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Kremlin official not surprised by sanctions

U.S. sanctions dig deeper into Russian energy sector as fighting continues in eastern Ukraine, where pro-Kremlin fighters remain active. UPI/Ivan Vakolenko MOSCOW, Aug. 3 (UPI) — U.S. sanctions extending deeper into the Russian energy sector prompted legal threats from Kremlin-backed entities but come as no surprise, an official said. The U.S. Treasury Department’s Office of Foreign Assets Control targeted Ukrainian and Russian business leaders, including Russia gas trader Gennady Timchenko and Boris Rotenberg, a close associate of Russian President Vladimir Putin. OFAC Director John Smith said the sanctions are aimed at encouraging Russia to honor peace-keeping commitments signed earlier this year regarding conflict in eastern Ukraine. Sanctions, he said, are part of the Western-backed effort to keep pressure on Russia for violating international laws and "fueling the conflict in eastern Ukraine." Russia’s energy sector, a key source of government revenue, has been the target of Western sanctions since conflict […]

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IMF Says Sanctions Take Toll On Russia

MOSCOW—Russia’s economy faces the loss of as much as 9% of the inflation-adjusted value of the goods and services it produces if Western sanctions and Moscow’s retaliatory measures remain in place in the medium term, the International Monetary Fund said on Monday. The West imposed the sanctions last year in response to Moscow’s annexation of Crimea and its support of rebels in eastern Ukraine. The IMF said their impact on Russia’s oil-dependent economy suggests a recovery could be slower than the Kremlin’s forecast. This year, the U.S. and European Union extended sanctions against Moscow, restricting access to global capital markets for Russian banks and companies. In response, Moscow prolonged its ban on food imports from states that sanctioned Russia. “The external shocks, added to pre-existing structural weaknesses, are certainly weighing on Russia’s growth prospects,” Ernesto Ramirez Rigo, IMF mission chief for Russia, said in a report. The IMF kept […]

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Russian oil sector slowly adapting to new tax regime

Seven months after Russia made the latest changes to its oil tax regime, the industry seems to have been able to adapt more easily to the new landscape than had been expected at the turn of the year. However, market experts have warned that the government must consider more fiscal reforms as the current system is continuing to distort the sector. The so-called tax maneuver, which includes a phased reduction in export duty for crude and oil products over 2015-2017 and an increase in oil extraction tax, was introduced in January. It significantly reduced refining margins at a time when oil prices were already falling sharply, limiting the financial leverage of refiners that were already suffering from the dual impact of international sanctions and a weak economy. Refining throughput slipped by 4% year on year in March, the first drop following four years of steady growth, prompting oil companies […]

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Oil Prices Drop to Four-Month Low on Supply Glut Concerns

HONG KONG–Oil prices slid to fresh four-month lows Monday as a rise in the number of U.S. oil rigs fueled supply glut concerns even as weak China manufacturing activity weighed on the demand outlook. The oil-rig count in the U.S. rose by five to 664 in the latest week, according to Baker Hughes Inc. BHI -0.92 % This offset the positive impact of signs that the country’s oil production might have peaked and has begun to decline in the past two months. The supply-side concerns also rose as Iran’s oil minister said the country can increase oil production in one week after international sanctions are lifted, ANZ said in a report. In China, the Caixin manufacturing purchasing managers’ index, a gauge of nationwide manufacturing activity, fell to a two-year low of 47.8 in July, compared with 49.4 in June. Though Chinese oil imports have held steady despite a stream […]

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Oil Slumps to Six-Month Low on Iran Supply Plan, China Slowdown

Oil fell to a six-month low in London as Iran vowed to boost production immediately after sanctions are lifted and manufacturing in China slowed. Futures declined as much as 2.6 percent in London after capping a 18 percent drop in July, the biggest since December. Iran can raise output by 500,000 barrels a day within a week of sanctions ending, the state-run Islamic Republic News Agency reported. A Chinese private factory gauge released on Monday fell to a two-year low in July, while an official index on Saturday slipped to the lowest in five months. Crude slid into a bear market last month as expanding supplies and concern demand in China may falter with slower economic growth sparked losses in raw materials. Iran’s nuclear deal with world powers has fueled speculation about when and by how much it will lift output. Sanctions against the Persian Gulf nation should be […]

