Friday, June 14, 2019

Gulf of Guinea piracy continues to threaten seafarers

An undated photo of West African pirates.

Members of the shipping community, flag states and agencies from Gulf of Guinea (GoG) gathered at the IMO Headquarters for a day-long symposium on maritime security in the region. 
The event, organised to highlight the continuing danger to seafarer in the GoG, was co-sponsored by BIMCO, IMCA, ICS, ITF and OCIMF, featured speakers from regional maritime agencies, as well as shipping officials, academics and military staff.  
In opening the symposium, Dr Grahaeme Henderson, Chair of the UK Shipping Defence Advisory Committee and Vice President of Shell Shipping & Maritime, said; “Simply put, the high level of piracy and armed robbery attacks in the Gulf of Guinea is not acceptable. Yet it is happening every day and this is not business as usual. We need to take urgent action now.”
Concerns raised by industry were supported by figures from the IMB, which showed that the number of attacks in the GoG region had doubled in 2018. There was also a marked  increase towards kidnapping for ransom and armed robbery incidents.
Piracy expert Prof Bertand Monnet, who has interviewed pirate gangs in the Niger Delta, estimated that there were around 10 groups of pirates that were responsible for the majority of attacks in the area, and they were well organised and motivated.  
Dr Dakuku Peterside, Director General and CEO of the Nigerian Maritime Authority and Safety Agency (NIMASA),acknowledged the maritime security risks present in the GoG, but stated that new initiatives underway to improve the joint capacity of Nigerian law enforcement and Navy capabilities could make seafarer kidnappings “history” within a matter of months.
He went on to say that he is keen to improve international co-operation, particularly with the shipping industry.
Dr Peterside said;: "We have no option but to work together, but we cannot have imposed solutions.” He also stated that "NIMASA and the Nigerian Navy will also be hosting a Global Maritime Security Conference in October to seek tailored short and long term solutions to strengthen regional and international collaborations in the Gulf of Guinea."
The forum also included an interview led by Branko Berlan, the ITF representative to the IMO, with a seafarer who had been attacked and kidnapped in a recent incident. He said the attack appeared to be well organised and led from ashore. “The first indication I had of the attack was a knock on my cabin door and two men holding guns appeared.” He was subsequently held in a camp onshore along with other members of his crew until his release could be secured.
Other speakers at the event emphasised the region was starting to build capacity and joint co-operation to fight maritime crime through the Yaoundé Process, which focuses on joint co-operation across the region for reporting and response. The international community is also sponsoring long-term capacity building and partnerships. 
However, the shipping industry, seafarer groups and flag states were keen to identify actions that can have an immediate impact. For example, delegates heard about recent Spanish Navy action to assist Equatorial Guinea to rescue seafarers from a piracy attack last month, as well as the new US programme to embark law enforcement officers on regional vessels. Jakob Larsen, BIMCO’s Head of Security pointed out that regional states needed to play their part as well.
“Nigerian piracy mainly affects a small geographical area of around 150 x 150 nautical miles. The problem can be solved easily and quickly, especially if Nigeria partners with international navies. Nigeria holds the key to solving this problem,” Larsen said.
The symposium was held in the lead-up to a series of meetings focused on seafarer safety and security at the IMO. Concerns over increased piracy in the GoG have resulted in several member states submitting proposals that could help address the crisis. 
According to Russell Pegg, OCIMF Security Adviser, “We are encouraging all stakeholders to take a pro-active role on this issue and are working with member states to support those proposals that could help mitigate the risks to seafarers.”  
Guy Platten, ICS Secretary General, concluded, “It is unacceptable that seafarers are being exposed to such appalling dangers and we need the authorities to take action now.”

Thursday, June 13, 2019

Tanker attacks in Gulf of Oman stoke security and oil fears

Oman oil tanker attack
The attacks on the tankers took place near the Strait of Hormuz. (AP)

DUBAI (Reuters) - Two oil tankers were attacked and left adrift on Thursday in the Gulf of Oman, driving up oil prices and stoking fears of a new confrontation between Iran and the United States.

