Written by rjs, MarketWatch 666
Here are some more selected news articles about the oil and gas industry from the week ended 03 October 2020. Go here for Part 1.
This is a feature at Global Economic Intersection every Monday evening.
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Oil and Gas Companies Indirectly Bailed Out by the Fed – A new report shows the U.S. government bought more than $350 million in bonds issued by oil and gas companies and induced investors to loan the industry tens of billions more at artificially low rates since the coronavirus pandemic began, Bloomberg reported. The Federal Reserve itself bought debt from 19 fossil fuel companies, including 12 that have since been downgraded by independent credit-rating agencies, according to the report, released Wednesday by Public Citizen, Friends of the Earth and Bailout Watch. Since the Federal Reserve began bailing out corporate debt markets in March, a total of 56 oil and gas companies have issued $99.3 billion in debt, including some to companies that have said they may have failed without the cash. By announcing it would buy corporate debts, the reports authors write, the Fed effectively reduced the risk to investors who might otherwise not have purchased the oil and gas companies’ debt. “The Treasury and Fed have provided a massive safety net for the oil industry, whose business model was failing before the pandemic,” Alan Zibel, research director of Public Citizen’s Corporate Presidency Project, told Bloomberg. According to the report: “The bailouts engineered by Treasury Secretary Steven Mnuchin and Fed Chairman Jerome Powell are just the latest example of how corporate-friendly Trump appointees have scrambled to help the fossil fuel industry. The dirty-energy sector has been a key source of support for Republicans as well as a consistent pipeline for Trump administration staffers.”
U.S. oil refiner Marathon Petroleum cuts 12% of staff because of pandemic -Refiners and oil producers have been dismissing staff, slashing spending and reducing production to cope with weak prices and a global glut of fuel. U.S. gasoline futures are down 26% from a year ago and oil is trading down a third from where it began the year. Marathon will incur an up to $175 million charge to third quarter earnings for the 2,050 job cuts, it reported to the U.S. Securities and Exchange Commission. About 20% of the charge will be recouped from its publicly traded pipeline unit, the company said. The Findlay, Ohio, firm disclosed the workforce cuts after Reuters on Tuesday reported employees across the company had been notified of impending layoffs. The cuts includes staff at its Martinez, California, and Gallup, New Mexico refineries, which in July were designated to close. The shutdowns and job cuts will lower overall costs beginning next year, Marathon said in a statement. Employees of its retail gasoline business are not included in the 12% reduction. Marathon in August agreed to sell its Speedway unit to Japan’s Seven & i Holdings Co Ltd 3382.T, a deal expected to close next year. Red ink and job cuts are expected across the oil industry as results start rolling out next month. U.S. refiners typically gear up for winter heating oil demand after summer driving season ends. This year, heating oil and gasoline consumption are both depressed. “The pandemic has resulted in near-record lows on diesel margins, the go-to product for refineries as we enter into the winter heating season,” said Andrew Lipow, president of consultancy Lipow Oil Associates. “The glut in refining capacity has forced these downstream companies into layoffs,” he said.
Shell to cut thousands of jobs as it shifts toward focus on renewable energy – The oil company Royal Dutch Shell has announced plans for significant job losses as it shifts its focus to more low-carbon alternatives. CEO Ben van Beurden announced in an interview on Wednesday that the company would remain dedicated to its promise to combat climate change by reducing carbon emissions. As a consequence of that promise to be carbon neutral, van Beurden said the company would be shedding between 7,000 and 9,000 jobs before 2022. “As a society, we need to keep global warming below two degrees Celsius, and ideally below 1.5 degrees Celsius. That means society needs a net-zero emissions energy system,” van Beurden said. “In that context, a company like Shell has a choice. It can choose to produce oil and gas with the lowest possible emissions. Or it can say: ‘If society wants to get to net-zero emissions and we really want to be an integral part of that society, then we need to get to net zero as well.'” Van Beurden noted that the company would need to make a “dramatic change” to become a carbon-neutral company by 2050. He said the company would be shifting away from oil to produce “predominantly low-carbon electricity” and “low-carbon biofuels.” He noted that the decision will cause “painful” job losses. “This is an extremely tough process. It is very painful to know that you will end up saying goodbye to quite a few good people. I know I, and many others in Shell, will be saying goodbye to people we know well and really like and who have great loyalty to the company. But we are doing this because we have to, because it is the right thing to do for the future of the company,” van Beurden said. “We do not have an exact figure because the details are still being worked out, and we have never had a target to reduce a particular number of jobs. But we can say that, because of the efficiencies we expect to gain, we will reduce between 7,000 and 9,000 jobs by the end of 2022. This includes around 1,500 people who have already agreed to take voluntary redundancy this year, but excludes any who may leave Shell because of divestments,” he later added.
U.S. oil producers on pace for most bankruptcies since last oil downturn (Reuters) – Oasis Petroleum Inc and Lonestar Resources US Inc’s bankruptcy filings are the latest in a slew of restructurings that put oil-and-gas producers on track for their biggest year of bankruptcies since the 2016 shale downturn. Thirty-six producers with $51 billion in debt filed for bankruptcy protection in the first eight months of the year, according to the law firm Haynes and Boone. The coronavirus pandemic crushed fuel demand and left debt-laden producers without access to credit. The number of companies filing still lags 2016, when 70 companies filed for bankruptcy. However, those firms were generally smaller and left a total of $56 billion in debt. Oil and gas producer bankruptcies on track for most since 2016: Reuters Graphic. The United States grew to become the world’s largest oil producer at nearly 13 million barrels per day (bpd), led by shale companies. However, those companies, in order to maintain high levels of production, need to keep drilling new wells to offset the swift decline rates from each site. Many shale producers took on heavy debt to finance their operations. Despite the industry’s growth, investor returns have been weak for years, and share prices struggled even as the broader Standard & Poor’s 500 stock index set ever-higher records. “It is reasonable to expect that a substantial number of producers will continue to seek protection from creditors in bankruptcy before this year is over,” Haynes and Boone said in its bankruptcy report. Oasis, which operates in the Bakken formation of North Dakota and Permian in Texas, announced the news on Wednesday. Lonestar said it was going to file for bankruptcy on Thursday.
Why Oil Giants BP, Chevron, and ConocoPhillips Stocks Tumbled More Than 10% in September – Oil market volatility returned with a vengeance last month. Crude oil prices tumbled as rising coronavirus cases caused concerns that demand will remain under pressure. Brent, the global oil benchmark price, plunged 9.6% on the month, while WTI, the U.S. benchmark, slumped 5.6%. The slump in oil prices walloped oil stocks as most sold off sharply last month. Among the notable decliners were leading global producers BP (NYSE:BP), Chevron (NYSE:CVX), and ConocoPhillips (NYSE:COP), which have lots of exposure to Brent. All three oil giants declined by more than 10% in September, according to data provided by S&P Global Market Intelligence. As major oil producers, BP, Chevron, and ConocoPhillips live and die with oil prices. Because of that, when crude prices tumble, so does their cash flow. Thus, all three will likely report weaker third-quarter earnings following last month’s decline, since Brent’s sell-off pushed it down 0.5% for the quarter. On a positive note, WTI did end the third quarter up 2.4%, which will benefit the U.S. operations of these oil giants. This year’s turbulence caused most oil producers to reevaluate their strategy. BP has basically thrown in the towel on the oil market. The company unveiled its revised long-term outlook on the energy market last month, with a chilling forecast that oil demand has peaked. That’s leading the company to shift capital spending from oil to renewable energy. As a result, BP anticipates that its oil output will decline by 40% over the next decade, while its renewable energy production will grow 20-fold. ConocoPhillips and Chevron aren’t going quite that far in their strategy shifts. ConocoPhillips provided investors with a glimpse of what’s likely ahead. Despite last month’s volatility, the oil market has stabilized a bit in recent months, giving oil companies more visibility into their future cash flows. Usually, that leads them to boost spending on capital projects. But ConocoPhillips chose to bring back its stock buyback program instead, aiming to repurchase $1 billion of its shares during the fourth quarter. That move suggests that the company is prioritizing returning cash to shareholders instead of investing in its oil business’ growth. Meanwhile, Chevron has been tweaking its portfolio following the initial COVID-19 crash in crude oil prices. It tried to jump-start a consolidation wave in the sector earlier this summer by agreeing to acquire Noble Energy in an all-stock deal valuing the target at $13 billion. Meanwhile, EQT proposed to pay $750 million for 800,000 acres in the Marcellus and Utica shale as well as an interest in a pipeline company. That’s well below the $3.4 billion Chevron paid for Atlas Energy and its position in the region a decade ago. This prospective swap suggests that the oil company wants to focus on bulking up its best assets while cutting its losses on others.
