Latest news with #Opec+)
Business Times
5 days ago
- Business
- Business Times
Saudis raise crude prices to Asia after Opec+ adds barrels
[SINGAPORE] Saudi Arabia raised crude prices for a second consecutive month, signalling confidence in demand for its barrels as Organization of the Petroleum Exporting Countries and its allies (Opec+) continues to ramp up supply. State producer Saudi Aramco will raise the premium for Arab Light crude to Asia by US$1 a barrel for shipments in September, to US$3.20 a barrel, according to a price list seen by Bloomberg, the highest since April. The company was expected to increase the price of the grade by 90 US cents a barrel, according to a survey of refiners and traders. The world's biggest exporter has been leading the Opec+ in raising output as they seek bigger market share. So far, burgeoning demand for transport fuels has bolstered refining margins and helped the market to absorb the added barrels. Aramco chief executive officer Amin Nasser said this week that he's bullish that it will continue. 'The strength in oil market fundamentals is supporting demand for our crude and products,' Nasser told reporters on an earnings call. 'We expect the second half to be more than two million barrels per day higher than the first half.' In contrast to the hikes to Asian buyers, the kingdom cut prices for its European customers by the most in a year. All values to Europe were cut by US$1.30. Prices for shipments to the US nudged slightly higher. Many analysts and traders expect that the bulk of added output from Opec+, which is set to come this month and next, could weigh on prices later this year. Wall Street firms such as JPMorgan Chase and Goldman Sachs anticipate that prices will sink towards US$60 a barrel in the fourth quarter. On Sunday, Opec+, which includes partners such as Russia, agreed to raise production by 547,000 barrels a day in September. The planned increase, following a similar-sized boost for August, came as traders are waiting to see how US President Donald Trump's threats to punish Russia over the war in Ukraine could affect the market. Brent crude has held near US$70 a barrel lately as traders balance the Opec+ output hikes against the prospect of potential US measures against Russian oil sales. BLOOMBERG
The Star
6 days ago
- Business
- The Star
Opec+ gets lucky as it brings back oil output amid uncertainty
A COUPLE of months ago it would have been a brave call to say that the Organisation of the Petroleum Exporting Countries and its allies (Opec+) would be able to bring back 2.5 million barrels per day (bpd) of crude production and still keep oil prices anchored around US$70 a barrel. But this is exactly what has occurred, with the eight members of the producer group winding back the last of their 2.2 million bpd of voluntary cuts by September, as well as allowing a separate increase for the United Arab Emirates. The eight Opec+ members met virtually on Sunday, agreeing to lift output by 547,000 bpd for September, adding to the increases of 548,000 bpd for August, 411,000 bpd for each of May, June and July, as well as the 138,000 bpd for April that kickstarted the unwinding of their voluntary cuts. Opec+ stuck to their recent line that the rolling back of production cuts was justified by a strong global economy and low oil inventories. It's debatable as to whether this is actually the case. Certainly, demand growth in the top-importing region of Asia has been lacklustre. Asia's oil imports were about 25 million bpd in July, down from 27.88 million bpd in June and the lowest monthly total since July last year, according to data compiled by LSEG Oil Research. While China, the world's biggest crude importer, has been increasing purchases in recent months, much of this is likely because of lower prices that prevailed when June-and July-arriving cargoes were arranged. It's also the case that China has likely been adding to its stockpiles at a rapid pace, and while it doesn't disclose inventories, the surplus of crude once refinery processing is subtracted from the total available from domestic output and imports was 1.06 million bpd over the first half of 2025. It appears more likely that Opec+ has largely been fortunate in that it has been increasing output at a time of rising risks in the crude oil market, largely from geopolitical tensions. The brief conflict between Israel and Iran in June, which was later joined by the United States, did lead to an equally brief spike in crude prices, with benchmark Brent futures reaching a six-month high of US$81.40 a barrel on June 23. The price has since eased back to trade around the US$70 mark, with some early weakness in