Germany faces recession as energy crisis bites: think-tank

FRANKFURT, Germany - Germany will fall into recession next year, a leading think-tank warned Monday, with Europe's biggest economy facing soaring inflation as Russia slashes energy supplies.

The Ifo institute expects the German economy to shrink 0.3 percent in 2023 -- slashing its forecast by four percentage points from a previous prediction in June.

Inflation is expected to hit 8.1 percent this year and 9.3 percent next year, it said. 

"We are heading into a winter recession," said Timo Wollmershaeuser, Ifo's head of forecasts.

"The cuts in gas supplies from Russia over the summer and the drastic price increases they triggered are wreaking havoc on the economic recovery following the coronavirus."

Real household incomes and purchasing power will drop sharply, the think-tank warned.

There is likely to be a "return to normal" in 2024 with 1.8 percent growth and 2.5 percent inflation, Wollmershaeuser said. 

At the start of September, Russian energy giant Gazprom halted gas deliveries to Europe via the key Nord Stream 1 pipeline saying it would be under repair for an unspecified period. 

The shutdown accentuates an energy crisis in Germany, long reliant on Russian gas, and across Europe, with Moscow accused of using energy as a weapon amid tensions over the Ukraine war.

German inflation hit 7.9 percent in August, and earlier this month the government unveiled a new multi-billion-euro relief package to help households cope with soaring prices.

Last week, the European Central Bank hiked interest rates by a record 75 basis points as its seeks to battle sky-high inflation across the eurozone and said more increases were to come. 

Agence France-Presse

Virus to cut forecast oil demand growth by a quarter this year - Rystad Energy

OSLO - The coronavirus outbreak will cut growth in global oil demand by a quarter this year compared to earlier forecasts, Norway's biggest independent energy consultancy Rystad Energy predicted on Tuesday.

Oslo-based Rystad now predicts global oil demand will grow by 820,000 barrels per day (bpd) in 2020, down from a December forecast of 1.1 million bpd.

Crude prices have fallen sharply since news of the virus outbreak first emerged in mid-January.

The outbreak will primarily affect demand in the early part of the year, with the first quarter now expected to see growth of just 100,000 bpd, before consumption recovers later in the year, Rystad argued in a research note.

"Our current assessment implies that the impact of coronavirus will persist throughout all of February and March and will then gradually subside towards June," it added.

In a worst-case scenario however, if travel restrictions last longer, the overall impact for the year could be to lower 2020 demand growth to 650,000 bpd, the consultancy said. (Reporting by Terje Solsvik; Editing by Gwladys Fouche and Jan Harvey)

source: news.abs-cbn.com

US, France vie to bolster Gulf security after Saudi oil attack

MANAMA, Bahrain - The United States and France are boosting Saudi Arabia's radar systems following crippling drone and cruise missile attacks on Saudi oil infrastructure in September, which Washington blames on Iran.

The chief of the US Central Command and France's defense minister, whose countries have taken divergent approaches to Iran, also touted rival versions of maritime missions to protect Gulf waters at a Bahrain security forum on Saturday.

More than two months after the biggest assault on Saudi oil facilities, Riyadh and Washington have yet to provide concrete proof linking Iran to the attack while Saudi Arabia has provided few details about how it is addressing gaps in its air defenses.

Tehran denies involvement in the strikes that initially halved the crude output of the world's top oil exporter and led the United States to send thousands of troops and military hardware to the kingdom.

"We continue to refine information on the attack against (Saudi state oil firm) Aramco and that will be released principally through the Saudis," said General Kenneth McKenzie, who oversees operations in the Middle East and South Asia.

"We are working with the Saudis to increase the networking of their systems. That will make them better able to defend against this type of threats," he told reporters.

McKenzie said boosting the US military presence at Prince Sultan Air Base south of Riyadh, in addition to large bases in Qatar and Bahrain, would "complicate an adversary's ability to target you".

French Defense Minister Florence Parly said Paris was separately sending Riyadh "a robust package of advanced warning", including radars, to confront low-altitude attacks.

"It will be in Saudi Arabia in the coming days so it will be operational very, very rapidly. But there is an analysis to be done in order to better identify how to fill the gap," she later told reporters.

"COOLING TEMPERS"

The Sept. 14 strikes heightened regional tensions following attacks on tankers in Gulf waters and other Saudi energy assets in the summer that Washington also blamed on Iran, a charge Tehran denies.

Saudi Minister of State for Foreign Affairs Adel al-Jubeir told the IISS Manama Dialogue that Riyadh was consulting with its allies about what measures would be taken against Iran after the investigation concluded. He gave no timeframe.

