a government that almost never confirms or denies such accusations. A spokesman for the C.I.A. declined to comment. But American officials acknowledged that Iran’s oil sector is of intense interest to the United States and its intelligence agencies. Whoever is doing the spying, there is little doubt that cloak-and-dagger tactics have buffeted the shrinking Iranian oil trade. Traders say they have been offered all kinds of enticements in exchange for information.

Iran says Britain might release oil tanker soon, Gibraltar says not yet -(Reuters) – The British territory of Gibraltar will not yet release an Iranian oil tanker seized by Royal Marines in the Mediterranean despite an Iranian report that it could do so on Tuesday, an official Gibraltar source said. The commandeering of the Grace 1 on July 4 exacerbated frictions between Tehran and the West and led to retaliatory moves in Gulf waterways used to ship oil. Britain accused the vessel of violating European sanctions by taking oil to Syria, a charge Tehran denies.

Gibraltar releases captured Iranian oil tanker, US makes immediate request to seize vessel – An Iranian oil tanker held in Gibraltar since early July has been officially released by local authorities, although it may not sail if a U.S. application to seize the vessel proves successful.On July 4, Gibraltar authorities with the help of the British Royal Marines, seized the Grace 1 oil tanker following suspicions it was delivering oil to the Syrian regime – a violation of European Union sanctions. Tehran claimed the tanker was not headed to Syria and that the seizure was unlawful.Gibraltar’s Chief Minister Fabian Picardo said in a statement Thursday that he had received written assurance from the Republic of Iran that, if released, Grace 1 would not sail to Syria.Picardo added that there was no longer any “reasonable grounds” to hold the ship as Iran had made “an important material change in the destination of the vessel and the beneficiary of its cargo.” Earlier Thursday, the Gibraltar Chronicle reported that a judge had previously been due to lift the detention on the ship but an application by the U.S. Department of Justice to the Supreme Court of Gibraltar had delayed the release. In the statement, Picardo confirmed that the DOJ had asked for a new legal procedure to immediately detain the ship again. It is therefore not clear if the tanker will sail.

Iran tanker released in Gibraltar despite US bid to seize it – The decision announced by a judge in the British overseas territory of Gibraltar Thursday to release an Iranian oil tanker Grace 1, seized by the British Royal Marines on July 4, was taken despite a last-minute intervention by the US Justice Department. The US authorities used an email sent at 1:30 in the morning to communicate their demand that the ship be held so that Washington could file its own pseudo-legal case for taking control of it. Chief Justice Anthony Dudley of Gibraltar’s supreme court ruled Thursday afternoon that there were no legal grounds for continuing to hold the tanker, which had been seized on the pretext of enforcing unilateral sanctions imposed by the European Union – which Britain is deserting – against the shipment of oil to Syrian facilities controlled by the government of President Bashar al-Assad. The judge likewise dismissed the US demand, saying that no legal papers had been filed with the court. The Iranian government, following negotiations with British officials in London, issued a formal letter to the authorities in Gibraltar pledging that the Grace 1 would not deliver its load of 2.1 million barrels of crude oil, valued at $140 million, to any “entity” proscribed by the EU sanctions. Tehran indicated that the ship would sail to an unspecified destination in the Mediterranean. The EU anti-Syrian sanctions were merely a pretext for what amounted to an act of piracy by the British military. Spain’s Foreign Ministry and other diplomatic sources have revealed that the action was carried out at the behest of Washington as a means of ratcheting up tensions under conditions in which US provocations have placed a war in the Persian Gulf on a hair trigger.