The White House said U.S. President Donald Trump had been briefed on the issue, after Washington accused Tehran of being behind a similar incident on May 12 when four tankers were attacked in the same area, a vital oil shipping route. 

Russia was quick to urge caution, saying no one should rush to conclusions about Thursday’s incident or use it to put pressure on Tehran, which has denied the U.S. accusations. 

There were no immediate statements apportioning blame after Thursday’s incidents, nor any claims of responsibility.

The crew of the Norwegian-owned Front Altair abandoned ship in waters between Gulf Arab states and Iran after a blast that a source said might have been from a magnetic mine. The ship was ablaze, sending a huge plume of smoke into the air. 

The crew were picked up by a passing ship and handed to an Iranian rescue boat. 

The second ship, a Japanese-owned tanker, was hit by a suspected torpedo, the firm that chartered the ship said. Its crew were also picked up safely. 

The Bahrain-based U.S. Navy Fifth Fleet said it had assisted the two tankers after receiving distress calls.

Crude prices climbed 4% after the attacks near entrance to the Strait of Hormuz, a crucial shipping artery for Saudi Arabia, the world’s biggest oil exporter, and other Gulf energy producers. 

“We need to remember that some 30% of the world’s (seaborne) crude oil passes through the straits. If the waters are becoming unsafe, the supply to the entire Western world could be at risk,” said Paolo d’Amico, chairman of INTERTANKO tanker association.


Tensions have risen in the region since the United States pulled out of a deal between Iran and global powers that aimed to curb Tehran’s nuclear ambitions. 

Japanese Prime Minister Shinzo Abe, who was visiting Tehran when Thursday’s attacks occurred, carried carrying a message for Iran from Trump, who has demanded that the Islamic Republic curb its military programs and its influence in the Middle East.

Abe, whose country was a big importer of Iranian oil until Washington ratcheted up sanctions, urged all sides not to let tensions in the area escalate. 

Iranian Foreign Minister Mohammad Javad Zarif described Thursday’s incidents as “suspicious” on Twitter, noting they occurred during Abe’s Tehran visit. The minister called for regional dialogue. 

Iran also said it would not respond to Trump’s overture, the substance of which was not made public. 

Britain said it was “deeply concerned” about the attacks. Germany, which like Britain remains a signatory to the nuclear pact with Iran, said the “situation is dangerous” and all sides needed to avoid an escalation. 

The Arab League said some parties were “trying to instigate fires in the region”, without naming a particular party.

Oman and the United Arab Emirates, which have coastlines on the Gulf of Oman, did not immediately issue any public comment. 

Saudi Arabia and the UAE, both majority Sunni Muslim nations that have a long-running rivalry with predominantly Shi’ite Iran, have previously said attacks on oil assets in the Gulf pose a risk to global oil supplies and regional security.


Bernhard Schulte Shipmanagement said the Japanese tanker Kokuka Courageous was damaged in a “suspected attack” that breached the hull above the water line while transporting methanol from Saudi Arabia to Singapore. 

Japan’s Kokuka Sangyo, owner of the Kokuka Courageous, said the ship was hit twice over a three-hour period.

A shipping broker said the vessel might have been struck by a magnetic mine. “Kokuka Courageous is adrift without any crew on board,” the source said. 

The crew of about 21 or 22 people was picked up by the Coastal Ace vessel, Denis Bross of Acta Marine in the Netherlands told Reuters. He said they were handed to a U.S. Navy vessel. 

Taiwan’s state oil refiner CPC said the Front Altair, owned by Norway’s Frontline, was “suspected of being hit by a torpedo” around 0400 GMT carrying a Taiwan-bound cargo of 75,000 tonnes of petrochemical feedstock naphtha, which Refinitiv Eikon data showed had been picked up from Ruwais in the UAE. 

Frontline said its vessel was on fire but afloat, denying a report by the Iranian news agency IRNA that the vessel had sunk. 

Front Altair’s 23-member crew abandoned ship after the blast and were picked up by the nearby Hyundai Dubai vessel. The crew was then passed to an Iranian rescue boat, Hyundai Merchant Marine said in a statement.