The event focused mostly on the Iranian threat but included no representatives from Tehran. It underscored differences between Western allies over how to deal with Iran since the United States quit a 2015 international nuclear pact.

France wants to salvage the agreement, which Saudi Arabia and other US-allied Gulf states oppose for failing to address Iran's ballistic missiles program and regional interference.

"We have seen a deliberate, gradual US disengagement," Parly said, citing also US inaction over a 2013 chemical attack in Syria and this year's downing of an American drone by Iran.

She said it was time to "reinvent deterrence", mentioning France's efforts to form a European-led maritime mission, unassociated with the US maximum pressure campaign on Iran, to help "cool down tempers".

Parly told reporters the initiative could start early next year and around 10 European and non-European governments would join pending parliamentary approval.

Only Albania, Australia, Bahrain, Saudi Arabia, the United Arab Emirates and the United Kingdom have so far joined the US-led International Maritime Security Construct (IMSC), which McKenzie said would "shine a spotlight on nefarious activity".

source: news.abs-cbn.com

Aramco declares $1.71 trillion valuation in blockbuster IPO

RIYADH - Saudi Arabia on Sunday put a value of up to $1.71 trillion on energy giant Aramco in what could be the world's biggest IPO, but missed Crown Prince Mohammed bin Salman's initial target of $2 trillion. 

Aramco said it would sell 1.5 percent of the company in a blockbuster initial public offering worth $24-25.6 billion, scaling down Saudi Arabia's original plan to sell up to five percent of the firm.

"The base offer size will be 1.5 percent of the company's outstanding shares," the state-owned energy giant said as it began taking bids from investors in a price range of 30-32 Saudi riyals per share ($8-8.5).

The much-delayed offering, a cornerstone of de facto ruler Prince Mohammed's ambitious plan to diversify the oil-reliant economy, could exceed the world's biggest listing -- the $25 billion float of Chinese retail giant Alibaba in 2014.

But the plans are a long way from the crown prince's initial aim to raise as much as $100 billion from a dual listing -- a first flotation of two percent on the kingdom's Tadawul bourse, followed by a further three percent on an overseas exchange.

The firm has said there are no current plans for an international stock sale and the IPO seems to be banking on local demand, with one-third of the offering reserved for Saudi retail investors.

Aramco kicks off its investor road show on Sunday, but a source close to the company told AFP it will not be marketing the shares overseas, including the United States, as originally planned.

The source did not offer an explanation but analysts said it was because the listing was not compatible with US regulatory requirements.

Aramco has also shied away from plans to list on foreign exchanges such as New York owing to litigation risks.

The launch has been dogged by delays since the idea was first announced in 2016, with Prince Mohammed's desired valuation of $2 trillion meeting with skepticism from investors and analysts.

Tarek Fadlallah, chief executive officer of the Middle East unit of Nomura Asset Management, called the company's valuation of between $1.6-1.71 trillion a "sensible compromise".

If priced at the top end of the range, it could eclipse Alibaba to become the world's biggest IPO, Fadlallah added on Twitter.

BOOSTING STATE COFFERS

Saudi Arabia is pulling out all the stops to ensure the success of the IPO, a crucial part of Prince Mohammed's plan to wean the economy away from oil by pumping funds into mega projects and non-energy industries.

"If subsequently effectively deployed, the funds raised could be used to support longer-term economic growth in Saudi Arabia," said S&P Global Ratings. 

The government has reportedly pressed wealthy Saudi business families and institutions to invest, and many nationalists have labeled it a patriotic duty.

Among those considering a sizeable investment is Prince Al-Waleed bin Talal, a billionaire tycoon who was held in Riyadh's palatial Ritz-Carlton hotel in 2017 during a crackdown on corruption, Bloomberg News reported. 

Last week senior cleric Abdullah al-Mutlaq sought to drum up support for the IPO among ordinary Saudis, saying in a local television program that it was permissible in Islam and even religious scholars were likely to participate.

Even for the domestic listing though, there are reports the firm is struggling to attract foreign institutional investors, amid uncertainties in energy markets and questions over company disclosures and governance.

Investment research firm Bernstein, which earlier said Aramco was valued between $1.2 and $1.5 trillion, said the company's declared valuation was "higher than most institutional investors would consider attractive".

In its prospectus released last week, the firm listed a variety of risks ranging from the possibility of anti-trust legislation to "terrorist" attacks and geopolitical tensions in a region dominated by Saudi-Iran rivalry.

