|Bid||0.00 x 0|
|Ask||0.00 x 0|
|Day's Range||13.48 - 13.68|
|52 Week Range||10.81 - 13.71|
|Beta (3Y Monthly)||0.21|
|PE Ratio (TTM)||20.46|
|Earnings Date||Oct 30, 2019|
|Forward Dividend & Yield||0.65 (4.80%)|
|1y Target Est||12.98|
(Bloomberg) -- It’s bargain time in the liquefied natural gas market.After prices plunged to their lowest on record for this time of year, traders say buyers from Japan to India have started to snap up cargoes in anticipation of a pickup in winter demand. Procurement for the colder season is only expected to intensify over what’s left of the summer.“We have likely reached bottom,” Sanford C. Bernstein & Co analysts including Neil Beveridge said in a report.The rout can be traced back to last winter, when mild weather dented demand for heating in large parts of the northern hemisphere. To make matters worse for producers, which are adding supply at a record pace, consumption for cooling in the past few months wasn’t very strong either. A market in contango is also pushing some traders to consider storing gas on tankers to sell later at a higher price, a practice that last year began later in autumn.Another sign that demand is picking up can be spotted in the shipping market. The cost of hiring a tanker on a spot basis East of Suez is at the highest since January. Oystein M Kalleklev, chief executive officer of vessel owner Flex LNG Ltd., expects the LNG market to become “increasingly tight” in the second half of the year, he said Tuesday on an earnings call.Cargoes for early September delivery to North Asia were bought between high-$3 to low-$4 per million British thermal units, while October shipments are currently priced around the mid-$4 level, according to traders.In Europe, where inventories are already above last year’s high point, traders see the gap of as much as $1.50 per million Btu between September and the fourth-quarter contract as an opportunity to sell the fuel later.One tanker, Marshal Vasilevskiy, which loaded at Rotterdam last weekend, doesn’t appear to have a destination yet and is idling off the port, ship-tracking data on Bloomberg show. Also, at least three BP Plc vessels appear to be idling for longer than usual, according to the data.S&P Global Platts defines floating storage as any laden trip that takes 1.75 times the standard length of time to reach its destination. The company, which provides commodity price assessments and market analysis, said traders will probably float cargoes for delivery in November and December, boosting prices during autumn in the European market.“Even if charter rates triple from current levels, marginal LNG spot supply is still profitable selling into November or December,” Platts said in a report. “We expect this dynamic to limit European regasification rates and push LNG storage to its limits in October.”Idling LNG Tankers Hint at Increasing Appeal of Floating StorageWhile an uptick in prices at this time of year is normal, prices are still less than half of where they were at the same time last year.Nick Boyes, a senior gas and LNG analyst at Swiss utility Axpo Group, doesn’t see much upside for prices until the first quarter. Only then will the possibility of cold weather in northeast Asia offer some bullish sentiment along with higher nuclear maintenance.“Some small relief from an oversupplied market may appear from floating storage, or slow sailing reloads from northwest Europe, to take advantage of the steep contango in LNG prices,” he said.New supply from plants in the U.S. to Australia will also likely curb any bigger gains.A record 35 million tons of LNG capacity will be added globally next year, according to Bernstein. The U.S. alone will add about 17 million tons of capacity in the next two quarters, said Leslie Palti-Guzman, president and co-founder of GasVista LLC, an energy consultant in New York. All the new supply, coupled with demand at the mercy of deteriorating U.S.-China trade relations, is sending a bearish signal.“The market should question the forward winter LNG curve price,” she said.(Updates with analyst comment from 12th paragraph)To contact the reporters on this story: Anna Shiryaevskaya in London at email@example.com;Stephen Stapczynski in Singapore at firstname.lastname@example.orgTo contact the editors responsible for this story: Reed Landberg at email@example.com, Lars Paulsson, Rob VerdonckFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The Iranian oil carrier Helm experienced technical issues in the Red Sea off the Saudi port of Yanbu and the crew is working to resolve them, according to the National Iranian Tanker Co.The vessel, one of the world’s largest crude tankers, signaled distress at 6:30 a.m. Iran time on Tuesday, about 75 miles (about 121 kilometers) off of Yanbu, owner NITC said in a statement. Both the ship and crew are safe and stable, NITC said without saying whether the Helm can continue the voyage.The tanker was showing minimal movement in the immediate area on Wednesday, according to tanker-tracking data compiled by Bloomberg at 2:30 p.m. in London.Iran’s tanker fleet is under global scrutiny amid U.S. sanctions seeking to choke off the country’s crude sales. The U.S. failed in efforts to seize a loaded supertanker allegedly bound for Syria that had been blocked in Gibraltar for more than a month.That vessel, the Adrian Darya 1, is now sailing east in the Mediterranean and