How Tehran fits into Russia-China strategy – – Pepe Escobar -Complex doesn’t even begin to describe the positioning of Iran-Russia in the geopolitical chessboard. What’s clear in our current, volatile moment is that they’re partners, as I previously reported. Although not strategic partners, as in the Russia-China tie-up, Russia-China-Iran remain the crucial triad in the ongoing, multi-layered, long-term Eurasia integration process.A few days after our Asia Times report, an article – based on “senior sources close to the Iranian regime” and crammed with fear-mongering, baseless accusations of corruption and outright ignorance about key military issues – claimed that Russia would turn the Iranian ports of Bandar Abbas and Chabahar into forward military bases complete with submarines, Spetsnaz special forces and Su-57 fighter jets, thus applying a “stranglehold” to the Persian Gulf.For starters, “senior sources close to the Iranian regime” would never reveal such sensitive national-security details, much less to Anglo-American foreign media. In my own case, even though I have made several visits to Iran while consistently reporting on Iran for Asia Times, and even though authorities at myriad levels know where I’m coming from, I have not managed to get answers from Islamic Revolutionary Guard Corps generals to 16 detailed questions I sent nearly a month ago. According to my interlocutors, these are deemed “too sensitive” and, yes, a matter of national security.Predictably, the report was fully debunked. One of my top Tehran sources, asked about its veracity, was blunt: “Absolutely not.” After all, Iran’s constitution decisively forbids foreign troops stationed on national soil. The Majlis – Iranian parliament – would never approve such a move barring an extreme case, as in the follow-up to a US military attack.As for Russia-Iran military cooperation, the upcoming joint military exercises in the “northern part of the Indian Ocean,” including the Strait of Hormuz, are a first-ever such occasion, made possible only by a special agreement.Analyst Gennady Nechaev is closer to reality when he notes that in the event of growing Russia-Iran cooperation, the possibility would be open for “permanent basing of the Russian Navy in one of the Iranian ports with the provision of an airfield nearby – the same type of arrangement as Tartus and Hmeimim on the Mediterranean coast of Syria.” To get there, though, would be a long and winding road.

German government and Greens promote military mission in Persian Gulf – Following the official rejection of a US-led military mission in the Persian Gulf, the German government is actively pursuing its campaign for a European war mission in the region. “We want a European mission,” stressed Foreign Minister Heiko Maas (SPD) on Monday during a visit to Slubice in Poland. However, it would “take time to convince the EU of this.” Deputy government spokeswoman Ulrike Demmer made similar remarks at a press conference. “In principle, the German government continues to consider the proposal of a maritime protection mission by European states as worthy of consideration, and we are also in exchange with our European partners,” she explained. There will be “further talks this week between … Germany and France” and there will also be “further talks on the subject in Brussels.” Demmer didn’t rule out a possible German participation in “a US-led mission” at some point in the future. “The chancellor [Angela Merkel] and the federal government do not see any participation in a US-led mission in the current situation or at the present time,” she explained. But things that are “directed far into the future” could not “be confirmed here” and she did not want to “speculate here on what else could be possible.” The statements by Demmer and Maas underline that Germany’s rejection of Washington’s request has nothing whatsoever to do with military restraint or even pacifism. Rather, against the background of growing transatlantic conflicts, German imperialism is preparing to assert its economic and geostrategic interests more militarily independent of Washington. The Greens play a particularly aggressive role here. “Germany must take responsibility and ensure that Europe acts as one and with its own voice in this tense situation,” demanded Robert Habeck, chairman of the Green Party, in an interview with the Passauer Neue Presse this weekend. He could imagine “Germany participating in a European mission if this would help to de-escalate. … But in no case under American leadership.”

Iraq says Israeli role in Gulf flotilla unacceptable – Iraq has rejected any Israeli participation in a naval force to protect shipping in the Strait of Hormuz, at the heart of tensions with Iran. Iraq “rejects any participation of forces of the Zionist entity in any military force to secure passage of ships in the Arabian Gulf”, Foreign Minister Mohammed Ali al-Hakim wrote on social media on Monday.”Together, the Gulf states can secure the passage of ships,” he said.He added that “Iraq will work to lower tensions in our region through calm negotiations”, while “the presence of Western forces in the region would raise tensions”.Tensions have escalated in past months, with drones downed and tankers mysteriously attacked in Gulf and nearby waters, where about 20 percent of the world’s oil trade passes through. Washington and its Arab allies in the Gulf have accused Iran of carrying out the tanker attacks, allegations that Tehran denies.The United States has since sought to assemble an international coalition to guarantee freedom of navigation in the Gulf.Israel has made no official announcement on the operation, although Israeli media have reported a possible role for it.Tehran and Washington have been at loggerheads since President Donald Trump unilaterally withdrew the US from a nuclear accord between Iran and world powers in May 2018, reimposing biting sanctions.If the coalition is formed, each country would provide a military escort for its commercial ships through the Gulf with the s upport of the US military, which would carry out aerial surveillance and command operations.