An update on Alberta’s two PDH-PP plants and their appetite for propane. – In the past three years, two major commitments were made to construct propane dehydrogenation and polypropylene plants in Alberta to take advantage of the rising bounty and generally low cost of propane supplies in Western Canada. Two Calgary-based midstream companies, Inter Pipeline Ltd. and Pembina Pipeline, each started developing PDH-PP plants in Alberta’s Industrial Heartland area northeast of Edmonton. But then came COVID-19, which set back the timeline for one of the projects and put the other on ice. All this comes as Western Canada’s propane market is in greater flux than usual, and facing a tightening supply/demand balance as exports to Asia ramp up. Today, we provide a status check on the development of these two plants, and what the increase in demand might portend for propane balances in the next few years. The increased role of unconventional oil and gas plays in Western Canada in the past decade has resulted in substantial growth of NGL supplies, including propane – too much propane, it often seemed. To make fuller use of burgeoning propane supply, Alberta’s provincial government in December 2016 initiated a royalty incentive program to promote investment in projects that would upgrade propane into value-added products. Taking advantage of abundant low-cost propane supplies and the government’s royalty incentives, two projects eventually came forward: one by Inter Pipeline Ltd.’s (IPL) Heartland Petrochemical Complex (HPC) and the other by a joint venture of Pembina Pipeline and Kuwait Petroleum Corp. (KPC). Both plants rely on the process of propane de-hydrogenation (PDH) to create polypropylene (PP), a primary chemical building block for everyday products such as automotive parts, plastic containers, and reusable shopping bags. If you love inorganic chemistry, the basic steps behind this process are explained in Things Can Only Get Better.
Nord Stream 2 Nears Completion After Clearing Another Hurdle – Denmark cleared on Thursday the final hurdle to Nord Stream 2 potentially starting operations in Danish waters, while the U.S. continues its attempt to stop the Russia-led natural gas pipeline project. On Thursday, the Danish Energy Agency said it had granted Nord Stream 2 AG, the company behind the project, an operations permit for the Nord Stream 2 pipelines on the Danish continental shelf, on a number of conditions. “Commissioning can only take place when at least one of the pipelines has been tested, verified and when relevant conditions in the construction permit and the operations permit have been met,” the Danish agency said.Meanwhile, U.S. Secretary of State Mike Pompeo said an interview with a German daily last week that the U.S. was building a coalition aimed at preventing the completion of the Nord Stream 2 pipeline that will substantially increase the flow of Russian gas into Europe. “From the US point of view, Nord Stream 2 endangers Europe because it makes it dependent on Russian gas and endangers Ukraine – which in my opinion worries many Germans,” Pompeo told German daily Bild.Germany, the endpoint of Nord Stream 2, has been looking at the economic benefits of the project, while the United States, including President Donald Trump, has been threatening sanctions on the project and even on Germany over its support for the project.The United States, several European countries including the Baltic states and Poland, as well as the European Union (EU), have expressed concern about Russia using gas sales and its gas monopoly Gazprom as a political tool. The United States views Nord Stream 2 as further undermining Europe’s energy security by giving Gazprom another pipeline to ship its natural gas to European markets. In July, the United States warned companies helping Russia to complete Nord Stream 2 that they should ‘get out now’ or face consequences, as the Trump administration steps up efforts to stop the construction of the controversial Russia-led pipeline in Europe. In recent weeks, German Chancellor Angela Merkel has come under pressure from some of her coalition partners to drop the German support for Nord Stream 2 after the poisoning of Russian opposition leader and Putin critic, Alexey Navalny.
Europe’s Oil Refineries Struggling to Cope With Diesel Glut The coronavirus is destroying the profitability of Europe’s oil refiners and the industry is hunkering down for a tough winter. Owners of plants in Finland, France and the Netherlands made announcements in recent weeks that point to the likely closure of facilities in those countries. While that would take out some surplus refining capacity, there’s a more pressing issue: the region’s refineries will operate about 25% below capacity this month, according to IHS Markit. With virus cases surging and diesel trading near its weakest in at least nine years, few are optimistic for a meaningful recovery. Diesel is under pressure from almost every angle. Refineries, responding to still-collapsed jet fuel demand, are making more of the road fuel instead. Another challenge is that gasoline markets are holding up as people avoid public transport by driving their cars to work. That puts pressure on the plants to continue processing crude even if it means churning out more diesel at a time when demand remains lackluster. “It’s very difficult for anyone to make money when diesel cracks are at this level,” said UBS Group AG analyst Henri Patricot, referring to the price gap between the fuel and crude oil in Europe. “We continue to see a demand recovery, but it has slowed.” Diesel now costs about $4 a barrel more than crude in Europe, after falling recently to the lowest in at least nine years. That’s particularly difficult for Europe’s refiners since the fuel represents almost half a typical plant’s output. Gasoline traded at just over $4 a barrel more than crude in Europe on Wednesday. That’s a big improvement on recent months, but still a very low level by historic standards. “We don’t see any scope for strong recovery in refinery utilization through next spring,” said Eleanor Budds, an analyst at IHS Markit. “Demand recovery will be hampered by restrictions on movement and very subdued jet demand.” While refiners can re-jig what they make depending on seasonal changes in demand, European producers would normally expect demand for heating oil, a similar product to diesel, to support margins in winter. The current weakness also coincides with maintenance season in the industry, when the idling of capacity should also offer some support.
Emergency declared at oil spill site on Russias Taymyr Peninsula –The authorities of Russia’s Taymyr Peninsula declared an emergency situation as a result of an oil spill that occurred due to the depressurization of a temporary pipeline during oil pumping, the press service of the local authorities said on Wednesday. The prosecutor’s office of the Krasnoyarsk Territory previously said that an inspection was launched after almost one tonne of crude oil got on the soil and into the Khatanga river. “By the decision of the commission for the prevention and elimination of emergencies and ensuring fire safety of the municipal district, the spill of crude oil in the territory of the Khatanga village was recognized as an emergency. The fuel was spilled while it was being pumped from Lenaneft-2060 tanker to an oil products warehouse. Municipal emergency regime … has been introduced … To take urgent measures to eliminate the emergency spill, a local level of emergency response has been established, its zone is determined by the territory of the spill,” the statement said. On Thursday, a special commission will arrive in Khatanga to assess the damage.
Venezuela Sees Oil Revenue Fall By 99% As U.S. Sanctions Sting -Venezuela’s foreign currency revenues – almost all of which come from crude oil sales – have plunged by 99 percent since 2014, Nicolas Maduro said, blaming most of the losses on the “persecution and criminal blockade” of Venezuela’s oil exports.”In six years of persecution and criminal blockade against Venezuela, the country lost 99 percent of its foreign currency income,” Maduro said on Twitter, sharing a graph showing that Venezuela’s foreign currency income slumped from US$56.6 billion in 2013 to just US$477 million as of September 28, 2020. The decline of 99 percent was attributed in the graphic to the drop in oil prices in that period and the ‘blockade’ of Venezuela’s oil exports. Venezuela’s exports have significantly slumped since the U.S. imposed sanctions on its crude oil exports in early 2019, essentially prohibiting U.S. refiners from buying Venezuelan crude, which was a large part of the imports of crude for U.S. Gulf Coast refiners.U.S. sanctions have exacerbated the already dire state of the Venezuelan oil industry, which is suffering from years of mismanagement, corruption, lack of investment, and the inability of the financially weak state oil firm PDVSA to invest in new production or find customers willing to risk secondary U.S. sanctions if they purchase Venezuelan oil. Venezuela’s oil production and exports have been in freefall for several years, but the U.S. sanctions on its industry and exports, the crash in demand, and the COVID-19 pandemic further accelerated the decline.Venezuela’s oil industry was collapsing even before the oil price crash and the pandemic, due to the increasingly stricter sanctions in the U.S. maximum pressure campaign against Maduro’s regime and its sources of revenues. Oil income is pretty much the only hard currency that Maduro gets, so the U.S. is looking to stifle as much of Venezuela’s oil trade as possible. At the end of August, U.S. Special Representative for Venezuela Elliott Abrams told Reuters in an interview that the U.S. Administration is considering a tightening of the sanctions against Venezuela in the near future.