Asia on Monday seeing Brent drop to around US$69.35. But the point is that the Israel-Iran conflict arrested a downtrend in oil prices that had been in place for much of the first half of the year. Crude prices have also been supported in recent days by US President Donald Trump's threats of wide-ranging sanctions against buyers of Russian oil unless Moscow agrees to a ceasefire in its war with Ukraine. As with everything Trump, it pays to be cautious as to whether his actions will ultimately be as drastic as his threats. But it would also be foolhardy to assume that there will be no impact on crude supplies even if any eventual measures imposed by the United States are not as drastic as feared. Additionally, there are effectively only two major buyers of Russian crude, India and China. Of these two, India is far more exposed, given its refiners export millions of barrels of refined products, many made with Russian oil. India imported 2.1 million bpd of Russian oil in June, according to data compiled by commodity analysts Kpler, which is the second-highest monthly total behind only 2.15 million bpd in May 2023. In recent months, India has been buying about 40% of its crude from Russia and if it were to replace that with other suppliers, it would have a severe impact on oil flows, at least initially. It's likely that a combination of Middle East, Africa and Americas exporters could make up for India's loss of Russian barrels, but this would tighten supplies considerably and likely keep prices higher. Whether Russia and its network of shadowy traders and shippers could once again work around sanctions remains to be seen, but even if they could, it would still take some time for them to get Russian crude through to buyers. For now, much remains up in the air and Opec+ members are following a smart strategy in taking advantage of the uncertainty to bring their production back and rebuild market share. How long this play can work is the question. Furthermore, even if Russian barrels do leave the market, it's also possible that demand growth disappoints in the second half as the impact of Trump's trade war becomes more apparent, cutting global trade and lowering economic growth. — Reuters Clyde Russell is a columnist for Reuters. The views expressed here are the writer's own.
Straits Times
04-08-2025
- Business
- Straits Times
Oil drops after Opec+ supply hike amplifies concerns over glut
Another major output increase from Opec+ comes as the US-led trade war may be exacting a toll on economic growth and energy consumption. SYDNEY - Oil fell after the Organization of the Petroleum Exporting Countries and its allies (Opec+) agreed to another major output increase, stoking concerns about global oversupply just as the US-led trade war may be exacting a toll on economic growth and energy consumption. Brent edged lower toward US$69 a barrel, while West Texas Intermediate was near US$67, after Opec+ endorsed an additional 547,000 barrels-a-day of output from September, in line with expectations. Another layer of about 1.66 million barrel-a-day of curbed supply may follow, although there's no clear signalling. Crude is coming off the back of a three-month winning run, although prices slumped last Friday (Aug 1) as soft US jobs data raised concern the world's largest economy was slowing following the Trump administration's wave of tariffs. Still, traders are weighing the possibility Washington may also move later this week against Russian oil flows, including buyers such as India, in a bid to raise the pressure against Moscow to pause the war in Ukraine. 'While Opec+ policy remains flexible and the geopolitical outlook uncertain, we assume that Opec+ keeps required production unchanged after September,' Goldman Sachs Group said in a note. The bank retained forecasts for Brent to average US$64 a barrel in the fourth quarter, followed by a drop to US$56 in 2026. The September output hike announced by Opec+ at the weekend stands to complete the reversal of a cutback made by an eight-member sub-group in the alliance, including Saudi Arabia and Russia, in 2023. The progressive restoration of supplies over recent months has been widely seen as a concerted push by the cartel to reclaim market share against rivals such as US shale drillers. With uncertainty hanging over Russian flows, India hasn't given its refiners instructions to stop buying the nation's shipments, according to people familiar. Still, US President Donald Trump earlier blasted New Delhi for the energy purchases, and threatened so-called secondary sanctions that could take effect from Aug 8. US special envoy Steve Witkoff may head to Russia this week. Ukraine's military at the weekend claimed strikes on two refineries and other infrastructure in Russia in what it said was a response to deadly attacks by Kremlin forces on Ukrainian cities. The Novokuibyshevsk plant in the Samara region and the Ryazan refinery were hit, the Ukrainian General Staff said. BLOOMBERG
