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1 hour ago, yota691 said:

Trump re-sent a project to build an oil pipeline with Canada

image.gif

 

Source:

  • AFP
History: 30 March 2019

US President Donald Trump on Friday granted a new permit to build the massive Keystone XL pipeline, which is supposed to link Canada's oil fields to the United States after a US judge suspended the project in November.

The document, published by the White House and signed by Trump on Friday, states: "Under this license, under the conditions set out below, I granted permission to Trans Canada Keystone Pipeline LP to build, link, manage and operate an oil pipeline on the international border between the United States and Canada, Montana, with the aim of exporting Canadian oil to the United States. "

The Canadian government supports the project, and welcomed the US president's decision.

Canada is relying on Keystone to ease the pressure of the saturated North American oil pipeline network at present.

"The signing of this new authorization clearly shows that the executive branch of the US government is aware of the importance of this project," the Canadian Office of Natural Resources Minister Amargit Sohe said in an e-mail to AFP.

Sohey has repeatedly defended Keystone XL to US Energy Secretary Rick Perry, who recently said the project was an absolute priority.

A federal judge in Montana in early November commented on the construction of the massive project. The suspension was a serious setback for Trump, who, since assuming office, has re-launched the project, which is under intense criticism for its risks to the environment and indigenous peoples.

The pipeline is 1,900 kilometers long and is supposed to link oilfields in the Canadian province of Alberta to Nebraska, eventually bringing oil to refineries in the Gulf of Mexico.

The indigenous peoples in the territory to be crossed by this project line will be fiercely opposed for fear of environmental damage.

The new authorization signed by the President revokes and replaces the previous licenses. It was not clear Saturday whether the project would be re-examined for its impact on the environment.

The risks that may pose to the environment have led the administration of former President Barack Obama to suspend the project for the first time in 2015.

In November Judge Bryan Morris said the Trump administration ignored a State Department report that the project was not of "national interest" interest because of the risks involved.

The Canadian government expects the project to respect the maximum greenhouse gas emissions allowed in Alberta, western Canada.

Trans Canada expressed its pleasure at Trump's decision and thanked "President Donald Trump for confirming his support system" rel="">support for the Keystone XL oil pipeline project by publishing a new presidential authorization."

I guess Native American has become too pc now and we must use the term "indigenous people". 

 

The same State Department ruled that the Uranium One deal was in the nation's best interest is the same department that said the Keystone Pipeline was not in the nation's best interest. Now, which report should we believe? Let's nullify both reports and any deals and start over. Which one will come out in the Nation's best interest in the most objective way, now?  

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  • yota691 changed the title to OPEC" exports to the US will continue to decline

OPEC" exports to the US will continue to decline

Economie
Spread Sunday , 31 March 2019

"OPEC" exports to the US will continue to decline

DUBAI (Reuters) - OPEC oil exports to the United States are likely to continue to fall in the coming period, amid sharp cuts in Saudi exports to the United States in recent years, a survey showed.

 

88% of energy executives polled by Gulf Intelligence said OPEC exports to the US would continue to decline in the coming period.

 

OPEC's oil exports to the United States fell to their lowest level in five years in January, while US inventories rose to 3.6 million barrels in February, according to the US Energy Information Administration.

 

The data showed a jump in US production by 140 percent since 2008, while some analysts expect the United States to become a net source of crude oil and refined by 2020.

US production reached 12 million barrels per day (bpd) in February, beating expectations of the second half of 2019.

Saudi Arabia, OPEC's largest oil producer and the world's largest exporter, has seen its oil exports steadily decline in recent years, from 1.36 million bpd in 2012 to 949,000 bpd by 2017, and only 500,000 bpd at the end of the year. last year.

The United States imported less crude oil in general, and not only OPEC, especially after its imports fell from 262.8 million bpd in early 2017 to 226.6 million barrels in October 2018.

Despite losing its market share in the US, OPEC and its outside producer partners, including Russia, have committed themselves to a 1.2 million barrel-per-day cut in December agreed to at least June 2019.

The Opec + 25 agreement comes after two years of production cuts of 1.8 million barrels per day (bpd), which have managed to curb oil prices for three years and restore some measure of market stability.

The latest agreement succeeded in keeping Brent crude prices at around $ 60 a barrel since the beginning of the year. Brent crude was $ 68.39 on March 29, 2019.

OPEC and its allies agreed to cut output by 90 percent in February, up from 83 percent in January, according to the Joint Ministerial Monitoring Committee, which meets every two months to assess the impact of production cuts on the market. At its last meeting, March, canceled a meeting scheduled for April to stabilize market conditions.

"The task of OPEC and its allies is not over, and the group of oil producers needs to continue at least until June when the current global reduction agreement ends," Saudi Energy Minister Khalid al-Faleh said in Baku last month.

OPEC and its allies are due to meet in May ahead of a meeting on June 25 in Vienna, where a decision on production targets is expected for the second half of 2019.

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Texas oil digger. "Reuters"
  

 Arab and international


Economy News Baghdad

Oil prices rose to a five-month high on Tuesday, boosted by strong Chinese economic data that dampened concerns about demand as well as the possibility of new sanctions on Iran and a further disruption of Venezuelan supplies.