It also acknowledged that climate change concerns could reduce demand for hydrocarbons and warned global oil demand may peak within the next 20 years.

But Aramco, a cash cow that catapulted the kingdom to become the Arab world's biggest economy, does appear to hold enormous appeal for local retail investors, some of whom are taking loans to fund share purchases.

source: news.abs-cbn.com

Iran president: State firm found new oilfield with 53 billion barrels of crude

DUBAI—Iran has discovered a new oilfield in the southwest of the country that has the potential to boost its reserves by about a third, President Hassan Rouhani said on Sunday.

"Workers and the exploration arm of the National Iranian Oil Co. . . . have found an oilfield with 53 billion barrels of reserves," Rouhani said in a televised speech in the central city of Yazd.

The field stretches over 2,400 sq km in the oil-rich Khuzestan province, Rouhani said.

Iran ranks as the world’s fourth–largest reserve holder of oil, and the second-largest holder of gas reserves, according to the U.S. Energy Information Administration (EIA).

Iran had an estimated 157 billion barrels of proved crude oil reserves in January 2018, the EIA website said.

Since withdrawing from Iran's 2015 nuclear deal with world powers, the United States has reimposed sanctions to strangle its vital oil trade.

(Reporting by Dubai newsroom; Editing by Elaine Hardcastle)

source: news.abs-cbn.com

Aramco hopes to repair remaining damage from attacks by end-Nov

KHURAIS FIELD, Saudi Arabia - Oil major Saudi Aramco hopes to fix by the end of November the last four key pieces of equipment damaged during attacks last month, in a move to allow it to fully regain production capacity, company officials said on Saturday.

The mid-September attacks on the Abqaiq and the Khurais plants caused damage that halved the crude output of the world's top oil exporter by shutting down 5.7 million bpd of production, driving a spike in oil prices.

Yemen's militant Houthi group claimed responsibility but a U.S. official said the attacks originated from southwestern Iran and Riyadh blamed Tehran. Iran, which supports the Houthis in Yemen's war, has denied involvement.

Aramco restored oil production of around 10 million barrels per day within 10 days and said it was on track to regain its maximum capacity of 12 million bpd by the end of November.

Thousands of people have been working to restore full production of the key source of revenues for the kingdom. Saudi Arabia is preparing to float a small stake in Aramco this or next year in one of the world's biggest share sales ever.

At Abqaiq, the attacks hit five oil processing towers and three were still being restored, Khalid Buraik, vice president of Aramco's Southern Area Oil Operations, told several media invited to the facilities on Saturday. Abqaiq is the world's biggest oil processing facility and has 18 towers.

Buraik said he expected the three towers to be fully repaired within six weeks.

The attacks on Khurais damaged four of five towers. Three had been repaired, said a local senior manager who asked not to be named because he is not allowed to speak to media.

Khurais can process around 1.5 million bpd of crude and Abqaiq around 7 million, though it usually works well below its capacity at around 5 million.

Aramco's current crude oil production capacity stands at 11.3 million bpd, Saudi officials have said, some 0.7 million below the normal level. The kingdom produces just under 10 million bpd as it caps its output as part of an OPEC agreement. 

source: news.abs-cbn.com

United States blames Iran for Saudi attacks

WASHINGTON - US Secretary of State Mike Pompeo on Saturday accused Iran of leading attacks on Saudi oil plants that have cut the kingdom's output roughly in half, as he ruled out Yemeni involvement and denounced Tehran for engaging in false diplomacy.

Yemen's Iran-aligned Houthi group claimed credit for the attacks on two plants at the heart of Saudi Arabia's oil industry, including the world's biggest petroleum processing facility.

Pompeo, however, said on Twitter that there was no evidence the attacks came from Yemen.

"Tehran is behind nearly 100 attacks on Saudi Arabia while Rouhani and Zarif pretend to engage in diplomacy," Pompeo said, referring to Iran's President Hassan Rouhani and Foreign Minister Mohammed Javad Zarif.

"Amid all the calls for de-escalation, Iran has now launched an unprecedented attack on the world's energy supply," he added. The State Department declined to provide any evidence to bolster Pompeo's claim.

"We call on all nations to publicly and unequivocally condemn Iran’s attacks," Pompeo said, warning that the Trump administration would work with its allies to make sure Iran was "held accountable for its aggression."

The tweets signaled a more hawkish stance in Washington towards Tehran, following signs of a possible thaw in relations between the two nations after months of escalation.

Last year, U.S. President Donald Trump withdrew the United States from a 2015 pact that aimed to keep a lid on Tehran's nuclear ambitions and he has imposed a series of sanctions that have crippled Iran's economy.