signaling Greece, potentially to transfer crude to other ships. Another tanker loaded crude this month in Iran with the aim of delivering oil to Syria, Fox News reported, citing unidentified intelligence officials.Transponder SignalsIranian tankers have turned off their satellite transponders intermittently in an apparent attempt to mask their voyages to supply crude. The Helm appears to have used that strategy since loading some crude in Iran in May.It’s unclear when the Helm entered the Red Sea or what was the ship’s last port of call, based on tanker-tracking data available on Bloomberg. Until this week when the vessel made the distress call, the tanker’s last known position was in the Persian Gulf in May when satellite signals showed the tanker was half full and heading for the Suez canal.The Helm, a Very Large Crude Carrier, capable of carrying about 2 million barrels of crude, is not full, according to ship tracking data compiled by Bloomberg. The tanker last reported its status as “not under command.”Another NITC tanker that encountered trouble off the Saudi coast was kept in the port of Jeddah for more than two months before leaving in July and returning to Iran this month.Separately on Wednesday, Iranian Foreign Minister Javad Zarif said that the country’s government will try to expedite the legal process over its holding of a U.K.-flagged oil tanker so “we can close this ordeal.”Iran seized the ship, the Stena Impero, in July, following the detention of the tanker that was held in Gibraltar. “This is something that we did not start but we want to end,” Zarif said at an event in Stockholm.(Updates with ship position in third paragraph, comment from Iranian foreign minister in last two paragraphs.)\--With assistance from Rafaela Lindeberg.To contact the reporters on this story: Anthony DiPaola in Dubai at firstname.lastname@example.org;Arsalan Shahla in Tehran at email@example.comTo contact the editors responsible for this story: Nayla Razzouk at firstname.lastname@example.org, Brian Wingfield, John DeaneFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- The Iranian oil tanker impounded off Gibraltar since early July set sail on Sunday after local authorities rejected a U.S. bid to detain the vessel. The supertanker has been renamed and reflagged and is now heading east into the Mediterranean. The U.S. has threatened sanctions against any party dealing with the vessel.Where is the ship now?The tanker is heading east, deeper into the Mediterranean Sea. It has changed its name to Adrian Darya 1 and is now sailing under the Iranian flag. It was previously named Grace 1 and flew the flag of Panama.Why did Gibraltar allow the ship to leave?The government of Gibraltar says European Union regulations didn’t allow it to seek a court order to seize the tanker, which the U.S. accuses of breaching its sanctions by exporting Iranian oil. That’s because of “differences in the sanctions regimes applicable to Iran in the EU and the U.S.,” according to a statement from the Gibraltar government. “The EU sanctions regime against Iran -- which is applicable in Gibraltar -- is much narrower than that applicable in the U.S.”Is the vessel still carrying Iranian crude?Yes, it appears to be. The draft of the ship -- how deep it is sitting in the water -- is still reported as being 22.1 meters, which indicates that its full cargo of about 2 million barrels of crude oil is on board. The draft is manually entered by the captain into the ship’s Automatic Identification System, so it could be wrong, but there is no evidence that the cargo was discharged while the vessel was anchored off Gibraltar.Where is the ship heading?According to vessel-tracking data from the ship, it is now heading for the Greek port of Kalamata. This probably won’t be its final destination, as the port is too small to accommodate a ship the size of the Adrian Darya 1. Oil tankers sometimes anchor there to stock up on provisions or change crew, but they cannot take on fuel at that location. Greek authorities haven’t received formal notification that the vessel intends to head to a port in the country, according to a spokesman for the nation’s coast guard.Where will the cargo end up?It remains unclear where the crude on the Adrian Darya 1 will be offloaded. Iran gave assurances to the government of Gibraltar that the ship wouldn’t sail to Syria.The most likely course of action is for the ship to discharge its cargo onto smaller vessels in a process known as a ship-to-ship transfer. Those smaller tankers would then deliver the cargo to its final destination. Before doing that, the Adrian Darya 1 would probably switch off the transponder that signals its position and "go dark" in an attempt to conceal its actions. This may not be enough to hide a ship that has become so closely watched.Can the vessel get back to Iran?The ship cannot get back to Iran if it continues on its current course without first offloading at least some of its cargo. It’s simply too full to pass through the Suez Canal.Even if it were able to traverse that link, that route poses the risk that the vessel could be seized by Egypt at the request of the U.S. While Iranian tankers continue to pass through the Suez Canal into the Mediterranean, some have been prevented from making the journey.If the ship is prevented from passing through the canal, or it is deemed too risky to attempt making