Business Times
03-08-2025
- Business
- Business Times
Opec+ leaves traders with cliffhanger as stormy chapter ends
[NEW YORK] The Organization of the Petroleum Exporting Countries and its allies (Opec+) closed a two-year chapter in its oil strategy on Sunday (Aug 3) with the last in a series of bumper oil production increases. But it left crude traders with a cliffhanger. Saudi Arabia and its partners have stunned oil markets and capped futures prices in recent months by pushing more barrels into a fragile global market, offering relief to consumers and a fillip for US President Donald Trump. The 547,000 barrel-a-day output increase they approved on Sunday completes the reversal, one year ahead of schedule, of a giant supply cutback made in 2023. The Opec+ have fast-tracked the revival in a bid to reclaim market share. Yet they also have unfinished business: another layer of supplies, also halted two years ago, amounting to 1.7 million barrels a day, which is currently due to remain offline until late 2026. And on Sunday, delegates were offering less, rather than more, clarity regarding its fate. Depending on oil market conditions, the coalition could press on with restarting this tranche, officials said. Or, as some delegates suggested last month, the producers could take a pause. Alternatively, if markets slump, they might even completely reverse the recent surge. A follow-up meeting was set for Sep 7 to review the situation. 'The messaging coming from today's voluntary producer meeting is that all options remain on the table, including bringing those barrels back, pausing increases for now, or even reversing the recent policy action,' said Helima Croft, head of commodity strategy at RBC Capital Markets. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up Based on the outlook for the months ahead, Opec+ may actually need to consider cutting production. While oil demand has held up this year, a projected slowdown in China and swelling supplies across the Americas leave world markets on track for a hefty surplus of two million barrels per day in the fourth quarter, according to the International Energy Agency in Paris. Weak US economic data on Friday underscored the risks to consumption from Trump's tariffs. Forecasters such as Goldman Sachs and JPMorgan Chase see crude futures, already down 6.7 per cent this year to near US$70 a barrel in London, sliding further towards US$60 later in the year. That's considerably lower than the levels the Saudis and other Opec+ members need to cover government spending. Goldman expects that the coalition will most likely pause and hold output levels steady for some time as it takes stock of supply and demand balances. Five crude traders surveyed by Bloomberg last week also predicted a hiatus. On the other hand, if Riyadh is genuinely committed to pursuing market share, as sources familiar with its thinking believe, it should ignore those forecasts and press on with restarting the 1.7 million-barrel tranche regardless. 'We can expect the group to adopt a wait-and-see approach for at least the first several months,' said Greg Brew, senior analyst at Eurasia Group. 'But if there is a contraction in US supply, and if demand growth and the general macro environment remains favourable, I think further unwinding of cuts should be expected.' The outlook is only clouded further by the geopolitical backdrop, as Trump intensifies diplomatic pressure on Opec+ co-leader Russia over its war against Ukraine. The US president has threatened to impose secondary tariffs on Moscow's oil customers unless a ceasefire in the conflict is quickly agreed. On Thursday, Russian Deputy Prime Minister Alexander Novak made a rare visit to Riyadh for talks with Saudi Arabian Energy Minister Prince Abdulaziz bin Salman, a meeting that officials said symbolised the solidarity between the two oil giants. As Opec+ weighs pressure from Trump to lower prices on one side, and a desire to preserve alliance cohesion on the other, whatever it ultimately decides will involve a delicate balancing act. 'Will it move to unwind the remaining 1.7 million barrels-a-day to defend market share, especially if fresh US sanctions hit Russian oil, without putting unity at risk?' said Jorge Leon, an analyst at Rystad Energy A/S who previously worked at the Opec secretariat. 'The group is still threading a fine needle.' BLOOMBERG
Mint
