Sanctions and cuts push sour crude prices above Brent

US sanctions on Venezuela and Iran along with output cuts by OPEC have tightened the supply of medium to heavy sour oil. (Reuters)
Updated 12 February 2019
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Sanctions and cuts push sour crude prices above Brent

  • US sanctions on Venezuela have created a strong pull for medium and heavy sour crude from other sources
  • A decision by OPEC and Russia to rein in oil output has also buoyed sour crude prices

SINGAPORE: Middle East oil benchmarks Dubai and DME Oman have nudged above prices for Brent crude, an unusual move as US sanctions on Venezuela and Iran along with output cuts by OPEC tighten supply of medium to heavy sour oil.
Sour crudes, mainly produced in the Middle East, Canada and Latin America, have a high sulfur content and are usually cheaper than Brent, the benchmark for low-sulfur oil in the Atlantic Basin.
But Dubai spot prices and DME Oman crude futures for April have held above ICE Brent at Asia’s market close since the start of February, data from the Intercontinental Exchange (ICE), Dubai Mercantile Exchange and Refinitiv Eikon showed.
“The forceful implementation of US sanctions on Venezuelan crude exports, the greater-than-expected recent Saudi crude output cut ... and the uncertainty over US sanction exemptions on Iranian crude have all served to strengthen sour crudes relative to sweet benchmarks such as Brent,” said Tilak Doshi, a Singapore-based analyst at consultancy Muse, Stancil & Co.
US sanctions on Venezuela created a strong pull for medium and heavy sour crude from other places, said the traders and analysts.
The sanctions, aimed at blocking Venezuelan President Nicolas Maduro’s access to the nation’s oil revenue, will be extended to non-US oil buyers from April 28.
Uncertainty over whether Washington will extend waivers to sanctions on Tehran’s oil exports that it previously granted to top Iranian crude buyers — China, India, Japan and South Korea — is also boosting Middle East oil prices.
A decision by OPEC and Russia to rein in oil output has buoyed sour crude prices as well.


Japan to restrict foreign ownership in high-technology sectors

Updated 27 May 2019
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Japan to restrict foreign ownership in high-technology sectors

  • Japan wants to prevent a leakage of technology deemed important for national security
  • The new rule will be applied to 20 sectors in information and communications industries

TOKYO: Japan’s government said on Monday that high-tech industries will be added to a list of businesses for which foreign ownership of Japanese firms is restricted.
The new rule, effective August 1, comes amid heightening pressure from the United States in dealing with cyber-security risks and technological transfers involving China.
The Japanese government made no mention of specific countries or companies that will be impacted by applying existing foreign ownership restrictions to the IT and telecoms industries.
The announcement came on the same day visiting US President Donald Trump and Japanese Prime Minister Shinzo Abe are holding talks in Tokyo on trade and other issues.
The United States has warned countries against using Chinese technology, saying Huawei Technologies could be used by Beijing to spy on the West. China and Huawei have strongly rejected the allegations.
“Based on increasing importance of ensuring cybersecurity in recent years, we decided to take necessary steps, including addition of integrated circuit manufacturing, from the standpoint of preventing as appropriate a situation that will severely affect Japan’s national security,” Japanese ministries said in a statement.
Japan wants to prevent a leakage of technology deemed important for national security or damage to defense output and technological foundation, they added.
The new rule will be applied to 20 sectors in information and communications industries, according to the joint statement by the finance ministry, trade ministry and communications ministry.
Under the foreign exchange and foreign trade control law, Japan brings certain industries such as airplanes, nuclear-related sectors and arms manufacturing under foreign capital controls.
The law requires foreign investors to report to the Japanese government and undergo inspection in case they buy 10 percent or more of stocks in listed Japanese companies or acquire shares of unlisted firms.
If the government finds any shortcomings, it can order foreign investors to change or cancel their investment plans.