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Iran Says OPEC Must Address Rising Libya, Nigeria Oil Output

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  • Iran Says OPEC Must Address Rising Libya, Nigeria Oil Output

OPEC’s commitment to cutting production to clear a global glut is working, but the group needs to address rising output from Libya and Nigeria, Iran’s Oil Minister Bijan Namdar Zanganeh said.

Compliance with the output cuts is “acceptable,” Zanganeh told reporters Sunday in Tehran. The Organization of Petroleum Exporting Countries should focus on “the situation with Libya and Nigeria,” he said, referring to the two countries exempted from capping production due to their internal strife. Nigeria will be able to participate in cuts when its output stabilizes at 1.8 million barrels a day, Oil Minister Emmanuel Kachikwu said Friday.

“OPEC’s actions are working and compliance is acceptable overall, although there needs to be some change,” Zanganeh said, referring to OPEC members’ compliance with their pledges to pump less. “Changes are really related to Libya and Nigeria and the 100 percent compliance of everyone.” He didn’t elaborate.

OPEC and other global producers including Russia agreed to maintain output cuts through March to end a price rout that has battered their economies since 2014. Iran was part of the deal reached last year, though it was given special permission to raise output by 90,000 barrels a day. Libya and Nigeria were not part of the deal and have since increased production, complicating the efforts of the suppliers to reduce the glut. Benchmark Brent crude has dropped by about half from its 2014 peak.

OPEC backs any action to help stabilize the oil market, and if a meeting is needed for the group to decide whether to extend the cuts that expire in March, “we’ll arrange it,” Zanganeh said.

Iraqi Production

Iran “will consider everything within the framework of our national interest and cooperation with OPEC,” he said when asked whether the country would adjust its output.

Iraq supports OPEC’s efforts to pare oil output and clear a global glut even as the group’s second-biggest producer plans to expand its own capacity to pump more, Iraqi Oil Minister Jabbar al-Luaibi said Sunday at a news conference in Baghdad.

The country’s plan to boost capacity to 5 million barrels a day by the end of the year won’t affect crude markets, he said. Iraq won’t export all of its additional output, he said. The nation pumped 4.49 million barrels a day in August, data compiled by Bloomberg show.

“The oil market’s status is stable, and we don’t accept that any country exceed its share” under OPEC’s deal to cut production, he said. “We support OPEC’s position to stabilize markets.”

Nigeria Rebound

Nigeria’s production of 1.7 million to 1.75 million barrels a day has climbed from an all-time low of about 1 million barrels a day, Kachikwu said Friday in a Bloomberg TV interview. Output will be “back in full swing” in five to six months, he said.

The United Arab Emirates, also participating in OPEC’s output cuts, is 100 percent compliant with its commitment to the agreement, and its crude exports have dropped as much as 10 percent in the past two months, Energy Minister Suhail Al-Mazrouei said Monday in Abu Dhabi. Oil prices should improve in the second half, and by next year crude inventories should decline to below their five-year average, he said. OPEC’s goal with the cuts is to reduce global inventories to the five-year historical average.

When OPEC meets next, some members that aren’t subject to output cuts may be asked to join the agreement, Mazrouei said. “The meeting will discuss whether to extend the production cut and also the possibility of including some countries” that don’t already have an output cap, he said.

Kurdish Referendum

Iraq is seeking to rebuild its energy industry after decades of conflict, and al-Luaibi sought to reassure oil markets a day before the country’s energy-rich, self-governing Kurdish area plans to vote on a referendum on independence. The central government opposes the vote, which many global powers say could create further instability in a region convulsed by war. The Kurds plan to include the disputed Kirkuk region, home to Iraq’s oldest producing oil fields, in the referendum.

Oil should be left out of the political wrangling over control of Kirkuk, al-Luaibi said. Kurds, Arabs and Turkmens are all competing to control Kirkuk, making it a potential flashpoint for conflict. The Baghdad-run North Oil Co. is currently pumping 500,000 barrels a day in northern Iraq, he said.

Iraq’s government is still in discussions with Royal Dutch Shell Plc, which quit Iraq’s southern Majnoon field and plans also to withdraw from the West Qurna-1 deposit, al-Luaibi said. It’s not talking with any other oil companies about replacing Shell, he said.

“We have no problems in finding international companies” to replace the oil major, al-Luaibi said, adding that Iraqi staff are capable of taking over from Shell.

