Russian Oil Output Rises to Record as Production Freeze in Doubt
Jake Rudnitsky
Rudnit
April 1, 2016 — 9:37 PM HST
Russia’s oil output set a post-Soviet high in March as the success of a proposed crude production freeze between OPEC members and other major producers appeared to be in doubt.
Russian production of crude and a light oil called condensate climbed 2.1 percent in March from a year earlier to 10.912 million barrels a day, according to the Energy Ministry’s CDU-TEK unit. That narrowly beat the previous high of 10.910 million barrels in January.
With most of the Organization of Petroleum Exporting Countries members, Russia and some others outside the group scheduled to meet in Doha this month to discuss an accord on capping output, Saudi Arabia’s Mohammed bin Salman signaled in an interview with Bloomberg that if any country raises output, the kingdom will also boost sales. Prices on Friday sank more than 4 percent after the comments. Iran previously said it plans to boost production after the lifting of sanctions following a deal to curb its nuclear program.
Saudi Arabia, Russia, Venezuela and Qatar in February first proposed an accord to cap oil output to reduce a worldwide surplus and boost prices. Brent prices in London have gained nearly 40 percent from the 12-year low reached in January.
Russian oil exports rose 10 percent to 5.59 million barrels a day, according to the Energy Ministry data.
http://www.bloomberg.com/news/articles/2016-04-02/russian-oil-output-rises-to-record-as-production-freeze-in-doubt
Big Banks Aided Firm At Center Of International Bribery Scandal
Unaoil relied on both banks as it cut deals with corrupt regimes.
04/02/2016
Senior Political Economy Reporter
British financial giant HSBC and American bailout kingpin Citibank processed transactions, managed money and vouched for Unaoil, a once-obscure firm that is now at the center of a massive international corruption scandal. Police raided Unaoil’s Monaco offices and interviewed its executives on Thursday, a day after The Huffington Post and Fairfax Media first exposed the company’s practices. Law enforcement agencies in at least four nations are involved in a wide-ranging probe of the company and its partners.
Halliburton, KBR and other corporate conglomerates relied on Unaoil to deliver them lucrative contracts with corrupt regimes in oil-rich nations. But without the help of banks like HSBC and Citibank, none of Unaoil’s operations would have been possible.
Both Citibank and HSBC declined to comment on whether Unaoil or the Ahsani family, who own and operate the firm, remain their clients.
“As a matter of policy, we only maintain relationships with clients who have been vetted through our strict due diligence and compliance checks,” HSBC spokeswoman Sorrel Beynon told HuffPost in a written statement.
http://www.huffingtonpost.com/entry/unaoil-citibank-hsbc_us_56feba02e4b0daf53aefa1da?3b8ipwa88v2qehfr
GCC currency pegs to stay for 'next few years', says International Institute of Finance (IIF)
The Gulf Cooperation Council (GCC) countries are expected to maintain their fixed exchange rate regime for the next few years, even as their currencies are "now clearly misaligned with their fundamentals," according to International Institute of Finance (IIF). "In our view, the GCC's relatively low public debt ratios, large financial buffers, and the sizeable fiscal consolidation being planned, combined with a modest recovery in global oil prices, should put the fiscal position on a more sustainable footing and allow the pegs to be preserved, at least for the next few years," Washington-based IIF said yesterday.
While public foreign assets will continue to decline, albeit from very high levels, import cover will remain well above 20 months through 2020, it said in the report "GCC: Dollar Pegs Will be Maintained". The GCC countries' dollar pegs are backed by large stocks of international assets and low debt ratios such that large deficits in the coming few years can be managed. However, pegs will only be feasible over the medium term if fiscal policy adjusts sufficiently to ensure sustainable trajectories even with prolonged low oil prices, it said. "But if we get into 2018 with international public assets substantially depleted, and it is clear that the oil price is going to remain around $40/bbl and that fiscal deficits will remain at high levels, then a significant devaluation may be the only option, particularly in Oman, Bahrain and perhaps Saudi Arabia," it said.
The medium-term choices for the GCC countries could be a move towards a managed float, which has the advantage of allowing them use monetary policy to smooth business cycles, or peg to a basket that includes oil price, which does not require autonomous monetary policy and would ensure that the GCC currencies generally move with the global price of oil while dampening the volatility associated with a pure oil peg. The GCC authorities' continued commitment to defending their pegs reflects limited benefits from flexible exchange rates, it said, adding import and export volume elasticity with respect to real exchange changes are very low, given the limited domestic manufacturing and non-oil tradable goods sectors in the region.
There would be some benefit in the form of boosting oil revenue in local currency, but the adjustment would also raise local currency costs of imported materials, it said. Finding that for almost three decades, the GCC countries have pegged their currencies to the US dollar; IIF said supported by the flexibility of the labour market, their currencies' pegs have provided monetary policy credibility and have helped deliver low inflation and inflation volatility. But the sharp fall in oil prices and the appreciation of the dollar in the past two years have raised doubts about the sustainability of the GCC's pegs, it said. Terming that "GCC currencies are now clearly misaligned with their fundamentals"; it said the equilibrium real effective exchange rates (ERER) have depreciated significantly in the past two years, given the large terms-of-trade losses (as a result of the slump in oil prices), but the actual real effective exchange rate (REER) has appreciated because of the appreciation of the dollar.
