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Mexico’s Oil Crisis Deepens

Mexico’s Oil Crisis Deepens

Pemex oil

Mexico’s state oil company Pemex said it produced an average 1.76 million bpd of crude in October, down 7 percent from October last year, Reuters reports, citing data released by the company. This is also one of the lowest monthly production rates since 1990 when records began.

The decline was attributed to the natural depletion of mature fields, highlighting the urgent need for new production in the country. The outgoing government of Enrique Pena Nieto launched a sweeping reform in Mexico’s energy sector, one of its aims being to open up the local oil wealth to foreign operators in order to stem this decline in production. The incoming government is currently reviewing oil contracts signed by the previous administration to make sure no corruption was involved in the deals.

Exports of crude also declined last month, and by a lot more than production. Pemex exported an average 1.03 million bpd, down by 25 percent from a year earlier. President-elect Andres Manuel Lopez Obrador earlier this year said Pemex should keep more crude for its refineries instead of exporting it to reduce Mexico’s dependency on imported fuels, but the country’s refining sector needs a lot of work to make this plan successful.

It was in October that Pemex’s refineries hit a record low utilization rate of 25.7 percent, according to an S&P Global Platts report, which also noted the causes of the drop included shortages of light crude and technical difficulties at some refineries. Pemex would need to upgrade its refineries to produce more gasoline to make local refining more profitable as currently its facilities produce a lot more fuel oil than would make economic sense.

Despite the problems, Obrador has ambitious plans, including an increase in crude oil production to 2.6 million bpd by the end of his six-year term in office and a lot more domestic refining.

China Ambassador Warns Of “Dire Consequences” If No Deal, Hints At “All Out” War

Earlier today, Trump’s chief economic advisor Larry Kudlow poured cold water on expectations for an imminent resolution of the US-China trade war when he said that negotiations in the run up to this week’s G-20 talks “haven’t yielded any progress”, and unless something changes, the “administration will move ahead with the next phase of tariffs.”

“Things have been moving very slowly between the two countries,” Kudlow said, adding that it was up to Xi to come up with new ideas to break the deadlock. And, echoing a report from the US Trade Representative published earlier this month, Kudlow said there hasn’t been much of a change in China’s approach. “We can’t find much change in their approach,” Kudlow told reporters. “President Xi may have a lot more to say in the bilateral [with Mr Trump], I hope he does by the way, I think we all hope he does…but at the moment, we don‘t see it.”

Just a few hours later, a report by Reuters confirmed that Kudlow won’t be “seeing it” for a long time, because according to China’s ambassador to the US, Cui Tiankai, China is going to this week’s G-20 summit hoping for a deal to ease a damaging trade war with the United States, even as he warned of “dire consequences” if U.S. hardliners – read the trade hawks led by Peter Navarro – try to separate the world’s two largest economies.

China’s ambassador to the United States Cui Tiankai 

Asked whether he though hardliners in the White House were seeking to separate the closely linked U.S. and Chinese economies, Cui said he did not think it was possible or helpful to do so, but warned that “I don’t know if people really realize the possible consequences – the impact, the negative impact – if there is such a decoupling.

…click on the above link to read the rest of the article…

“It Will Be A Cold War”: APEC Summit Ends In Unprecedented Chaos After Dramatic US-China Showdown

One day after vice president Mike Pence and China’s president Xi Jinping clashed after exchanging sharply worded barbs in a showdown between the two superpowers, on Sunday the annual Asia-Pacific Economic Cooperation summit ended in unprecedented chaos and disarray, without agreement on a joint communique for the first time in its history as the escalating rivalry between the United States and China dominated proceedings and reflected escalating trade tensions.

Competition between the United States and China over the Pacific was also thrown into focus with the United States and its Western allies launching a coordinated response to China’s Belt and Road program, Reuters added.

One diplomat told Reuters tension between the U.S. and China, bubbling all week, erupted when the Chinese government’s top diplomat, Wang Yi, objected during a leaders’ retreat to two paragraphs in a draft document seen by Reuters. One mentioned opposing “unfair trade practices” and reforming the WTO, while another concerned sustainable development.