that passage, its only alternative route to Iran would be to retrace its voyage back out into the Atlantic Ocean and around the tip of Africa. That journey is about 11,500 miles from Gibraltar to the Strait of Hormuz and the vessel would certainly need to take on fuel before it could attempt it and that could prove problematic.Who will provide the ship with fuel and provisions?Obtaining fuel and provisions could prove difficult for the Adrian Darya 1. The U.S. has warned that ports, banks and anyone else who does business with the vessel or its crew might be subject to sanctions, according to two administration officials. That would make it difficult to refuel in the Mediterranean, as European or North African ports and fuel suppliers will probably be cautious about dealing with the ship.One option would be for the ship to be resupplied with fuel and provisions by ship-to-ship transfer from a vessel owned by an entity that has no exposure to the U.S., or is prepared to risk being sanctioned. A Russian or Syrian vessel could fit that bill.Any attempt by the U.S. Navy to impede resupply at sea would mark a significant escalation in recent tensions between the U.S. and Iran, which would be almost certain to respond by increasing its harassment of traffic through the Strait of Hormuz. The U.S. Sixth Fleet referred Bloomberg to the U.S. Justice Department and Office of the Secretary of Defense for any questions concerning the tanker.(Updates with options for route and resupply in the final four paragraphs.)To contact the reporters on this story: Julian Lee in London at email@example.com;Verity Ratcliffe in Dubai at firstname.lastname@example.orgTo contact the editors responsible for this story: Alaric Nightingale at email@example.com, Rachel Graham, John DeaneFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Follow @Brexit, sign up to our Brexit Bulletin, and tell us your Brexit story. U.K. officials wondering how to cope if Britain crashes out of the European Union can generally agree that there’s no real precedent for how it might pan out.That’s the theme Bank of England Governor Mark Carney played to when he spoke to lawmakers on Nov. 1 -- exactly one year before he’s set to man the front line defending the post-Brexit economy. “This is rare,” he said. “It doesn’t happen.”The unique nature of Britain’s challenge if Boris Johnson’s government doesn’t reach a deal with the EU makes the job of finance officials all the tougher, because it forces them to rely on imagination to model complex outcomes as they prepare a response. While the projected slump in the pound has happened regularly in response to past shocks, the same can’t be said for a sudden shutdown in commerce.“You’re completely re-ordering U.K. trade overnight -- our supply system and the country itself,” said Cathal Kennedy, an economist at RBC Capital Markets and former U.K. Treasury official. “In the context of the economic history we know, post-Second World War, it’s almost unique in stepping back from that, in a pretty dramatic way.”This lack of precedent is noteworthy in a global economy that has suffered multiple bouts of turbulence. Britain itself has also had its fair share of emergencies since World War II. Here’s a cursory look at some of the U.K.’s previous international economic crises over the years.Eden’s EmergencyPrime Minister Anthony Eden’s military intervention in Egypt in 1956 to secure the Suez Canal is most often cited as a turning point in Britain’s foreign policy, and showcases a previous attempt by the country to act without wide international support.Amid the U.S.-led backlash, the country faced a run on sterling. Unwilling to devalue the currency, the U.K. instead sought funds from the International Monetary Fund, helping to establish that institution’s role as an emergency lender.Wilson’s WoeSustaining the pound remained the overarching struggle for policy makers in the ensuing decade and plagued Harold Wilson’s first term as prime minister, starting in 1964.Britain’s persistent balance-of-payments deficit proved too much to bear however. Three years later, despite Wilson’s efforts to shore up the currency as a status symbol, his administration succumbed to devaluation.Callaghan’s CapitulationThe country’s economic decline intensified in the next decade. The oil crisis of 1973, rampant inflation, waves of labor strikes and a swelling budget deficit all took their toll, and the pound continued its incessant weakening. By 1976, James Callaghan’s government resorted to seeking what was then the biggest-ever loan extended by the IMF, agreed on condition of budget austerity.The full facility was never called upon and the episode marked a turning point in the country’s economic policy. And when Margaret Thatcher took power in 1979, she abolished exchange controls.Major’s MisadventureBritain’s last significant battle with the foreign-exchange markets was in September 1992. As chancellor of the exchequer during the final weeks of Thatcher’s premiership in 1990, John Major oversaw the U.K.’s accession to Europe’s Exchange Rate Mechanism, a framework for the continent’s currencies as a precursor to the euro.After Major became prime minister, sterling became a focus of market speculators convinced it was overvalued. That culminated in its exit from the ERM on so-called Black Wednesday -- but not before the Treasury had raised the