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Saudi Arabia refuses to learn from its two FAILED oil price WARS – RT

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Saudi Arabia appears to have learned nothing from its two failed oil price wars, with the oil kingdom suggesting this week that it is ready to increase its production capacity to 13 million bpd.

Having failed to achieve the slightest semblance of success in the two oil price wars that it started – the first running from 2014 to 2016, and the second running from the beginning of March to effectively the end of April this year – it might be assumed that key lessons might have been learned by the Saudis on the perils of engaging in such wars again. Judging from various statements last week, though, Saudi Arabia has learned nothing and may well launch exactly the same type of oil price war in exactly the same way as it has done twice before, inevitably losing again with exactly the same catastrophic effects on it and its fellow OPEC members. At the very heart of Saudi Arabia’s problem is the collective self-delusion of those at the top of its government regarding the Kingdom’s key figures relating to its oil industry that underpins the entire regime. These delusions are apparently not discouraged by any of the senior foreign advisers who make enormous fees and trading profits for their banks from Saudi Arabia’s various follies, most notably oil price wars. It is, in the truest sense of the phrase, a perfect example of ‘The Emperor’s New Clothes’, although in this case, it does not just pertain to Crown Prince Mohammed bin Salman (MbS) but to all of the senior figures connected to Saudi Arabia’s oil sector. One of the most obvious examples of this is the chief executive officer of Saudi Arabia’s flagship hydrocarbons company, Saudi Aramco (Aramco), Amin Nasser, who said last week – bewilderingly for those who know even a modicum about the global oil markets – that Aramco is to go ahead with plans to increase its maximum sustained capacity (MSC) to 13 million barrels per day (bpd) from 12.1 million bpd.




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Quite aside from the sheer pointlessness of this posturing in a world already awash in oil as a result of the negative demand effect of the COVID-19 pandemic and the output overhang from the oil price war just ended, this comment from Saudi Arabia’s third-ranking oil man (after MbS, albeit by the loosest possible definition, and Energy Minister, Abdulaziz bin Salman al Saud), is extremely misleading. As such, it feeds into the oil market’s collective understanding since the 2014-2016 oil price war that anything that Saudi Arabia says about its oil industry is not to be taken as true, without a lot of additional fact-checking. Regarding the ‘maximum sustained capacity’ statement, to begin with, this term is one that has been repeatedly used by Saudi Arabia since the first oil price war disaster to cover for two other long-running delusions relating to the real level of its crude oil reserves and to the real level of its spare capacity.

Before the 2014-2016 oil price war, Saudi had stated for decades that it had a spare capacity of between 2.0-2.5 million bpd. This implied – given the widely-accepted (but also wrong) belief that Saudi Arabia had pumped an average of around 10 million bpd for many years (it actually pumped an average of just over 8.162 million bpd from 1973 until 2020) – that it had the ability to ramp up its production to about 12.5 million bpd when required. However, even as the 2014-2016 oil price war dragged on and wreaked new heights of economic devastation on Saudi Arabia and its OPEC colleagues, the Kingdom could produce on average no more than just about 10 million bpd. Crucially here, the Energy Information Administration (EIA) defines spare capacity specifically as production that can be brought online within 30 days and sustained for at least 90 days, whilst even Saudi Arabia has said that it would need at least 90 days to move rigs to drill new wells and raise production by an additional 2.0-2.5 million bpd.




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Instead, from that point onwards, Saudi Arabia began to attempt to obfuscate this spare capacity lie by semantic trickery. Senior Saudis spoke of ‘capacity’ and of ‘supply to the market’ rather than of ‘output’ or ‘production’ and these two groups of terminology mean very different things. ‘Capacity’ (or its synonym, as far as the Saudis are concerned, ‘supply to the market’) relate to the utilization of crude oil supplies held in storage at any given time in the Kingdom plus the supplies that can be withheld from contracts and re-directed into those stored supplies. It can also mean oil clandestinely bought in from other suppliers (notably Iraq in the last oil price war) through brokers in the spot market and then passed off as its own oil supplies (or ‘capacity’). Exactly the same semantic trickery was used to cover up the actual supply shortfalls in the aftermath of the September 2019 attacks by the Iran-backed Houthis on Saudi Arabia’s Khurais and Abqaiq facilities, with the Energy Minister talking of ‘capacity’ and later of ‘supply to the market’, which are absolutely not the same thing at all as actual production at the wellheads.

