Saudi pledges ‘measurable’ oil supply boost as OPEC and Russia agree deal
S&P affirms Gulf Bank’s rating at A-; outlook stable Iran says Kingdom cannot compensate for Venezuela output loss
VIENNA, June 23, (RTRS): OPEC agreed with Russia and other oil-producing allies on Saturday to raise output from July, with Saudi Arabia pledging a “measurable” supply boost but giving no specific numbers.
The Organization of the Petroleum Exporting Countries had announced an OPEC-only production agreement on Friday, also without clear output targets. Benchmark Brent oil rose by $2.5 or 3.4 percent on the day to $75.55 a barrel.
On Saturday, non-OPEC oil producers agreed to participate in the pact but a communique issued after their talks with the Vienna-based group provided no concrete numbers amid deep disagreements between OPEC arch-rivals Saudi Arabia and Iran.
US President Donald Trump was among those wondering how much more oil OPEC would deliver. “Hope OPEC will increase output substantially. Need to keep prices down!” Trump wrote on Twitter after OPEC announced its Friday decision.
The United States, China and India had urged oil producers to release more supply to prevent an oil deficit that could undermine global economic growth.
OPEC and non-OPEC said in their statement that they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction.
Saudi Energy Minister Khalid al-Falih said OPEC and non-OPEC combined would pump roughly an extra 1 million barrels per day (bpd) in coming months, equal to 1 percent of global supply.
Top global exporter Saudi Arabia will increase output by hundreds of thousands of barrels, he said, with exact figures to be decided later.
“We already mobilised the Aramco machinery, before coming to Vienna, pre-empting this meeting,” Falih said, referring to the Saudi state oil company.
Russian Energy Minister Alexander Novak said his country would add 200,000 bpd in the second half of this year.
Asked to what extent the decision to increase supply had been driven by pressure from Trump, Novak said: “It is obvious that we are not being driven by tweets but base our actions on deep market analysis.”
Iran, OPEC’s third-largest producer, had demanded OPEC reject calls from Trump for an increase in oil supply, arguing that he had contributed to a recent rise in prices by imposing sanctions on Iran and fellow member
Venezuela.
Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran’s output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise output, unlike Saudi Arabia.
Iranian Oil Minister Bijan Zanganeh said the real increase could amount to as little as 500,000 bpd because Saudi Arabia would not be allowed to pump more on behalf of Venezuela, where output has collapsed in recent months.
“Each country which has produced less (than its allocation) can produce more. Those which cannot, will not ... This means that Saudi Arabia can increase its production by less than 100,000 bpd,” Zanganeh told Argus Media. But Falih said pro-rata quota reallocations did not have to be strict, meaning Saudi wanted to fill the gaps left by others.
“Some of the countries ... are not going to be able to produce, so the others will. And that implies there will be indirectly a reallocation,” Falih said.
He also said OPEC could hold an extraordinary meeting before its next formal talks due on Dec 3 or adjust deliveries in September, when its monitoring committee meets, if global oil supply fell further because of sanctions
on Iran.
OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure had helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.
But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.
Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018.
“Both Saudi and Iran can show that they won,” an OPEC delegate said.
“Zanganeh can go back to his country and say ‘I won’, because we are keeping the original agreement unchanged. Falih can go back and say ‘we will be able to raise production to meet market needs’.”
The United States, which rivals Russia and Saudi Arabia for the position of world No. 1 oil producer, is not participating in the supply pact.
Iran said on Saturday the world will see little extra oil reaching the market if OPEC and its partners adhere properly to a supply pact, underlining a disagreement with top exporter Saudi
Arabia.
OPEC and a group of non-OPEC countries agreed on Saturday that they would return to 100 percent compliance with previously agreed oil output cuts, after months of underproduction by OPEC countries including Venezuela and Angola.
Al-Falih said this implied an indirect reallocation of extra production from countries unable to produce more oil to those, such as his own and the other Gulf OPEC members, that are able to do so.
But Iran’s OPEC governor, Hossein Kazempour Ardebili, told Reuters that no reallocation was agreed at Saturday’s joint OPEC and non-OPEC meeting or the OPEC-only talks a day earlier.
“There is no such thing,” Kazempour said. “Some people may do, but they are in breach of the agreement.”
The comments underline that disagreement between Iran and Saudi Arabia, longtime rivals in the Organization of the Petroleum Exporting Countries, persists despite extensive talks in Vienna this week aimed at resolving differences.
Venezuela has been pumping more than 500,000 barrels per day below its OPEC target because of natural
declines in its oil output, but in Iran’s view other countries should not step in to cover the shortfall.
“They cannot go and say Venezuela has 500,000 bpd on the table and there is no cat to eat this meat, I’m the cat and I will jump on it,” Kazempour said.
If countries stick to their allocations, output would rise by 300,000 bpd in the first three months and up to 500,000 bpd by the end of the year, he said - less than the 1 million bpd mentioned by Falih and some other ministers.
“This will come up naturally, some is additional barrels, some is restraint barrels, because nobody can turn up tomorrow,” Kazempour said.
Iran had demanded OPEC reject calls from US President Donald Trump for an increase in oil supply, arguing that he had contributed to a recent rise in prices by imposing sanctions on Iran and Venezuela.
According to Kazempour, Venezuela had said its output would partially recover in the next three to four months, another reason why other producers should not step in to compensate.
“Venezuela told us that 300,000 bpd will come back,” he said. KUWAIT CITY, June 23: Standard and Poor’s (S&P) Global Ratings has affirmed Gulf Bank’s Credit rating at A-/A-2 long and shortterm counterparty credit ratings with a Stable Outlook in its recent research update issued June 21, 2018.
S&P believes that Gulf Bank will deliver above market growth in Kuwait over the next two years, while maintaining a relatively high dividend payout ratio.
“Our ratings continue to reflect Gulf Bank’s sound market position as the fourth largest commercial bank in Kuwait. Gulf Bank’s market share in loans and deposits has been improving, and we believe the bank will continue to grow faster than the market” said S&P in their report. Commenting on the stable outlook, S&P stated that: “The stable outlook on Gulf Bank reflects our view that the bank’s business and financial profiles will remain resilient over the next 24 months. This is owing to the bank’s adequate capitalization and good asset quality.”
Commenting on S&P’s credit rating announcement, Ms Dalal Al-Dousari, Gulf Bank’s Head of Investor Relations said: “We are pleased with the recently issued credit opinion by S&P Global Rating. The Affirmation of Gulf Bank’s long-term counterparty credit rating at “A-” is an international acknowledgement of the bank’s sustained improvement in loan asset quality and profitability, solid capital and sound liquidity position.With this recently issued credit opinion, Gulf Bank continues to be rated “A” by all four leading credit rating agencies,” added Al-Dousari.
Gulf Bank continues to be well recognized internationally in terms of its credit worthiness and financial strength. In addition to S&P Global Rating recent affirmation, Moody’s Investor Services has revised their outlook on the Bank to “Positive” from “Stable” and affirmed its issuer credit rating at “A3” in May 2018. Similarly, Fitch Ratings has upgraded Gulf Bank’s viability rating from “bb” to “bb+” and affirmed the bank’s Long-Term Issuer Default Rating at “A+” with a “Stable” Outlook. Capital Intelligence on the other hand recently upgraded the Bank’s rating to “A-” from “BBB+” with a “Stable” outlook.