interest rate to 15% in a failed defense of the currency.Brown’s BailoutThe British economy faced its gravest moment of the postwar period in 2008. A year of turmoil that had already felled U.K. lender Northern Rock in 2007 and Lehman Brothers that September almost brought down Royal Bank of Scotland and HBOS in early October, requiring a costly bailout by Prime Minister Gordon Brown’s government. The rescue involved the U.K. taking equity stakes in afflicted banks, a model of response that was then repeated elsewhere.As a consequence, the country’s budget deficit swelled. The next administration, led by David Cameron, enforced a tough austerity program, and cited the need to defend Britain’s longstanding top credit ratings as a justification.Cameron’s CrisisThe U.K.’s vote in June 2016 to leave the EU prompted the worst daily drop on record for the pound and the resignation of Cameron. Within days, the country lost its AAA rating from S&P Global Ratings, with a two-notch cut.The pound move turned out to be the main “shock absorber” of the surprise outcome, as the BOE has described the currency’s role. Acting in a political vacuum, the central bank smoothed the immediate market fallout by opening liquidity taps to banks and cutting interest rates.Those tools will be available to them again, should Brexit precipitate the next crisis.To contact the reporters on this story: Craig Stirling in Frankfurt at firstname.lastname@example.org;Eddie Spence in London at email@example.comTo contact the editors responsible for this story: Simon Kennedy at firstname.lastname@example.org, Lucy Meakin, David GoodmanFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg Markets) -- Dustin Yellin, a Brooklyn, N.Y.-based artist whose intricate 3D photomontages adorn the likes of New York’s Lincoln Center, wants to draw your gaze to climate change. Not in a subtle way, either. He plans to stand an oil supertanker on its end in the ground—a structure soaring 1,000 feet into the air.The Bridge, as Yellin dubs it, would repurpose a piece of energy infrastructure as a ready-made artwork, complete with elevators and a viewing platform for visitors, capturing the sheer scale of our energy system. The difficulty of hoisting thousands of tons of steel into the air would itself symbolize the monumental challenge of retooling our hydrocarbon-fueled civilization in the face of climate change.The world depends on coal, oil, and natural gas for about four-fifths of its energy—just as it did when I was a boy. Back then, fears shaped by the 1970s centered on what would happen when our vital fuels ran out.Our actual energy crisis turns out to be one of abundance, not scarcity. We’ve burned 1 trillion barrels of oil since 1980, yet global reserves are almost three times bigger. Natural gas is so plentiful that producers in Texas have been burning it off or even paying customers to take it off their hands. As for coal, the only thing many mines have run out of is jobs.Carbon emissions are similarly inexhaustible, reaching a record last year. Abstract fears of “global warming” from the ’80s have morphed into the present danger of climate change. Rather than running out of hydrocarbons, we’re running out of time to deal with their pollution.Our species struggles to grasp gradual change. Tell people the gas pumps have run dry, and they focus in an instant. Tell people their cars produce an invisible gas that will engender biblical droughts and floods—not necessarily where they live—and their attention drifts. Hence Yellin’s skyscraper-size exclamation point.Similarly, it’s hard for us to conceive of the end of the hydrocarbon era. And yet financial markets appear to be ahead of us on this.This summer the energy sector’s weighting in the S&P 500 fell below 5%, lower than at any time in the past four decades. That’s quite a show of disdain for a set of giant companies raking in almost $3 billion in revenue every day.The most recent boom and bust ruined the industry’s reputation with many investors. News flash: This isn’t the first time that’s happened. In the past, though, the ubiquity of fossil fuels preordained that consumption (and prices) would eventually rise and tempt investors back.Now at least some of them worry that a new deep-water field might end up as a stranded asset in a little changed or shrinking market. Oil majors are deserting prior strongholds, such as Norway’s frigid waters, and going all in on U.S. shale basins, which can be developed in months instead of years. BP Plc’s head of strategy acknowledges that some of the company’s resources “won’t see the light of day.” And members of OPEC, whose power always rested on the geological lottery of vast oil reserves, find themselves relying on the support of nonmember Russia to shore up their diminished credibility.Hydrocarbons, dense with energy and intertwined with so much of our existing infrastructure, remain formidable incumbents. Roughly 150 years old, the oil business is still capable of sprightly disruption: Look at what hydraulic fracturing of shale hath wrought. Coal, an even older industry, isn’t quite so vigorous—global demand peaked in 2013—but nor has it gone gently into that good night, especially in Asia.Above all, hydrocarbon consumption is just big: Last year we burned oil, gas, and coal with an energy equivalent of almost 12 billion tons of oil. Like The Bridge, it’s hard to