Saudi Arabia raises oil output amid fears of supply crunch

Gas is flared off at Khurais oilfield. Saudi crude shipments rose during May to 7.16 million bpd, up 250,000 bpd month-on-month. (Reuters)
Updated 13 June 2018

Saudi Arabia raises oil output amid fears of supply crunch

  • The IEA noted that only Saudi Arabia and OPEC’s other Middle East members have the ability to ramp up production swiftly to alleviate any supply shortages in the market.
  • US President Donald Trump blamed OPEC for excessive oil prices. “Oil prices are too high, OPEC is at it again. Not good!”

LONDON: Saudi Arabia posted the biggest month-on-month increase in oil supply of any OPEC country in May, according to the latest report from the International Energy Agency (IEA).
The Kingdom’s production was up 100,000 barrels per day (bpd) to 10.02 million barrels. Domestically, more crude was burned in Saudi power plants during the month, partly due to higher air-conditioning use.
The IEA noted meanwhile that only Saudi Arabia and OPEC’s other Middle East members have the ability to ramp up production swiftly to alleviate any supply shortages in the market. That is viewed as vital in the event of further output drops from Venezuela, and expected shortfalls from Iran when US sanctions bite later this year.
The report estimated that Middle East OPEC countries could increase production in fairly short order by about 1.1 million bpd, and there could be more output from Russia.
After oil prices surged to $80 a barrel in mid-May, Saudi Energy Minister Khalid Al-Falih said that the Kingdom, along with other producers, would ensure the availability of adequate supplies to offset any potential shortfalls.
According to information from data intelligence company Kpler, Saudi crude shipments rose during May to 7.16 million bpd, up 250,000 bpd month-on-month.
“However, even if the Iran-Venezuela supply gap is plugged, the market will be finely balanced next year, and vulnerable to prices rising higher in the event of further disruption. It is possible that the very small number of countries with spare capacity beyond what can be activated quickly will have to go the extra mile,” the IEA said.
US President Donald Trump yesterday blamed OPEC for excessive oil prices. “Oil prices are too high, OPEC is at it again. Not good!” Trump tweeted on Wednesday, the second time in two months he blamed the bloc for higher oil prices.
Saudi Aramco is moving ahead with plans to raise output from offshore oil fields by more than 1 million bpd by 2023 to compensate for declining onshore production and to sustain overall capacity, which now stands at around 12 million bpd.
Aramco has invited bids to build new units to expand the Marjan oil field from 500,000 bpd currently to 800,000 bpd. Aramco also recently invited bids to boost the 300,000 bpd Berri field by 250,000 bpd. The expansion effort also includes the 550,000 bpd Zuluf field, where capacity will be raised by 600,000 bpd.
In May, the IEA said, higher flows from Saudi Arabia, Iraq and Algeria outweighed a fall in Nigerian supply and further losses in Venezuela, lifting OPEC crude production by 50,000 bpd to 31.69 million bpd. Crude oil output was nonetheless down 610,000 bpd on 2017 due to Venezuela’s sharp decline.
For 2019, IEA anticipates growth of 1.4 million bpd due to a “solid” economic background and an assumption of more stable prices. Demand growth for 2018 is also forecast at 1.4 million bpd.
But downside risks were growing in the wake of the G-7 bust-up involving President Donald Trump and his Western allies.
Dangers included the possibility of higher prices amid trade disruptions prompted by the tariffs war unleashed by the US against China, but which has also sucked in the EU, Canada and Mexico.
There were already signs of a slowdown in the growth of global trade volumes, the IEA said, which was “a concern.”


Innovation jobs flocking to a handful of US cities

Updated 09 December 2019

Innovation jobs flocking to a handful of US cities

  • Economists fear job clustering could have a “destructive” influence on society

WASHINGTON: A new analysis of where “innovation” jobs are being created in the US paints a stark portrait of a divided economy where the industries seen as key to future growth cluster in a narrowing set of places.

Divergence in job growth, incomes and future prospects between strong-performing cities and the rest of the country is an emerging focus of political debate and economic research. It is seen as a source of social stress, particularly since President Donald Trump tapped the resentment of left-behind areas in his 2016 presidential campaign.

Research from the Brookings Institution released on Monday shows the problem cuts deeper than many thought. Even cities that have performed well in terms of overall employment growth, such as Dallas, are trailing in attracting workers in 13 industries with the most productive private sector jobs.

Between 2005 and 2017, industries such as chemical manufacturing, satellite telecommunications and scientific research flocked to about 20 cities, led by well-established standouts San Francisco, Seattle, San Jose, Boston and San Diego, the study found. Combined, these mostly coastal cities captured an additional 6 percent of “innovation” jobs — some 250,000 positions.

Companies in those industries tend to benefit from being close to each other, with the better-educated employees they target also attracted to urban amenities.

Brookings Institution economist Mark Muro said he fears the trend risks becoming “self-reinforcing and destructive” as the workforce separates into a group of highly productive and high-earning metro areas and everywhere else.

Even though expensive housing, high wages, and congestion have prompted some tech companies to open offices outside of Silicon Valley, those moves have not been at scale. Most US metro areas are either losing innovation industry jobs outright or gaining no share, Muro wrote.

Over this decade, “a clear hierarchy of economic performance based on innovation capacity had become deeply entrenched,” Muro and co-author Rob Atkinson, president of the Information Technology and Innovation Foundation, wrote in the report. Across the 13 industries they studied, workers in the upper echelon of cities were about 50 percent more productive than in others.

For much of the post-World War Two period labor was more mobile, and the types of industries driving the economy did not cluster so intensely, a trend that started reversing around 1980.

Concerns that the US is separating effectively into two economies has sparked support for localized efforts to spread the benefits of economic growth.

The Federal Reserve has flagged it as a possible risk to overall growth, and some of the presidential candidates running for office in 2020 have rolled out proposals to address it. One aim of Trump’s decision to impose tariffs on imports from China and elsewhere is to revive ailing areas of the country.