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Demand Destruction Foils Saudi Arabia's Plan To Flood Europe With Oil – OilPrice.com

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Demand Destruction Foils Saudi Arabia’s Plan To Flood Europe With Oil | OilPrice.com

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Saudi Arabia has promised a flood of cheap oil to Europe as it aims to hit its former ally Russia in its own backyard, but it looks like demand for the ultra-cheap Saudi crude doesn’t exist after all.

Despite the flood of cheap oil Saudi Arabia has promised, some refiners in Europe, including supermajor Shell, are set to take less crude from the Kingdom in April amid plummeting demand in the coronavirus pandemic, Reuters reported on Thursday, quoting industry sources.

Saudi Arabia, the world’s biggest oil exporter and OPEC’s top producer, has pledged to flood the market with oil in April after Russia refused to back deeper cuts proposed by the Saudi-led OPEC in response to the demand slump. The Kingdom is intent on unleashing growing crude oil volumes on the global market, aiming to significantly boost its crude oil exports to a record-breaking more than 10 million bpd in May.

In Europe, Saudi Arabia appears to be going after Russia’s oil market share with deeply discounted Arab Light crude at up to three times the usual volumes. Saudi Arabia hasn’t seen Europe as a core market in recent years because it has prioritized continuously growing demand in Asian markets. But in the war of market share, the Kingdom is now looking to squeeze Russian oil out of Europe by offering deep discounts which make its Arab Light crude priced at as low as $25 a barrel at Rotterdam, much lower than the price of Urals.

Regardless of the cheap extra Saudi crude oil, refiners in Europe plan to cut allocations for Saudi oil by as much as 25 percent for April, Reuters sources said, as many major economies – including Germany, France, Spain, Italy, and the UK – are in lockdown mode to try to slow the spread of the coronavirus. The widespread lockdowns are leading to a massive slump in oil demand in Europe’s biggest economies. Refining operations in Europe and elsewhere are scaling back as gasoline and jet fuel demand falls off a cliff due to the pandemic.

It’s difficult to “nominate a lot” amid refinery processing cuts, a trade source told Reuters.    

By Tsvetana Paraskova for Oilprice.com

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Saudi Arabia, Russia Push Negotiations for Global Oil Pact – Yahoo Canada Finance

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(Bloomberg) — Saudi Arabia, Russia and other large oil producers are racing to negotiate a deal to stem the historic price crash as diplomats said some progress was made on Sunday.

The talks still face significant obstacles: a meeting of producers from OPEC+ and beyond — delayed once — is only tentatively scheduled for Thursday. Russia and Saudi Arabia want the U.S. to join in, but U.S. President Donald Trump has so far shown little willingness to do so.

Oil diplomats are trying to stitch together a meeting of G20 energy ministers for Friday, as part of the effort to bring the U.S. on board, according to two people familiar with the situation.

Crude prices have fallen 50% this year, as the economic effects of the pandemic have knocked out about a third of global demand. The price crash is so dramatic that it’s threatening the stability of oil-dependent nations, the existence of U.S. shale producers, and poses an extra challenge to central banks.

Even the International Energy Agency, which represents nations that consume oil, is calling for action. And oil officials know that if a deal to cut output in an orderly way isn’t reached, the slump in prices will force some producers to shut down operations as storage on land and at sea is filling up.

The aim of talks, first revealed by Trump last week, is to cut oil production by about 10% — the biggest ever coordinated reduction. Oil rallied on Trump’s comments last week, but then pared those gains as the diplomatic intricacies became clearer.

Cut Together

Saudi Arabia and Russia both say they want the U.S., which has become the world’s largest producer thanks to the shale revolution, to join the cuts. But Trump had only hostile words for OPEC on Saturday, and threatened tariffs on foreign oil.

“If the Americans don’t take part, the problem which existed before for the Russians and Saudis will remain — that they cut output while the U.S ramps it up, and that makes the whole thing impossible,” said Fyodor Lukyanov, head of the Council on Foreign and Defense Policy, a research group that advises the Kremlin.

It’s not clear if Russia and Saudi Arabia will require the U.S. to publicly commit to cut production — a challenge in the private, fragmented American industry — or if a compromise gesture would be enough. Alexander Dynkin, president of the Institute of World Economy and International Relations in Moscow, a state-run think tank, said Moscow would like the U.S. to lift some sanctions as a compromise.

Russia and Saudi Arabia — which sparred publicly between themselves over the weekend — have also disagreed about how they would calculate the cuts, according to a person familiar with the talks.

But in another sign of progress, Norway — which hasn’t joined any production cuts since 2002 — signaled over the weekend it was ready to reduce unilaterally its output if others did. And a senior official from the oil-rich Canadian province of Alberta said it will dial into the oil meeting this week. Iraq’s oil minister said he was optimistic about a deal.

Any agreement will require diplomatic agility at a time when nations are devoting massive resources to fighting the pandemic itself. It’s also a battle of wills between Putin, Saudi Crown Prince Mohammad bin Salman, and Trump. On all sides, there are maneuvers to avoid blame if negotiations fail.