“These two countries were pushing each other so much that the chair couldn’t see an option to bridge them,” said the unnamed diplomat. “China was angered that the reference to WTO blamed a country for unfair trade practices.

Sunday’s dramatic conclusion was foreshadowed by accusations that Chinese officials had attempted to strong-arm officials in Papua New Guinea, which was hosting the event, into issuing a statement that fitted what Beijing wanted. The Chinese vigorously denied the claims. When asked about the impasse, Papua New Guinea’s Prime Minister Peter O’Neill was quoted by the South China Morning Postsaying: “You know the two big giants in the room, so what can I say?”

…click on the above link to read the rest of the article…

Trump Claims Victory As Oil Prices Plummet

Trump Claims Victory As Oil Prices Plummet

Trump

Oil prices are now down over 20 percent from recent highs, and President Trump knows exactly where the credit for that belongs. “If you look at oil prices they’ve come down very substantially over the last couple of months,” President Trump said in a news conference last week. “That’s because of me.”

The President is partially correct about that, but not for the reasons he thinks. He attributes it to his hard line on OPEC. But what has actually happened is that crude oil inventories in the U.S. have risen for seven straight weeks.

As pointed out in the previous article, one reason for that is that China, in response to the ongoing trade spat, has stopped importing U.S. oil. Earlier this year China imported more than half a million barrels of day of crude oil from the U.S. Loss of this export market has contributed to the inventory growth in the U.S. — and hence to the drop in crude oil prices. (Presumably, crude oil inventories are dropping elsewhere, but possibly in countries with less transparency about their inventories).

Some feel that there is also an element of fear that global demand may be slowing. But this week Reuters reported that China’s crude oil imports reached an all-time high in October. So, despite the trade war, demand in China doesn’t appear to be slowing. But China isn’t getting its oil from the U.S. now.

Where is China getting its oil? Iran, for one. Another way that President Trump has helped oil prices go down is that he blinked as the deadline for sanctions on Iran’s oil exports neared. Oil prices had risen about 50 percent over the past year because of the impending sanctions that were expected to take Iran’s oil off the market. (I don’t recall him taking credit for oil prices that rose in response to sanctions).

…click on the above link to read the rest of the article…

China Is Helping Governments of the World Build Their Own Surveillance State

China Is Helping Governments of the World Build Their Own Surveillance State

Everywhere we look the influence of the Chinese government and their totalitarian surveillance methods can be seen.

Go ahead and search “China surveillance” (Pro-tip: Use DuckDuckGo or an alternative search engine!) and watch how many articles pop up regarding the growing digital dystopia being finalized across the People’s Republic of China. Titles like, Smart ID cards and facial recognition: How China spreads surveillance tech around the world and China’s new surveillance state, everyone will be watched, reviewed and rated really warm the heart and fill the head with a vision of a society where no thought is private, criticism of the State is illegal, and your social behaviors affect your place in life.

This is the current state of much of China. And it’s coming to a neighborhood near you.

Case in point, Reuters recently reported that Chinese telecom giant ZTE Corp is developing a “Smart Card” for Venezuela to help track citizens every move. The Venezuelan government sent a group to China to learn how to build their own surveillance state. Reuters reports:

‘What we saw in China changed everything,’ said the member of the Venezuelan delegation, technical advisor Anthony Daquin. His initial amazement, he said, gradually turned to fear that such a system could lead to abuses of privacy by Venezuela’s government. ‘They were looking to have citizen control.’

The following year, when he raised concerns with Venezuelan officials, Daquin told Reuters, he was detained, beaten and extorted by intelligence agents. They knocked several teeth out with a handgun and accused him of treasonous behavior, Daquin said, prompting him to flee the country. Government spokespeople had no comment on Daquin’s account.

…click on the above link to read the rest of the article…

Bank of England refuses to return 14 tonnes of gold to Venezuela

Bank of England refuses to return 14 tonnes of gold to Venezuela 

The Bank of England claims to be one of the largest physical gold custodians in the world, holding gold bars in vault storage on behalf of more than 70 central banks and a number of commercial (bullion) banks.

