Leading Persian Gulf oil producers Saudi Arabia and Kuwait gave the clearest signal yet that OPEC plans to extend a deal with non-OPEC producers to curb oil supplies into the second half of the year.
Consensus is growing among oil producers that their supply restraint agreement should be extended after its initial six-month term, but there is no agreement yet, Saudi Arabian Minister of Energy, Industry and Mineral Resources Khalid al-Falih said yesterday.
“There is consensus building, but it’s not done yet,” he told reporters on the sidelines of a conference in the United Arab Emirates.
Asked about non-OPEC producer Russia, Falih said: “We are talking to all countries. We have not reached an agreement for sure, but the consensus is building.”
Kuwaiti Minister of Oil Essam al-Marzooq said at the same event that he expected to see an extension of the agreement.
“We have a noticeable increase in compliance from non-OPEC, which shows the importance of extending the agreement,” al-Marzooq said.
“Russia is on board preliminarily... Compliance from Russia is very good. Everyone will continue on the same level,” he said.
If OPEC and non-OPEC producers decide to extend their six-month agreement, the cuts might become less deep as oil demand is expected to be stronger for seasonal reasons in the second half of this year, al-Marzooq said.
OPEC would extend the deal if there was consensus among non-OPEC producers, he said, adding that producers were always looking for more non-OPEC members to join the agreement.
One African country has expressed interest in joining, he said, without elaborating.
OPEC is keen that non-OPEC play its part in reducing world inventories to support a price rise that has stalled near US$55 per barrel. Crude is up from last year’s lows of less than US$30.
OPEC meets on May 25 to discuss extending supply curbs with non-OPEC countries that total 1.8 million barrels daily, two-thirds of that from OPEC.
Al-Falih said there was “an initial agreement” that the oil cuts might need extending to drain high global inventories, adding that talks were ongoing.
“Our target is the level of inventories. This is the main indicator for the success of the initiative,” al-Falih said.
While inventories held at sea and in producer countries have dropped, they remain stubbornly high in consumer regions, particularly in Asia and the US.
The International Energy Agency last week said that inventories in industrialized countries were still 10 percent above the five-year average, a key gauge for OPEC.
Omani Minister of Oil and Gas Mohammed bin Hamad Al Rumhi said a “quite high” number of producers favored extending the supply restraint agreement.
“The number of countries that are supporting the extension I think would be quite high, percentage-wise,” Al Rumhi told reporters.
However, Iraq might seek to be exempt and ask to boost its own output, said Ammar al-Hakim, the leader of the nation’s Shiite ruling coalition, the Islamic Supreme Council.
Speaking in Cairo, al-Hakim said that Baghdad could ask to be exempted from taking part in the supply curbs as the nation needed its oil income to fight the Islamic State.
“Given these sensitive circumstances, it is the right of Iraq to hope for an exemption by the other OPEC member states and have an opportunity to increase its production,” al-Hakim said in an interview late on Wednesday. “But we are with the principle of reducing the overall OPEC supply to lift prices.”
‘ACCORDING TO PLAN’: A company official said that it has set up production sites worldwide to provide services and that its Wisconsin project was going smoothly Hon Hai Precision Industry Co’s (鴻海精密) smart manufacturing center in Wisconsin would begin trial manufacturing in the middle of this year, the company said yesterday, adding that it plans to build a research institute to develop key technologies to support growth over the next five years. Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), said in an annual report submitted to the Taiwan Stock Exchange that its planned Foxconn Institute for Research in Science and Technology would conduct research into artificial intelligence, next-generation communications, quantum computing, cybersecurity and nano semiconductors in Taiwan. Hon Hai is to make products at the center
STAYING AHEAD: Fitch said that TSMC remains technologically ahead of others, but Samsung is building a new chip fab, while China is investing in its domestic industry As escalating US-China tensions and COVID-19-related production disruptions force US technology supply chains to transform, Taiwan Semiconductor Manufacturing Co’s (TSMC, 台積電) US$12 billion chip fabrication plant in Arizona would be key to spurring greater US production of core semiconductor components, Fitch Ratings said. “We view the US-TSMC alliance as a first step in building a more autonomous US technology supply chain, given high barriers to entry, specifically related to the significant capital and design capability required for leading-edge semiconductor manufacturing,” Fitch said in a statement on Tuesday. “By working with TSMC, US chipmakers will not face the financial burden of incremental investment
E Ink Holdings Inc (元太科技), the world’s sole supplier of e-paper displays for e-readers and shelf labels, posted its best quarterly net profit for the first quarter in nine years amid increased demand during a traditionally slow season. Net profit soared 80 percent to NT$787 million (US$26.23 million) in the quarter ended March 31, compared with NT$438 million a year earlier. That translated into earnings per share of NT$0.69, up from NT$0.39. E Ink posted lower royalty income of NT$371.23 million last quarter from NT$448.74 million a year earlier, a company financial statement showed. E Ink said that it expects royalty income to
DIVERSIFICATION: Although COVID-19 would push more companies to produce in emerging markets, DBS said that it was unlikely that firms would totally leave China Geopolitical tensions and supply disruptions are expected to accelerate the migration of manufacturing out of China, as concerns about the risk of production concentrated in one country increase, S&P Global Ratings said. Although its economic expansion might be weaker than previous levels due to the accelerated relocation of manufacturing, China’s economic growth would still be stronger than that of most other economies, the ratings agency said. “While absolute growth rates will moderate, we believe China’s economic performance will continue to be a key sovereign credit support,” S&P Global Ratings credit analyst Tan Kim Eng (陳錦榮) said in a statement on Thursday. “Its growth