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Why Saudi Arabia will lose the next oil price war

The reason why Saudi Arabia seeks to obfuscate its real production and also spare capacity figures is that oil has been the only true foundation-stone of the Kingdom’s geopolitical power since its discovery in the late 1930s and this is also why it lies about its crude oil reserves. Specifically, at the beginning of 1989, Saudi Arabia claimed proven oil reserves of 170 billion barrels but only a year later, and without the discovery of any major new oil fields, the official reserves estimate somehow grew by 51.2 percent, to 257 billion barrels. Shortly thereafter, it increased again to just over 266 billion barrels, a level that persisted until a slight increase in 2017 to just over 268 billion barrels, with, again, no major new oil field finds made, a figure which – depending on who you believe – has increased yet again. At the same time, as highlighted, Saudi Arabia took out of the ground an average of 8.162 million bpd from the beginning of 1973 to the beginning of 2020, which totals over 2.979 billion barrels of crude oil every year, or 137.04 billion barrels of crude oil taken out of the ground over that time period. Given this tangible and proven production, with no major new field finds (and declining production at many of its core oil fields as well, including Ghawar), it is mathematically very difficult to see how it is possible that Saudi Arabia’s crude oil reserves are not actually around 120 billion barrels (and that is using the highly-dubious 257 billion barrels base figure) and not the stated 268+ billion barrels.

Given the wider public realization that the core figures upon which Saudi Arabia’s remaining geopolitical and economic power is based are essentially nonsense, Aramco’s share price might – in the normal circumstances of a correctly functioning market – be regarded as vulnerable. However, such was the absolute desperation on the part of MbS not to lose personal credibility by allowing the omni-toxic Aramco IPO to be seen to fail – at least in Saudi Arabia – that very few of the share purchasers have much to lose. In order to even sell the 1.5 percent stake finally offered (cut down from the initially-mooted five percent), Saudi banks were ‘encouraged’ to offer to lend money to retail customers at a 2-to-1 ratio for every riyal they would invest in Saudi Aramco (compared to average leverage ratio limit for loans of 1-to-1). Additionally, the IPO’s international adviser banks were there to take up any slack in the offering left after the sovereign wealth funds of neighboring states were equally ‘encouraged’ to participate on the offering, as were various senior Saudis fearful of a re-run of their treatment in the Ritz Carlton in 2017.

READ MORE: Saudi Aramco profits crash 73% as coronavirus sinks oil market

Now, in addition to these levers, Aramco has also reassured this small cadre of investors that it will meet the minimum US$75 billion dividend payout that it was forced into promising in order to ensure that it sold even 1.5 percent of the company. As Aramco’s share price is now intimately connected to MbS’s standing at home, Aramco has little choice in the matter, despite the announcement last week that its net profit plunged by 73.4 percent in the second quarter of this year. This was entirely due, ironically, to Saudi Arabia’s starting yet another oil price war to destroy the US shale sector by crashing prices through overproducing at a time when demand was already annihilated by the COVID-19 pandemic. Such figures, of course, will become entirely meaningless if Saudi Arabia embarks on yet another oil price war in the not-too-distant-future, as is the clear implication of the announcement that it will increase its MSC to 13 million bpd from 12.1 million bpd, as the result for Saudi Arabia next time could be the end of the al-Saud dynasty in the Kingdom.

This article was originally published on Oilprice.com

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Drugmaker Novavax begins late-stage vaccine trial in U.K. – CTV News

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LONDON —
U.S.-based Novavax has begun a late stage trial of its potential COVID-19 vaccine in the United Kingdom because the high-level of the coronavirus circulating in the country is likely to produce quick results, the pharmaceutical company said.