22-06-2025
- Business
- Mint
US strike on Iran raises oil shock, capital flow risks for India's economy
New Delhi: The flare-up in West Asia following US missile strikes on Iran's nuclear facilities has heightened geopolitical tensions and intensified external risks to India's economy, even as many analysts say the escalation may prove short-lived. At stake for India is the potential fallout from surging oil prices, a widening current account deficit, higher energy and shipping costs fuelling domestic inflation, investor risk aversion, capital outflows, and broader risks to economic growth. 'The bigger impact will be on sentiment. However, oil intensity has been going down structurally. For India too, the share of oil imports in total imports has come down from 21% in 2018 to 16.5% in 2025," said Sachchidanand Shukla, group chief economist at Larsen & Toubro. Read this | Mint Primer: What if the US joins Israel's war with Iran? Shukla added that India can absorb oil prices up to $85 a barrel without triggering large macro imbalances. 'There is no need to panic and one needs to keep an eye on how the situation evolves," he said. In a televised address on Sunday (India time), US President Donald Trump confirmed the direct American assault on Iran's nuclear programme, ending days of speculation about Washington's entry into the Israel-Iran conflict. He warned that further strikes could follow. 'Remember, there are many targets left. Tonight was the most difficult of them all by far, and perhaps the most lethal. But if peace doesn't come quickly we will go to those other targets with precision, speed and skill," Trump said. Oil price spike the immediate risk A sustained rise in oil prices remains the most visible risk for India, which relies on imports for nearly 85% of its crude oil needs. Higher global prices can widen India's current account deficit, fuel domestic inflation, trigger risk aversion among investors, and slow down growth. 'Every sustained 10% rise in oil price versus the baseline can lower India's GDP by 15 basis points (bps) and raise inflation measured by Consumer Price Index (CPI) by 30bps. On the other hand, it can reduce global GDP by 15 bps and raise CPI by 40 bps which can impede the rate cut trajectory," explained Shukla. While crude prices have already risen from $64–65 per barrel to $74–75 since the Israel-Iran conflict erupted on 13 June, some offsetting factors remain in play. Read this | US attack on Iranian nuclear sites roils oil market, India braces for possible price surge Experts noted that oil supply from the Organization of the Petroleum Exporting Countries Plus (Opec+) is improving as members unwind voluntary production cuts. Crude output from Opec+ rose by 180,000 barrels per day in May compared to April, according to the cartel's latest monthly oil market report. This production rebound, experts said, could help cap sharp price spikes, provided the conflict does not escalate further. 'The current flare-up may be short-lived and could even mark a turning point in the West Asia crisis towards its early closure, given the substantial disparity in conventional military capabilities, though the complex regional dynamics suggest multiple pathways for conflict evolution," said Rishi Shah, Partner and Economic Advisory Services Leader, Grant Thornton Bharat. 'As things stand today, there may be regional disturbances but these appear unlikely to translate into a major negative shock for India's economy," said Shah. On the trade front, while treaty negotiations continue, commercial flows seem to be adapting and progressing despite the tensions, he added. "Therefore, based on current developments and assuming the conflict remains contained, we expect the net external impact on India's growth trajectory to be relatively muted in the near term — though this assessment remains contingent on the conflict not escalating significantly or disrupting critical energy supply routes," said Shah. Prolonged conflict could hit growth Economists warn that a prolonged conflict could have deeper consequences. 'For oil-importing countries like India, this means slightly higher inflation and increased fiscal costs. While we have some buffer, with inflation currently below 4%, expectations have suddenly firmed up," said NR Bhanumurthy, director of the Madras School of Economics. Bhanumurthy cautioned that the current account deficit could widen not just due to the oil import bill, but also from potential pressure on remittances and capital flows. 'CAD will be a key concern going forward," he said, adding that fiscal support may be needed to absorb part of the oil price shock. 