As a long-standing and well-known gold custodian, it should therefore be a simple matter operationally and logistically for any central bank customer from around the world to withdraw gold bars from the Bank of England and to have those gold bars sent overseas. These types of shipments have been happening at the Bank of England for hundreds of years.

Such an event would normally not generate any media interest nor even be known about in the public domain such is the secrecy and opacity of central bank gold transactions. For these reasons, the current case involving the Bank of England’s refusal to deliver Venezuela’s gold stored in London, and the way its been publicized, raises some questions and deserves comment.

HM Treasury and Fleet Street

So what exactly is the issue? On 5 November, the London headquartered Reuters news agency reported that the Venezuelan state, fearing sanctions, is attempting to repatriate 14 tonnes of gold from the Bank of England in London, but that this gold withdrawal and transport operation has not yet been actioned despite the withdrawal request being made by Venezuela nearly two months ago.

According to Reuters’ sources which were two unnamed “public officials with direct knowledge of the operation“, Venezuela’s gold bar withdrawal delay is being caused by the difficulty and cost in obtaining insurance for the gold shipment, and also because the Bank of England wants to know what Venezuela plans to do with its gold once it receives it.

…click on the above link to read the rest of the article…

 

Ebola Outbreak “Worst In Congo’s History” As Hundreds Dead; Risk Of Spread To Uganda “Very High” 

The most recent Ebola outbreak spreading through the Democratic Republic of Congo is now the worst in the country’s history, with 209 dead and 333 confirmed or probable cases, according to the DRC’s health ministry.

According to The Express, efforts to contain the disease have been hampered by localized armed conflict and community resistance to health officials.

The outbreak, the second this year, began in North Kivu before spreading east to Ituri. Oly Ilunga Kalenga, the DRC’s minister of public health, said efforts to contain the deadly outbreak have been thwarted by violence against health officials and civilians as militant groups battle for control in the affected region. –Express

Two health workers were killed during the militant attack according to the minister, while 11 civilians and a soldier were killed last month in the city of Beni – the outbreak’s epicenter.

And on Thursday, the United Nations announced that at least seven UN peacekeepers were killed by militants in at the epicenter of the Ebola outbreak.

“Our peacekeeping colleagues tell us that six peacekeepers from Malawi and one from Tanzania who are part of the U.N. peacekeeping operation in the DRC … were killed yesterday, in Beni territory, in North Kivu,” said UN spokesman Stephane Dujarric.

Meanwhile, a USAID worker speaking to Reuters on condition of anonymity said “We are absolutely concerned about the ongoing outbreak in the Democratic Republic of Congo. It is occurring in an area of active conflict, so physical insecurity is a persistent challenge and complication to the ongoing response efforts.”

“No other epidemic in the world has been as complex as the one we are currently experiencing,” said Kalenga.

…click on the above link to read the rest of the article…

“Flashpoint For War”: U.S. And Japan Plan Military Response To Chinese Incursions Of Disputed Islands

Things are again rapidly heating up in the East China Sea amidst already heightened tensions in a region where Washington is increasingly asserting the right of navigation in international waters against broad Chinese claims and seeking to defend the territorial possessions of its allies.

According to a bombshell new Reuters report the tiny and rocky Senkaku Islands which lie between northern Taiwan and the Japanese home islands are “rapidly turning into a flashpoint for war”. Alarmingly, Japanese government sources have been quoted as saying Tokyo and the United States are drawing up an operations plan for an allied military response to Chinese threats to the disputed Senkaku Islands.

The Senkaku Islands, historically claimed by both Japan and China.

From nearly the start of his entering the White House, President Trump has said he’s committed to upholding Article 5 of the US-Japan security treaty signed the post-war years of the mid-20th century: “We are committed to the security of Japan and all areas under its administrative control and to further strengthening our very crucial alliance,” Trump had promised from the first official reception of Japanese Prime Minister Shinzo Abe back in February 2017, and since consistently maintained.