Iraq will soon sign a deal with Iran to jointly invest in two oil fields, he said, without giving a date. It’s also in talks with Kuwait to jointly develop four fields and to ship surplus natural gas to Kuwait, he said.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade long experience in the global financial market.

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Barclays Tell High Net Worth Investors to Shun Africa and Other Emerging Economies

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Barclays to High Net Worth Clients, Stay Off Africa and Other Emerging Economies

Barclays, one of the world’s largest investment banks, has started advising high net worth clients to stay off Africa and other emerging economies.

According to Barclays, despite the recent recovery noticed in emerging-market stocks, investors are better off avoiding the risks that still abound in emerging nations. Barclays Plc, however, advised high net worth clients to focus on U.S equities despite the S&P’s breakneck rally.

The investment bank said emerging economies do not have enough fiscal buffers to spend their way out of the COVID-19 pandemic and will likely continue to struggle in the near-time compared to the US with 12 percent of gross domestic product fiscal-support.

It said the huge US stimulus may halt rebound in emerging-markets stocks as more money is expected to flow into the world’s largest economy and its European counterparts.

“Compared to the U.S., emerging-market economies appear more vulnerable,” said Haider, the London-based managing director and head of global growth markets. “Their central banks have less room to maneuver, their governments may not be able to provide unlimited support and equity markets, given their sector mix, can be more challenged by an economic slowdown.”

Barclays added that even after 33 percent rebound in stocks of emerging markets since the panic selloff subsided in March, stocks are still down by 9 percent from year-to-date while the US S&P 500 stocks are up by 45 percent. Presently, their stocks trading at a 36 percent discount to US stocks, up from 25 percent three months ago.

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Crude Oil Rises to $43.1 Per Barrel on Production Cuts Extension

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  • Crude Oil Hits $43.1 Per Barrel Following OPEC’s Production Cuts Extension

Brent crude oil, against which Nigerian oil price is measured, rose by 1.25 percent on Monday during the Asian trading session following OPEC and allies’ agreement to extend crude oil cuts to the end of July.

OPEC and allies, known as OPEC plus, agreed to extend production cuts of 9.7 million barrels per day reached in April to July on Saturday.

In the virtual conference, delegates agreed that members, including Nigeria and Iraq presently struggling to attain a 100 percent compliance level must keep to the agreement or be forced to do so in subsequent months.

Nigeria, Iraq and others failed to keep to the cartel’s agreement in May after reports show that Nigeria only managed to attain a 19 percent compliance level during the month while Iraq struggled to attain just 38 percent in the same month.

Russia and Saudi Arabia, the two largest producers of the group, warned members to stick to the agreed quota if they want to rebalance the global oil market.

While the errant producers such as Iraq and Nigeria have vowed to reach 100% conformity and compensate for prior underperformance, we still think they will likely continue to have some commitment issues over the course of the summer,” said Helima Croft, head of global commodity strategy at RBC Capital Markets.

The potential return of Libyan output could also cause considerable challenges for the OPEC leadership.

Earlier on Monday, Brent crude oil hits $43.1 per barrel, more than a month record-high, before pulling back slightly to $42.83 per barrel.

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Gold Dips by 2 Percent on Better Than Expected Job Report

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  • Gold Dips by 2 Percent on Better Than Expected Job Report

Gold prices declined by 2 percent on Friday following a better than expected US non-farm payroll report.

The report showed an increase of 2.5 million payroll numbers against a decline of 7.5 million predicted by many experts.

The surprise number boosted investors’ confidence in US recovery as many dumped their haven investment (gold) for the stock market.

“We had significantly stronger-than-expected U.S. payroll numbers – an increase of 2.5 million versus an expectation of a decline of 7.5 million – that 10-million swing has brought forward expectations of the economic recovery in the United States,” said Bart Melek, head of commodity strategies at TD Securities.

Spot gold immediately declined by 1.9 percent per ounce to $1,678.81 while the U.S. gold futures slid 2.6 percent to settle at $1,683.

Gold was also being pressured by stronger yields and a slightly firmer dollar, “meaning the opportunity cost to hold gold in the portfolio has gone up,” Melek added.

The surprise didn’t stop there, US Dow Jones was up 614 points despite the protest going on the US and US-China tension.

Also, NASDAQ rose by 29 points while the S&P index added 50 points increase.

Note: Investors generally increase their investments in gold and other haven assets during a crisis to avert risk exposure and do the opposite once they sense a better economy.

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