Iran’s IRNA reported that Iranian search and rescue teams picked up 44 sailors from the two damaged tankers and took them to the Iranian port of Jask. The numbers in the Iranian media report could not be independently confirmed. 

Thursday’s attacks came a day after Yemen’s Iran-aligned Houthis fired a missile on an airport in Saudi Arabia, injuring 26 people. The Houthis also claimed an armed drone strike last month on Saudi oil pumping stations. 

Iranian Supreme Leader Khamenei told Abe during his visit to Iran that Tehran would not repeat its “bitter experience” of negotiating with the United States, state media reported. 

“I do not see Trump as worthy of any message exchange, and I do not have any reply for him, now or in future,” the Iranian leader said. 

Reporting by Koustav Samanta and Jessica Jaganathan in Singapore, Liang-Sa Loh and Yimou Lee in Taipei, Terje Solsvik in Oslo, Ghaida Ghantous in Dubai, Hyunjoo Jin in Seoul and Jonathan Saul in London; Writing by Edmund Blair; Editing by Jon Boyle and Alison Williams

Wednesday, June 12, 2019

Oil prices down more than 2% on U.S. inventories, demand worries

oil barrels

NEW YORK (Reuters) - Oil prices fell more than 2% on Wednesday, pressured by an unexpected rise in U.S. crude inventories and by a weaker outlook for global oil demand.

Brent crude futures, the international benchmark for oil prices, fell $1.36, or 2.2%, to $60.93 a barrel by 11 a.m. EDT (1500 GMT). U.S. West Texas Intermediate crude futures were down $1.39, or 2.6%, to $51.88 a barrel. 

Oil futures extended losses after the U.S. Energy Information Administration (EIA) reported domestic crude stockpiles climbed last week by 2.2 million barrels. Analysts had forecast a decrease of 481,000 barrels. 

Gasoline stocks also increased more than expected.

“The report was mostly bearish, given the sizeable crude oil inventory build,” said John Kilduff, a partner at Again Capital LLC in New York. “It was also impressive that gasoline inventories rose, despite very strong demand on the week.” 

The EIA on Tuesday cut its forecasts for 2019 world oil demand growth and U.S. crude production. 

Trade tensions between the United States and China, the world’s two biggest oil consumers, also weighed on prices. U.S. President Donald Trump said he was holding up a trade deal with China. 

European shares pulled back from three-week highs on Wednesday as this month’s recovery rally ran out of steam on the back of soft Chinese factory activity and trade frictions.

Hedge fund managers are liquidating bullish oil positions at the fastest rate since the fourth quarter of 2018. 

With the next meeting of the Organization of the Petroleum Exporting Countries set for the end of June, the market is looking to whether the world’s major oil producers will prolong their supply cuts. 

OPEC countries and non-member producers including Russia, have limited their oil output by 1.2 million barrels per day this year to prop up prices. 

Goldman Sachs said an uncertain macroeconomic outlook and volatile oil production from Iran and others could lead OPEC to roll over supply cuts. 

“The sell off in recent weeks shows how vulnerable the market is and it may force Russia’s hand in extending the deal,” said Warren Patterson, head of commodities strategy at ING.

The energy minister of the United Arab Emirates, Suhail bin Mohammed al-Mazroui, said on Tuesday that OPEC members were close to reaching an agreement on continuing production cuts. 

OPEC is due to meet on June 25 after talks with its allies led by Russia on June 26, although sources have told Reuters that Russia has suggested a date change to July 3 to 4. 

Additional reporting by Julie Payne in London; Editing by David Gregorio

Tuesday, June 11, 2019

US ramps up prohibitions on Venezuelan petroleum trade, holds off secondary sanctions

Venezuela's Ex-Oil Boss: PDVSA Is Collapsing

Washington — Trump administration officials are still considering secondary sanctions to push the Maduro regime out of power in Venezuela, though analysts said Monday that there may be little reason to impose them.

"I think for the most part we are already seeing the impact that secondary sanctions would have," said Lisa Viscidi, director of energy, climate change and extractive industries at Inter-American Dialogue. "I think official secondary sanctions would close some loopholes Venezuela is still able to exploit, but Venezuela is already very dependent on exporting to countries that refuse to get in line with US sanctions policy."