More: http://www.zawya.com/story/GCC_currency_pegs_to_stay_for_next_few_yearsIIF-ZAWYA20160331035246/#utm_source=zawya&utm_medium=web&utm_content=related-news&utm_campaign=story
Jake Rudnitsky
Rudnit
April 1, 2016 — 9:37 PM HST
Russia’s oil output set a post-Soviet high in March as the success of a proposed crude production freeze between OPEC members and other major producers appeared to be in doubt.
Russian production of crude and a light oil called condensate climbed 2.1 percent in March from a year earlier to 10.912 million barrels a day, according to the Energy Ministry’s CDU-TEK unit. That narrowly beat the previous high of 10.910 million barrels in January.
With most of the Organization of Petroleum Exporting Countries members, Russia and some others outside the group scheduled to meet in Doha this month to discuss an accord on capping output, Saudi Arabia’s Mohammed bin Salman signaled in an interview with Bloomberg that if any country raises output, the kingdom will also boost sales. Prices on Friday sank more than 4 percent after the comments. Iran previously said it plans to boost production after the lifting of sanctions following a deal to curb its nuclear program.
Saudi Arabia, Russia, Venezuela and Qatar in February first proposed an accord to cap oil output to reduce a worldwide surplus and boost prices. Brent prices in London have gained nearly 40 percent from the 12-year low reached in January.
Russian oil exports rose 10 percent to 5.59 million barrels a day, according to the Energy Ministry data.
http://www.bloomberg.com/news/articles/2016-04-02/russian-oil-output-rises-to-record-as-production-freeze-in-doubt
Big Banks Aided Firm At Center Of International Bribery Scandal
Unaoil relied on both banks as it cut deals with corrupt regimes.
04/02/2016
Senior Political Economy Reporter
British financial giant HSBC and American bailout kingpin Citibank processed transactions, managed money and vouched for Unaoil, a once-obscure firm that is now at the center of a massive international corruption scandal. Police raided Unaoil’s Monaco offices and interviewed its executives on Thursday, a day after The Huffington Post and Fairfax Media first exposed the company’s practices. Law enforcement agencies in at least four nations are involved in a wide-ranging probe of the company and its partners.
Halliburton, KBR and other corporate conglomerates relied on Unaoil to deliver them lucrative contracts with corrupt regimes in oil-rich nations. But without the help of banks like HSBC and Citibank, none of Unaoil’s operations would have been possible.
Both Citibank and HSBC declined to comment on whether Unaoil or the Ahsani family, who own and operate the firm, remain their clients.
“As a matter of policy, we only maintain relationships with clients who have been vetted through our strict due diligence and compliance checks,” HSBC spokeswoman Sorrel Beynon told HuffPost in a written statement.
http://www.huffingtonpost.com/entry/unaoil-citibank-hsbc_us_56feba02e4b0daf53aefa1da?3b8ipwa88v2qehfr
GCC currency pegs to stay for 'next few years', says International Institute of Finance (IIF)
The Gulf Cooperation Council (GCC) countries are expected to maintain their fixed exchange rate regime for the next few years, even as their currencies are "now clearly misaligned with their fundamentals," according to International Institute of Finance (IIF). "In our view, the GCC's relatively low public debt ratios, large financial buffers, and the sizeable fiscal consolidation being planned, combined with a modest recovery in global oil prices, should put the fiscal position on a more sustainable footing and allow the pegs to be preserved, at least for the next few years," Washington-based IIF said yesterday.
While public foreign assets will continue to decline, albeit from very high levels, import cover will remain well above 20 months through 2020, it said in the report "GCC: Dollar Pegs Will be Maintained". The GCC countries' dollar pegs are backed by large stocks of international assets and low debt ratios such that large deficits in the coming few years can be managed. However, pegs will only be feasible over the medium term if fiscal policy adjusts sufficiently to ensure sustainable trajectories even with prolonged low oil prices, it said. "But if we get into 2018 with international public assets substantially depleted, and it is clear that the oil price is going to remain around $40/bbl and that fiscal deficits will remain at high levels, then a significant devaluation may be the only option, particularly in Oman, Bahrain and perhaps Saudi Arabia," it said.
The medium-term choices for the GCC countries could be a move towards a managed float, which has the advantage of allowing them use monetary policy to smooth business cycles, or peg to a basket that includes oil price, which does not require autonomous monetary policy and would ensure that the GCC currencies generally move with the global price of oil while dampening the volatility associated with a pure oil peg. The GCC authorities' continued commitment to defending their pegs reflects limited benefits from flexible exchange rates, it said, adding import and export volume elasticity with respect to real exchange changes are very low, given the limited domestic manufacturing and non-oil tradable goods sectors in the region.
There would be some benefit in the form of boosting oil revenue in local currency, but the adjustment would also raise local currency costs of imported materials, it said. Finding that for almost three decades, the GCC countries have pegged their currencies to the US dollar; IIF said supported by the flexibility of the labour market, their currencies' pegs have provided monetary policy credibility and have helped deliver low inflation and inflation volatility. But the sharp fall in oil prices and the appreciation of the dollar in the past two years have raised doubts about the sustainability of the GCC's pegs, it said. Terming that "GCC currencies are now clearly misaligned with their fundamentals"; it said the equilibrium real effective exchange rates (ERER) have depreciated significantly in the past two years, given the large terms-of-trade losses (as a result of the slump in oil prices), but the actual real effective exchange rate (REER) has appreciated because of the appreciation of the dollar.
More: http://www.zawya.com/story/GCC_currency_pegs_to_stay_for_next_few_yearsIIF-ZAWYA20160331035246/#utm_source=zawya&utm_medium=web&utm_content=related-news&utm_campaign=story