Iraq Accuses Pentagon Of Extremely Exaggerating Numbers Of ISIS Fighters — The US Department of Defense Inspector General released a formal report last week which claimed ISIS retains between 14,000 and 18,000 members in Iraq and Syria, which Pentagon officials used to argue for a continuing US troops presence in Syria. They touted the report as “verification” that a US draw down in Syria had enabled a a resurgent ISIS.The Iraqi military, however, which partners with US forces, has rejected the report, calling it “extremely exaggerated”. “The figure announced by the Pentagon is extremely exaggerated,” the spokesman for the Joint Operations Command, Brig. Gen. Yahya Rasool, said in a press statement, as quoted by Iraqi news agency Malouma and regional outlet Kurdistan24. The general added that Iraqi national forces are in their third and final phase of an operation meant to clean out final pockets of Islamic State sleeper cells. Last Tuesday’s Pentagon report presented to Congress asserted that ISIS terrorists are “growing again in power” in Syria and Iraq, and painted a general picture that to the extent American troops leave the region, the Islamic State will correspondingly reestablish itself. It should be remembered that it’s precisely the same argument Syria hawks have repeatedly used to stymie previous plans voiced by President Trump to “bring the troops home”. Baghdad officials themselves have also increasingly seen little need for the unpopular US troops presence on Iraqi soil. Like Osama bin Laden and al-Qaeda in the post-9/11 years, the constantly inflated “ISIS threat” is the new bogeyman that keeps on giving: neocons and hawks will cling to it so long as in enables expanding American presence in the Middle East.

Iraq’s burning problem: the strange fires destroying crops and livelihoods – Fires in Nineveh province have broken out on a scale that farmers here describe as unprecedented, turning tens of thousands of acres of wheat and barley fields into barren patches of black. Strong rains and a return to relative stability following Islamic State’s territorial defeat had promised to yield a bumper harvest, even raising hopes that Iraqcould wean itself off its dependence on crop imports. Iraq’s prime minister, Adel Abdul-Mahdi, said that, despite the fires, Iraq had so far produced a record quantity of wheat, adding that only a negligible amount of crops had been destroyed. But testimonies from the ground and data obtained from local officials suggest that the impact of the fires is greater than the government admits. Duraid Hikmat, Nineveh’s director of agriculture, says his province alone had recorded 30,350 hectares (75,000 acres) of scorched crops as of 25 June, four times the figure given by the prime minister for the entire country. While the impact of the fires is plain to see, the causes remain shrouded in mystery. The prime minister attributed the fires largely to accidents, such as sparks from harvesting machines. “Most of the fires were for natural reasons,” Abdul-Mahdi told reporters at a press conference in Baghdad on 16 July. “The percentage of fires [caused] by criminal activities or terrorism is around 30%.” This narrative is hard to accept for farmers, who say they have never before seen fires on such a scale. The fires have particularly affected Sunni and Yazidi communities that have struggled to recover from years of war and displacement. Near Hawija, one of the last towns to be freed from Isis – and a place where militants retain a presence – farmers braved the threat of guerrilla-style attacks, only to see their harvest go up in flames. In Sinjar, the fires have torched the livelihoods of Yazidis who had begun to return after Isis drove them from their ancestral land in 2014.“There’s economic warfare between countries so as to force Iraq to import,” says Hikmat. Unverified, shaky videos purportedly showing Iranian-backed armed groups setting fields ablaze have circulated on social media, fuelling conspiracy theories among Sunnis that Shia Iran wants to hamper Iraq’s progress towards self-sufficiency.

