Brent Falls as Saudi Output Rises

Oil prices fell after Saudi Arabia said it was producing the most crude oil since July. Brent for May delivery fell to $54.64 a barrel on London’s ICE Futures exchange. On Sunday, Saudi Oil Minister Ali al-Niami said the Saudis were currently producing around 10 million barrels of crude a day, the country’s highest output since July, when oil prices started collapsing.

Niami said there was no conspiracy behind OPEC’s decision last fall to maintain its output target. The group could have lost market share if it had cut its production, he added. (The Wall Street Journal, 23 March).

Oil Rising

Brent at $56.68

Oil prices continued their rise today, with Brent crude trading at $56.68 a barrel this morning in New York. The latest rise in prices came after the United Steelworkers union that represents employees at 200 refineries, terminals, pipelines and petrochemical plants stopped work on Sunday at nine sites, accounting for 10 percent of the U.S. refining capacity, Reuters reported. This is the biggest oil workers' strike since 1980.

Oil Jumps

Crude oil prices had its biggest daily advance since 2012, with Brent jumping nearly 8 percent to $52.99 a barrel on Friday. Oil services giant Baker Hughes reported the oil rig count fell to a three-year low, signaling that the almost 60 percent slump in oil prices in the past seven months will slow production. Chevron, for example, announced today that it will cut spending in response to free-falling prices. (Bloomberg, 30 January)

Falling Oil Prices May Hurt Fight against ISIL – Abadi

Iraqi Prime Minister Haidar al-Abadi told reporters in London on Thursday that the falling oil prices were imperiling the Iraqi government’s efforts to fight the Islamic State. Abadi made the comments after meeting with the representatives of 20 countries who were gathered in the UK to unify international community’s response to ISIL. 

Baghdad generates around 85 percent of its hard-currency revenues through oil sales. Oil has lost more than half its value since last summer.

“This has been disastrous for us,” Abadi said. “I cannot stress this any more, and we explained this to our partners in the coalition, and I think there will be a program to stand with Iraq.” (Dow Jones Newswires, 23 January)

The reference to a program to stand with Iraq probably signifies the readiness of the coalition to provide higher levels of financial aid to Baghdad to overcome the shortages in oil revenues.

“We don’t want to see a reverse of our military victory due to our budget and fiscal problems, and we have been assured that every member of this coalition will stand with Iraq,” Abadi said.

A senior U.S. official who met with Abadi in London said, “Despite Iraq hitting a record number of oil exports in recent months, the price of oil is impacting their ability and their resource base. It’s not at the level that we anticipated 100 days ago when we were thinking through where we’d be.”

Secretary of State John Kerry said on Thursday that the international coalition set up to fight ISIL has reclaimed 700 square kilometers of territory from the Islamic State and half the insurgency’s top command had been “eliminated.” Baghdad and Washington are also devising an economic strategy that will allow the Iraqi government to develop areas that have been reclaimed once they’re liberated. (Dow Jones Newswires, 23 January)

Iraqi Oil Production at Record Level

Iraq is pumping crude at a record level and will continue to boost exports this year amid a global market glut that has pushed prices down.

“The average for Iraqi crude output is 4 million barrels a day, which is a historical record,” said Iraqi Oil Minister Adel Abu Mahdi at a news conference on Sunday after meeting his Turkish counterpart, Taner Yildiz, in Baghdad.

Iraq also plans to boost crude exports to 3.3 million barrels a day this year, including oil exports from Kurdistan. Today, Iraq and Turkey agreed to boost Iraqi crude exports from the north via Turkish port of Ceyhan to 375,000 barrels a day in the coming months, and to as much as 600,000 barrels a day by April, the Iraqi oil minister said. Iraq exported 2.94 million barrels daily in December 2014, the most ever for the country.

File photo: Getty Images

Oil Climbs to $50

Brent crude gained 2% to reach $50 in trading on Friday afternoon. Earlier in the week, Brent futures were trading at $46 range. The rise in prices is attributed to IEA’s lowering its forecast for crude supplies outside OPEC, saying prices could recover. In late afternoon in New York, Brent was at $49.86.

Still oil markets will post loss for the week, capping the longest weekly losing streak since March 1986, or nearly 28 years.

Iran Lowers Oil Price for Budget to $40

Iran’s Minister of Finance and Economy Ali Tayeb-Nia announced today that Iran is revising its draft budget to assume an oil base price of $40 a barrel. The Iranian calendar and fiscal year begins on 21 March. Tayebnia added that in order to cope with falling revenues, the government will have to halt some projects. (Fars News Agency/Bloomberg, 15 January)

President Rouhani had presented a budget based on $72 oil to the parliament only on 7 December. That’s the budget that is now being revised to account for a $40 oil.

The price of Brent crude has fallen by 54 percent in the past year, forcing governments across the Persian Gulf to reduce spending, including cuts for subsidies on petroleum products and capital budgets. On Wednesday, Qatar Petroleum and Royal Dutch Shell called off plans to build a $6.5 billion petrochemical plant.

“Most Gulf countries are pricing $50 oil for 2015,” said Naeem Aslam, chief market analysts at Dublin-based Avatrade. “ (And) creditors want to be sure they recoup their money so there could be hesitation to starting up new projects.” (Bloomberg, 15 January)

Meanwhile, Brent futures price fell by 2% on Thursday and finished at $47.67. 

Photo credit: Iran’s Minister of Finance and Economy Ali Tayeb-Nia, center, announced revision of government’s proposed budget to account for a $40 oil.

Oil Rebounds – Brent at $48.65

Crude Oil Surged the Most in More Than 2.5 Years

Crude oil futures rose sharply today, with global benchmark Brent rising nearly 4.5 percent to $48.65. Prices had been dropping in the past six months, the longest stretch since the 2008 financial crisis. Analysts said the prices had fallen so far so fast that it was probably time to call a bottom, although it was way pre-mature to say the bear market was over.

The market was “overdue” for a correction, said Jeff Grossman, president of New York-based BRG brokerage. “It’s been down, down, down; It’s lifting its head” (Bloomberg, 14 January)

Photo credit: Getty Images

Oil Prices Fall to Fresh Lows

Global benchmark Brent today dropped by nearly 6% to $47.23, lowest since March 2009. U.S. crude oil was at $45.90, also lowest in nearly six years. The drastically falling market is creating serious financial problems for oil producing countries, including Iran, whose national budget according to IMF and Deutche Bank is currently based on $131 oil.

Brent Falls Below $50

The price of Brent crude fell below the $50 mark at the opening of Asian markets on Monday. 

UPDATE: On Monday, Brent for February settlement dropped nearly 4 percent to $48.23 per barrel on the London-based ICE Futures Europe exchange.

File photo: IRNA