Mauritius still evaluating Oil Spill damage – Two months after a cargo loaded with fuel ran aground off Mauritius, the shores are still taking stock of the damage. The rich fishing grounds and sensitive marine habitats have been severly damaged by the oil. Conservationists are particularly concerned about the long-term ecological damage to the island’s marine ecosystems. “There is visible pollution, and invisible pollution. Some of the oil doesn’t float but dissolves in the sea. The fish eat it, the coral absorbs it, it goes into the ecosystems”, environmental expert Sunil Dowarkasing said. The oil itself is known as VLSFO — a fuel oil less viscous and lower in sulphur than conventional fuel oils. But this newer generation oil is poorly understood in terms of its environmental impact, said Ware. “They are quite new to us, compared to the heavy fuel oils that we mostly used to deal with… That is why we need to study this, and this will certainly help for future oil spills elsewhere.” The tourism industry, crucial to the country’s economy, has suffered a heavy blow, in what is the worst environmental disaster ever witnessed in the Indian Ocean archipelago. “This oil spill is the worst environmental disaster that Mauritius has ever faced. We are still assessing the damage to the mangroves and the coastal areas. Thousands of volunteers marshalled along the coast in the early days wearing rubber boots and gloves, scrubbing the shoreline clean and stringing together makeshift cordons to contain the oily tide. Since then the government has identified 26 affected sites around the coastline and commissioned the clean-up operation to French company Le Floch Depollution and Greek outfit Polyeco SA. “The work is progressing satisfactorily, but it is a very delicate clean-up operation, we must make sure that it is done in a methodical and systematic way”, Environment Minister Kavydass Ramano said. The clean-up is divided into four phases, and some sites are already in the second or third stage. The ship eventually split in two and the bow and hull of the wreck were towed 15 kilometres (nine miles) offshore and sunk. The stern remains on the reef and the government expects to announce a contract to remove it within days, Ramano said.
Controversial Mauritius ship involved in Operation To Tow Broken Sri Lanka Oil Supertanker — The Panama- flag oil supertanker that had an explosion off the coast of Sri Lanka earlier this month, the MT New Diamond, is being helped by a controversial support vessel that led the operation to deliberately sink a large, Japanese iron ore vessel Wakashio in the coastal waters of Mauritius last month. Satellite analysis by global maritime analytics firm, Windward has revealed that the Malta-flagged fire-ship, Boka Expedition, sailed from the scene of the controversial scuttling of the Wakashio on 24 August, an event that sparked national protests in Mauritius and outside its embassies around the world. Photos taken by the Mauritian Coastguard were shared but the location of the sinking was never disclosed. Within days, a second vessel sunk in Mauritian waters, the Sir Gaetan Duval with the loss of four crew on 31 August. Satellite analysis from Windward reveals that the Boka Expedition was also involved in the Search and Rescue operation there too. Five days later, the Boka Expedition then sailed straight to the MT New Diamond that was on fire for several days off the coast of Sri Lanka. The complex mission to save the MT New Diamond took almost a week and involved a dozen ships from several nations. The Panama-flagged oil supertanker was carrying 2 million barrels of crude oil from Kuwait to India when an onboard explosion 40 miles off the coast of Sri Lanka killed a crew member and put the entire Southeast coastline of the large Indian Ocean island at risk. SMIT Salvage has been involved in the salvage operation in Mauritius with the Wakashio since the start, and the same company is also engaged in the operation for the MT New Diamond that is now off the coast of India and unable to be towed into a port. The Malta-flagged Boka Expedition had been singled out by Greenpeace, who identified several international laws that may have broken with its role in the sinking of the Japanese oil spill ship the Wakashio.
Vietnam approves Exxon’s $5 billion LNG-to-power project – The port city of Hai Phong in Vietnam has approved a liquefied natural gas (LNG) project for power generation, expected to be developed by U.S. supermajor ExxonMobil and to cost US$5.09 billion. The people’s committee of the city of Hai Phong approved the project which is expected start electricity generation in 2026 or 2027, Reuters reported on Friday, citing a statement from the Vietnamese city. The power plant is expected to have an initial capacity of 2.25 gigawatts (GW) when it becomes operational. Capacity will be doubled to 4.5 GW by 2029-2030, the city of Hai Phong said. In June this year, Vietnam’s Prime Minister Nguyen Xuan Phuc told Irtiza Sayyed, President of ExxonMobil LNG Market Development, that Vietnam welcomes the U.S. supermajor’s plans to invest in the Southeast Asian country. Exxon is exploring the possibility of investing in new projects to develop LNG-to-power plants in Vietnam, the local government said at the time. The plans included a 4-GW LNG-to-power plant in Hai Phong, which could start generating power between 2025 and 2030, and a 3-GW gas-fired power complex in the Mekong Delta province of Long An. While LNG-to-power projects led by Exxon in Vietnam could become reality only in the latter half of this decade, the U.S. oil giant is doubling down in the more immediate future on its operations in Guyana – one of its key focus areas. Earlier this week, Exxon made the final investment decision on the Payara offshore oilfield in Guyana.. Payara is expected to yield up to 220,000 bpd of crude oil when commercial production begins in 2024. This would be the third offshore development project of the supermajor in Guyana, which rose to fame thanks to a string of discoveries in the Stabroek block made by Exxon and its partner Hess Corp. So far, the discovered recoverable resources in the block have been estimated at more than 8 billion barrels of oil equivalent.
Chevron resumes arbitration in Thai gas dispute (Reuters) – U.S. energy major Chevron Corp has resumed arbitration proceedings with Thailand to try to resolve a dispute over who should pay for removing offshore assets in the country’s Erawan gas field, the company told Reuters on Friday. The move comes a year after the company suspended the legal process to allow more time for talks with Thailand’s energy ministry, ahead of the end of its concession in April 2022. “For the last 12 months we have been seeking a solution on this issue … in order to reach agreement that protects our rights as an investor,” a company spokesman told Reuters. “With no such solution likely in the near term, we are regretfully compelled to reinstate arbitration.” Thailand’s energy ministry was not immediately available for comment, but has said it would be ready to enter arbitration if needed. The dispute resulted from a retroactive Thai law in 2016 requiring gas field operators to pay the costs of decommissioning assets they have installed, including those they will transfer free of charge to a next operator. Last year, Thailand asked Chevron to pay the full decommissioning costs of around $2 billion for assets in the Erawan gas field, including those it will hand over to PTT Exploration and Production Pcl, a unit of the state-owned PTT Pcl. Chevron argues that, under the terms of its initial contracts from 1971, it is only liable for infrastructure that is no longer deemed usable and the transferred assets are the responsibility of the new operator.
Saudi Aramco ships first cargo from Jizan refinery, heading to Singapore: Kpler – – Saudi Aramco is sending its first cargo from its new Jizan refinery on the kingdom’s west coast to Singapore, the clearest indicator that the 400,000 b/d facility is in advanced phases of startup. Aramco chartered the UACC Eagle to send 475,000 barrels of gasoil to Singapore from Jizan, according to data analytics firm Kpler. Aramco CEO Amin Nasser said in August that first processing at Jizan was expected to begin by the first quarter of 2021. Aramco declined to comment. The UACC Eagle was heading for the Bab el-Mandeb strait, a sea route chokepoint between the Horn of Africa and the Middle East that connects the Red Sea to the Gulf of Aden and Arabian Sea. Kpler said the destination is Singapore. Saudi Arabia sent two shipments of crude to Jizan last year in preparation for startup, with 2.03 million barrels arriving in October and another 2 million barrels in November, according to Kpler data. The newly constructed 400,000 b/d refinery, also spelled Jazan, will start with crude runs of 200,000 b/d before ramping up to 400,000 b/d, Nasser said in August. It had previously been expected to be commissioned at the end of 2019 and be ready for full operations in the second half of 2020. The refinery, in the far south of Saudi Arabia on the Red Sea about 60 km from the Yemeni border, has been targeted in several missile attacks by Iran-backed Houthi rebels in Yemen, though Saudi officials say they have intercepted each attempted strike. The Bab el-Mandeb is 18 miles wide at its narrowest point, limiting tanker traffic to two 2-mile-wide channels for inbound and outbound shipments, according to the US Energy Information Administration. It estimated 6.2 million b/d of crude oil, condensate and refined petroleum products flowed through the strait toward Europe, the US and Asia in 2018, an increase from 5.1 million b/d in 2014.