The Trump administration has blocked imports of Venezuelan crude and condensate into the US, prohibited US dollar transactions with state-run PDVSA and threatened sanctions on essentially all diluent trade with the company. But the US has yet to impose secondary sanctions on Venezuelan oil flows, similar to those fully re-imposed on Iranian crude last month, subjecting essentially all petroleum trade with a targeted country to US sanctions.

India, for example, has agreed to stop exporting gasoline to Venezuela and has reduced its Venezuelan crude imports in response to pressure from the US, Viscidi said. But Russia, Venezuela's most significant remaining crude and refined product trading partner, may not halt purchases even if secondary sanctions are imposed, she said.

"Russia is not going to stop trading oil with Venezuela as a result of official secondary sanctions, especially since Russia itself is being sanctioned by the US," she said.

State-run Russian companies may be unlikely to comply with US sanctions, keeping at least some Venezuelan petroleum flows viable even if secondary sanctions are imposed, according to Paul Sheldon, chief geopolitical advisor with S&P Global Platts Analytics.

"Among other factors, assisting a US adversary in the Americas carries geopolitical benefits for the Kremlin," Sheldon said in a note.

PDVSA exported an average of 720,000 b/d of crude and fuel oil in May, up about 150,000 b/d from April, but well below the nearly 1.29 million b/d exported out of Venezuela a year earlier, according to a PDVSA document seen by Platts.

In May, PDVSA sold 8.8 million barrels of crude to Russia's Rosneft, including diluted crude oil and Merey 16, roughly 40% of all crude and fuel oil it sold in May, according to the PDVSA document.
Venezuelan oil production fell to 720,000 b/d in May, down 60,000 b/d from April and less than half the 1.5 million b/d the country produced in May 2018, according to a Platts OPEC survey released Monday.

For months, the Trump administration has been considering secondary sanctions, but has avoided imposing them due partly to the impact on oil and gasoline prices amid other sanctions and trade disputes.


But the risk of secondary sanctions has caused a steep decline in trade with PDVSA, according to Joe McMonigle, an analyst with Hedgeye Risk Management.

"The threat of sanctions is definitely having an impact," McMonigle said. "Companies don't want to risk that kind of exposure."

But while Russia and China have continued to trade petroleum with Venezuela, secondary sanctions could amplify that risk, according to Francisco Monaldi, Latin American energy policy fellow at Rice University's Baker Institute for Public Policy.

"It is hard to know how far they will be willing to go to help [President Nicolas] Maduro, under a tougher sanctions environment," Monaldi said. "Would Russia consume Venezuelan oil in their domestic market? Would China pay cash for Venezuelan oil? Would they be willing to invest in the Venezuelan oil industry?"

In January, the US unveiled sanctions on PDVSA, Venezuela's state-owned oil company, which have served as a de facto ban on US imports of Venezuelan crude and an immediate ban on US exports of diluent to Venezuela. On April 28, the US prohibited transactions between non-US firms and PDVSA involving the US financial system, essentially banning the use of US dollars in all transactions with PDVSA.

Last week, the US announced further prohibitions on essentially all diluent trade with PDVSA, which PDVSA uses in the production and marketing of its heavy crudes, in an attempt to accelerate declines in Venezuela's oil sector.

-- Brian Scheid,

-- Edited by Richard Rubin,

Monday, June 10, 2019

BP, ExxonMobil Commit $10M Apiece to Alaska LNG


BP and ExxonMobil are contributing $10 million apiece to help get the $43 billion Alaska LNG Project get its federal construction authorization, Lt. Gov. Kevin Meyer said Thursday.

Meyer made the announcement at the Alaska Oil and Gas Association’s annual conference in Anchorage.

The state-owned Alaska Gasline Development Corp. estimates it will take roughly $30 million to complete the environmental impact statement the Federal Energy Regulatory Commission is currently drafting.