By 0636 GMT, the benchmark Brent crude rose 15 cents, or 0.2 percent, to $ 69.16 a barrel after touching $ 69.50, its highest level since mid-November.

US crude futures rose 14 cents, or 0.2 percent, to $ 61.73 a barrel after crossing the $ 62 barrier for the first time since early November.

Prices were supported by positive data from the two largest economies in the world: the United States and China. Data showed on Monday that China's manufacturing sector returned unexpectedly to growth in March for the first time in four months.

Most Asian equity markets rose as strong industry data boosted investor confidence.

Manufacturing data in the US also came in better than expected in March, helping investors outperform weak February retail sales data.

On the supply front, a senior administration official told reporters on Monday that Washington was considering additional sanctions on new sectors of the Iranian economy.

The official noted that the United States may not extend exemptions from sanctions on Iranian oil exports. Exemptions for eight importers expire next month.


Views 17   Date Added 02/04/2019

 
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Brent rises to 5-month high with positive economic data

Brent rises to 5-month high with positive economic data

 02 April 2019 10:53 p
Mubasher: Oil prices rose on Tuesday, and Brent crude for the highest level in 5 months, with positive economic data .

By 0740 GMT, London Brent crude for June delivery was up 0.2% at $ 69.14 a barrel, after hitting $ 69.50 a barrel earlier in the session, its highest level since mid-November .

US Nymex crude futures for May delivery rose 0.2% to $ 61.70 a barrel .

China announced yesterday the rise in industrial activity for the first time in 4 months in March at a level of 50.8 points .

The United States also announced industrial activity recovery last month from its lowest level since 2016 to 55.3 .

Separately, OPEC output fell 295,000 barrels per day (bpd) to 30.385 million barrels a day for the fourth consecutive month in March, according to a Bloomberg survey.

Since the beginning of this year, OPEC has cut production in cooperation with Russia by 1.2 million barrels per day.

It is expected that the US Petroleum Institute will announce its preliminary inventory data for the previous week

 
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 Arab and international


Economy News _ Baghdad

Crude oil inventories in the United States rose unexpectedly last week, while inventories of gasoline and distillates declined.

Crude stocks rose 3 million barrels in the week ending March 29 to 451.7 million barrels, compared with analysts' forecasts for a drop of 425,000 barrels.

Crude stocks at the delivery center in Cushing, Oklahoma, rose 18,000 barrels, the institute said.

The Petroleum Institute's data showed that the refinery consumption rates of crude increased by 188 thousand barrels per day.

Gasoline inventories fell by 2.6 million barrels, compared to analysts' forecasts in a Reuters poll of 1.5 million barrels.

Data from the Institute showed distillate stocks, including diesel and heating oil, fell by 1.9 million barrels, compared to expectations of a 506,000 bpd decline.

US crude imports last week rose 264,000 bpd to 6.9 million bpd.


Views 17   Date Added 03/04/2019

 
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Why Oil Markets Need New OPEC+ Cuts
By Rystad Energy - Apr 04, 2019, 10:30 AM CDT
OPEC logo

As oil prices approach $70 a barrel, Rystad Energy expects that a short-lived price rally through the first half of 2020 will then lose momentum and be replaced by a need for additional production cuts by Russia and the cartel of oil producing countries, OPEC.

“We retain our bullish stance for the second half of 2019 and first half of 2020 as we anticipate OPEC+ to extend production cuts through 2019, while we also expect bullish oil market effects due to the introduction of IMO 2020 regulations on sulfur content in marine fuels,” says Bjørnar Tonhaugen, Head of Oil Market Research at Rystad Energy.

He added:

“However, the effects of the IMO 2020 ‘scramble’ will likely be short-lived. By 2021 there will be renewed pressure on Saudi Arabia and OPEC+ to cut production again, or risk a new down-cycle in oil prices.”

1554390620-o_1d7khqvbs8l1r9pd9uq59qle8.j 

Rystad Energy sees that US shale production is causing a “recurring dilemma” for the OPEC countries. 

 

“We tentatively expect a correction in prices, possibly already from the second half of 2020 and into 2021, as the IMO effect fades. Nevertheless, the biggest issue is the ability of the US shale industry to grow by 1.4 million bpd annually between 2020 and 2025 in our current base case, which is enough to keep up with global demand, causing a recurring dilemma for Saudi Arabia and OPEC,” Tonhaugen remarked.

Rystad Energy forecasts that the upcoming IMO 2020 sulfur limit regulations for marine bunker fuels will have short-lived consequences for the world’s oil markets. We conclude that despite around 2,800 vessels having so-called scrubbers installed on average in 2020, and refiners gearing up and readjusting to meet the increased low sulfur fuels demand (LSFO, MGO) while also getting rid of most of the high sulfur fuel oil (HSFO) currently produced, there will still be a significant 0.6 million bpd deficit in marine gasoil in 2020.

“We estimate that global gasoil/diesel demand growth in 2020 could reach 1.7 million bpd, 1.4 million bpd of which is from marine bunkers, almost six times the five-year average global gasoil growth,” Tonhaugen said.

He added:

“This could have reverberations for the whole fleet of diesel-driven vehicles. Global diesel prices – also at the pump – could be higher in 2020 than many expect.”