Oil steady as surging virus cases cloud demand outlook – Oil prices were largely steady on Monday but on track for their first monthly fall since April as rising coronavirus cases continued to spur concerns about demand. Brent crude was unchanged at $41.92 per barrel. West Texas Intermediate was at $40.13 a barrel, down 12 cents or 0.3%. “The rise in daily infections has accelerated and the total number is now very close to 33 million. The most impacted countries are the populous ones,” PVM analyst Tamas Varga said. “The speed with which the virus is spreading is the main concern for both health officials and financial investors.” Russian Energy Minister Alexander Novak said on Monday that the global oil market has been stable for the past few months and the demand-supply balance restored, but warned of the risks of a second wave of COVID-19 cases. Meanwhile one of the heaviest clashes between Armenia and Azerbaijan since 2016 broke out over the weekend, reigniting concern about stability in the South Caucasus, a corridor for pipelines carrying oil and gas to world markets. Despite efforts by the Organization of the Petroleum Exporting Countries and their allies to limit output, more crude is being exported from OPEC producers Iran and Libya. OPEC Secretary General Mohammad Barkindo said on Sunday that commercial oil inventories in OECD countries are expected to stand only slightly above the five-year average in the first quarter of 2021, before falling below that level for the rest of the year. A factor that may offer some support to the market is the prospect of industrial action in Norway, where a workers’ strike that may take place on Sept. 30 is threatening to cut its production by 900,000 barrels per day, the Norwegian Oil and Gas Association (NOG) said on Friday.
Oil up 1% on economic hope; virus fears check price gains (Reuters) – Oil prices rose 1% on Monday as global equities rallied on hopes for another U.S. stimulus package, but rising virus cases fed concerns about fuel demand and kept oil futures from moving higher. Brent crude LCOc1 settled at $42.43 a barrel, up 51 cents, or 1.22%. U.S. West Texas Intermediate CLc1 settled at $40.60 a barrel, rising 35 cents, or 0.87%. “In my opinion, the most likely event capable of moving the crude oil market to the next level would be the passing of a coronavirus stimulus package,” said Bob Yawger, director of energy futures at Mizuho. Oil followed Wall Street higher as American political talks continued for another COVID-19 relief bill after U.S. House Speaker Nancy Pelosi on Sunday said she thought a deal could be reached with the White House. A weaker U.S. dollar, which moves inversely with oil prices, also helped crude futures. Still, the global health crisis, which has slashed global fuel consumption, kept oil prices from pushing much higher. “The speed with which the virus is spreading is the main concern for both health officials and financial investors,”
Oil falls as demand worries counter U.S. stimulus hopes – Oil prices fell on Tuesday, paring gains from the previous session, as persistent demand concerns due to the coronavirus pandemic outweighed hopes for a new U.S. stimulus package. More than 1 million people have died of Covid-19 as of Tuesday, a Reuters tally showed, with fatalities and infections surging in several countries. U.S. West Texas Intermediate crude futures dropped 21 cents, or 0.52%, to $40.39. The more-active Brent crude futures for December fell 19 cents, or 0.4%, to $42.68 a barrel. The November contract, which expires on Wednesday, fell 13 cents to $42.30 per barrel. Commodities markets crept up earlier in the day as Democratic lawmakers unveiled a new $2.2 trillion coronavirus relief bill, which U.S. House of Representatives Speaker Nancy Pelosi said was a compromise measure. “If it happens, the U.S. stimulus checks will go a long way to shoring up U.S. oil demand at a most critical juncture and could move oil prices back into a pre-September frame of mind,” Brent and WTI in August hit their highest levels since early March on optimism over rising fuel demand and major oil producers’ strong compliance with promised supply cuts. Since then, though, they have dropped about $3 on demand worries. “The rally (overnight) has quickly run out of steam in Asia,” “The price action suggests that although the speculative community is still short … the underlying bearish drivers are still ascendant,” he said, pointing to reduced consumption and a global oversupply. Investors will be looking for signs of U.S. demand growth in data from the American Petroleum Institute on Tuesday and the Energy Information Administration on Wednesday. Five analysts polled by Reuters on average estimate U.S. crude oil inventories rose by 1.4 million barrels in the week to September 25. They expect gasoline stockpiles fell by 1.6 million barrels and distillate inventories, which include diesel and jet fuel, fell by 800,000 barrels. Traders were also keeping an eye on clashes between Armenia and Azerbaijan over the Nagorno-Karabakh region. If the conflict escalates it could affect oil and gas exports from Azerbaijan, analysts said. Meanwhile, data from Japan’s Ministry of Finance showed that the country’s imports of crude oil in August fell more than 25% from a year earlier.
Oil drops 3% on weak demand outlook and higher OPEC supplies (Reuters) – Oil prices fell over 3% on Tuesday to their lowest in two weeks on worries about the outlook for fuel demand as Europe and the United States grappled with a surge in new coronavirus infections. Investors in stocks and commodities also remained cautious ahead of the first U.S. presidential debate between Democrat Joe Biden and Republican Donald Trump later on Tuesday. .DJI.SPX “Today’s lower trade generally followed declines in the equities,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois. On its second to last day as the front-month, Brent LCOc1 futures for November delivery fell $1.40, or 3.3%, to settle at $41.03 a barrel, while the more active Brent contract for December LCOc2 fell 3.1% to settle at $41.56. U.S. West Texas Intermediate (WTI) crude CLc1 fell $1.31, or 3.2%, to settle at $39.29 per barrel. Those price declines came ahead of the release of U.S. oil inventory data from the American Petroleum Institute (API) on Tuesday and the U.S. Energy Information Administration (EIA) on Wednesday that is expected to show crude stockpiles increased 1.6 million barrels last week. [API/S] [EIA/S] More than a million people worldwide have died from COVID-19, according to a Reuters tally, a bleak milestone in a pandemic that has devastated the global economy and demand for fuel.
WTI Holds Stimulus-Hope Gains After Surprise Crude Draw — Oil prices rebounded overnight as stocks rallied on fiscal stimulus hope and the API-reported inventory data sank in. “Traders see oil demand as fragile,” said Paola Rodriguez-Masiu, senior oil-market analyst at Rystad Energy. “We may see some production needing to be sent to inventories in 2020’s last quarter.” DOE
- Crude -1.98mm (+1.9mm exp)
- Cushing +1.785mm
- Gasoline +683k (-1.3mm exp)
- Distillates -3.184mm (-1.7mm exp)
A surprisingly large crude draw combined with a big distillates draw… Source: Bloomberg Most of the storm-impacted noise has now left the data. WTI hovered around $39.50 ahead of the official data and maintained those levels immediately after… Finally, we note that Bloomberg Intelligence Senior Energy analyst Vince Piazza warns that “daily U.S. crude output has crept close to 11 million barrels a day from the May low of 10 million, adding supply to a market whose downstream demand remains depressed by the effects of Covid-19. Well completions could drive production higher, and that would be compounded by any move of WTI into the high $40s. Coronavirus outbreaks in Europe and elsewhere add to the pressure on demand, and we believe adjusted storage remains high and limits long-term rally prospects.”
Oil prices settle higher as U.S. supplies fall a third week – U.S. oil futures settled higher Wednesday after U.S. government data showed a third consecutive weekly decline in domestic crude supplies. Prices, however, still suffered their first monthly decline since April as concerns persist about the global economic outlook and its impact on demand. The Energy Information Administration reported Wednesday that U.S. crude inventories fell for a third straight week, down by 2 million barrels for the week ended Sept. 25. That compared with an average climb of 1.9 million barrels expected by analysts polled by S&P Global Platts, while the American Petroleum Institute on Tuesday had reported a fall of 831,000 barrels. The data revealed an unexpected draw in crude oil, but traders should “definitely take note of the large build” at the trading hub in Cushing, Okla., Tariq Zahir, managing member at Tyche Capital Advisors, told MarketWatch. The EIA data showed crude stocks at the Cushing, Okla., storage hub rose by 1.8 million barrels for the week. Overall, the risk for oil prices is to the downside, with another wave of the coronavirus impacting demand as the market goes through the fourth quarter, said Zahir. “Couple that with additional supply that has come back to the market from Libya,” following the recent lift of a months-long blockade on crude exports.
Oil drops 3% on weak demand outlook and higher OPEC supplies (Reuters) – Oil prices fell 3% on Thursday as rising coronavirus cases around the world dampened the demand outlook, and a rise in OPEC output last month also pressured prices. Brent crude LCOc1 futures fell $1.37, or 3.2%, to settle at $40.93 a barrel after dropping to a low of $39.92. U.S. West Texas Intermediate (WTI) crude CLc1 futures ended down $1.50, or 3.7%, at $38.72 after sliding more than 6% to a session low of $37.61. “It has become evident that the virus has not been contained. Infection rates are going up, the global death toll has surpassed the 1 million mark and the world is becoming a gloomy place once again,” said PVM Oil analyst Tamas Varga. In the United States alone the pandemic has infected more than 7.2 million and killed more than 206,000. Europe’s worst COVID-19 hot spot, Madrid, will go into lockdown in coming days and Moscow’s mayor ordered employers to send at least 30% of their staff home, as several European countries reported records in new infections. Standard Chartered analysts said they now expect global demand to fall 9.03 million bpd in 2020 and recover by 5.57 million bpd in 2021, leaving the 2021 average slightly below the 2016 average. Increasing oil supply from the Organization of the Petroleum Exporting Countries (OPEC) also weighed on the market, with output in September up 160,000 barrels per day (bpd) from August, a Reuters survey found. The rise was largely on the back of higher supplies from Libya and Iran, both exempt from an oil supply pact between OPEC and allies led by Russia, a grouping known as OPEC+.
