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"We wish to convey our sincere thanks to your organization which has been professionally handling our biz since 2003. We would like to take this opportunity to thank everyone of your staff members who supported and helped us during the hard times and gave us workable solutions and ideas to reach our business objectives. Al Rana Equipment & Machinery Trading Eng. Bassam Nowfat - Managing Director"

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Regional News

OPEC EXPECTS LOWER DEMAND FOR ITS OIL

Crude Oil Price Movements

The OPEC Reference Basket value rose by $3.54, or 5.6%, month-on-month in December, to average $66.48/b, the highest value since April 2019.

World Economy

The global economic growth remains at 3.0% for 2019, but is revised up by 0.1 pp to 3.1% for 2020. US growth remains at 2.3% for 2019 and is revised up by 0.1 pp to 1.9% for 2020.

World Oil Demand

Global oil demand growth for 2019 is revised lower by 0.05 mb/d compared with the previous month’s assessment, and is now estimated at 0.93 mb/d.

World Oil Supply

Non-OPEC oil supply growth for 2019 is revised up by 0.04 mb/d from the previous month’s assessment and is now estimated at 1.86 mb/d, for an average of 64.34 mb/d.

Product Markets and Refining Operations

In December, product markets weakened as feedstock prices firmed and as product inventory levels rose given higher refinery intakes, and lacking winter-related support.

Tanker Market

The tanker market strengthened in December 2019, as freight rates in both dirty and clean segments of the market increased.

Stock Movements

Preliminary data for November showed that total OECD commercial oil stocks fell by 8.8 mb m-o-m to stand at 2,920 mb, which is 62.7 mb higher than the same time one year ago and 17.5 mb above the latest five-year average.

Source: OPEC

RUSSIA, UAE SAY OPEC+ MEETING STILL ON FOR MARCH

Key OPEC Gulf member the United Arab Emirates and the group’s ally Russia said on Wednesday they were still committed to meeting in March to decide on future production policies.

Citing an unnamed source from The Organization of the Petroleum Exporting Countries, Russian news agency Tass reported on Wednesday that OPEC and its allies — known as OPEC+ — have started consultations on extending the current output-cutting deal until June without holding a meeting in March.

OPEC and its allies agreed in December to reduce supply by 1.7 million bpd in 2020. The pact expires at the end of March as Russia had insisted it wanted the current deal to last only three months.

Source: Reuters

LNG SUPPLY GLUT OVERSHADOWS MIDDLE EAST TENSIONS TO HOLD BACK PRICES

Rising tensions in the Middle East that kicked off the New Year and sent a brief jolt through energy markets weren’t enough to outweigh the global supply glut that has kept a lid on liquefied natural gas (LNG) prices.

Crude oil surged to a nearly four-month high in the days after a U.S. attack killed a top Iranian military leader on Jan 3. LNG prices were poised to spike following the unrest, particularly contracts tied to Brent crude, the global benchmark. Spot prices were also seen vulnerable on the escalation and its possible impact on shipping in the Strait of Hormuz.

The reaction, however, was short-lived and crude prices stabilized. LNG futures jumped slightly with oil prices and Asian spot prices inched up by a few cents, but have since fallen.

Source: Natural Gas Intel

ENERGY MARKETS UNDERESTIMATE GULF OIL SUPPLY RISKS

The apparent desire of both Washington and Tehran to avoid a wider conflict in the region does not mean that the risk to Gulf oil supplies is reducing.

Global energy markets are underestimating the risks to Gulf oil supplies from the escalation in tensions between the US and Iran, say analysts.

There will be no let up on the sanctions imposed on Iran’s oil sector, according to Francis Fannon, assistant secretary at the US State Department’s Bureau of Energy Resources, who was also speaking at the Atlantic Council’s Global Energy Forum in Abu Dhabi.

US sanctions are having a crippling effect on the Iranian economy, says Fannon, slashing Iranian crude oil and condensate exports and depriving Tehran of “tens of billions of dollars in revenues”.

Despite this, it is unclear where President Trump has drawn his ‘red lines’ for further military action.

Croft for one is not confident that the US would respond to an energy infrastructure attack, particularly if it was carried out by one of Iran’s proxy groups.

ADNOC ON TRACK TO REACH 4MN BPD PRODUCTION CAPACITY IN 2020

ADNOC is on track to hit its target of 4mn barrels per day of production capacity in 2020, group CEO Dr. Sultan Al Jaber said at the Atlantic Council Global Energy Forum in Abu Dhabi.

In November 2019, ADNOC announced that it had discovered additional reserves of 7bn barrels of oil, 58trn cubic feet of conventional gas, and 160trn cubic feet of unconventional gas.

He also commented on recent geopolitical tensions following the US strike which killed Iran's top military commander Qassem Soleimani, saying that "geopolitical tensions have dissipated over the past few days and wisdom appears to be prevailing.

OIL PRICES POISED FOR SLIDE AS TENSIONS COOL

Oil prices have had a tumultuous week since the US launched a drone attack in Baghdad, killing Iranian General Qassem Soleimani. With tensions peaking after the US and Iran traded missile attacks, oil markets priced in a risk premium. Oil prices still react dramatically to news of tensions in the Persian Gulf, although less dramatically now than they would have before the US shale revolution. However, one key reason that geopolitically-driven oil price swings are now more subdued relates to the stabilizing effect of US shale oil production on global oil supplies.

REGIONAL TENSIONS WEIGH ON SAUDI ARAMCO VALUATION

The fallout from the Soleimani assassination shows that geopolitcal risk is hampering investor appetite for the region.

Saudi Aramco’s share price fell to SR34.2 on 8 January, down by about 2.7 per cent from the SR35.15 share price of 2 January, the day before the assassination of Iranian general Qasem Soleimani in Baghdad in a US drone strike. And 10 per cent down from its peak of SR38 on 16 December.

The 8 January price marked the lowest the oil giant’s shares had slid to since its market debut on 11 December.

There are two primary factors behind the volatility in the Aramco share price trajectory.

The most obvious is the heightening of regional geopolitical tensions since Soleimani’s killing by the US. The second relates to a prolonged period of subdued oil demand in the global energy markets, led by the protracted US-China trade war.

IRAN UNCERTAINTY WILL HIT GULF ECONOMIC RECOVERY

As US airbases in Iraq reeled from an Iranian missile attack on Wednesday, experts fear the news could derail the Gulf’s latent economic recovery.

Brent crude jumped 1.4 percent to $69.21 per barrel in the middle of the Asian trade as two bases in Iraq were hit by ballistic missiles.

The escalation with Iran and its repercussions in the Middle East and for U.S. national security, and possibly, U.S. elections, has moved to the front of the queue in terms of a key driver for 2020. Escalation might also have effects on energy markets and hence on regional and global economies.

ADES SECURES FIVE-YEAR JACKUP RIG RENEWAL WITH SAUDI ARAMCO

Egyptian offshore driller ADES International has sealed a contract renewal for 1982-built jackup rig Admarine 262.

The renewal, with Saudi Aramco, commences upon the expiry of the current contract in April 2020 and is for five years at a higher daily rate than the previous contract.

Dr Mohamed Farouk, chief executive officer of ADES International Holding, commented: “We are delighted to secure this renewal for Admarine 262 with our extremely valued and important client. It further supports our presence in KSA and underpins ADES’s track record for securing renewals for our fleet which results in greater backlog visibility.”

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