Japanese government sources have told regional media that the joint plan of response with the United States involves “how to respond in the event of an emergency on or around the uninhabited islands in the East China Sea” — which is set to be completed by next march, according to the statements.

Beijing claims the islands as part of its historical inheritance — as it does neighbouring Taiwan, despite failing to seize the protectorate during the Chinese Civil War.

Taiwan, however, was a Japanese protectorate before World War II.

…click on the above link to read the rest of the article…

US Threatens SWIFT With Sanctions If Iran Isn’t Cut Off

Treasury Secretary Steven Mnuchin threatened the global financial messaging service SWIFT on Friday that it could be penalized if it doesn’t cut off financial services to entities and individuals doing business with Iran. The warning came just days ahead of the US re-imposition of all US sanctions on Iran that had been lifted under the 2015 nuclear deal, which will take effect at midnight tonight and cover Iran’s shipping, financial and energy sectors.

Speaking to reporters, Mnuchin was quoted by Reuters as saying that “SWIFT is no different than any other entity,” adding “We have advised SWIFT that it must disconnect any Iranian financial institutions that we designate as soon as technologically feasible to avoid sanctions exposure.”

The Trump administration has been pressuring allies to cut Iranian oil imports to “zero” next month although on Friday the US agreed to grant exemptions to 8 countries that import Iran oil; the countries include Japan, India, and South Korea according to Bloomberg. China, the leading importers of Iranian oil remains in discussions with the US on terms but is among the eight, as is Turkey which will likely receive an exemption, the country’s energy minister said on Friday. The full list of countries receiving waivers will be released on Monday.

By cutting Iran off from SWIFT, Iran would lose its ability to be paid for its exports and to pay for imports. Washington has been pressuring SWIFT to cut Iran from the financial system as it did in 2012 before the nuclear deal. Six years ago the EU imposed sanctions on Iranian banks, forcing SWIFT, which is subject to EU laws, to cut financial transactions with at least 30 of Iran’s financial institutions, including the central bank.

Iranian banks were reconnected to the network in 2016 after the Iran nuclear deal came into force, allowing much needed foreign cash to flow into Tehran’s coffers.

…click on the above link to read the rest of the article…

Big Oil Walking A Tightrope As Prices Rise

Big Oil Walking A Tightrope As Prices Rise

offshore arctic

Supermajors have had a great year so far, and their third-quarter results, to be released over the next couple of weeks, are likely to strengthen this impression. But this does not necessarily mean that investors will reward them. Investors have become a lot more careful in the past few years, and chances are they will want to see more proof of post-crisis flexibility and strict cost discipline before stock prices reflect an increase in trust.

On the face of it, Exxon, Shell, Chevron, and their likes have everything going for them: oil prices are higher, free cash flow is coming in at higher rates, and there have even been a few discoveries, most notable among them Exxon’s 4-billion-barrel elephant off the coast of Guyana. But Big Oil still needs to be cautious.

In a recent article for 24/7 Wall Street, its senior editor Paul Ausick noted the heightened prospects of even higher oil prices after a Reuters report revealed that OPEC has been having trouble lifting production by the promised 1 million bpd. From May to September, the cartel’s combined production plus Russia’s had fallen well short of that figure because of production declines in Venezuela, Iran, and Angola, among others. These, the internal OPEC document that Reuters saw, offset some substantial output hikes from Saudi Arabia, Russia, the UAE, Iraq, and Kuwait.

What this means is that there seems to be less spare capacity than optimists believed. This, in turn, means prices are likely to climb further, despite a fresh assurance from Treasury Secretary Steven Mnuchin that traders have already factored in the U.S. sanctions against Iran. Mnuchin’s warning that Washington will insist on importers cutting Iranian crude imports by more than 20 percent most certainly has not helped rein in prices, though its effect has yet to be fully acknowledged.

…click on the above link to read the rest of the article…

US Is Negotiating With SWIFT To Disconnect Iran From Network

Treasury Secretary Steven Mnuchin said that unlike Obama’s 2013 Iran blockade, it would be harder for countries to get waivers on Iran oil sanctions as the US is already working on disconnecting Iran from the SWIFT network and dismissed concerns that oil prices could rise, saying the market had already factored in the output losses.