Turkey to annex northern Syria with US blessing – The United States military, desperate to avoid an open confrontation between its NATO ally and Kurdish clients, has capitulated in a game of chicken with Ankara, agreeing to an occupation zone across northern Syria. The announced agreement comes just weeks after US lawmakers threatened Turkey with sanctions over its purchase of the Russian S-400 missile defense system. By threatening an imminent attack on the Kurdish YPG militia – America’s ally against ISIS – Ankara appears to have obtained a green light for a US-shepherded seizure of Syrian territory. The so-called “peace corridor” is expected to span the entire region east of the Euphrates River, stretching 460 kilometers, according to Turkey’s state news agency Anadolu. It will also go 32 kilometers deep into Syrian territory, putting Kurdish-held towns like Kobane – seized from ISIS in 2015 – under Turkish authority. A statement by the US Embassy in Turkey said the agreement included the establishment of a “joint operations center in Turkey” in order to set up the zone, though it did not offer details on the size of the area or how the Pentagon plans to deal with its Kurdish allies of the past six years. “The safe zone shall become a peace corridor, and every effort shall be made so that displaced Syrians can return to their country,” the embassy said.The statement suggests that the area will become a dumping ground for Syrian refugees, who are currently facing an unprecedented crackdown in Turkey, including forced deportations. The Syrian Foreign Ministry called the US-Turkish accord “blatant aggression against the sovereignty and territorial integrity of the Syrian Arab Republic and a flagrant violation of the principles of international law and the UN Charter.” There was no indication, however, that Damascus was prepared to send troops into the fray.

Israel bans entry to two Muslim US congresswomen over their criticism -Israel’s government decided to bar two Democratic congresswomen from entering the country on Thursday, in an unprecedented move that is likely to reverberate through the halls of the US Congress.Rashida Tlaib, who is of Palestinian origin and has family in the West Bank, and Ilhan Omar were expected to arrive at the weekend for a visit to Jerusalem and the Palestinian territories. The left-leaning Muslim congresswomen are outspoken critics of Israel’s policy toward the Palestinians and support the so-called BDS movement, which advocates boycotts, divestment and sanctions against Israel. They are also sharp critics of US President Donald Trump, a close ally of Israeli Prime Minister Benjamin Netanyahu.”As a vibrant and free democracy, Israel is open to any critic and criticism, with one exception,” Netanyahu said in a statement. “Israel’s law prohibits the entry of people who call and act to boycott Israel, as is the case with other democracies that prevent the entry of people whom they see as harming the country.”

Distorting the Definition of Antisemitism to Shield Israel from All Criticism – There is a growing tendency among both Jews and non-Jews to label those with whom they have profound political differences, especially on the subject of Israel-Palestine, as antisemitic. The accusation is a severe one: in most countries in the West, antisemitism is considered a taboo, and the identification of a person or organization with antisemitism often renders them illegitimate in the public arena.Two major techniques facilitate such allegations. The first relates one’s claim very illusively to some antisemitic imagery. The fact that 2,000 years of hostility and hatred toward Jews have created a storehouse of anti-Jewish imagery so rich – and at times contradictory – means that nearly any claim can be linked to at least one of those images.Through manipulation of these images, along with a little imagination, one could identify any form of criticism as antisemitic. This kind of logic is deployed by supporters of Israel’s occupation and nationalistic government in order to delegitimize anyone who dares criticize Israeli policies. The second technique draws on the definition of antisemitism formulated by the International Holocaust Remembrance Alliance. Founded in 1998 (under a different name), the IHRA is a political body with considerable political power, uniting government representatives and Holocaust scholars from 33 countries, nearly all of them in the West. The IHRA agreed on a definition of antisemitism in 2016, along with a list of examples, based on previous definitions. It has since become a kind of “soft law” that is binding in many institutions and even states across the world. The problem is that the IHRA definition deals obsessively – more than with any other topic – with the degree of antisemitism in criticism of Israel, making it far more difficult to identify real instances of antisemitism, while casting a cloud of suspicion over nearly all criticism of Israel. Meanwhile, the burden of proof lies with critics of Israel, who are constantly asked to prove that they are not anti-Semites.

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