But in recent weeks, Trump has said he would be open to meeting with Rouhani, perhaps on the sidelines of the United National General Assembly in New York later this month. Pompeo has said such talks could take place without any preconditions.

Rouhani, for his part, has said that Tehran, which denies seeking nuclear weapons, would not talk to the United States until Washington lifts the sanctions.

Republican Senator Lindsay Graham, a close Trump ally and a member of the Senate Foreign Relations Committee, said Saturday's attacks showed Iran was not interested in peace and was instead pursuing nuclear weapons and regional dominance.

"It is now time for the U.S. to put on the table an attack on Iranian oil refineries if they continue their provocations or increase nuclear enrichment," Graham said on Twitter.

Others cast doubt on Pompeo's allegations.

"This is such irresponsible simplification and it's how we get into dumb wars," Democratic Senator and committee member Chris Murphy tweeted. "Iran is backing the Houthis and has been a bad actor, but it's just not as simple as Houthis=Iran."

Saturday's attacks follow earlier cross-border attacks on Saudi oil installations and on oil tankers in Gulf waters.

Saudi Arabia, which leads a Sunni Muslim coalition that intervened in Yemen in 2015 against the Houthis, has blamed regional rival Shi'ite Iran for previous attacks. Tehran has denied the allegations. Riyadh also accuses Iran of arming the Houthis, a charge denied both by the group and Tehran.

The White House said the United States was committed to keeping oil markets well-supplied in the wake of the attack and the U.S. Energy Department said the administration could release oil from strategic reserves if necessary.

The attacks on the two facilities cut Saudi Arabia's crude oil supply by around 5.7 million barrels per day or about 50 percent of its output.

source: news.abs-cbn.com

Dollar dips, stocks slip on Trump remarks

SYDNEY - The dollar declined on Monday against major currencies to its lowest in more than two weeks after US President Donald Trump criticized the Federal Reserve's tightening policy, while stocks slipped on fears of further trade protectionist measures.

Trump, on Friday, lamented the recent strength of the US dollar and accused the European Union and China of manipulating their currencies.

The remarks, coupled with Trump's threats to impose tariffs on all US imports from China, triggered a bout of sell-offs in Wall Street and European stocks on Friday, despite good corporate earnings.

Asian stocks followed that lead on Monday with Japan's Nikkei stumbling 0.9 percent. Australian shares were off 0.1 percent while the New Zealand market was down 0.4 percent.

MSCI's broadest index of Asia-Pacific shares outside Japan was up a touch waiting for other markets to open.

Trump's comments also hit the greenback, which was last down 0.2 percent at 94.25 against a basket of six major peers, and steepened long-term Treasury yields.

"The President's remarks also make it very clear he has a distaste for a stronger dollar, effectively limiting the greenback's ability to perform, at least near term," said Rodrigo Catril, senior forex strategist at National Australia Bank.

The dollar index is so far up 2.4 percent this year.

A Reuters report on Friday that the Bank of Japan was in unusually active discussions to modify its massive easing also played a role in the tick-up in yields globally.

Benchmark 10-year Japanese Government Bond futures opened weaker on Monday, sending yields to six-month highs. The Reuters report also added to the yen's strength, which was last up 0.3 percent at 111.07 per dollar.

"The market took the news as a possible sign the anchor at the long end may allow for some natural drift higher," ANZ said in a note to clients.

Investors are now looking ahead to an important meeting on trade between Trump and European Commission President Jean-Claude Juncker at the White House. A breakdown in talks could hit risk sentiment, hurting global equities, analysts said.

The euro climbed for a third straight day to a two-week top of $1.1746.

In commodities, oil prices were caught between a weakening dollar which supported the market and concerns about US-China trade tensions and supply increases which undermined sentiment.

US crude was last off 3 cents at $68.24 a barrel after posting its third straight weekly loss. Brent settled at $73.18, up 11 cents.

source: news.abs-cbn.com

Gasoline, diesel prices up P0.50 a liter

MANILA, Philippines – Prices at the pump rose again as crude surged in the international market amid continued tensions between Iran and the West.

Eastern Petroleum Corp and Phoenix Petroleum Philippines Inc. led the latest round of price adjustments on Wednesday morning, delivering increases of P0.50 a liter across all products.

Total Philippines Corp. on Wednesday afternoon followed, saying it was implementing a similar increase across all petroleum products effective 12:01 am Thursday.

The latest adjustment represents the eight increase in prices this year.

source: interaksyon.com