get your head around the scale.But in a transition, scale only tells you where you are; marginal growth points to where you’re going. Rather than focus on the mountain, get a feel for the gradient of travel.Harry Benham, an oil industry veteran turned consultant, presents this as a math problem. Primary energy consumption grows at about 1% to 2% a year, and that rate has trended downward, more or less, since the 1960s. That’s linear growth, meaning the world’s sources of energy, no matter how big or small, must fight for a slice of that shrinking sliver of extra demand over time. Wind and solar power, while small, are expanding at a ferocious clip: 23% a year, compounded, over the past decade. Which means they grab a bigger share. Having generated less than 2% of the world’s electricity a decade ago, wind and solar will likely surpass nuclear power this year or next.This collision course is driven by cost. Less than a decade ago, shale frackers needed maybe $100 a barrel to break even. Now some need less than $50. Impressive, but the all-in cost of solar power has dropped 85% since 2010, and BloombergNEF forecasts an additional 63% drop through 2050. In two-thirds of the world, up from 1% five years ago, new solar and wind projects undercut new plants that use either coal or natural gas.If you think oil is safe in its internal-combustion fortress, consider that electric models accounted for all the growth in passenger-vehicle sales last year and are forecast to do the same this year. Again, it’s scale vs. growth. Sales of traditional gas guzzlers, while still 80 million-odd strong, have declined. And investors, technology talent, and research and development budgets tend to start backing away from little changed or shrinking markets, no matter how big they are. Energy stocks are out of favor not because they’re no longer dominant; they clearly are. But mortality has begun to creep into risk premiums.Despite the falling costs and growing market share of renewable energies, they still lack the killer app: a price on carbon emissions that would expose the frequently hidden costs of fossil fuels. Conventional wisdom holds that Americans, especially, wouldn’t stand for that.But aside from President Trump professing ardor for “beautiful” coal, few people love hydrocarbons—when was the last time you fist-pumped at the prospect of a trip to the gas station? Most folks don’t even care about energy. What they love is what it provides: light for dark streets, cool offices on hot days, and, of course, the ability to travel. These hallmarks of modernity—the ends, not the means—persuade us to tolerate the drawbacks.One is pollution. In the past, when society reached tipping points on industrial nasties such as leaded gasoline or smog, government acted to curb them. Carbon emissions, invisible and with a slow, diffuse impact, are of a different order. Even here, however, sentiment is shifting, and that gradient of public tolerance is steepening.For example, oil majors’ relatively recent touting of renewable energy investments may strike you as “greenwashing.” The point is that they’ve acknowledged that man-made carbon emissions cause climate change. That particular cat won’t go back in the bag.It’s also easy to dismiss Pope Francis’ recent convening of oil bosses in the Vatican as political theater. But as Kevin Book of Washington-based ClearView Energy Partners says, the church epitomizes conservatism and tradition: “The activists are already persuaded about climate change, and now the Vatican is, too.” In a pleasing irony, the pope pushed the case for climate science in the same building where Galileo was tried by the church for his own bit of scientific insight.Even in the U.S., where discussion of climate policy so often regresses into theological positions of “believing” or “disbelieving” scientific consensus, there are signs of a shift. Polls show rising concern about the dangers of climate change, particularly among younger voters. The Green New Deal may be a mere scrap of a proposal, but it’s nonetheless dragged the politics of climate left. There’s no chance anything like the GND will be enacted into law while Kentucky Republican Mitch McConnell runs the Senate. But Democratic presidential primary candidates now speak openly about scrapping the filibuster precisely to push through legislation on issues such as climate change. If the past few years have taught us anything, it’s that while nothing is a given, nothing is fixed, either.The same applies to the seas on which fossil fuels are shipped across the world. In June, Trump unleashed a tweeted torpedo at the Carter Doctrine when he questioned the U.S. Navy’s role in ensuring freedom of navigation, especially for oil tankers.Homo hydrocarbon is largely a product of the American-led free-trading era after 1945. Absent the U.S. Navy policing sea lanes, it’s debatable whether oil-importing countries would have allowed themselves to rely on barrels shipped from the Middle East and other hot spots. Yellin’s supertanker is a product of this: a bulk-storage technology adopted after the 1956 Suez Crisis, making it economical to ship oil on longer routes avoiding such chokepoints. Yet these lumbering leviathans wouldn’t have been feasible without the implicit protection of American sea power.Today, with its shale-inspired sense of energy dominance, the U.S. is rethinking