 

 

https://oilprice.com/Energy/Crude-Oil/Why-Oil-Markets-Need-New-OPEC-Cuts.html

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  • yota691 changed the title to Sources: Saudi Arabia threatens to abandon the dollar in oil transactions
 
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 Arab and international


Economy News _ Baghdad

Saudi Arabia is threatening to sell oil in currencies other than the dollar if Washington approves a law that would make OPEC member states vulnerable to US antitrust litigation, sources familiar with Saudi Arabia's energy policy said on Tuesday.

The sources added that several senior Saudi energy officials were discussing the option of giving up the dollar in recent months.

Two sources said the plan was discussed with members of the Organization of the Petroleum Exporting Countries (OPEC) and a source familiar with the Saudi oil policy that Riyadh also discussed with senior US officials in the field of energy.

The prospect of a US law known as the NOPC is slim and Saudi Arabia is unlikely to go ahead with its threat, but Riyadh's search for such a tough move is a sign of its alarm over potential US legal threats to OPEC.

If Riyadh abandons the sale of oil in dollars, which is unlikely, this would undermine the status of the dollar as the main currency of the global reserve, reduce Washington's influence in world trade and weaken its ability to enforce sanctions on state governments.

"The Saudis know that the dollar has a nuclear option," said one source familiar with the issue.

Another source said: "The Saudis say: Let the Americans approve of Nubk and will collapse the share of the US economy."

The Saudi Energy Ministry did not respond to a request for comment. 
"As a general principle, we do not comment on pending legislation," a State Department official said.

The US Department of Energy did not respond to a request for comment. Energy Secretary Rick Perry said the NOPC law could have unintended consequences.


Views 25   Date Added 05/04/2019

 
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Saudi Arabia threatens to abandon the dollar in its oil transactions

Economy | 08:52 - 05/04/2019

 
image
 
 

Follow - up - the balance News 
said three sources familiar with Saudi Arabia 's policy in the field of energy, the kingdom threatened to sell oil in currencies other than the dollar if Washington passed a law that makes members of the Organization of Petroleum Exporting countries are prone to lawsuits for antitrust. 
The sources said in a statement to Reuters that the option to abandon the dollar has been discussed internally by a number of senior Saudi officials in the field of energy in recent months. 
Two sources said the plan was discussed with OPEC members. 
A source familiar with Saudi oil policy said Riyadh also conveyed the threat to senior US energy officials.
The prospect of the US draft law known as the NOPEC comes into effect, and Saudi Arabia is unlikely to go ahead with its threat, but the mere fact that Riyadh is considering such a move is a sign of Saudi Arabia's alarm over potential US legal threats to OPEC.

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LONDON/DUBAI (Reuters) - Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits, three sources familiar with Saudi energy policy said.

 
FILE PHOTO: An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. REUTERS/Ahmed Jadallah

They said the option had been discussed internally by senior Saudi energy officials in recent months. Two of the sources said the plan had been discussed with OPEC members and one source briefed on Saudi oil policy said Riyadh had also communicated the threat to senior U.S. energy officials.

The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

In the unlikely event Riyadh were to ditch the dollar, it would undermine the its status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states.

“The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said.

“The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart,” another source said.

Saudi Arabia’s energy ministry did not respond to a request for comment.

A U.S. state department official said: “as a general matter, we don’t comment on pending legislation.”

The U.S. Energy Department did not respond to a request for comment. Energy Secretary Rick Perry has said that NOPEC could lead to unintended consequences.

 

DOLLAR HEGEMONY

NOPEC, or the No Oil Producing and Exporting Cartels Act, was first introduced in 2000 and aims to remove sovereign immunity from U.S. antitrust law, paving the way for OPEC states to be sued for curbing output in a bid to raise oil prices.

While the bill has never made it into law despite numerous attempts, the legislation has gained momentum since U.S. President Donald Trump came to office. Trump said he backed NOPEC in a book published in 2011 before he was elected, though he not has not voiced support for NOPEC as president.

Trump has instead stressed the importance of U.S-Saudi relations, including sales of U.S. military equipment, even after the killing of journalist Jamal Khashoggi last year.

A move by Saudi Arabia to ditch the dollar would resonate well with big non-OPEC oil producers such as Russia as well as major consumers China and the European Union, which have been calling for moves to diversify global trade away from the dollar to dilute U.S. influence over the world economy.

Russia, which is subject to U.S. sanctions, has tried to sell oil in euros and China’s yuan but the proportion of its sales in those currencies is not significant.

Venezuela and Iran, which are also under U.S. sanctions, sell most of their oil in other currencies but they have done little to challenge the dollar’s hegemony in the oil market.

However, if a long-standing U.S. ally such as Saudi Arabia joined the club of non-dollar oil sellers it would be a far more significant move likely to gain traction within the industry.

WHAT IF?

Saudi Arabia controls a 10th of global oil production, roughly on par with its main rivals - the United States and Russia. Its oil firm Saudi Aramco holds the crown of the world’s biggest oil exporter with sales of $356 billion last year.

Depending on prices, oil is estimated to represent 2 percent to 3 percent of global gross domestic product. At the current price of $70 per barrel, the annual value of global oil output is $2.5 trillion.