FERC is scheduled to release a draft version of the Alaska LNG Project EIS in June; the agency pushed back from February earlier this year. AGDC officials said at a May 22 board meeting they expect the draft document to be roughly 4,000 pages.

The major producers signed a memorandum of understanding with AGDC in March to provide technical assistance on the project. They also signed separate confidential gas sales precedent agreements with AGDC last year that outline the terms — including price — under which they would sell gas from the Prudhoe Bay and Point Thomson North Slope fields into the project.

The state capital budget that passed the Senate in early May authorizes AGDC to accept up to $25 million from outside sources to support the Alaska LNG Project.

AGDC officials expect to have approximately $22 million remaining for the project at the end of the 2019 fiscal year, which is June 30.

Gov. Mike Dunleavy has stressed a desire to bring the producers back into the project after they stepped away in 2016 amid poor oil and gas market conditions.

The state has since focused on advancing the regulatory and marketing aspects of the project.

“All future decisions on Alaska LNG will be rooted in world-class LNG experience,” Meyer said.

The companies are also currently assisting AGDC in reevaluating the overall economics of the project and its $43 billion cost estimate amid new global LNG market conditions.

BP Alaska Vice President of Commercial Ventures Damian Bilbao said in an interview that the company continues to be excited about monetizing Alaska natural gas because the company’s share of North Slope reserves are still its “single largest undeveloped resource on the planet.”

On the $43 billion estimated cost of the project — a figure calculated in 2016 that includes $9 billion in contingencies — Bilbao said he believes there are avenues in supply procurement and other areas to bring the cost down.

Alaska LNG officials have always cited the cost of the 800-mile gas pipeline from the North Slope to the Kenai Peninsula as the main cost obstacle to developing the long-sought project.

“Four years is a long time in this industry; it’s a technology-driven industry so our experts feel very confident that the number that was delivered at the end of (the preliminary design period), that $43-$44 billion — they can really look at some opportunities to bring that into the high 30s and we’re going to look at some opportunities to take that down even further,” he said.

As for North Slope oil, Assistant Secretary of the Interior Joe Balash, a former Alaska Department of Natural Resources commissioner, said during remarks at the conference that a draft environmental impact statement should be published by the end of summer for ConocoPhillips’ large Willow prospect in the National Petroleum Reserve-Alaska, with a final EIS coming in 2020. ConocoPhillips estimates Willow, with a cost of $4 billion to $6 billion, could produce more than 100,000 barrels of oil per day.

Balash also said the Bureau of Land Management, which he oversees, just completed consultation with Canadian officials over the potential impacts to the Porcupine caribou herd from possible oil and gas activity in the Arctic National Wildlife Refuge; the herd migrates across the border. A final EIS analyzing industry development in the ANWR coastal plain should be ready in August and a lease sale will follow towards the end of the year, according to Balash.

Friday, June 7, 2019

Oil tanker attack probe reveals new photos, blames likely "state actor"


The first photos of damage to the hulls of four oil tankers that were hit in an alleged sabotage attack on May 12, 2019, near the port of Fujairah in the United Arab Emirates (UAE), taken by UAE divers and shown to United Nations Security Council delegations on June 6, 2019 in New York. HANDOUT 


United Nations -- Three nations that own the oil tankers damaged last month in an alleged sabotage attack, which the U.S. has blamed on Iran, have told the United Nations that their joint investigation strongly suggests a "state actor" was behind the explosions, but the probe stops short of pointing a finger at Tehran.

The investigating nations also revealed the first photos of the damage to the tankers' hulls taken by divers, showing large holes caused by what U.S. officials have described to CBS News as limpet bombs, believed to have been stuck onto the ships by attacking divers for the May 12 attack.

"While investigations are still ongoing, these facts are strong indications that the four attacks were part of a sophisticated and coordinated operation carried out by an actor with significant operational capacity, most likely a state actor," the U.N. was told on Thursday.
The photos of the tankers from Norway, the United Arab Emirates, and Saudi Arabia were taken by underwater divers of the Emirates, which led the investigation with support from U.S. military experts. The photos were shown during an informal briefing on Thursday to nations of the U.N. Security Council and to a small group of reporters, including CBS News.
The briefing on the investigation was given by Emirates Ambassador Lana Nusseibeh, Saudi Arabia's UN Ambassador Abdallah al-Mouallimi, and Norway's Deputy Ambassador Mari Skåre, to members of the Security Council, including U.S. acting Ambassador Jonathan Cohen.