this. China’s planners have taken notice of the potential change: It’s one rationale for Beijing’s pro-electric-vehicle industrial policy. Likewise, faced with the upheaval of the Arab Spring and collapse of Venezuela, oil producers such as Saudi Arabia are trying to remake themselves for a world where oil’s primacy and U.S. backing aren’t guaranteed.Like the shadow that The Bridge may cast one day, darkness is gathering on the hydrocarbon horizon. There will always be those who doubt climate change, but their platform is literally burning. Even many fossil fuel producers have leapt to politically safer ground. The end of the dominance of hydrocarbons begins with the end of innocence about their hidden costs. The implications of this knowledge will only grow.Hydrocarbons achieved their preeminence on the back of one overriding imperative: growth. Growth in wealth, living standards, and population. This is how the 20th century world was made, and it’s why we fretted about energy running out. It’s also why we could ignore the environmental and political costs of an energy system that wastes two-thirds of its input as heat.Now we know that such growth, unchecked, will ultimately undo us. A central argument for fossil fuels’ continued dominance is that humanity will surpass 10 billion at some point, and all those people will want something like the Western living standards built over the past 100 years on the back of coal, gas, and oil. Yet what a poverty of imagination this betrays, especially in light of climate change, which hits the poorest hardest. How can that be the pinnacle of civilization? What even constitutes “higher living standards” in a world where the costs of our existing technologies are so transparent? Far from securing hydrocarbon dominance for another 100 years, the needs and aspirations of future generations demand it give way to something more sustainable.Denning writes about energy for Bloomberg Opinion in New York. This column doesn’t necessarily reflect the opinion of Bloomberg LP and its owners.To contact the author of this story: Liam Denning in New York at email@example.comTo contact the editor responsible for this story: Christine Harper at firstname.lastname@example.orgFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
(Bloomberg) -- Signals from oil tankers last month suggest that Saudi Arabia is sending an ever-larger portion of its crude to China -- with the U.S. losing out.Saudi Arabia’s observed exports to China soared to 1.74 million barrels a day in July, the highest since Bloomberg began tracking the tanker shipments in January 2017. At the same time, the kingdom’s shipments to the U.S. appear to have tumbled to 161,000 barrels a day, the lowest during that same period.The divergence illustrates the current state of energy geopolitics. The Organization of Petroleum Exporting Countries -- of which Saudi Arabia is the largest producer -- and a group of allies last month agreed to extend production cuts. A big reason behind the curbs is soaring U.S. output, which is near record levels in weekly data. U.S. inventories have dropped in recent months as Saudi shipments to the country have declined.At the same time, Saudi Arabia has grabbed a greater slice of China’s market as U.S. sanctions cripple exports from Iran, the kingdom’s regional rival. Saudi crude flows to markets east of the Suez Canal were about 5.1 million barrels a day last month, tracking data show, and the number is likely to rise as some ships indicate their final destinations. Saudi flows west of Suez appear to have dropped to about 1.1 million barrels a day in July.“East is where their focus is,” said Amrita Sen, chief oil analyst at Energy Aspects Ltd. in London, noting that China has refineries with about 800,000 barrels of daily capacity starting up. “The West has been cut quite significantly.”Overall, Saudi shipments haven’t changed dramatically in recent months -- the 6.7 million barrels a day in observed cargoes the kingdom exported in July is only about 200,000 daily barrels less than in June.China’s AppetiteChina imported a record amount of crude from Saudi Arabia in June, according to data from its General Administration of Customs. The country has a growing appetite for the feedstock, with the Hengli Petrochemical and Zhejiang Petrochemical megaprojects scheduled for this year. The Hengli plant in Dalian reached full capacity in May.With China grabbing more Saudi crude, flows to India, Japan and South Korea also appear to have declined last month. Just three crude-laden ships sailed from Saudi Arabia for the U.S. in July -- one each for the East, West and Gulf Coasts -- though more could emerge in the coming days as tankers indicate their final destinations. U.S.-bound flows are down from 1.03 million barrels daily in July 2018.Of the vessels that loaded crude in Saudi Arabia in July, ships holding some 13 million barrels haven’t yet revealed where they’re headed. Almost half of that amount is likely sailing east, tracking signals show.To contact the reporter on this story: Brian Wingfield in London at email@example.comTo contact the editors responsible for this story: Alaric Nightingale at firstname.lastname@example.org, Rachel GrahamFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
In December 2018, Suez SA (EPA:SEV) released its earnings update. Generally, analysts seem fairly confident, with...