 

Not all of those oil volumes are traded in the U.S. currency but at least 60 percent is traded via tankers and international pipelines with the majority of those deals done in dollars.

Trading in derivatives such as oil futures and options is mainly dollar denominated. The top two global energy exchanges, ICE and CME, traded a billion lots of oil derivatives in 2018 with a nominal value of about $5 trillion.

Just the prospect of NOPEC has already had implications for the Organization of Petroleum Exporting Countries. Qatar, one of the core Gulf OPEC members, quit the group in December because of the risk NOPEC could harm its U.S. expansion plans.

Two sources said that despite raising the dollar threat, Saudi Arabia did not believe it would need to follow through.

“I don’t think the NOPEC bill will pass but the Saudis have ‘what if’ scenarios,” one of the sources said.

ASSET SALES

In the event of such a drastic Saudi move, the impact would take some time to play out given the industry’s decades-old practices built around the U.S. dollar - from lending to exchange clearing.

Other potential threats raised in Saudi discussions about retaliation against NOPEC included liquidating the kingdom’s holdings in the United States, the sources said.

The kingdom has nearly $1 trillion invested in the United States and holds some $160 billion in U.S. Treasuries.

If it did carry out its threat, Riyadh would also have to ditch the Saudi riyal’s peg to the dollar, which has been exchanged at a fixed rate since 1986, the sources said.

The United States, the world’s largest oil consumer, relied heavily on Saudi and OPEC supplies for decades - while supporting Riyadh militarily against its arch-foe Iran.

 

But soaring shale oil production at home has made Washington less dependant on OPEC, allowing it to be more forceful in the way it deals with Saudi Arabia and other Middle Eastern nations.

Over the past year, Trump has regularly called on OPEC to pump more oil to lower global oil prices, and linked his demands to political support for Riyadh - something previous U.S. administrations have refrained from doing, at least publicly.

 
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Saudi Arabia and its US dollar peg dilemma

 
For GCC countries and Saudi Arabia in particular, the fall in oil prices means regional growth is likely to lag that in the US. This will put new pressure on the countries’ linkage to the dollar.
A Saudi Arabian one hundred riyal note and an assortment of US dollar bills. Stephen Hilger / Bloomberg News A Saudi Arabian one hundred riyal note and an assortment of US dollar bills. Stephen Hilger / Bloomberg News

The fall in oil prices has strained Arabian Gulf countries’ cur­rency policy, and increased the cost of carrying a US dollar peg.

Most GCC countries are pegged to the US dollar to avoid currency fluctuation and eliminate uncertainties in international transactions (Kuwait is pegged to a basket of currencies dominated by the US dollar).

This comes at the expense of monetary policy flexibility. Stable domestic currency and a fixed exchange rate imply that traders do not have to face currency risks, and therefore will be more willing to invest and facilitate trade. Since oil is the chief commodity in the GCC, and the oil price is fixed in dollars, any exchange rate fluctuation could drastically reduce revenue if the currencies were unpegged.

With the US economy expanding, the Federal Reserve has begun hiking interest rates gradually, and plans to achieve a target of 3 per cent by the end of 2018.

While the US is expected to ride a growth wave over the next few years, the GCC economies, especially the oil exporters, are facing contraction because of low oil prices. Declining oil revenue, subdued global growth, liquidity crunch and geo­political issues are some of the challenges facing the region.

These differences are starker in countries such as Saudi Arabia, the world’s largest oil producer and exporter, where more than 73 per cent of government revenues come from the hydrocarbon sector, according to the Institute of International Finance industry group.

In such a scenario, Saudi Arabia can either follow the monetary policy direction set by the US or deviate from it.

If it opts for the former, the kingdom maintains the peg but sacrifices its growth, as it will tighten monetary conditions during a period of low growth. According to the kingdom’s central bank, the Saudi Arabian Monetary Agency (Sama), a 100 basis point increase in the Saudi Interbank Offered Rate (Sibor) leads to a decline of 90 basis points in GDP in the subsequent quarter and 95 basis points in the quarter after that.

If it opts for the latter, then there will be a gap in interest rates between the US and Saudi Arabia, leading to arbitrage opportunities. To counter this, Sama will have to buy Saudi ­riyals in the open market by selling US dollars from its reserves. And as the Fed increases the interest rate, Sama has to keep depleting its forex reserves until it runs out of dollars. Hence there is a cost involved with ­either choice.

The oil price fall since mid-2014, has reduced the kingdom’s revenue, incurring a deficit of $98bn in 2015, and it is estimating a further $87bn deficit in 2016. The Saudi government had funded this deficit by drawing down its central bank deposits, reducing its forex reserves to $602bn; a drop of $132bn, in the year to this January.

During the last Fed hike, Saudi Arabia, along with ­other GCC countries, raised its interest rates tracking the US monetary policy. According to Moody’s, the kingdom has large foreign currency reserves that provide ample room to maintain the pegged exchange rate regime for several years, even in an adverse oil price scenario. At present, Sama holds about 80 per cent of its investments in US Treasury bills.

