Connect with us

Finance

Aramco Slashes Crude Pricing, Starting Oil War as OPEC Flops

Published

on

(Bloomberg) — Saudi Arabia kick started an all-out oil war on Saturday, slashing official pricing for its crude and making the deepest cuts in at least 20 years on its main grades, in an effort to push as many barrels into the market as possible.

The cuts in monthly pricing by state prouder Saudi Aramco are the first indication of how the Saudis will respond to the break up of the alliance between OPEC and partners like Russia. Talks in Vienna ended in dramatic failure on Friday as Saudi Arabia’s gamble to get Russia to agree to a prolonged and deeper cut failed to pay off.

In the first major marketing decision since the meeting, the state producer lowered April pricing for crude sales to Asia by $4-$6 a barrel and to the U.S. by $7 a barrel, according to a copy of the announcement seen by Bloomberg.

“Saudi Arabia is now really going into a full price war,” said Iman Nasseri, managing director for the Middle East at oil consultant FGE.

The collapse of the meeting between the Organization of Petroleum Exporting Countries and its erstwhile partners effectively ends the cooperation between Saudi Arabia and Russia that has underpinned oil prices since 2016. Unshackled from the cartel’s restrictions and with budget holes to fill, there is every chance producers will ramp up output. A reduction in the official selling prices, or OSPs, suggests the Saudis are looking to do just that.

The company’s pricing decision affects about 14 million barrels a day of oil exports, as other producers in the Persian Gulf region follow its lead in setting prices for their own shipments. Every month, the Persian Gulf’s biggest producers announce the official selling price for their crude grades as a differential — a premium or discount — against regional benchmarks. The changes are usually measured in cents and, at most, a couple of dollars.

Aramco didn’t immediately comment on the price changes.

As the coronavirus erodes demand, pushing Brent crude down about 20% so far this year heading into the meeting, the Saudis had hoped to shore up prices. After Russia balked at OPEC, Brent fell further, closing the week down more than 30% for the year.

Last month, Saudi Arabia pumped 9.7 million barrels a day, but with the agreement on cuts expiring at the end of the month, the kingdom will be free to produce as much as it wants. Saudi Arabia claims it’s able to produce as much as 12.5 million barrels a day.

Aramco cut its official selling price for flagship Arab Light crude to buyers in Asia by $6 a barrel, to a discount of $3.10 below the Middle East benchmark. The cuts eclipsed the $1.90 reduction expected by traders and refiners.

Pricing to Northwest Europe and to the Mediterranean region will be cut by between $6-$8 a barrel. Aramco made the biggest cut for crude delivered to northwest Europe, where the $8 a barrel reduction in most grades to the region amounts to a direct challenge to Russia, which sells a large chunk of its flagship crude Urals in the same region.

With Aramco selling Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe, the kingdom is mounting a direct challenge to Urals.

The world’s biggest oil exporter had expected to announce the pricing on Thursday but delayed its decision until after a meeting on Friday between the OPEC and allies including Russia. The postponement marked the first time in at least a decade that Aramco missed its pricing schedule. It typically announces pricing for its crude on the fifth day of each month.

(Updates with comment in fourth paragraph.)

To contact the reporters on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net;Javier Blas in London at jblas3@bloomberg.net

To contact the editors responsible for this story: Nayla Razzouk at nrazzouk2@bloomberg.net, Christopher Sell, Linus Chua

For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source.

©2020 Bloomberg L.P.

Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Finance

Stock market news live updates: Stocks trade lower as indices head for weekly losses – Yahoo Canada Finance

Published

on

By

Continue Reading

Finance

Financial assistance on the way for struggling Iowa county fairs

Published

on

By

Clay County, IA (KUOO Radio) – Some assistance is being made available to fairs and expos in Iowa that were hit hard by the pandemic.

Governor Kim Reynolds and the Iowa Economic Development Authority have announced the state is allocating up to $6 Million in federal CARES Act funds through the Iowa County Fairs Relief Program.

Jeremy Parsons, General Manager of the Clay County Fair, says he was pleased to hear the announcement, adding they’ll be happy to get whatever assistance they can. “You know many aspects of our economy are slowly starting to come back on line through this COVID pandemic but one aspect is not. And that’s the live event business. And for us here at the Fair and Events Center when your whole livelihood depends on bringing people together, we can’t do curbside pickup, we can’t do online. You have to actually have people physically on the fairgrounds and so with COVID obviously we can’t do that, so it’s good recognition from the state that there’s some substantial financial losses occurring.”

Parsons says the the Clay County Fair lost about $3 Million when this year’s events were called off.

Clay County is independently raising funds through their “Save the Fair” efforts, and have so far brought in just over $1 Million dollars.

Source link

Continue Reading

Finance

Embattled financial company AMP confirms takeover bid from US company

Published

on

By

AMP has confirmed it has received a conditional takeover offer from US private equity firm Ares Management Corporation.

The 171-year-old financial company did not reveal how much was offered.

In a statement, AMP stressed the discussions were at a “very preliminary stage” and “there is no certainty that a transaction will eventuate”.

The non-binding bid comes almost two months after the company essentially advertised itself for sale, either as a whole, or broken apart into separate businesses.

In early September, AMP’s new chairman Debra Hazelton launched a strategic review of the company following the resignation of her predecessor David Murray over the board’s handling of sexual harassment complaints.

Amid the management upheaval, former Treasury secretary John Fraser resigned from his AMP directorship and Boe Pahari was demoted from his plum role as head of AMP Capital.

AMP customers pulled billions of dollars out of the company’s wealth management division in the wake of scandals unearthed at the 2018 banking royal commission.

The company also confirmed it had received “significant” interest in its assets and businesses from potential buyers.

In the meantime, AMP said it was assessing its options in a “considered and holistic manner” to maximise shareholder value.

AMP’s suitor, Ares, brands itself as an “alternative investment manager”.

Investors were clearly excited about the possibility of a foreign company breathing new life into the embattled financial firm.

AMP shares jumped (+21.7pc) to $1.56, by 12:50pm AEDT.

Based on its share price, AMP’s market value is around $5.3 billion.

Source link

Continue Reading

Trending