(Bloomberg Opinion) -- So much for Britannia ruling the waves.U.K. Prime Minister Theresa May will spend her last days in office working out how to secure the release of the Stena Impero, a British-flagged oil-products tanker seized by Iran in the Strait of Hormuz last week.Amid the likely handover of power to former Foreign Secretary Boris Johnson, and just over three months before the U.K. is due to exit the European Union, the incident looks like a disastrous miscalculation by a political class that’s had its share of poor decision-making.Indeed, an ill-planned military operation in a vital global shipping lane and a mistaken gamble on Washington’s response looks oddly reminiscent of the Suez crisis – the disastrous 1956 episode that marked the end of Britain’s ambitions as a global power.The most baffling thing about this incident is how entirely predictable it’s been.Tehran has been operating a calibrated tit-for-tat strategy in the Persian Gulf ever since the situation in the Strait of Hormuz started to deteriorate this summer. Within hours of the U.K. seizing a tanker carrying Iranian oil near Gibraltar earlier this month, a senior official in Tehran was calling for retaliation. Given the relative ease with which Iran can control shipping through the Strait (a fact the country’s foreign minister Mohammad Javad Zarif highlighted in an interview last week with Bloomberg Television), the current situation was all but inevitable, as my colleague Julian Lee has written.What happens if Tehran decides that honor isn’t yet satisfied? May’s government lacks the firepower to prevent further attacks: There’s just a single frigate, the HMS Montrose, currently in the region. Two more ships, HMS Duncan and HMS Kent, are to be rotated through the Gulf over the course of this year. But at best two boats will be available to escort marine traffic – or one when Montrose is docked.That’s plainly inadequate to protect a merchant fleet that numbers close to 1,000 trading vessels, once you throw in U.K.-owned ships sailing under the flags of other countries. Tankers likely to transit Hormuz comprise about a third of that total.(1)It defies logic that the U.K. got into this mess without being aware of how events would play out – but much about the U.K. these days defies logic.The country’s civil service surely would have warned the Cabinet that the Gibraltar operation, however legitimate, would risk a blowback Westminster couldn’t contain. Looking the other way to avert an international incident is a time-honored practice of governments adjacent to global shipping lanes, one that Spain appears to have employed in this situation.Whether Westminster decided to intervene out of an abundance of duty or the expectation Washington would offer its far larger Persian Gulf force for protection as repayment, the government clearly acted without a secure back-up plan. The fact that the crisis has played against the backdrop of the messy resignation of Westminster’s ambassador to Washington, Kim Darroch, couldn’t have helped matters, either.To be sure, the existence of diplomatic ties between Iran and the U.K. should, in theory, make resolving this incident a little easier than a comparable blow-up with the U.S. Even there, though, it’s not clear that London has much leverage these days. Relations now are almost certainly worse than they were in 2007, when it took nearly two weeks to secure the release of 15 Royal Navy personnel captured in an area disputed between Iran and Iraq. British-Iranian woman Nazanin Zaghari-Ratcliffe has been imprisoned in the country for more than three years, in a lingering dispute where the intervention of Britain’s likely future prime minister has been less than helpful.As with Suez, which gave cover for the Soviet Union to send tanks to crush Hungary’s 1956 revolution, the bigger risk isn’t so much the blow to Britain’s standing in the world, as international relations more broadly.With Iranian oil exports bumping along around their lowest levels since the 1980s, Tehran’s desire to stay on good terms with the remaining parties to the Joint Comprehensive Plan of Action on its nuclear program is one of the main factors preventing the situation in Hormuz deteriorating further. That’s markedly weakened now that the Stena Impero situation has put it on a collision course with a second member, after the U.S., of the six-nation group.As we’ve argued before, the situation in Hormuz is a good deal more fragile than you’d think just from looking at somnolent crude prices. A crucial passage for the world’s oil flows has been a tinderbox for months. It’s no place for Britain, in its current weakened state, to be caught playing with matches.(1) Maritime lawyers might quibble that Iran should only have a problem with boats sailing under the British flag, but the fact that it also stopped the British-operated, Liberian-registered Mesdar last week suggests Tehran is acting as if all is fair in love and war.To contact the author of this story: David Fickling at email@example.comTo contact the editor responsible for this story: Rachel Rosenthal at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.David Fickling is a Bloomberg Opinion columnist covering commodities, as well as industrial and consumer companies. He has been a reporter for Bloomberg News, Dow Jones, the Wall Street Journal, the Financial Times and the Guardian.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