Speaking in an interview with Reuters in Jerusalem on Sunday at the start of a Middle East trip, Mnuchin said countries would have to reduce their purchases of Iranian oil by more than the roughly 20% level they did from 2013 to 2015 to get waivers. “I would expect that if we do give waivers it will be significantly larger reductions,” said the US Treasury Secretary.

To achieve the US goal of further isolating Iran from the global financial community, Mnuchin said that the U.S. Treasury was already in negotiations with the Belgian-based financial messaging service SWIFT which intermediates the bulk of the world’s cross-border dollar-denominated transactions, on disconnecting Iran from the network. Washington has been pressuring SWIFT to cut Iran from the system as it did in 2012 before the nuclear deal.

Validating European concerns that the US can and will weaponize the dollar at will and use the reserve currency as a global bargaining chip, Mnuchin’s threats confirmed that although the United States does not hold a majority on SWIFT’s board of directors, the Trump administration could impose penalties on SWIFT unless it disconnects from Iran, pressuring it to comply with US demands.

“I can assure you our objective is to make sure that sanctioned transactions do not occur whether it’s through SWIFT or any other mechanism,” he said, “Our focus is to make sure that the sanctions are enforced.”

…click on the above link to read the rest of the article…

In Latest Provocation To Beijing, US Plans New Warship Passage Through Taiwan Strait

In Washington’s latest attempt to provoke Beijing, the United States is planning to send warships through the Taiwan Strait according to Reuters, a mission meant to ensure “free passage” through the strategic waterway and which will further heighten political tensions with China. Reuters sources did not discuss the potential timing for any fresh passage through the strait.

The last time the US conducted a similar crossing under the “free passage” umbrella, China responded angrily over what it saw was the latest US incursion in its geopolitical sphere of influence and a fresh mission would only exacerbate the state of affairs between the two superpowers; meanwhile any repeat would be seen in self-ruled Taiwan as a fresh expression of support by President Donald Trump’s government.

China, which views Taiwan as a wayward province, has been ramping up pressure to assert its sovereignty over the island and it raised concerns over U.S. policy toward Taiwan in talks this week with U.S. Defense Secretary Jim Mattis in Singapore.

Ironically, even as Washington mulls ordering a fresh passage through the strait in a show of support for Taiwan and defiance of China’s growing sphere of influence, it has been trying to explain to Beijing that its policies toward Taiwan are unchanged. Mattis delivered that message to China’s Defense Minister Wei Fenghe personally on Thursday, on the sidelines of an Asian security forum.

“Minister Wei raised Taiwan and concerns about our policy. The Secretary reassured Minister Wei that we haven’t changed our Taiwan policy, our one China policy.

…click on the above link to read the rest of the article…

Weekly Commentary: Moscovici and the National Team

Weekly Commentary: Moscovici and the National Team

From the perspective of monitoring an unfolding global crisis, things turned only more concerning this week. The Shanghai Composite declined to 2,450 in early Friday trading, the low since November 2014 – and down almost 26% y-t-d. Across the globe in Europe, Italian 10-year yields jumped to 3.80% in early-Friday trading, the high going back to January 2014. The spread between Italian and German 10-year sovereign yields surged to as high as 340bps, the widest spread since March 2013.
October 19 – Reuters (Samuel Shen, Andrew Galbraith and Noah Sin): “China’s regulators lined up to rally market confidence on Friday with new rules, measures and words of comfort… Vice Premier Liu He, who oversees the economy and the financial sector, supplemented regulators’ moves by saying the recent stock market slump ‘provides good investment opportunity…’ Earlier in the day, the securities regulator, central bank and banking and insurance regulator all pledged steps to bolster market sentiment… Friday’s announcements were largely aimed at putting a floor under the tumbling stock market.”