While this should have been a clear indication of Sama’s dir­ection, early this year the forwards market for the Saudi riyal sprang to life with speculation that the kingdom could be forced to abandon its three- decade peg to the US dollar. The market expected a 12-month forward exchange rate of 3.85 riyals to the dollar, a 2.7 per cent devaluation from the 3.75 level that has, in essence, held since 1986.

Sama doused the speculation by reiterating that it will continue to stick with its currency peg, and ordered banks in the kingdom to stop offering options contracts on riyal forwards to their clients.

Other GCC countries with sufficient SWF assets and central bank reserves, such as Kuwait, Qatar and the UAE, could also maintain the peg with little difficulty.

However, Oman and Bahrain do not enjoy this luxury, and could potentially run out of reserves in less than three years. Both these countries have resorted to issuing debt to extend the longevity of their reserves.

For Saudi Arabia, speculation about the possibility of depegging its currency from the US dollar may have been premature, but it has provided an opportunity to analyse the costs incurred by the kingdom in maintaining the peg, and whether an alternative exists to the current scenario. While the low oil price does not seem to have affected the peg much, thanks to the presence of ample forex reserves, it could have severe repercussions in the future, if the low prices persist.

Looking ahead, cost benefit analysis, stress and scenario testing are a must to gauge the extent to which the status quo is preferable. While the advantages of maintaining the peg are manifold, so are the costs. Ergo, Saudi must also chart out a road map and prepare for a time where depegging from the US dollar is a preferable option to continuing with an expensive peg.

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12 hours ago, bostonangler said:

I don't think most Americans have any idea what this would mean.

I don't see it happen. But it could. I was looking for the info why it was peg to the dollar. Has to do with a war or threat and the USA protected the Saudi's. In turn they wanted to give up some oil sites in return for the Thankfulness. The US said no an ask them to peg to the dollar, in which they did. If I'm not mistaken that how that went down...

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1 minute ago, yota691 said:

I don't see it happen. But it could. I was looking for the info why it was peg to the dollar. Has to do with a war or threat and the USA protected the Saudi's. In turn they wanted to give up some oil sites in return for the Thankfulness. The US said no an ask them to peg to the dollar, in which they did. If I'm not mistaken that how that went down...

 

If major oil producers move from the Petrodollar, the world economy will be redefined...

 

B/A

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Could A Saudi De-Peg Cause A US Dollar Crash?
By Jeff Voudrie -January 21, 2016

I have the best clients. Most of them are retired after successful careers. They understand investing and are able to differentiate between real market data versus salesman hype. They are intelligent. They are tuned into what is going on around the world and do a good job of understanding the vagaries of the financial markets. The more we interact the better we both become. I highly value their thoughts and concerns about the markets and investing.

Could Saudi Actions Cause A US Dollar Crash?

I received an email from one such client yesterday. He is an international traveler that spends several months each year in emerging markets. He is a great source for what he sees ‘on the ground’. His question was about the potential impact if Saudi Arabia decoupled (removing their currency peg) from the US Dollar.

Here is his question:

JEFF,

WHAT ABOUT THE RUMORS ABOUT SAUDI ARABIA WILL DE-PEG FROM THE US DOLLAR?  THE FINANCIAL WORLD SEES THIS AS A VERY SERIOUS MOVE AGAINST THE US DOLLAR. THEY ARE CALLING THIS THE GREAT CURRENCY SHOCK OF 2016. SAUDI FELT THAT THE US HAS STABBED THEM IN THE BACK BECAUSE OF RELEASING THE HOLD OF BILLIONS OF DOLLARS TO IRAN WHO IS AN ENEMY OF SAUDI ARABIA. PEOPLE ARE PREDICTING THAT THIS WILL SEND MAJOR SHOCKS WAVES THROUGH THE MARKET.  DO YOU HAVE ANY THOUGHTS ON THIS RUMOR?


 
There has been concern over the US Dollar for many years. Critics will talk about how the massive debt we have will cause a US Dollar crash. They say that China can crash our currency and/or that the Chinese Yuan will become the new reserve currency (remember the IMF is now including it in the Special Drawing Right or basket of currencies it uses).

And, of course, financial newsletter writers have been scaring people into buying their subscriptions by promoting the same “the US Dollar crash is coming and you’ll lose all your money unless you do THIS.” Careful here.

Here’s my take on it:

The Saudi’s decided a few years ago that fracking was a threat to their oil-cartel dominance and that they needed to deal with the threat posed by American oil. So they decided to continue to pump as much oil as they could even in the midst of a glut of oil. Their goal was (and is) to run the ‘frackers’ out of business. They knew that strategy would produce pain for their economy in the short run but that it should allow them to maintain their dominance long term.

So Saudi Arabia has been running massive deficits as a result. And the fact that their currency peg is to the US Dollar keeps them from de-valuing their currency relative to the USD. Whereas China can devalue their currency relative to the USD and make Chinese goods and services less expensive, Saudi Arabia can’t because of the USD currency peg.