(Bloomberg Opinion) -- The noose strangling the flow of oil to Syria tightened a notch last week, when British Royal Marines boarded a tanker carrying Iranian crude into the Mediterranean Sea through the Strait of Gibraltar. With Syria’s Iranian supplies halted, the flow will have to come from somewhere else, and the alternative is troubling.The Very Large Crude Carrier Grace 1 loaded a cargo of Iranian oil from the Kharg Island terminal in mid-April and set off on a long voyage around the southern tip of Africa to the eastern Mediterranean. The ship was apprehended because it was believed to be heading to a refinery that is ultimately owned by Syria’s ministry of petroleum, an entity subject to European Union sanctions. The journey from Iran to Syria around Africa is about 14,500 miles (23,300 kilometers), compared with about 4,100 miles via the Red Sea and Suez Canal. Why take such a circuitous route? Because Iranian crude is not accepted by the owners of the Sumed pipeline, which crosses Egypt to link the Red Sea to the Mediterranean. It is also banned from the Eilat-Ashkelon pipeline across Israel, originally built with the express purpose of carrying the Persian Gulf nation’s output to the Mediterranean. More recently, ships carrying Iran’s crude to Syria also seem to be prevented from using the Suez Canal. That looks to be a new development, since the oil trade between the two countries between 2016 and 2018 via the waterway averaged 50,000 barrels a day. All of those ships involved in that transport that have not been scrapped or sold appear on a list of vessels undertaking sanctionable activity published in March by the U.S. Department of the Treasury’s Office of Foreign Assets Control.The fate of one of those ships, the Suezmax tanker Sea Shark, is instructive. It was hauling a cargo of around 1 million barrels of Iranian crude when it arrived at the southern approach to the Suez Canal at the end of November, but turned back a day later, according to tanker tracking data compiled by Bloomberg. It then spent nearly five months anchored off the Egyptian coast before returning to Suez in late April. It is a still there and it is still full of oil. Prior to its interrupted voyage, the ship had made at least 11 journeys in 2017 and 2018 carrying oil from Iran to Syria. This doesn’t mean Iran’s crude is completely forbidden in the waterway, since ships heading to Turkey are still able to pass. But it does mean that Syrian-bound ships carrying its cargoes have to rely on the much longer route around Africa and that a larger ship would make the journey more economic – the Grace 1 can carry twice as much oil as the Sea Shark. But that route passes through European Union waters as ships enter the Mediterranean and it was here that the Grace 1 was impounded. The government of Gibraltar has denied the claim by the Spanish Foreign Affairs Ministry that the action was carried out at the request of the U.S.If Syria can’t get Iranian crude via the sea, what about by land? That will be difficult. U.S. allies control most of the oil-producing territory in Syria itself, while American forces straddle most of the crossings from Iraq into Syria, which might have been used to create an overland route for Iranian output.Syria clearly needs to import oil. Aside from all the normal reasons, President Bashar Al-Assad has a war to fight. Since sanctions have severely constrained his universe of potential suppliers, he has little recourse but to look to his supporters.If the smuggling routes set up by ISIS during its now-defunct caliphate to export oil from Syria are not now operating in reverse, perhaps they soon will be. Or, perhaps some of the fuel delivered to keep Russian military aircraft and vehicles operating in Syria could find its way to the Syrian state.The Syrian government has two big oil-producing friends, Iran and Russia. With the routes from the first apparently closed, it may have to turn to the second. This presents a new host of potential risks. Impounding an Iranian ship in the Strait of Gibraltar is one thing. Stopping a Russian ship in the Aegean Sea is quite another. \--With assistance from Elaine He.To contact the author of this story: Julian Lee at email@example.comTo contact the editor responsible for this story: Jennifer Ryan at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Julian Lee is an oil strategist for Bloomberg. Previously he worked as a senior analyst at the Centre for Global Energy Studies.For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
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