Some great lines in this piece on the glut of oil weighing on price
- A massive supply glut has caused global oil prices to crash this year
- “floating storage” of crude oil soared to nearly triple the normal level last week, according to ClipperData
- It’s a “super tanker traffic jam”
- Epic oil glut
Smith first noticed the maritime congestion popping up a month ago off the coast of Singapore. And then ClipperData discovered a similar phenomenon off China and even the Arabian Gulf.
“There just appears to be more oil than can be dealt with. They haven’t got anywhere to put it”
Talk about a change in fortunes.
Ratings agency Moody’s is the latest to warn that the huge decline in oil prices, and weak prospects for a serious recovery, are set to pinch the finances of Gulf states hard, potentially damaging the countries’ credit profiles.
Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, (collectively, the Gulf Cooperation Council) ran an aggregate fiscal surplus equivalent to 9 per cent of GDP from 2010 to 2014, Moody’s says. That is set to flip into a deficit close to 10 per cent in 2015 to 2016, it thinks.
Says Steffen Dyck, an analyst at Moody’s:
We expect that the impact of lower hydrocarbon revenues on GCC public finances will spur policy adjustments in 2016. These could include reductions in subsidy spending and measures to broaden the non-oil revenue base.
Brent crude, which now trades at $48.90 per barrel, is set to average $55 per barrel this year, $53 next year, and $60 in 2017, Moody’s analysts reckon. That’s well below previous forecasts of $65 in 2016 and $80 in the following year.
Moody’s notes that:
BP will pay a higher than expected $20.8bn to settle civil claims with US federal and state authorities over the 2010 Deepwater Horizon disaster, with $8.1bn of the funds designated for coastal wetlands and marine mammals as part of a 15-year Gulf of Mexico restoration plan.
Federal agencies provided details of the settlement for the first time in a decree that was filed on Monday. The settlement amount exceeds the $18.7bn deal announced in July, which officials attributed to additional refinements of penalties and amounts that BP has already paid.
The deal announced on Monday is the largest ever reached by the Department of Justice with a single entity and resolves what could have been years of legal wrangling over the April 2010 oil spill and explosion that killed 11 workers.
Also included in the settlement are the five Gulf states affected by the spill — Alabama, Florida, Louisiana, Mississippi and Texas. There will be a 60-day public comment period and then the agreement will be subject to court approval.
“BP is receiving the punishment it deserves, while also providing critical compensation for the injuries it caused to the environment and the economy of the Gulf region,” Attorney-general Loretta Lynch said. “Once approved by the court, this agreement will launch one of the largest environmental restoration efforts the world has ever seen.”
Fars news agency, via Reuters, reports:
Iran, six powers to hold comprehensive meeting at 0800 GMT at UN headquarters
Fars is an Iran news agency
Just the headline at this stage.
Oil prices have been dribbling lower all morning:
CRUDE WTI :
Major Support at $ 51.23
Break below this level and closes for 3 consecutive days we see Panic upto $ 47.45—-46.19 level.
The anti-begging campaign by Dubai Police, which began on June 7, has exposed a new category of beggars, who stay in 5-star hotels in Dubai and enter the country on business visas, according to a report in ‘Emarat Al Youm’.
Dubai Police arrested 70 such beggars, said Colonel Mohammed Rashid Al Muhairi, Director, Tourism Security, CID.
They stand before mosques, malls and roam the streets in poor clothes, but otherwise dress according to their station.
Recalling an incident, Lieutenant Colonel Ali Salem, Director, Infiltrators and Illegal Department, CID, Dubai Police, said when cops nabbed an Arab woman she pleaded with officials not to arrest her as she is a mother of four kids and they are all alone. Police discovered the kids aged between three and nine years in a 5-star hotel.
She had entered the country on a business visa and paid hotel charges on a daily basis. Police seized Dhs13,000 from her. She claimed that her husband was suffering from some hardships and so she had come to beg and earn.
The woman has been referred to Public Prosecution.
Five Iranian boats fired shots across the bow of a Singapore-flagged cargo vessel in the international waters of the Gulf on Thursday, CNN reported, citing a U.S. official.
It was unclear if the shots hit the vessel, CNN said. After the shots, the cargo vessel turned to the national waters of the United Arab Emirates, where that country protected it using its coast guard, CNN also said.
There were no U.S. personnel on the vessel, according to CNN. Reuters could not immediately confirm the report, and representatives for the Pentagon could not be immediately reached for comment.
The shots at the Singapore-flagged vessel were fired as U.S. President Barack Obama and leaders from Gulf nations were set to meet at Camp David in a rare, high-profile summit on U.S. efforts to broker a nuclear deal with Iran. The United States and five other world powers are in talks with Tehran to curb its atomic program.
Iran, currently in a standoff with a Saudi Arabia-led coalition over security inspections of its own cargo ship, last month intercepted a Marshall Islands-flagged vessel in the Strait of Hormuz. It forced that ship into Iranian territorial waters by firing shots across its bow.
A decline in Dubai residential property prices is steepening as foreign interest dries up, according to new research.
The emirate’s yo-yoing real estate market, which collapsed by two-thirds in 2008, recovered strongly after the Arab spring unrest of 2011 drove demand for housing in the region’s business haven.
Apartment sale prices decreased 3.7 per cent, while villas fell by 3 per cent in the first six weeks of 2015, when compared to the last quarter of 2014, according to Phidar Advisory, a real estate consultancy.
Dubai residential demand is teetering.
The consultancy added:
Price decline is gradually accelerating
Phidar, which tracks a portfolio of flats and houses across Dubai, said apartment values are down by one per cent and villas are down 8 per cent compared to the first quarter in 2014.
Iran’s Revolutionary Guards launched cruise missiles at a life-size copy of the US Nimitz aircraft carrier as they started naval exercises in the Strait of Hormuz, the country’s Tasnim New Agency announced.
The aircraft carrier model was sunk with four life-size Nasr cruise missiles, which have an operational range of 35 kilometers and a 150 kilogram armor-piercing high-explosive warhead.
In addition, the Revolutionary Guards launched Khalij Fars (Persian Gulf) ballistic missiles from a coastal port. The missiles have a range of 300 kilometers and can reach mach 3 speeds (at least 1020 meters per second).
The drills, dubbed Great Prophet Nine, take place in the Strait of Hormuz, a 39 kilometer-wide waterway which is the sole entrance to the Persian Gulf.
Iran’s state television said that the war games’ goal is to “demonstrate the power” of the Iranian Navy in protecting the country’s interests in the Persian Gulf.
Dubai’s government is expecting to run a balanced budget in 2015, even as it increases spending by 9% compared with a year earlier, an official statement said.
The no-deficit budget would be Dubai’s first in the six years since the global financial crisis. It reflects strong local economic growth coupled with a boost in expected revenues from taxes and real-estate transaction fees, according to a statement on Saturday carried by the official WAM news agency.
A semiautonomous member of the United Arab Emirates, Dubai’s rise in fortunes comes as the Persian Gulf business hub enjoys an economic resurgence. Real-estate prices have registered double-digit rises in the past two years after plummeting in the aftermath of the crisis in 2009, although the pace of growth has slowed in recent quarters.
Trade and tourism have also provided a lift for Dubai, which unlike its neighbors doesn’t have large oil and gas reserves. The local economy was on track to grow by more than 5% in 2014, according to a forecast by the Institute of International Finance last year.