Oil settles at lowest price in more than 2 weeks – Oil futures were sharply lower Thursday, with prices logging their lowest settlement since mid-September, as worries about rising cases of COVID-19 worldwide fed expectations for a slowdown in energy demand. West Texas Intermediate crude for November delivery dropped $1.50, or 3.7%, to settle at $38.72 a barrel on the New York Mercantile Exchange, following a 2.4% gain on Wednesday. Prices for the U.S. benchmark, based on the front-month contracts, saw monthly fall of 5.6%, but ended 2.4% higher for the quarter, according to Dow Jones Market Data. Oil prices in September suffered their first monthly decline since April. December Brent crude shed $1.37, or 3.2%, at $40.93 a barrel after trading as low as $39.92 on the ICE Future Europe exchange. Prices for both WTI and Brent marked the lowest front-month settlements since Sept. 15 reported MarketWatch. “The oil market can’t shake its demand fear funk even though U.S. oil supply continues to tighten,” said Phil Flynn, senior market analyst at The Price Futures Group. The Energy Information Administration on Wednesday reported an unexpected decline of 2 million barrels in U.S. crude supply. That marked three weekly declines in a row. “Lingering demand concerns makes the market less concerned about the trend of tightening supply,
Oil loses 4% after Trump gets coronavirus and economies wobble (Reuters) – Oil prices fell more than 4% on Friday, and posted a second weekly decline after U.S. President Donald Trump tested positive for COVID-19, roiling risky assets, and as rising global crude output threatened to overwhelm the market’s weak recovery. Benchmark Brent and U.S. crude each posted a second straight week of losses. The uncertainty surrounding the U.S. president’s health added to a series of jitters, including a lackluster U.S. unemployment report and increased supply from major world oil producers. “It’s been a rough week, and now the president’s diagnosis sends a shudder through markets,” . “The COVID-19 pandemic has weighed more on the oil market than any other asset class.” This week marked the grim milestone of 1 million deaths and several countries are tightening restrictions and contemplating lockdowns as infections accelerate. Brent crude was down $1.66, or 4.1%, at $39.27 a barrel. Brent was down 7% on the week. U.S. oil settled down $1.67, or 4.3% at $37.05 a barrel, an 8% drop on the week. Both benchmarks were down for a second consecutive week. The U.S. labor market recovery slowed in September, as non-farm payrolls increased by 661,000 jobs last month after advancing 1.49 million in August, the U.S. Labor Department said. Trump’s announcement that he and First Lady Melania Trump had tested positive for COVID-19 prompted sell-offs in equity markets worldwide. Increasing supply also weighed on the market. U.S. energy firms added oil and natural gas rigs in the latest week, according to energy services firm Baker Hughes Co, a signal of more supply to come. The increase was the third in a row, and came as price increases in recent months prompted some producers to start drilling again. Crude supplies from the Organization of the Petroleum Exporting Countries (OPEC) rose in September by 160,000 barrels per day (bpd) from a month earlier, a Reuters survey showed.
Oil sells off after Trump’s coronavirus diagnosis, sending U.S. prices down 8% for the week – Oil prices were hit Friday by news that President Donald Trump said he contracted coronavirus, adding to the industry’s concerns about rising cases of the disease worldwide which may dent demand for the commodity. The news that Trump and First Lady Melania Trump tested positive for Covid 19 “creates a new round of market uncertainty and reinforcing fears of a second wave of the virus, which will harm the economy and projected energy demand,” “Broader implications of the diagnose for energy, not only for the short term but for the long-term, cannot be understated. ” West Texas Intermediate crude for November delivery tumbled $1.67, or 4.3%, to settle at $37.05 a barrel on the New York Mercantile Exchange, the lowest finish since Sept. 8, according to Dow Jones Market Data. December Brent crude futures slid 4.1%, or $1.66, to $39.27 a barrel on ICE Futures Europe, settling at the lowest front-month contract price since June 12. Based on the front-month contracts, WTI futures lost about 8% and Brent futures declined by 7.4% for the week. Oil prices had logged their lowest settlement since mid-September on Thursday, driven by fears that COVID-19 cases will drive demand lower, even as U.S. supply tightens up. The Energy Information Administration on Wednesday reported a surprise fall of 2 million barrels in U.S. crude supply, the third straight weekly decline. Still, data from Baker Hughes Friday showed the number of active U.S. rigs drilling for oil rose by 6 to 189 this week, marking as second straight weekly rise and implying an upcoming rise in output. The crude market was already breaking down “before the announcement of the president’s COVID diagnosis,” . “Fears around demand growth through the 4th quarter have undermined market sentiment.” Investors in oil markets have been keeping close watch on the disease’s expansion, which has worsened in parts of Europe, because it has a direct effect on the commodity if economies begin to slow down. Among other petroleum products, November gasoline RBX20, -0.40% lost 2.5% to $1.1235 a gallon, with prices ending 5.6% lower for the week, and November heating oil HOX20, -0.09% declined by 3.6% to $1.085 a gallon, for a weekly loss of 4.3%.
Oil prices likely to continue to struggle in the fourth quarter as demand lags – Oil prices are expected to rise just slightly in the final quarter of the year, held back from further gains by a deep chill in global travel and a still healing economy. Analysts forecast the prices of Brent and West Texas Intermediate should rise to the low to mid-$40s per barrel, but they also see risks tilted toward another drop in oil prices. “If anything, they’re vulnerable to falling into the low $30s. The oil market is taking Covid the hardest of all of the asset classes out there,” . “Demand is just not coming back, especially for jet fuel.” Oil prices have clawed back from a crushing decline earlier this year, as the global economy shut down. Oil futures prices were even temporarily negative, as the market reacted to huge oversupply and a big drop in global demand. WTI futures fell below $40 this week and settled at $38.71 Thursday, falling 3.9% amid worries about the coronavirus and reports of a rise in OPEC output. “It looks really bleak right now. This was a bust for the ages,” “The demand just isn’t picking up.” Bank of America expects oil prices to remain range bound in the mid $40s to year end. “In terms of downside risks, a big second Covid-19 wave was always going to rank first, but a warm winter now ranks second given the persistent surplus in distillate fuels,” Blanch expects little price movement even though he expects the oil market could move into a 4.9 million barrel a day deficit, due to OPEC cuts if demand does rise. “Yet diesel and jet fuel/kerosene make up by far the largest petroleum product group in the oil market,” notes Blanch. He said that means crude oil prices cannot gain real traction until distillate demand, including jet fuel, recovers to a more normal level. The oil industry has been cutting back on production and spending on further development. Royal Dutch Shell, for instance, is looking to slash up to 40% of the cost of producing oil and gas in an effort to preserve cash so it can overhaul its operations and focus more on renewables and power, according to Reuters. The industry is also debating how much of the Covid-related cutbacks could be permanent. A recent report from BP supported a longer-term view that fossil fuel demand may have already hit its limit and may not be likely to fully recover from the impact of the virus. The Organization of Petroleum Exporting Countries (OPEC) recently cut back its near-term demand outlook, and now expects demand to average 90.2 million barrels a day in 2020, down 400,000 barrels a day from its last forecast and a decrease of 9.5 million barrels a day from a year ago. “There are still these serious headwinds for oil in terms of the macro outlook,” “OPEC is very focused on compliance. It’s just a question to me of how much more can you get out of these producers in terms of compliance.”