'A sustained flare-up in the conflict poses upside risks for estimates of crude oil prices, and India's net oil imports and the current account deficit. A $10/bbl increase in the average price of crude oil for the fiscal will typically push up net oil imports by ~$13-14 billion during the year, enlarging the CAD (current account deficit) by 0.3% of GDP," rating agency Icra Ltd had noted in an earlier report. Oil marketing companies and the government can absorb some of the costs in the short term, Bhanumurthy said. 'There will be fiscal implications, but we do have some fiscal space as we have exceeded fiscal targets in the last two years," he added. A sharp oil price rise could also weigh on foreign inflows and hurt domestic investment sentiment, he warned. A similar note of caution was sounded by Madan Sabnavis, chief economist at Bank of Baroda, who said that if crude prices stay above $80 for long, the trade deficit will widen and the rupee will come under pressure. "Wholesale inflation will rise accordingly, but the impact on retail inflation will depend on how the government manages fuel prices," he said, adding that excise cuts, if implemented to shield consumers, would widen the fiscal deficit — 'one that can be absorbed." India's current account deficit edged up to $11.5 billion, or 1.1% of GDP, in Q3 FY25 compared to $10.4 billion a year earlier. Retail inflation eased to 2.82% in May, while wholesale price inflation fell to a 14-month low of 0.39%. Icra Ratings on Friday warned that oil is expected to average between $70 and $80 per barrel in FY26, and any sustained rise beyond current levels could weigh on India's growth outlook. Shipping watches Hormuz chokepoint The Strait of Hormuz remains a key chokepoint for global energy and container trade, with Indian shipping companies monitoring the situation closely. 'But operations and movement of ships as of now has remained unaffected in the region. We have not yet received any alerts from either UK Maritime Trade Operations that patrols the area or the Indian Directorate General of Shipping," said Anil Devli, CEO, Indian National Shipowners' Association. Even before the latest flare-up, some ships had begun avoiding the strait, pushing up freight rates and crew costs amid rising security risks. Read this | Mint Explainer | Strait of Hormuz: Will Iran shut the vital oil artery of the world? Any blockade could spike global energy prices, disrupt supply chains, and hit container trade across the Persian Gulf, South Asia, and East Africa. India is also watching its strategic asset in the region — Chabahar Port in Iran — closely. 'Operations at the port, located near Iran's southeastern border with Pakistan, remain unaffected and normal," an India Ports Global Ltd official said. Meanwhile, Adani Group's Haifa Port in Israel remains fully functional despite the ongoing conflict. 'Earlier strikes caused minor shrapnel damage nearby, but operations were unaffected," another official said. Haifa handles over 30% of Israel's imports and contributes about 5% to Adani Ports' revenue, though it accounts for less than 2% of cargo volumes. Rice exporters brace for fallouts Beyond oil, India's basmati rice exporters are facing uncertainty as Iran, a key buyer, may scale back purchases if tensions persist. Iran typically imports around 1 million tonnes of basmati rice annually from India, accounting for roughly a fifth of India's total basmati exports by volume. Several shipments are currently lying at Indian ports, with exporters hesitant to dispatch consignments amid growing uncertainty. "We are in a catch-22 situation. Amid escalation of tension, many of the exporters, whose shipments are lying at port have kept shipments on hold. If the current situation persists, exporters would be on the receiving end," said Satish Goel, President, All India Rice Exporters Association (AIREA). India's rice exports to Iran rose to $757.3 million in FY25 from $689.8 million a year earlier, accounting for three-fourths of India's total farm exports to the country. Also read | Javier Blas: An Israel-Iran war may not rattle the oil market The timing makes the situation especially sensitive — mid-June to mid-July is peak season for exports, just ahead of Iran's domestic harvest. 'This is a peak season, as in the middle of July Iran might temporarily ban shipments to protect their domestic farmers and ensure fair prices for their harvest," Goel added. 'This is a common practice, particularly during the harvest season, and is aimed at supporting local agriculture by reducing competition from foreign imports. The ban is usually lifted once the domestic harvest is sold." Vijay C Roy and Dhirendra Kumar contributed to this story