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Oil CEOs’ Grim Outlook Rubs Off on Speculators Fleeing Market

The world’s biggest oil companies are painting a grim picture of the future and speculators are listening. Hedge funds reduced bullish bets to the lowest level in five years as oil capped the worst month since the financial crisis. The net-long position in West Texas Intermediate contracted 7 percent in the seven days ended July 28, U.S. Commodity Futures Trading Commission data show. BP Plc said oil prices will be lower for longer and Royal Dutch Shell Plc said it’s preparing for a prolonged downturn. Exxon Mobil Corp. and Chevron Corp. reported their worst earnings in years. Supply will outpace demand by 1 million barrels a day through 2016, according to Bank of America Corp. Prices need to stay below $40 a barrel for months for U.S. output to fall enough to erode the global surplus, IHS Inc. said. “The speculators are looking at the bad earnings and the […]

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Oil to hit low $30s by the end of 2015: Kilduff

The prospect of oil prices falling below $40 receded earlier this year amid a crude rally, but with futures sliding again, investors shouldn’t rule out a three-handle, Again Capital founding partner John Kilduff said Thursday. "Christmas time we’ll probably be rebounding off new lows off of the mid to low 30s," he told CNBC’s "Squawk Box." "We have a lot to go. We’re going to take out the March lows of $43 and trade down to the 30s in my view." U.S. crude was trading around $49 Thursday morning. The benchmark touched a four-month low this week. A growing global glut of diesel fuel could be the next catalyst, he said, noting that Saudi Arabia and China have ramped up their refining capacity and are now flooding the Asian market with diesel. "You hear analysts come on all the time talking about this golden era for refiners," he said. […]

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Iran’s President Says Nuclear Deal Will Help Revive Domestic Economy

TEHRAN—Iran’s landmark nuclear deal will revive a domestic economy that has struggled under a decade of sanctions and help ease political tensions in a volatile region, Iranian President Hassan Rouhani said in a nationally televised speech Sunday. “We must create jobs and seek economic improvement” on the back of the deal, Mr. Rouhani said in the speech, delivered on the eve of the two-year anniversary of his inauguration in 2013. “Economic growth must reach 8%.” “Our principles remain the same on regional issues, but this deal will certainly create a new climate for quicker political settlement of these issues,” he added. The speech appeared to show Mr. Rouhani laying out his administration’s political accomplishment in the deal, reached July 14 in Vienna between Iran and six world powers including the U.S. Mending ties with the West and removing sanctions have been central priorities for Mr. Rouhani, a moderate within […]

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Saudis to raise September oil price, but wary of losing market share

Oil pumps are seen at a MAX oil station in Yangon April 21, 2014. Saudi Arabia is expected to raise prices for crude it sells to Asia in September due to a stronger Dubai benchmark, traders and analysts said on Monday, adding that the top oil exporter will be wary of a hike so big it would threaten its market share. OPEC’s efforts to discourage growth from rival supply sources are bearing fruit as the group continued to pump at record levels in July. Still, raising prices when Asian refiners are cutting runs because of weak margins could hurt demand for Saudi oil, the traders and analysts said. "It’s an awkward decision," a Singapore-based trader said. "They have to follow their formula to ensure price continuity, but at the same time they have to keep their prices competitive when compared with other grades in the market." State oil giant […]

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China July factory growth unexpectedly stalls: official PMI survey

Workers install the chassis along a production line at a truck factory of Anhui Jianghuai Automobile Co. Ltd (JAC Motors) in Hefei, Anhui province May 5, 2014. Growth at China’s big manufacturing companies unexpectedly stalled in July as demand at home and abroad weakened, an official survey showed on Saturday, reinforcing views that the economy needs more stimulus as it faces fresh risks from a stock market slump. The official Purchasing Managers’ Index (PMI) stood at 50.0 in July, compared to the previous month’s 50.2. The 50-point mark separates growth from contraction on a monthly basis. Analysts polled by Reuters had predicted another tepid reading of 50.2, pointing to expansion, albeit a sluggish one. However, both export and domestic orders shrank for the large firms covered by the survey, and in response they continued to cut jobs. It did not mention any impact from a savage 30 percent drop […]

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