U.S. military officials and the White House have definitively laid blame for the attack on Iran, as has close U.S. ally and Iranian arch-rival Saudi Arabia.
Russia's Deputy Ambassador Vladimir Safronkov was at the briefing on Thursday, which took place at the Mission of the United Arab Emirates, and said diplomats should not "jump to conclusions," echoing previous Russian officials, urging a de-escalation of tensions in the region.

Norway, the Emirates and Saudi Arabia warned world powers said at the briefing that they wished to stress "that the attacks endangered international commercial navigation and the security of global energy supplies, and threatened international peace and security."

The attacks took place in the Gulf of Oman, "within UAE territorial waters less than 12 nautical miles from the UAE coastline," the investigation states. Its primary conclusions will be shared with the International Maritime Organization (IMO) and other intelligence agencies.

The reasoning

Explaining its conclusion that a nation was likely behind the attack, rather than a criminal or terrorist group, for instance, the investigation found:
  • The attacks required intelligence capabilities for the deliberate selection of four oil tankers from among almost 200 vessels of all types that lay at anchor off Fujairah at the time of the attacks. One of the targets was at the opposite end of the anchorage area from the other ships, which indicates that these were premeditated strikes, rather than targets picked at random.
  • The attacks likely required the positive identification of these pre-selected targets by the operatives carrying out the attacks.
  • The attacks required trained divers; the explosive charges were placed with a high degree of precision under the waterline, in ways that were designed to incapacitate the ships without sinking them or detonating their cargoes – indicating minute knowledge of the design of the targeted ships.
  • The attacks required a high degree of coordination among what most likely were several teams of operatives. This included the timed detonation of all four explosive charges, sequenced within less than an hour.

An infographic provided by the joint investigation into the May 12 attack on four oil tankers off the United Arab Emirates coast, provided by the governments which own the tankers and are conducting the official investigation, the Emirates, Saudi Arabia and Norway, on June 6, 2019. HANDOUT
"The attacks required the expert navigation of fast boats," the investigation states, "with understanding of the geographic area, that were able to intrude into UAE territorial waters and to exfiltrate the operatives after delivering the explosive charges."

Tension in the Gulf

The attacks on the oil tankers came amid a sharp escalation of tension between the U.S. and Iran.

American officials told CBS News senior national security correspondent David Martin last month that the initial assessment of a U.S. team sent to investigate the incidents was that Iran or Iranian-backed proxies had used explosives to blow holes in the four ships.
Meanwhile, citing intelligence suggesting a heightened threat to U.S. personnel and interests in Syria and Iraq from Iran or the groups it backs in the region, the White House ordered a U.S. aircraft carrier strike group and four B-52 bombers to the region.

On Thursday, the Associated Press quoted Marine Gen. Frank McKenzie, commander of U.S. forces in the Middle East, as saying Iran appeared to have taken a "step back and recalculate" in response to the U.S. military buildup in the Persian Gulf region, but he also cautioned there was no conclusion that Iran had abandoned the alleged plans for potential attacks against American interests.

Thursday, June 6, 2019

Putin Highlights Differences With Saudis as OPEC+ Decision Looms
  • Producers group has just weeks to decide on extending deal
  • Russia is happy at lower oil prices than Saudis: Putin
A year ago, in the enduring twilight of one of St. Petersburg’s famous “white nights” of summer, Saudi Arabia and Russia reached an agreement that set a new direction for the oil market.

This time around, President Vladimir Putin has emphasized the differences between the two architects of the OPEC+ deal. He reiterated the desire to continue cooperation, but noted that his country is happy with a lower oil price than its Saudi allies and declined to say whether he supports an extension of production cuts.

“We have certain differences in opinion regarding the fair price,” Putin told reporters on Thursday. “$60-65 a barrel suits us just fine” because Russia’s budget is based on $40 crude, he said.