Saudi Arabia’s Economy Hit Hard By The Oil Price Crash – Saudi Arabia’s economy shrank by 7 percent, with the unemployment rate hitting a record high in the second quarter as the combined effect of the oil price crash and the coronavirus pandemic hit the world’s largest oil exporter hard. Saudi Arabia’s gross domestic product (GDP) slumped by 7.0 percent year over year in Q2, the Kingdom’s General Authority for Statistics said on Wednesday. The oil sector contracted by 5.3 percent, while the non-oil sector shrank by 8.2 percent due to the restrictions and lockdowns to curb the pandemic. In Q2, the value of exports of goods and services plunged by 55.8 percent from a year earlier, mainly due to a 61.8-percent plunge in the value of oil exports, the statistics authority said. Meanwhile, the Saudi unemployment rate increased to 15.4 percent in the second quarter of 2020, a record high and 3.1 percentage points higher than in the same period of last year. Among the unemployed Saudis, 63.1 percent belonged to the age group of 20-29 years, the General Authority for Statistics said. The collapse in oil prices – to which Saudi Arabia itself contributed when it flooded the market with oil during the worst demand crash in April – has forced the Kingdom to take some very unpopular measures such as tripling the value-added tax (VAT), reducing payouts to poorer households, and discontinuing cost-of-living allowances for state workers. Saudi Arabia’s economic outlook for this year remains uncertain amid the pandemic-driven economic slowdown and the collapse in oil prices that led to the Kingdom slashing its oil production as part of the new OPEC+ pact, Ahmed al-Kholifey, governor of the Saudi Arabian Monetary Authority (SAMA), said earlier in September.
Difficult days await Saudi citizens – Middle East Monitor -Deflation, increased unemployment, expanding poverty rates, a growing deficit in the public budget, a significant decline in general revenues, foreign exchange reserves and public reserves, stagnation in the markets, paralysis in vital activities, expatriate workers fleeing, a sharp decline in the profits of banks and major companies and salaries being paid late – these are some of the most significant recent indicators of the state of the Saudi economy.These factors also confirm that worse may be coming for the kingdom and that a financial and economic crisis is imminent. This crisis will directly affect the living conditions of citizens who may find themselves facing a difficult reality.Some of Saudi’s most critical tribulations are the increase in the cost of living and the rise in the prices of basic commodities, including gasoline and diesel, in a country that is the largest oil producer in the world. Moreover, the cost of water, electricity, public transport and telephone bills have magnified, while taxes have risen, especially VAT. Perhaps imposing new taxes previously unknown to the kingdom, such as income tax, may follow, as well as other austerity measures.Saudi Arabia may need to take other steps including the government’s acceleration of the privatisation policy, such as the sales of companies and vital facilities to the private sector and foreign investors, especially healthcare and education – including schools, hospitals and pharmacies.It may also need to sell all flour mills, desalination companies, electricity production and 27 airports, while reducing spending, expediting the pace of external and internal borrowing, and therefore increasing public debt, while continuing to withdraw from cash reserves deposited abroad. Saudi may also postpone the implementation of many major investment projects that aid the economy, create new jobs and augment the rate of economic growth.The latest indicators issued on Wednesday by the kingdom signal a jump in the unemployment rate among Saudis, as the rate increased during the second quarter of this year to 15.4 per cent, compared to 11.8 per cent during the first quarter of the year.It is noteworthy that the rise in the unemployment rate occurred despite around 2.5 million expatriate workers leaving the kingdom since 2017, and there are 1.2 million expatriate workers expected to leave the kingdom during the current year, due to the outbreak of the coronavirus. Major companies have also stopped paying salaries, while private sector companies are lowering them, while continuing to implement the Saudisation policy of replacing foreign workers with national workers, as well as localising many economic sectors. This growth in unemployment rates is occurring in Saudi Arabia, one of the richest Arab countries and the largest oil producer in the world. It may disturb the calculations of the decision-maker who had planned to reduce the unemployment rate among Saudis to only seven per cent, according to the Saudi Vision 2030, and to about 10.6 per cent for the year 2020, according to the expectations of the Ministry of Economy.
Kuwait calls for end to Israeli occupation of Palestine – The Kuwaiti Prime Minister reaffirmed his country’s principled and firm position in supporting the choices of the Palestinian people to obtain their legitimate rights, Anadolu Agency reports. “The Palestinian cause still occupies a central historical and pivotal position in Arab and Islamic worlds,” Sabah Khaled Al-Hamad Al-Sabah told the 75th session of the UN General Assembly via video link. Al-Sabah stressed the importance of continuing efforts to relaunch negotiations to reach a just and comprehensive peace in accordance with the Arab Peace Initiative. He called for an end to the Israeli occupation and the establishment of an independent Palestinian state with East Jerusalem as its capital. READ: The UAE’s ‘Hope Probe’ offers no hope to the Palestinians Al-Sabah also reasserted Kuwait’s position that the political solution is the only solution to the ongoing crisis in Yemen. He called on all parties to agree to the proposals put forward by Martin Griffiths, the UN’s special envoy for Yemen. The Kuwaiti prime minister also urged all parties to the Libyan conflict to exercise restraint and allow peaceful solutions based on dialogue.
Rocket Attacks On Baghdad’s Green Zone Stepped Up Amid US ‘Warning’ It’ll Shutter Embassy -Rumors seemed to fly all day Sunday on Mideast social media channels based on unnamed US sources that a major attack on the US Embassy in Baghdad’s Green Zone was imminent.This at the same time it’s being widely reported that the State Department is actually considering shuttering the embassy’s operations altogether, angry at the Iraqi government’s inability to reign in the Shia paramilitary groups likely responsible for repeat mortar and missile attacks on the area. And now Monday more Katyusha rockets have been launched targeting the embassy, though they are being reported to have landed somewhere in the Green Zone off target.This after the prior day The Wall Street Journal reported the following: The Trump administration has warned Iraq it is preparing to shut down its embassy in Baghdad unless the Iraqi government stops a spate of rocket attacks by Shiite militias against U.S. interests, Iraqi and U.S. officials said Sunday, in a fresh crisis in relations between the two allies. Secretary of State Mike Pompeo delivered the warning in recent calls to Iraqi President Barham Salih and Iraqi Prime Minister Mustafa al-Kadhimi, the officials said.We doubt the majority of Iraqis will miss the American presence, given in recent years anti-American demonstrations have grown, demanding the end of US troop presence. Given the US “warning” to Baghdad, it’s now much more likely the rocket attacks and rumors of a Benghazi style ground assault upon the embassy complex will grow. The pro-Iranian militias, seeing the Americans are “on their way out” will only attempt to hasten the swift exit.
Yemens FM blames Houthis for looming Safer oil tanker disaster – Yemen’s Foreign Minister Mohammed Al-Hadhrami blamed the Houthi militia for the Safer oil tanker’s looming disaster as the militia continued to block the United Nation’s help to access the damage. Al-Hadhrami stressed the importance of pressuring the Houthis to allow technicians from the international organization to access the tanker during a meeting with senior British diplomats on Thursday, state news agency Saba New reported. Meanwhile, Saudi Arabia warned the UN Security Council that an “oil spot” has been sighted in a shipping lane 50 km west of abandoned and decaying Safer oil tanker off the coast of Yemen. Experts fear it could spill 1.1 million barrels of crude into the Red Sea. The tanker has been moored near Ras Issa oil terminal for more than five years. The UN previously warned that it could leak four times as much oil as was spilled during the 1989 Exxon Valdez disaster off the coast of Alaska. UN Secretary-General Antonio Guterres and the Security Council have repeatedly called on Houthi insurgents in Yemen to grant access the tanker for a technical assessment and emergency repairs. UN humanitarian chief Mark Lowcock said last week that a new UN proposal to assess and carry out initial repairs on the Safer oil tanker was being discussed with the Houthis. “We hope the new proposal will be quickly approved so the work can start,” he said. Meanwhile President Abed Rabbo Mansour Hadi on Thursday urged Houthis to stop impeding the flow of urgently needed humanitarian aid following a warning from the UN humanitarian chief last week that “the specter of famine” has returned to the conflict-torn country. His plea came in a pre-recorded speech to the UN General Assembly’s ministerial meeting being held virtually because of the COVID-19 pandemic. “We are trying to save our country and establish a just and lasting peace,” Hadi said, blaming Iran for meddling in his nation. “The objective is to stop the bloodletting in Yemen,” he said. Lowcock told the UN Security Council last week that famine in Yemen, the Arab world’s poorest country, was averted two years ago because donors swiftly met 90 percent of the UN’s funding requirements. But the UN’s latest figures show that the current $3.4 billion appeal is less than 38 percent funded.
Armenia Stands ‘Ready’ To Trigger Defense Pact With Russia As Azerbaijan Fighting Intensifies – Armenia could trigger its collective defense pact with Russia, the latter which also has a sprawling military base at Gyumri in the northwest part of the country, but on Monday the Armenian Ambassador to Moscow, Vardan Toganyan, has said the escalation of fighting with Azerbaijan has not reached that point yet. Russia’s TASS, however, has underscored that this remains a distinct possibility at a moment Armenia has reported at least 31 of its troops killed in the contested Nagorno-Karabakh border region, which it says its forces are protecting from Azerbaijan’s shelling and aggression: According to him, Yerevan and Moscow continue to boost defense cooperation. “We believe that should the need arise, we will request Russia [for additional military assistance],” the envoy pointed out. “As of today, we don’t think that we need additional troops or other forces,” he added. “However, we do believe that Russia has a major role in the Caucasus and is capable of using political methods to put an end to bloodshed,” Toganyan emphasized.Putin held a phone call with Armenian Prime Minister Nikol Pashinyan over the situation which began this weekend in the historically restive autonomous region which though claimed by Azerbaijan (and internationally recognized as such), declared independence in 1991 as an Armenian ethnic enclave. President Trump also weighed in, calling for an immediate halt to fighting and deescalation of tensions. Congressional leaders have also condemned the violence.