“With pressure mounting and anxiety setting in, China’s stock markets are anticipating the comeback of the ‘national team,'” read the opening sentence of an early-Friday morning article from Beijing-based business media group Caixin. Sure enough, the Shanghai Composite rallied 4.1% off morning lows to close the session up 2.6%. The ChiNext growth index surged 5.6% from its opening level to gain 3.7% for the day. Friday’s afternoon rally, however, couldn’t erase the week’s losses. The Shanghai Composite ended this week down another 2.2%. ChiNext’s Friday melt-up reduced the week’s losses to 1.5%.

October 19 – Reuters (Massimiliano Di Giorgio): “European Economics Commissioner Pierre Moscovici said on Friday he wanted to reduce tensions with Italy over its 2019 budget, adding it was important to see how Rome responded to the Commission’s objections to the fiscal plan.

…click on the above link to read the rest of the article…

Leaked Document: OPEC+ Struggling To Lift Oil Production

Leaked Document: OPEC+ Struggling To Lift Oil Production

oil field

OPEC and its Russia-led non-OPEC allies are struggling to fully deliver on the oil production increase of 1 million bpd promised in June, Reuters reported on Friday, quoting an internal OPEC document that it has seen.

OPEC and allies agreed in June to relax compliance rates with the cuts to 100 percent from the previous over-compliance. The respective leaders of the OPEC and non-OPEC nations part of the deal—Saudi Arabia and Russia—have been interpreting the eased compliance as adding a total of 1 million bpd to the market.

The document that Reuters has seen, however, showed that the significant production increases in Saudi Arabia and Russia were offset by declines in Iran, Venezuela and Angola within OPEC, and by production drops in Mexico, Kazakhstan, and Malaysia from non-OPEC.

Increasing production “is a work in progress,” OPEC Secretary General Mohammad Barkindo said this week. At an event in India he also reiterated OPEC’s position that “our current view is that the market is at the moment adequately supplied and well-balanced, though in a fragile state.”

According to the internal OPEC document prepared for a technical panel meeting scheduled for Friday, OPEC—excluding Nigeria, Libya, and Congo—increased its combined production by 428,000 bpd in September compared to May. Saudi Arabia put the most extra barrels on the market and boosted its production by 524,000 bpd in September compared to May. Iraq, Kuwait, and the United Arab (UAE) also increased their production, according to the document seen by Reuters.

However, Iran’s production slumped by 376,000 bpd in September from May, Venezuela’s output plunged by 189,000 bpd, and Angola saw its production drop by 17,000 bpd between May and September.

The non-OPEC partners in the deal have increased their combined production by 296,000 bpd since May. Russia boosted production by 389,000 bpd, but part of that increase was offset by declines in Kazakhstan, Mexico, and Malaysia.

“All-Out War” Coming: Record Number Of Israeli Tanks Amassed On Gaza Border

After months of violence and widespread protests along the Israeli-Gaza border fence, Israeli is quickly ramping up its military presence with a show of force a day after launching deadly airstrikes on Gaza in response to what officials say were two rockets fired from the strip earlier this week.

Reuters has reported some 60 Israeli tanks and armored personnel carriers now stationed at a deployment area along the border as of Thursday, which is the largest reported mustering of forces since the 2014 war between Israel and Hamas.

On Thursday a Reuters photographer counted some 60 tanks and armored troop carriers at a deployment area near the Gaza Strip. Via Reuters)​​​​​

Special UN envoy for the Middle East, Nickolay Mladenov, told the UN Security Council on Thursday thatwe remain on the brink of another potentially devastating conflict, a conflict that nobody claims to want, but a conflict that needs much more than just words to prevent”.

One of the rockets launched Wednesday reportedly landed in the sea, however, Israeli officials said it came dangerously close to densely populated Tel Aviv. Hamas, for its part, denied responsibility for the rocket launches and said it would investigate.

Meanwhile Israel retaliated in Wednesday airstrikes on Gaza, which reportedly killed at least one Palestinian while injuring several more. Israeli Prime Minister Benjamin Netanyahu further convened his security cabinet on the same day of the Gaza rocket launches and promised to take “very strong action” if such attacks continued.

Israel largest armor deployment since the 2014 war was documented by Reuters this week. 

…click on the above link to read the rest of the article…

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