While Saudi Energy Minister Khalid Al-Falih clearly wants to prolong the group’s curbs beyond their expiry at the end of this month, his Russian counterpart Alexander Novak remains at best non-committal. Right now, they can’t even persuade the rest of the group to agree on a date for the group’s usual mid-year meeting in Vienna.

Diverging interests and surging market volatility are making their decisions more difficult. Oil is torn between the bearish influence of U.S.-instigated trade wars and the bullish threat of supply disruptions from Iran to Venezuela. While Saudi Arabia needs higher prices and has enthusiastically reduced production, the benefits for Russia aren’t so clear and it was slower to make the cuts.

“I would expect a stronger message from Al-Falih” on extending the cuts, said Giovanni Staunovo, an oil analyst at UBS Group AG in Zurich. “Novak will keep all options open.”

Focus on Forum

Novak and Al-Falih are participating in the St. Petersburg International Economic Forum hosted by Putin. That will be the first face-to-face meeting between the two ministers since Jeddah in May, when the gap between their interests became visible.

Novak told reporters at the forum on Thursday that trade wars and sanctions are creating uncertainties that prevent strategic planning. Russian oil policy is driven by long-term concerns about investment, not short-term prices moves, he said.

The Russian president had no plans for bilateral talks with the Saudi delegation, his aide Yuri Ushakov told reporters on Tuesday. He didn’t rule out “a contact” with Al-Falih on the sidelines of the forum as there may be “unplanned meetings.” Commenting after Putin's traditional meeting with foreign investors on Thursday evening, his spokesman Dmitry Peskov said there had been no separate meeting or contact between the two.

Diverging Views

Putin’s closest oil ally, Rosneft PJSC Chief Executive Officer Igor Sechin, has long been skeptical of the benefits of OPEC cooperation and renewed his criticism this week. Russia’s share of the global oil market is already under threat due to interruptions in exports to Europe after the Druzhba pipeline became contaminated with chemicals, Sechin said. If Russia continues to cap its oil output, rival U.S. producers will “fill the void and take up the market share,” he said.

Last month, Finance Minister Anton Siluanov said Russia will need to weigh all the pros and cons of extending the pact. The nation’s official statistics show the deal hurting the economy in the first quarter.

Still, Russian officials have also talked down the prospect of an agreement at previous meeting, only to eventually forge a deal with their allies. In an interview this week with the Saudi Press Agency, Al-Falih said he sees “an emerging consensus among OPEC+ countries” on cooperation in the second half of this year.

Economic Fears

U.S. oil prices fell back into a bear market on Wednesday as fears of a global trade war overrode any concerns about supply disruption. Just minutes after Brent crude fell below $60 a barrel for the first time since January, OPEC’s top official said the group will take “economic bearishness” into account when they meet in the coming weeks, and are committed to keeping oil markets balanced this year and beyond.
U.S. oil futures have fallen 22% from this year's peak
“There has also been a significant change in market sentiment, in both equity and financial markets” that has worsened many institutions’ outlook for oil demand growth, OPEC Secretary-General Mohammad Barkindo said in remarks delivered via video link at a conference hosted by RBC Capital Markets in New York. “This will all play into our calculations in the upcoming ministerial meetings.”
Concerns about a slowing economy may bring the group together again in time for the meeting in Vienna, said Dmitry Marinchenko, senior director at Fitch Ratings.

“If OPEC+ shifts to production ramp-ups as the global economic growth is potentially slowing, this may bring the oil prices further down,” he said. “Nobody wants it, including Russia.”

Some industry executives appeared to share that view. Oil prices are at the lower end of the $60 to $70 range that’s comfortable for Russian producers, so “we hope that the efforts our ministers make will allow an increase in the price to the upper limit,” Lukoil PJSC CEO Vagit Alekperov told reporters in St. Petersburg.

BP Plc CEO Bob Dudley said he’s not worried about falling prices or the strength of demand, but added that signals are pointing to an extension of the OPEC+ production cuts.

— With assistance by Ilya Arkhipov, Jack Farchy, and Henry Meyer