Remember, a stronger US Dollar imports DEFLATION into the United States. That means that same thing happens to other countries that are pegged to the US Dollar. So as the US Dollar goes up, it has the impact of importing deflation for Saudi Arabia. That’s good for their consumer but bad for their businesses and their oil revenues. This chart shows how the USD has strengthened by almost 20% since early 2014. That’s a lot of pain for countries with currencies pegged to the US Dollar and/or those emerging market economies that have over $9 Trillion in US Dollar-denominated debt.

us dollar index bull market chart move higher

So the real reason that Saudi may want to de-peg from the US Dollar isn’t because they are concerned about the US Dollar losing its reserve currency status, it is because they need to be able to de-value their currency to try to spur their economy along.  In other words, a Saudi currency de-peg is a sign of weakness in their economy. It is a sign of desperation and highlights the cost of trying to run the ‘frackers’ out of business.

So I’m not concerned about it from a reserve currency basis or a US Dollar crash, per say. I am concerned about the strength of the USD for our economy, though, because it makes our businesses less competitive on the world stage. A strong US Dollar acts like applying the brakes to our economy, the same way that the Federal Reserve raises interest rates in an attempt to slow the economy. When you combine a 20 percent increase in the US Dollar Index the last two years and the recent Federal Reserve rate hike amidst a cyclically slowing economy, it looks like we may be heading for a recession. With the worst start of the year EVER for the stock market, the markets seem to share that fear.

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12 hours ago, blueskyline said:

GM DV's

GM blueskyline and DV Hope everyone has a Bless Day...one more...

China, Russia, Iran and Turkey to de-peg from dollar?
By Shehab Al-Makahleh Friday, 14 September 2018
Are world circumstances apt to jettison American dollar dominance? Since Donald Trump took over the presidency of the United States, opponents of Washington’s policies have been increasing. After Russia, Iran and North Korea were the main enemies, China and Turkey had also become at the top of the list of Washington’s trade war.

Under the policy of economic sanctions imposed by the US administration on these countries, using American currency, the aforementioned states are now looking for a real response to Washington’s procedures in order to reduce the dominance of the US dollar globally. Can these countries undermine the dollar, and can these initiatives lead the global economy to depeg their economies from American dollar?

This is the first time ever that the world economies witness such a dominance of one currency over others as the American dollar controls almost all of the world’s commercial and financial transactions. Most commodities are priced in dollars, primarily oil and financial stocks.

 

The American currency accounts for about 85 percent of commodities and services traded worldwide. More than 60 percent of world currency reserves are dollar based. Thus, any revamp in the major world currency would lead to a global economic tremor as the current trend of funds around the world directly depends on dollar value.

Investments are moving in consistent with US dollar and the global economies center around American economy thereof, for how long will this last? The dollar has been the undisputed acknowledged master of international currencies since the end of World War II.

When the then President Richard Nixon decided in 1971 to prevent the conversion of the US dollar to gold, declaring the collapse of the Bretton Woods Agreement, which has been a landmark system for monetary and exchange rate management that was established in 1944, the dollar has since then become the world’s first “benchmark currency”. Other currencies have been affected by the rise or fall of the dollar.

The dollar’s current exchange rate does not reflect its true value, which reinforces the idea that the US currency can easily lose its value easily

Shehab Al-Makahleh
Safe haven
Since 1971, many investors view the dollar as a safe haven for gold, and may even outperform it as interest rates rise. This has been clear in the past 8 months of 2018. As gold is compared to dollar, the US currency derives much of its strength from this outlook that allows huge financial flows into US economy.

However, the dollar’s current exchange rate does not reflect its true value, which reinforces the idea that the US currency is fragile and can easily lose its value easily. According to an IMF report at the end of July 2017, the value of the dollar is overpriced by up to 20 per cent, based on fundamentals of the US economy.

It is important here to clarify the idea that the decline in the dollar exchange rate does not mean the decline of control because domination relies on the use formula of the currency in commercial transactions or international reserves and financial loans. Thus, it is possible the dollar exchange rate would decline any time without affecting its dominance globally. In other words, the weakness of exchange rates does not affect US hegemony.

In the past, economists believed that the dollar’s control over financial transactions in the world is almost absolute; this has changed since Trump has taken over US presidency. The number of those who reject American control, which is affecting the economies of many countries, has been increasing through the sharp drop in domestic currencies and high levels of inflation in these countries accordingly.

 

Russia, Turkey and Iran seek exchange in local currencies. Russia, Turkey and Iran have recently faced economic sanctions imposed by the US administration, which has had a direct negative impact on the economies of these countries, prompting them to seek trade in local currencies.

On August 11, 2018, Turkish President Recep Tayyip Erdogan said that his country is currently preparing to use local currency in trade exchanges with China, Russia, Iran, Ukraine and other countries, adding that Turkey is ready to establish the same system with Europe if Ankara seeks a way out of the American dollar grip and dominance.

Russian Foreign Minister Sergei Lavrov has earlier confirmed that Russia supported the use of local currencies instead of US dollar in his country’s trade transactions with other countries including Turkey, stressing that the role of the dollar as an international reserve currency would recede and disappear over time.

China’s way to block the dollar
China’s intervention of the yuan in international Petro-Yuan is also a key step that would aggravate dollar’s dominance, a move that could lead to huge changes in the global oil game, which could erode the dollar’s supremacy.

On March 26th, 2018, China began trading crude oil contracts denominated in Chinese currency on the Shanghai International Energy Exchange. The Chinese move is a direct challenge to the dollar-dominated pricing plan in crude oil markets in a bid to weaken the dollar as an international reserve currency.