Deadly Armenia-Azerbaijan clashes unlikely to cause an oil spike, analyst says – – Deadly clashes between Armenia and Azerbaijan are unlikely to result in major disruptions to energy production and supplies, analysts say, despite the region being a critical corridor for pipelines transporting oil and gas to the global markets. “There is not really much anticipation that this will boil over into something more serious for oil and commodity markets,” “If the geopolitical premium is not already in the price, I don’t think we’re going to see much reaction here on in,” Bell added, despite a worry that recent clashes could impact production or pipeline facilities, which have been subject to illegal taps, attack and sabotage during periods of heightened tension in the past. The clashes between the two former Soviet republics in the South Caucasus are the latest flare-up of a long-running conflict over Nagorno-Karabakh, a breakaway region of Azerbaijan run by ethnic Armenians. At the weekend, Armenia said Azerbaijan had carried out an air and artillery attack on Nagorno-Karabakh, but Azerbaijan said it had responded to Armenian shelling, according to NBC News, which has not been able to independently confirm the number of injuries or fatalities. Azerbaijan is the 24th largest crude oil producer in the world and a significant producer of natural gas, which both account for more than 90% of Azerbaijan’s exports. Its pipelines make it a strategic gateway to oil and gas in the Caspian and a growing source of energy security for Europe. Azerbaijan has three crude oil export pipelines. The largest is the 1,768-km-long Baku-Tbilisi-Ceyhan (BTC) pipeline, which transports crude and condensates through Azerbaijan, Georgia and Turkey. It has two main gas export pipelines, including the 693 km South Caucasus Pipeline (SCP) that transports gas from the Shah Deniz field through Georgia to Turkey parallel to the BTC crude oil pipeline, according to the IEA. Even so, Bell says the risk of further military action might not be enough to prompt a commodity price spike. “I think oil markets have become very attuned and very good at pricing in what is an actual disruption to output that would prompt prices going higher,” he said, suggesting that even a brief interruption to output or disruption to a pipeline would easily be recovered given the vast amount of spare crude and gas production capacity elsewhere around the world.
Armenian-Azerbaijani War Rages In South Caucasus — On September 27, a new regional war in South Caucasus arose from the Armenian-Azerbaijani conflict over the contested Nagorno-Karabakh region. Pro-Armenian forces captured the region in the early 90s triggering an armed conflict between Armenia and Azerbaijan. Further development of the hostilities and the expected offensive by pro-Azerbajian forces were stopped by a Russian intervention in May of 1994. As of September 2020, the Nagorno-Karabakh region and nearby areas are still under the control of Armenian forces, de-facto making it an unrecognized Armenian state – the Republic of Artsakh (more widely known as the Nagorno-Karabakh Republic). The 2018 political crisis in Armenia the led to a seizure of power in the country by de-facto pro-Western forces led by current Prime Minister Nikol Pashinyan which did not strengthen Armenian positions over the territorial dispute. The double standard policy of the Armenian government, which was de-facto conducting anti-Russian actions but keeping public rhetoric pro-Russian, also played its own role. For years, Russia has been the only guarantor of Armenian statehood and the only force capable to rescue it in the event of a full-scale Azerbaijani-Turkish attack. Nonetheless, the Armenian leadership did pretty well in undermining its strategic partnership with its neighbor. On the other hand, the political and economic situation in Azerbaijan was more stable. Baku also was able to secure good working relations with Russia. Together with the developing strategic partnership with Turkey, a natural historical ally of the country, and the strengthening of Turkish positions in the Greater Middle East, led to an expected attempt by Azerbaijan to restore control over the contested territories. The Azerbaijani advance started on in the morning of September 27 and as of September 28, the Azerbaijani military said that it had captured seven villages and several key heights in the Fuzuli and Jabrayil areas. The military also announced that Azerbaijan captured the Murov height of the Murovdag mountain range and established fire control of the Vardenis-Aghdar road connecting Karabakh with Armenia. The Ministry of Defense said that this will prevent the transportation of additional troops and equipment from Armenia along the route in the direction of the Kelbajar and Aghdar regions in Karabakh. The Azerbaijani Defense Ministry also claimed that over 550 Armenian soldiers were killed and dozens pieces of Armenian military equipment, including at least 15 Osa air defense systems, 22 battle tanks and 8 artillery guns, were destroyed. All statements from the Armenian side about the casualties among Azerbaijani forces were denounced as fake news. Azerbaijan calls the ongoing advance a “counter-offensive” needed to put an end to Armenian ceasefire violations and to protect civilians. President Ilham Aliyev signed a martial law decree and vowed to “restore historical justice” and “restore the territorial integrity of Azerbaijan” Turkey immediately declared its full support to Azerbaijan saying that it is ready to assist it in any way requested, including military support.
Turkey’s Erdogan calls on Armenians to stand against leadership amid clashes with Azerbaijan (Reuters) – Turkish President Tayyip Erdogan on Sunday called on Armenia’s people to take hold of their future against “leadership that is dragging them to catastrophe and those using it like puppets”, following clashes between Armenian and Azeri forces over the breakaway region of Nagorno-Karabakh. Armenia on Sunday declared martial law and mobilised its male population after the clashes. Turkey has condemned Armenia for what it said were provocations against Azerbaijan. “While I call on the Armenian people to take hold of their future against their leadership that is dragging them to catastrophe and those using it like puppets, we also call on thire world to stand with Azerbaijan in their battle against invasion and cruelty,” Erdogan said on Twitter, adding that Turkey will “increasingly continue” its solidarity with Baku.
Full-Blown War In Caucuses Rising As Turkey Vows To Help Azerbaijan Take Back “Occupied” Lands – Already Azerbaijan and Armenia are locked in their worst fighting in decades in the disputed Nagorno Karabakh region. Now only three days into fighting, at least 100 people have been killed, which includes soldiers and civilians on both sides, amid tank warfare and the deployment of infantry and artillery units. There’s also increasing signs of direct aerial combat.Raising the likelihood of a full-blown regional war in the Caucuses, Turkish President Erdogan’s office shocked on Tuesday with a direct threat of intervention on its ally Azerbaijan’s behalf:Turkey raised the spectre of full-blown war in the flashpoint Caucus region of Nagorno Karabakh on Tuesday after vowing to help its ally Azerbaijan seize the disputed territory back from Armenian control.As fighting in the region raged for a third day, Turkey said it was “fully committed” to helping Azerbaijan take back its “occupied” lands, which Azeris were driven out of during the civil war of the early 1990s.Azerbaijan fired artillery against Armenian forces on Wednesday in the biggest eruption of their decades-old conflict since the mid-1990s https://t.co/0DHlqLeZf7 pic.twitter.com/G22DxIxU6b – Reuters (@Reuters) September 30, 2020The spokesman for the Turkish president made the statements already as Azerbaijan is poised for a full-scale military incursion into Nagorno Karabakh, which would trigger a national Armenian armed forces response.Yereven already on Sunday into Monday gave a nationwide ‘full troops mobilization’ order, and additional forces are flooding into the breakaway region which Armenia has for decades protected, despite the territory being officially within Azerbaijan’s borders.Tensions ran high between Ankara and Yerevan after on Tuesday Armenia’s Defense Ministry claimed a Turkish F-16 shot down an Armenian SU-25. While Turkey immediately denied the claim, slamming it as “fake news” and “propaganda,” Armenia the following day published photographs of wreckage it says proves the aircraft downing over Armenian airspace.
