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OPEC Shows It Still Matters, and Now It’s Bearish for Oil

The last time OPEC met, its decision to leave output unchanged cast doubt on the group’s relevance. That was a little premature. From the ministers’ market-moving comments to the array of oil executives gathered in Vienna to court new ventures, the Organization of Petroleum Exporting Countries showed no loss of stature in the run-up to Friday’s meeting, at which it again decided to maintain its current output target. While OPEC has ceded the role of adjusting supply to balance the market, its strategy of keeping up production is still driving prices lower now — and possibly higher later on. “Reports of their death are greatly exaggerated,” Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA in London, said in an e-mail. “OPEC is still relevant because by driving down prices, and crowding out investment in higher-cost basins, they are sowing the seeds of the future price rally.” […]

Posted On : Published By : Tom Whipple
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OPEC agrees to keep pumping as oil glut fears persist

VIENNA Oil group OPEC agreed to stick by its policy of unconstrained output for another six months on Friday, setting aside warnings of a second lurch lower in prices as some members such as Iran look to ramp up exports. Concluding a meeting with no apparent dissent, Saudi Arabian oil minister Ali al-Naimi said OPEC had rolled over its current output ceiling, renewing support for the shock market treatment it doled out late last year when the world’s top supplier said it would no longer cut output to keep prices high. The Organization of the Petroleum Exporting Countries will meet again on Dec. 4, Naimi said. With oil prices having rebounded by more than a third after hitting a six-year low of $45 a barrel in January, officials meeting in Vienna saw little reason to tinker with a strategy that seems to have resurrected moribund growth in world oil […]

Posted On : Published By : Tom Whipple
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Saudi Arabia says it shot down Scud missile fired by Yemen’s Houthis

DUBAI Saudi Arabia shot down a Scud missile fired into the kingdom by Yemen’s dominant Houthi group and its army allies on Saturday, according to the Saudi state news agency, in the first use of the missile in over two months of war. The missile was launched early Saturday morning in the direction of Khamees al-Mushait, and was intercepted by a Patriot missile, a statement by the leadership of the Saudi-led joint Arab military coalition said. The area is home to largest air force base in southern Saudi Arabia, the world’s top oil exporter, but there are no oil facilities in the area. An alliance of Gulf Arab nations has been bombing Yemen’s dominant Houthi militia and allied army units loyal to powerful ex-President Saleh since March 26 in an attempt to restore exiled President Abd-Rabbu Mansour Hadi to power. The coalition has said a main goal of their […]

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ISIS is using chlorine as a weapon, Australia’s Foreign Minister says

PERTH Islamic State militants have used chlorine as a weapon and are recruiting highly trained technicians in a serious bid to develop chemical weapons, Australia’s Foreign Minister Julie Bishop warned. In a speech to an international forum of nations that works to fight the spread of such weapons, Bishop said the rise of militant groups such as ISIS, also known as Daish, posed “one of the gravest security threats we face today.” “Apart from some crude and small scale endeavors, the conventional wisdom has been that the terrorist intention to acquire and weaponize chemical agents has been largely aspirational,” Bishop told a meeting of the Australia Group in Perth. The speech on Friday was posted online. “The use of chlorine by Daish, and its recruitment of highly technically trained professionals, including from the West, have revealed far more serious efforts in chemical weapons development,” she said. “Daish is likely […]

Posted On : Published By : Tom Whipple
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The Separation Strategy on Iraq

In 2006, Joe Biden, Les Gelb and many others proposed plans to decentralize power in Iraq. Biden, then a United States senator from Delaware, Gelb and others recognized that Iraqi society was fracturing into sectarian blocs. They believed that governing institutions should reflect the fundamental loyalties on the ground. According to the Biden plan , the central Iraqi government would still have performed a few important tasks, but many other powers would have been devolved to regional governments in the Sunni, Shiite and Kurdish areas. The administration of George W. Bush rejected that federalist approach and instead bet on a Baghdad-centric plan. The Iraqi prime minister at the time, Nuri Kamal al-Maliki, and his band of Shiite supremacists enflamed sectarian tensions even more, consolidated power, excluded rivals, alienated the Sunnis and Kurds and drove parts of the opposition into armed insurrection. The Obama administration helped oust Maliki and replace […]