Countries use the dollar to buy oil, but are there factors that could make this change? This depends on the extent of demand based on Petro-Yuan formula. There is no doubt that countries suffering from a crisis with the dollar will go for this option. In the past, any country that seeks to buy oil must first get US dollars.

 

This has been creating a huge demand for this currency at international markets, crafting global confidence in the dollar. However, China has made this step a new alternative, access to dollar is no longer a term now to buy oil. The lower the demand on US dollar, the lower its exchange price would be at international trade exchanges.

Moreover, China is the world’s largest oil importer, making it possible to choose the countries that approve the Petro- Yuan deal with oil sellers, especially when oil prices are relatively low, and sellers have to export more of this commodity without losing their reserves of US dollars.

However, this is not that simple and requires much time, especially since the world’s largest oil exporters agreed to accept the US dollar exclusively for oil sales more than 4 decades ago. In this regard, it is difficult to find swift fallouts, especially with American crude oil production increasing to its highest levels ever. Nonetheless, collective movement is what will undermine much of the American dollar dominance, which in turn affects American political and military influence overseas.
________________________
Shehab Al-Makahleh is Director of Geostrategic Media Center, senior media and political analyst in the Middle East, adviser to many international consultancies. He can be reached at: @shehabmakahleh and @Geostrat_ME.

Last Update: Friday, 14 September 2018 KSA 14:47 - GMT 11:47

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Crude rallied on Friday morning, ending the week on a bullish note as traders are increasingly concerned about global supply outages.

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April 5th 2019

Oil prices rose in early trading on Friday on risks in Libya and positive trade news from the U.S.-China negotiations. “The geopolitics around Libya and Venezuela, alongside the possible reflation of risk appetite on positive U.S.-China trade talks may well pull the market out of its morning doldrums,” Harry Tchilinguirian, global oil strategist at BNP Paribas, told the Reuters Global Oil Forum. On Thursday, Brent briefly topped $70 per barrel for the first time this year, although it fell back again. On Friday, Brent was hovering just below that threshold.

Potential turmoil in Libya threatens supply. The head of the Libyan National Army, Khalifa Haftar, ordered his troops to march on Tripoli on Thursday, dramatically escalating the risk of turmoil in the country. If oil production in the country is disrupted, it would “noticeably increase the pressure on Saudi Arabia to open up the oil tap again, as it did in the autumn”, Commerzbank said in a note.

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Utilities, afraid of losing market share, invest in EV recharging infrastructureDuke Energy (NYSE: DUK) announced a $76 million program to invest in EV recharging infrastructure in North Carolina, billed as the largest such program in the U.S. southeast. The move is also viewed by some analysts as a way of hedging against future losses to rooftop solar, energy efficiency and other measures that could eat away at utility demand.

U.S. and China make more progress on trade deal. President Donald Trump met with Chinese Vice Premier Liu He at the White House on Thursday as the two sides inch closer to a landmark deal that could end the trade war. The agreement reportedly would give China until 2025 to meet commitments on commodity purchases from the U.S. and for the concession of allowing 100 percent foreign ownership for American companies operating in China. Expectations are rising that a breakthrough is close and could be announced in the next few weeks.

Sharp Rise In Rig Count Pressures Oil Prices

Arabian Gulf production set to hit 26 mb/d by 2025. The seven nations in the Arabian Gulf are set to produce a combined 26 mb/d by 2025, according to Rystad Energy, up from 24 mb/d in 2018. Rystad expects output in the region to grow by 300,000 bpd per year, with Iraq, Kuwait and the UAE adding the most.

Saudi Arabia threatens dollar retaliation to NOPEC. The NOPEC bill that has gained momentum in the U.S. Congress could spark antitrust action against OPEC. In response, Saudi Arabia has is reportedly threatening to sell its oil in currencies other than the U.S. dollar should the bill pass, according to Reuters. “The Saudis know they have the dollar as the nuclear option,” a source told Reuters.

SEC sides with Exxon on climate vote. Investors pressed for a resolution at the upcoming annual shareholder meeting for ExxonMobil (NYSE: XOM) that would pressure the company to disclose climate risks. Exxon turned to the U.S. Securities and Exchange Commission to block the resolution. The SEC sided with Exxon, agreeing that the resolution would “micromanage” the company. Backers of the resolution vowed to continue the campaign to pressure the company.

E&P free cash flow hits record high. The total free cash flow for all publicly-traded exploration and production companies hit a record high in 2018 at nearly $300 billion, according to Rystad Energy. The “super profits” come even as oil prices remain at a fraction of their pre-2014 levels. “The fact that E&P companies are able to deliver the same shareholder returns despite much lower oil prices points to an impressive increase in profitability,” says Espen Erlingsen, Head of Upstream Research at Rystad Energy.

Marathon to spend $1.2 billion to upgrade refineryMarathon Petroleum (NYSE: MPC) said it will spend $1.2 billion to upgrade its Galveston Bay refinery.