Trump said Saturday at a White House press briefing he’s opposed OPEC his whole life, and characterized it as a cartel, or monopoly. “I don’t care about OPEC,” he said. He threatened to use tariffs if needed to protect the domestic oil industry, even as he predicted that Saudi Arabia and Russia would come to an agreement.

Meanwhile Saudi Arabia postponed its monthly price-setting event for exported oil. Saudi Aramco’s official selling prices for May will be pushed to Thursday, according to people familiar with the situation. The OPEC meeting has also been tentatively rescheduled for Thursday.

The move allows the company to have a better idea of how negotiations are going before setting the prices that are its key weapon in its battle for market share. Last month, it also delayed the event in the midst of wrangling at OPEC+ and responded to the breakdown in those talks with a historic price cut — launching the price war negotiators are now trying to unravel.

(adds G20)

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Ontario's hardware stores shift to curbside pickup, delivery during COVID-19 pandemic, – CTV News

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OTTAWA —
Ontario’s hardware stores, cannabis retailers and non-essential construction sites are now required to stay closed due to the COVID-19 pandemic.

The Ontario Government reduced the list of essential businesses allowed to remain open to 44 categories, including grocery stores, pharmacies, convenience stores and LCBO and Beer Stores.

Hardware stores and cannabis retailers are no longer allowed to stay open for in-store shopping, but can offer online service and curbside pick-up. All non-essential stores must stay closed for two weeks.

Here’s a look at how stores have adjusted their business model due to the COVID-19 pandemic.

Ontario Cannabis Store

The Ontario Cannabis Store says you can order online for delivery.

The Ontario Cannabis Store is waiving delivery charges to make its service accessible.

Preston Hardware

Preston Hardware says you can place your order online or by email for curbside pick-up or delivery.

Canadian Tire

All Canadian Tire stores in Ontario must close for in-store shopping.

Canadian Tire says customers can still shop online with free curbside pick-up at stores or delivery

Home Depot

Hope Depot stores in Ontario remain open for curbside pick-up and delivery.

Lowe’s Canada

All Lowe’s stores in Ontario remain open, but only for curbside pick-up following an online order.

Lowe’s also offers delivery options for purchases made online

Home Hardware

Home Hardware says some of its locations are offering delivery-only.

Shoppers are advised to check with their local store about online, phone or email orders.

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Oil prices set to open lower due to Saudi-Russia row – The Globe and Mail

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Russian President Vladimir Putin attends a meeting on global energy markets via a video link at his residence outside Moscow, Russia, April 3, 2020.

SPUTNIK/Reuters

Global benchmark oil prices are expected to open lower on Monday as a dispute between top crude exporters Russia and Saudi Arabia raises concerns of another collapse in talks to curb production at a meeting this week.

Russian President Vladimir Putin put the blame for the crash in prices on Saudi Arabia on Friday – prompting a firm response from Riyadh the following day, disputing Putin’s claims.

Crude futures surged for a second day on Friday, with both U.S. and Brent contracts posting their largest weekly percentage gains on record due to hopes that a global deal to cut crude supply worldwide would be struck at talks, which are now set for April 9. [O/R]

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The sharp rebound from weeks of losses came after U.S. President Donald Trump said Moscow and Riyadh would negotiate to end a price war that slashed prices by more than half last month.

“Given the slimmer chances of a deal, prices are likely to give up the gains made last week that were a shortcovering rally induced by Trump’s comments,” said Amrita Sen, co-founder of the Energy Aspects consultancy.

OPEC and its allies are working on a global agreement for an unprecedented oil production cut equivalent to around 10% of worldwide supply in what they expect to be a global effort including countries that do not exert state control over output, such as the United States.

Trump has, however, made no commitment to take the extraordinary step of persuading U.S. companies to cut output.

Per Magnus Nysveen, head of analysis at Rystad Energy, said the decline in global demand due to the coronavirus pandemic and the global lockdowns was larger than the proposed cuts by the OPEC+ alliance.

“It is not strange for the market to hike prices by enthusiasm such as Friday’s, but for the levels to stay stable for more than a day or two, it takes concrete developments and deals on the ground,” he said.

On Friday, Brent crude futures rose 13.9%, or $4.17 a barrel, to settle at $34.11. U.S. West Texas Intermediate (WTI) crude CLc1 rose $3.02, or 11.93% to settle at $28.34.

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OPEC and its allies postponed an emergency meeting, led by Saudi Arabia, where the oil cuts could be agreed upon. A senior Saudi source told Reuters on Sunday, that the kingdom would host the meeting via video conference on April 9 and the delay was to allow more time to bring other producers on board.

Saudi Aramco will delay the release of its crude official selling prices (OSP) for May until April 10 to wait for the outcome of a meeting between OPEC and its allies regarding possible output cuts, the Saudi source said.

“As Aramco seems to have postponed the release of their official selling prices for May, it seems the kingdom still believes an oil production cut deal is possible,” said UBS commodities analyst Giovanni Staunovo.

“The biggest challenge remains how to split up those cuts among producers, particularly if U.S. oil producers will not join with voluntary cuts.”

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