Novavax plans to test the effectiveness of its vaccine in a trial involving 10,000 people between the ages of 18 and 84, according to a statement issued late Thursday. At least 25% of the subjects will be over the age of 65, and 400 participants will also receive a licensed flu vaccine.

The trial is being conducted in partnership with the U.K. government’s Vaccine Taskforce, which was created in April to help speed the development of a COVID-19 vaccine.

“With a high level of SARS-CoV-2 transmission observed and expected to continue in the U.K., we are optimistic that this pivotal phase 3 clinical trial will enrol quickly and provide a near-term view of (the vaccine’s) efficacy,” Dr. Gregory M. Glenn, head of research and development for Novavax, said in the statement.

The announcement comes as COVID-19 cases continue to rise across the U.K. The government reported 6,634 new positive test results on Thursday — the U.K.’s highest daily number since the pandemic began. Britain has the deadliest outbreak in Europe, with nearly 42,000 confirmed COVID-19 deaths.

Drugmakers are rushing to develop COVID-19 vaccines with the backing of governments desperate to find a way of easing restrictions that have hammered the world economy.

The U.K. has already agreed to buy 60 million doses of the Novavax vaccine to ensure it can be distributed as quickly as possible if it is approved by regulators.

The government said Friday that participants in the Novavax trial will be drawn from the 250,000 people who have volunteered to take part in COVID-19 vaccine testing through the National Health Service’s Vaccine Registry.

“Finding a safe and effective vaccine that works for the majority of the U.K. population is the best way to tackle this devastating disease,” said Kate Bingham, chair of the government’s Vaccines Taskforce. “Whilst social distancing, testing and other measures can help reduce the impact of coronavirus, the only long-term solution to beating it will be finding a vaccine.”

Novavax also pledged to publish details of its vaccine testing protocol “to enhance information-sharing during the worldwide pandemic.”

Drugmakers are under pressure to release more information about the progress of their vaccine trials — information they normally wouldn’t release until the trials are complete — to increase public confidence in their work.

Several other big pharmaceutical firms, including AstraZeneca, Moderna and Pfizer, have already released the protocols for their trials.

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Demand for sports equipment and home gyms booms as Canadians prepare for pandemic winter – CBC.ca

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Canadians in need of sports equipment and fitness gear to stay healthy and have fun during a pandemic winter have learned a valuable lesson: Shop early to avoid disappointment.

“People saw what happened with kiddie pools and fitness equipment in the spring,” said Gillian Montgomery, who co-owns Skiis and Biikes, a sporting goods chain with three locations in southern Ontario. Her stores are already unusually busy.

“Normally we don’t have interest in winter products until we see the snow and even until Christmas, but this year we’ve had maybe 30 calls just since September about getting cross-country skiing equipment.”

At Calgary’s Abom Ski & Board, owner Randy Ahl already has a “big, long” waiting list for entry-level cross-country ski packages that haven’t even arrived at the store yet.

Wait lists already growing

“Whether it’s a couple or a family, they’re saying, ‘We want a phone call when those things come in,'” said Ahl, who has already outfitted entire families with boots, poles and skis that he does have in stock. “I consider over $2,000 to be a fairly big purchase, and that’s happened already more than a dozen times.”

People who plan to exercise indoors are prepping as well.  

Drew Berner has installed a home gym in his Toronto garage.

I fully intend to be out there all winter long,” said the father of three-year-old twins. “My garage is detached, but it is insulated, and I’m going to get a little space heater.”

Early in the pandemic with gyms locked down, health-conscious Canadians made alternate arrangements, following along with exercise instructors on YouTube, joining classes held in parks, or buying exercise gear to use at home. 

Drew Berner of Toronto hustled to assemble a gym in his garage, as many retailers were sold out of equipment and used goods were in hot demand. (Submitted by Drew Berner)

But many retailers were unable to satisfy demand for sporting goods and fitness equipment. Canadian Tire experienced triple-digit growth in the category. 

“Consumer demand far exceeded both historical demand and available inventory,” the company said in a statement to CBC News.  

