Asian markets extend rout as oil sinks below $28

Oil prices plunged below $28 a barrel early Monday, hitting energy firms and extending a rout across Asian markets after sanctions were lifted against Iran, allowing the key producer to resume crude exports.

While the decision to free Tehran of the strict embargoes had been well telegraphed, the news hammered Middle East equities Sunday, which were already under pressure as the price of oil sits at 12-year lows.

The United States and the European Union lifted the sanctions at the weekend after the UN's atomic watchdog confirmed Iran had complied with its obligations under a landmark deal last year to curb its nuclear programme.

The announcement means the country is now free to start shipping crude, adding to an already painful supply glut, which -- along with weak demand and a slowing global economy -- has seen prices slump by about three quarters since mid-2014.

On Monday a barrel of Brent oil fell 4.4 percent to $27.67 at one point before bouncing back above $28. The last time Brent closed below $28 was in November 2003.

"There is ongoing negative pressure on oil prices from oversupply," Ric Spooner, a chief analyst at CMC Markets in Sydney, told Bloomberg News.

"Iran is not new, but we've arrived now at the point where sanctions have been removed and it's going to be a key focus for the markets over coming weeks. The question is how much supply can come online in the short term."

The news was met with horror in Gulf trading, with stock markets in Saudi Arabia, Qatar, Dubai, Abu Dhabi and Kuwait all battered.

- Energy firms tumble -

Most Asian equities followed suit, with Tokyo down 1.9 percent by the break, Hong Kong down one percent, Sydney shedding 0.7 percent and Wellington 1.5 percent lower.

Shanghai stocks again swung in and out of positive territory, having plunged almost nine percent last week and almost about a fifth this year already. The benchmark index was down 0.4 percent in the morning.

Energy firms were among the big losers, with CNOOC in Hong Kong down 2.7 percent and PetroChina shedding 0.9 percent.

Sydney-listed mining giant BHP Billiton was 2.7 percent lower and Woodside Petroleum retreated two percent. Inpex slipped 1.7 percent in Tokyo.

The Chinese market was given some support by the People's Bank of China's decision to increase the yuan currency's rate against the dollar. The yuan's recent weakness has been a key contributor to a rout in global markets that has characterised the start of 2016.

Markets are now nervously awaiting the release Tuesday of Chinese economic growth data, with analysts surveyed by AFP forecasting the slowest rate in 25 years, and a further slowdown this year.

Worries about the state of China's economy, a crucial growth engine for the rest of the world, have scythed markets from Asia to the Americas over the past two weeks, with Beijing's ability to handle the crisis being brought into question.

- Key figures around 0230 GMT -

Tokyo - Nikkei 225: DOWN 1.9 percent at 16,814.10 (break)

Shanghai - Composite: DOWN 0.4 percent at 2,889.04

Hong Kong - Hang Seng: DOWN 1.3 percent at 19,274.64

Euro/dollar: DOWN at $1.0905 from $1.0916 Friday

Dollar/yen: UP at 117.20 yen from 116.96 yen

New York - Dow: DOWN 2.4 percent at 15,988.08 (close)

London - FTSE 100: DOWN 1.9 percent at 5,804.10 (close)

source: www.abs-cbnnews.com

Pangilinan 'in talks' with Chinese firm on Recto Bank

MANILA - A Philippine company said Tuesday it had held talks with a Chinese energy giant about jointly developing a potentially lucrative gas field in the hotly disputed South China Sea.

The reported negotiations between Philex Petroleum and China National Offshore Oil Corporation come as the two nations are locked in an increasingly tense territorial dispute over the area.

Philex Petroleum chairman Manuel Pangilinan said he met officials from state-owned CNOOC, China's biggest oil and gas producer, last week to discuss development of Reed Bank (called Recto Bank by the Philippines) in the South China Sea.

"I met with CNOOC in Beijing. We discussed SC 72," he told reporters, referring to the Philippine exploration block covering part of Reed Bank that was awarded to Philex.

Pangilinan said CNOOC had invited him to Beijing but refused to give further details about the substance or outcome of the discussions.

Philex Petroleum said last month the field at Reed Bank could hold 4.66 trillion cubic feet (TCF) of gas, nearly twice as big as the Philippines' largest known deposits.

Reed Bank is about 148 kilometres (92 miles) off the Philippine island of Palawan. But China claims nearly all of the South China Sea, even waters close to the coasts of Southeast Asian nations.

The Philippines last year accused Chinese vessels of harassing a Philex-contracted exploration vessel at Reed Bank, one of the first incidents in a series that has dramatically escalated tensions between the two countries.

In a speech before Congress last year, Philippine President Benigno Aquino vowed to defend the country's claim to Reed Bank.

However Aquino has also since expressed a willingness to jointly develop the area, as long as it is done under Philippine law.

The Philippines and China have for the past month stationed ships at Scarborough Shoal, more than 400 kilometres to the north of Reed Bank, in an effort to assert their sovereignty over that part of the South China Sea.

source: abs-cbnnews.com