Solar boom in Texas. The shale drilling frenzy in Texas is helping to fuel a solar boom, as drillers push up demand for electricity. And without any state incentives, the rush for solar is proof that the technology competes with coal and gas on economics alone. “People are trying to get in as much solar in Texas as they can,” Mike Garland, CEO of Pattern Energy Group Inc., a clean energy developer, told Bloomberg in an interview. A solar project costs about $38/megawatt-hour in Texas, according to Bloomberg New Energy Finance, while a high-efficiency gas plant costs $38/megawatt-hour. On top of that, solar plants can be completed in a matter of months, while gas plants take years.

EU charges BMW, Daimler and Volkswagen. Antitrust regulators in the European Union laid out charges against BMW, Daimler and Volkswagen for colluding to block the rollout of emissions technology, according to Reuters. It’s the latest emissions scandal for the auto industry.

Venezuela’s oil production falls to 740,000 bpd. There are some competing estimates for Venezuela’s oil production in March. Estimates from earlier this week from Reuters found that March exports proved resilient, holding at just below 1 mb/d. But S&P Global Platts estimates that Venezuela’s output plunged to 740,000 bpd, falling by 360,000 bpd, following the widespread power outages.

 

 

https://oilprice.com/Energy/Energy-General/Oil-Hits-70-On-Libya-Unrest-Crisis-In-Venezuela.html

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Saudi Arabia denies its threat to abandon the dollar in its oil dealings

Economy | 01:58 - 08/04/2019

 
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Follow - up - the balance of News 
denied the Saudi Energy Minister Khaled al - Faleh, on Monday, reports of threat to Saudi Arabia to sell oil in currencies other than the dollar. 
"Of course not, no change to our long-standing policy of oil trading in US dollars," Al-Falih said at an energy conference in Riyadh, commenting on Saudi Arabia's abandonment of the dollar. 
Earlier, the Reuters news agency reported in a report that "Saudi Arabia threatens to sell its oil in currencies other than the dollar, if Washington enacted a law that puts OPEC members under the jurisdiction of antitrust cases in the United States." 
On the other hand, the Saudi minister revealed that the demand for the first international bonds from Aramco is expected to exceed 30 billion dollars. He said the Aramco bond deal would close on Wednesday.
He expressed hope that Aramco's acquisition of Saudi Basic Industries Corporation (SABIC) would be completed within six months. 
Saudi Aramco is preparing to launch a major bond offering, in cooperation with international banks, including JPMorgan Chase. 
Early indications are investors are excited about the deal, which is expected to see a bond offering at least $ 10 billion this week.

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Saudi Arabia: No change in oil trade policy in dollars

Economy | 11:28 - 08/04/2019

 
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Follow - up to the balance of News 
said the Saudi Energy Minister Khaled al - Faleh, on Monday, that there is no change in the policy of the kingdom long - standing oil trade in US dollars. 
"When asked to comment on the possibility that Saudi Arabia would give up the dollar, of course, no, no change in our long-standing policy. 
Three sources familiar with Saudi energy policy told Reuters last week that the kingdom threatened to sell its oil in currencies other than the dollar if Washington enacted a law that puts Opec members under antitrust law in the United States.

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  • yota691 changed the title to Oil climbs to a 5-month high due to current production cuts

Oil climbs to a 5-month high due to current production cuts

Economy | 11:24 - 08/04/2019

 
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Follow - up balances News 
Oil prices rose to the highest level since November 2018 on Monday , driven by reductions in current production applied by OPEC and US sanctions against Iran, Venezuela and fighting in Libya as well as strong US jobs data. 
By 0716 GMT, the benchmark Brent crude for the year was $ 70.62 a barrel, up 28 cents, or 0.4 percent, from the last closing price. 
US WTI crude rose 30 cents, or 0.5 percent, to $ 63.39 a barrel. 
The crude hit their highest level since November at $ 70.76 and $ 63.48, respectively, in early trade on Monday. 
To support prices, OPEC agreed with producers from outside to cut supplies by 1.2 million barrels per day this year.
"Current OPEC production cuts and US sanctions on Iran have been the main drivers of prices throughout the year," said Hussein Sayed, senior market strategist at brokerage firm FXTM. 
"But the last batch came from the upsurge in fighting in Libya, which threatens to disrupt supplies even more," he said

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Al Mazrouei: UAE adheres to OPEC agreement with 100%

Al Mazrouei: UAE adheres to OPEC agreement with 100%
UAE Minister of Energy, Suhail Al Mazrouei
 08 Apr 2019 01:55 PM

Abu Dhabi - Mubasher: The UAE's commitment to the OPEC plan has reached 100%, the minister said.

Suhail Al Mazrouei, during his remarks to CNBC Arabia, said Monday that he is optimistic that the market is heading in the right direction.

Al Mazrouei explained that the demand may be achieved during the current year, pointing out that OPEC's decisions in June will reach the oil market to the desired balance.

Earlier this morning, the UAE Energy Minister stressed that " OPEC and OPEC + " will always do everything necessary to reach that balance in the market.

Investors this week expect OPEC to  announce  production data for March amid expectations of a 295,000 bpd drop .

 Oil prices rose on Monday , extending gains at a 5-month high as OPEC and its allies continue to cut supplies.

By 0610 GMT, the benchmark Brent crude for June delivery rose 0.5 percent to $ 70.66 a barrel.

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  • yota691 changed the title to Oil rises 1% on settlement amid fears of supply shortages
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