A sense of urgency

When Berner tried to find a set of weights, an exercise bike and a rowing machine for his garage gym, he found most were already sold out. Only by persisting was he able to get what he needed. He spent $3,000 on a mix of new and second-hand equipment.

“That involved everything from having alerts set on Kijiji … to having email alerts from stores so I would be notified as soon as they had things I wanted in stock,” said Berner, noting that he had to act fast before another buyer scooped them up. 

Now, as cases of COVID-19 surge across Canada, national fitness chains such as GoodLife Fitness and F45 Training remain open — with limited capacity. Even so, some gym members are unwilling to return to an environment where people breathe heavily and sweat. And the market for used goods is again red hot.

The most popular search terms on online seller Kijiji are still dumbbells, ellipticals and exercise bikes, said company’s manager of community relations, Kent Sikstrom.  

Second-hand Peloton Bikes have more than doubled since this time last year, while inquiries about elliptical machines are up 39 per cent and treadmills inquiries are up 15 per cent. 

Brother and sister team Devin and Gillian Montgomery, owners of Skiis and Biikes, a small Ontario sporting goods chain, say their stores are unusually busy for this time of year. (Submitted by Devin and Gillian Montgomery)

“Probably in the next couple of weeks we may see snow shoes, cross-country skis,  sleds, and snowboard begin to create a new trend for the season,” said Sikstrom. 

eBay Canada, which sells both new and used goods, is also reporting significant increases. Stair machines are up 230 per cent from this time last year, while treadmills sales are up 280 per cent, according to the head of the Canadian operation, Rob Bigler.

Gear not essential

“We’ve been super busy,” said Bigler. “It’s a great time to sell that treadmill that’s been sitting in your basement, maybe being used to hang up laundry.”

But Samantha Monpetit-Huynh, a fitness coach and trainer in Toronto, pointed out that a lot of gear isn’t essential to stay active and healthy.

Randy Alh, right, the owner of Calgary’s Abom Ski & Board, stands with customer Ken Dyer. Alsh has started a wait list for beginner cross-country ski packages because of the demand. (Submitted by Randy Ahl)

“People forget your body is probably the best piece of equipment you’ve got,” she said. “You don’t need all this stuff — you just need to move and you need to do it regularly. More than once a week.”

Monpetit-Huynh said it’s possible to use laundry detergent bottles or soup cans as weights, and go for walks or runs. However, she recently invested $3,000 in a brand-new Peloton exercise bicycle that allows her to join spinning classes remotely.

“I love going to the gym, but I thought, ‘You know what? I should get something because if we get a second wave I want to be prepared.'”

Berner said for him, there’s more to it than fitness.

“Exercise is crucial for my mental health,” he said. “I notice even if I go for a couple of days without exercise my mood starts to drop.”

Other Canadians who feel the same and haven’t yet made a plan would be well advised to start considering their options — or risk getting left out in the cold during a long pandemic winter.

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Did you return from Teck mine in B.C.? Get tested and stay isolated, says N.L. government – CBC.ca

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The Teck coal mine in Elkford, B.C., has suffered an outbreak of COVID-19 and any workers who returned to Newfoundland and Labrador in the last 14 days are told to stay home and get tested.

That means every worker who came back on or after Sept. 14 must isolate away from their families, and stay at home for the full 14 days regardless of their test results.

The Department of Health and Community Services is also asking anyone who came back from the mine after Aug. 31 to get tested for COVID-19 out of an abundance of caution.

This is the fourth work site identified by the Newfoundland and Labrador government that has suffered an outbreak. Outbreaks at the Canadian Natural Albian oil sands site, the Syncrude Mildred Lake oil sands site, and the Suncor base plant site — all in Alberta — are still active.

The rules for rotational workers from Newfoundland and Labrador who travel outside the Atlantic Provinces do not apply to work sites that have active outbreaks. While others can leave isolation after a negative test result, workers from outbreak sites must remain isolated during their time at home.

Read more from CBC Newfoundland and Labrador

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