Armenian-Azeri war threatens to trigger Russia-Turkey clash – Uncontrolled military clashes between Armenia and Azerbaijan in the South Caucasus involving artillery, tanks, helicopters and drones have continued for a third day after fighting erupted over the disputed Nagorno-Karabakh region on Sunday. It marks the bloodiest Armenian-Azeri fighting since the 1988-1994 conflict between the two former Soviet republics, which erupted in the run-up to the Stalinist dissolution of the Soviet Union in 1991. While Yerevan claims its forces have caused 500 deaths of Azeri forces, Baku says Armenian forces have lost 550. However, officials in Nagorno-Karabakh (who call it by the Armenian name Artsakh) only acknowledged that “80 servicemen were killed and nearly 120 were wounded in Artsakh” as well as four civilians. On the other hand, Baku claims 12 civilians have been killed in Armenian attacks. Russia’s Sputnik news agency reported that “hostilities are not only taking place in Karabakh, but also in other areas of Armenia and Azerbaijan.” While Azeri Defense Ministry Colonel Vagif Dargahli stated that “the 3rd Martuni motorized rifle regiment of the Armenian armed forces, stationed in Khojavand region, was destroyed,” the Armenian Defense Ministry has released a footage purportedly showing the “of the destruction of an entire Azerbaijani military unit.” Baku has declared that it will destroy Armenian S-300 missile systems if they are deployed in the Nagorno-Karabakh. Though severe clashes continued yesterday, and Baku has claimed that it has seized certain villages around Nagorno-Karabakh, several Russian military experts speculated that “neither of them is capable of achieving a significant military success.” The fighting further escalated yesterday, when Armenian Defense Ministry spokesperson Shushan Stepanyan claimed that “a Turkish Air Force F-16 fighter jet shot down an on-duty SU-25 jet of the Armenian Air Force in Armenian airspace,” killing the pilot. Both Azeri and Turkish officials rapidly denied this allegation, denouncing it as a “lie”. While Baku said that “The report alleging Armenia’s Sukhoi-25 was destroyed by an F-16 fighter is a lie,” Turkish President Recep Tayyip ErdoÄŸan’s Communications Director Fahrettin Altun told Bloomberg: “The claim that Turkey shot down an Armenian fighter jet is absolutely untrue.” He added: “Armenia should withdraw from the territories under its occupation instead of resorting to cheap propaganda tricks.”Whether or not allegations of Turkish involvement are true, it is clear that the war between these two former Soviet republics could rapidly spiral out of control, engulfing both a NATO member state, Turkey, and nuclear-armed Russia, Yerevan’s main backer. Both Turkey and Russia have bilateral military pacts with their allies in Baku and Yerevan, respectively, ensuring military support in case of a war with a third party. With Armenian officials leaving the door open to ask support from Russia and other allies, such a case would inevitably raise the prospect of an all-out regional or global war.
Russia, France denounce Turkey as Armenian-Azeri war escalates – Four days after fighting broke out between Armenia and Azerbaijan over the disputed Nagorno-Karabakh region, tensions between the major powers are escalating. Amid reports that Turkey and Syrian Islamist militias are sending mercenaries to Azerbaijan to fight a war on Russia’s borders, the risk is growing of a clash between Russia and Turkey, launching a regional or global war. While Azeri forces do not appear to have advanced far into Nagorno-Karabakh, casualties are mounting as precision weapons rain down on towns across the region. Armenian officials said yesterday they had lost 104 troops and that at least seven civilians had been killed since the fighting began. Azeri officials gave no statistics on military losses but confirmed that 15 Azeri civilians were killed. Online videos show air and drone strikes inflicting substantial losses to military units and equipment. Armenian officials claim to have destroyed 83 drones, seven helicopters, 166 armored vehicles, one warplane and one missile battery, and to have caused 920 casualties. Azerbaijan claims to have destroyed 130 armored vehicles, 200 artillery and missile launch systems, 25 air defense missile batteries and one S-300 air defense system, while inflicting 2,300 casualties. Arayik Harutyunyan, the president of the unofficial Armenian authority in Nagorno-Karabakh, warned: “We must be prepared for a long war. … The war will end with the defeat of Azerbaijan, or at least not with a victory.” Significantly, Harutyunyan added that Iran is one of the main targets of Turkish-backed Azeri operations. He said, “I want to say that one of the targets of this war (fighting on the contact line) is Iran because this war is directed, among other things, against Iran. We are aware of regional problems related, in particular, to the north of Iran,” where there is a substantial Azeri population. Iranian officials fear separatist sentiment could emerge among Iranian Azeris in favor of possibly seceding from Iran and joining Azerbaijan. This is the bloodiest Armenian-Azeri fighting since the 1988 – 1994 war between the two ex-Soviet republics, which erupted shortly before the Stalinist regime dissolved the Soviet Union in 1991. It is now however deeply enmeshed in the innumerable geopolitical rivalries, imperialist wars and local ethnic conflicts that have spread across the Middle East and Central Asia in the three decades since the dissolution of the Soviet Union. In particular, the war is unfolding amid a growing campaign by US imperialism to isolate and threaten both Iran and Russia. Turkish officials are aggressively supporting the ethnically-Turkic Azeris against Armenia. President Recep Tayyip ErdoÄŸan has called on Azeris to expel Armenia from Nagorno-Karabakh and pledged that the “Turkish people stand with their Azeri brothers with all our means.” This intensifies tensions with Armenia’s main regional backer, Russia, under conditions where Russia and Turkey are already waging bloody proxy wars against each other in the civil wars triggered by NATO regime-change operations in Libya and Syria over the last decade. Armenian officials said that they are discussing military aid with Russia and the Collective Security Treaty Organization (CSTO), which includes the post-Soviet republics of Russia, Armenia, Belarus, Kazakhstan, Kyrgyzstan and Tajikistan. Armenian Prime Minister Nikol Pashinyan called Russian President Vladimir Putin and French President Emmanuel Macron to discuss the war. On Russia’s Rossiya1 channel, he called the war “a threat to the Armenian people’s very existence.”
Turkey rejects ‘superficial’ Caucasus ceasefire calls – (Reuters) – Turkey rejected “superficial” demands for a ceasefire on Saturday in the South Caucasus, where it backs Azerbaijan, after a week of fierce fighting with ethnic Armenian forces in the breakaway Nagorno-Karabakh enclave. While Russia, the United States and France have called for an end to hostilities, regional power Turkey has staunchly supported the Azeris and has repeated that what it called Armenian “occupiers” must withdraw.Armenia said on Friday it would work with the three big powers toward a ceasefire. But Turkish President Tayyip Erdogan has said they should have no role in peacemaking and on Saturday said Ankara backs the “oppressed” in the South Caucasus. Turkey’s foreign minister, Mevlut Cavusoglu, told Italian newspaper La Stampa that Russia could play an intermediating role in a ceasefire “only if it is neutral”. “Superficial demands for an immediate end to hostilities and a permanent ceasefire will not be useful this time,” he was quoted as saying by Turkish state-run Anadolu news agency. Moscow has a defence pact with Armenia, but also good relations with Azerbaijan. Nagorno-Karabakh, where ethnic Armenians are the vast majority, said on Saturday that 51 more service personnel had been killed in the war with Azerbaijan, a sharp rise in the death toll from a week of fierce fighting.
French peace call to Armenian and Azeri leaders falls on deaf ears (Reuters) – Armenia said on Saturday it would use “all necessary means” to protect ethnic Armenians from attack by Azerbaijan, as the opposing sides pounded each other for a seventh day and the latest international peace call fell on deaf ears. Azerbaijan said Armenia bore full responsibility for the new outbreak of the decades-old conflict, which threatens to drag in regional powers such as Russia and Turkey. The death toll rose to at least 230 in the fighting over Nagorno-Karabakh, an ethnic Armenian enclave inside Azerbaijan that broke away from its control in the 1990s. A day after French President Emmanuel Macron phoned Armenian Prime Minister Nikol Pashinyan and Azeri President Ilham Aliyev with a new proposal for mediation, the rhetoric on both sides appeared if anything to be hardening. “The president of Azerbaijan placed the entire responsibility on the leadership of Armenia for the break-off of negotiations and the armed confrontation,” Aliyev’s press service said in its summary of the call. Armenia’s armed forces have so far held back from entering the war alongside those of Nagorno-Karabakh. But Pashinyan, in a televised address, portrayed the conflict as a national struggle and compared it to the country’s war with Ottoman Turkey in the early 20th century. “This is a new Sardarapat, and each of us should be ready to dedicate himself to one aim, the name of which is victory,” he said. The Armenian foreign ministry said Armenia, as the guarantor of Nagorno-Karabakh’s security, would take “all the necessary means and steps” to prevent what it called “mass atrocities” by the forces of Azerbaijan and its ally Turkey. Both those countries have repeatedly denied the involvement of Turkish forces, as well as assertions by Armenia, Russia and France that Syrian rebels are fighting on the Azeri side. Azerbaijan hit back, saying ethnic Armenians from Syria, Lebanon, Russia, Georgia, Greece and the United Arab Emirates had been deployed or were on their way to operate as “foreign terrorist fighters” on the ethnic Armenian side.
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