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Saudi Arabia’s Celebrity Oil Minister Ali al-Naimi Prepares for Potential OPEC Swan Song

VIENNA—Ali al-Naimi was an unlikely Saudi oil boss. At Saudi Arabian Oil Co., he was known as a technocrat’s technocrat, a company man hired out of a shepherd’s field at age 12—shy and wonky with no political profile. But during about 20 years as oil minister, Mr. Naimi has become the most influential voice in the world oil market and helped steer the Organization of the Petroleum Exporting Countries through some of its most tumultuous times. The spotlight is back on Mr. Naimi this week as he prepares for what may be his last OPEC meeting on Friday . The 79-year-old has previously said he wants to retire, and people familiar with the matter say a successor is being groomed. OPEC ministers on Friday are expected to cement a policy decision that analysts say will be Mr. Naimi’s lasting legacy: Instead of controlling the price of oil by cutting […]

Posted On : Published By : Tom Whipple
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Senior Israeli Official Asks Washington to Extend Iran Nuclear Talks

WASHINGTON—Israel’s point man on Iran pressed the Obama administration this week to extend nuclear negotiations with Tehran beyond the June 30 deadline, rather than signing a deal his government fears could prove fatal to Israel’s long-term security. Energy Minister Yuval Steinitz, in an interview on Friday, said his government believes parameters of a deal that global powers reached with Iran in April provided numerous loopholes for Tehran to exploit if it seeks to become a nuclear power. Mr. Steinitz, a close aide to Israeli Prime Minister Benjamin Netanyahu, specifically cited terms that allow Iran to continue to conduct some research and development on more advanced centrifuge machines, which are used to produce nuclear fuel. He also said there aren’t enough guarantees in the proposed agreement to ensure Iran will allow international inspectors real-time access to suspect nuclear and military sites. Mr. Steinitz added the agreement must be strengthened to […]

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Asian Yards Adapt to Industry Downturn

With little signs of a pick-up in newbuild rig orders, shipyards in Asia are turning to other offshore projects to ride out the market doldrums. Years of optimism in the Asian newbuild rig market has been shaken, with major petroleum companies reducing capital spending in line with the decline in oil prices, which have shown little signs of recovering from its descent below $100 a barrel since the second half of 2014. Asian shipyards, whose revenues have shrunk due to the weakness in global oil prices which in turn has led to a slowdown in newbuild rig orders, are looking elsewhere for fresh business opportunities covering floating production and offshore vessels. Vanishing Rig Orders The adverse impact of lower oil prices, with U.S. West Texas Intermediate and Brent crude oil futures falling by around 40 percent since September 2014, was felt almost immediately by Asian rig builders – newbuild […]

Posted On : Published By : Tom Whipple
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EPA Study: Fracking Puts Drinking Water Supplies at Risk of Contamination

Water splash image via shutterstock. Reproduced at Resilience.org with permission. The Environmental Protection Agency has released its long awaited draft assessment of the impacts that fracking has on the nation’s drinking water supplies — confirming that the process does indeed contaminate water. “From our assessment, we conclude there are above and below ground mechanisms by which hydraulic fracturing activities have the potential to impact drinking water resources,” the EPA wrote. The impacts take a variety of forms, the EPA wrote, listing the effects of water consumption especially in arid regions or during droughts, chemical and wastewater spills, “fracturing directly into underground drinking water resources,” the movement of liquids and gasses below ground “and inadequate treatment and discharge of wastewater.” The agency wrote that it had documented “specific instances” where each of those problems had in fact happened and some cases where multiple problems combined to pollute water supplies. Environmental […]

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Illinois Basin coal market stressed by low demand, prices

The Illinois Basin market continues to wilt as low spot demand and ongoing production leaves more tons on the ground and anxious producers with more to sell, market sources said Friday. "We’re at the point where it’s no longer rhetoric to say we’re going to leave coal in the ground rather than sell at these prices," one producer said. While there have been some indications of production discipline — notably Murray Energy’s recent announcement that it would lay off some Illinois Basin employees as well as rumored production cutbacks at some other basin mines — the market is still dealing with oversupply. "We haven’t been in the market for some time," one utility source said, adding that low power and gas prices are keeping them out of the IB market. "We’re long this year, building our stockpiles." Article continues below… Platts Coal Trader provides the latest prices for key […]

Posted On : Published By : Tom Whipple