Oil Rout Forces OPEC to Trim Price Expectations
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SUBSCRIPTION SATURDAY, AUGUST 29, 2015 THULQADA 14, 1436 AH No: 16624 Kuwait to build Greece’s new Schippers new airport PM names wins 200 in 1-1/2 years2 caretaker10 cabinet metres48 gold Oil rout forces OPEC to trim price expectations Min 35º 150 Fils Gulf delegate says market to correct itself Max 49º DUBAI/LONDON: A second oil price rout of 2015 has forced Arab OPEC members to cut their price expectations for this year, showing they are prepared to tolerate cheaper crude for longer to defend market share and curb rivals’ output. OPEC delegates, including those from core Gulf OPEC countries, see economic troubles in top energy consumer China as short term and unlikely to have much impact on demand for crude which will rise seasonally in the fourth quarter. But they also believe it will take more than just a few months for weak oil prices, which fell to a more than six-year low near $42 on Monday, to reduce supplies from higher-cost producers such as US shale and stimulate demand. They expect the recent price drop will help reduce the crude oversupply towards the end of the year and thus lift oil prices slightly. The comments further indicate that the Organization of the Petroleum Exporting Countries is sticking to its policy of defending market share rather than cutting production to shore up prices - regardless of how low they would fall and how long it would take to balance the market. “It will be better to leave the market to correct itself. I don’t think this low price will continue,” said a Gulf OPEC delegate who declined to be identified. “Prices will be around $40-$50 a barrel until the end of the year and hopefully they will reach $60, assum- ing there will be a recovery in China.” A second Gulf OPEC delegate also expected the oil price to remain around $40-$50 a barrel for the rest of the year. A third Gulf oil source said: “People are over-reacting to China. But you cannot underestimate the sentiment, that’s the problem.” GEVGELIJA: Migrants wait for Macedonian police to allow them to cross in Macedonia at the border line between “Oil is bottoming... and the deeper it goes the more the rebound Greece and Macedonia near the town of Gevgelija yesterday. Serbia and Macedonia’s foreign ministers called for EU will be quicker and the supply reaction will be even bigger,” the action on Europe’s migrant crisis at a summit of leaders from the western Balkans, attended by German Chancellor source said, adding prices may dip again to slightly below $45 Angela Merkel. Both have become major transit countries for tens of thousands of migrants trying to reach the before slowly recovering to around $60 by December when OPEC European Union in recent months, with Macedonia last week forced to declare a state of emergency. — AFP meets next. Arab OPEC delegates initially thought prices would recover more quickly after the group’s shift to the market-share strategy in Europe migrant crisis brings 2014 deepened the decline, saying last December they saw oil between $70 and $80 by the end of 2015. Other OPEC delegates outside the Gulf are also bracing for a pro- tragedy by land and sea longed period of low prices as they do not expect the group’s top producer Saudi Arabia, the driving force behind OPEC’s refusal to VIENNA: Rescue workers counted dozens of victims yester- and refugees have sought to cross the Mediterranean Sea this cut output, to change course and prop up prices. day from the increasingly desperate tide of humanity sweep- year- nearly 40 percent more than in all of 2014, which saw the “If this oversupply continues with no action from OPEC or Saudi ing into Europe fleeing war, oppression and poverty. Austrian highest numbers ever recorded. The vast majority are fleeing Arabia, then I expect prices will stay around $45 until the end of the police said 71 people likely suffocated in an airless truck and war, conflict or persecution in countries including Syria, year,” said one. authorities estimated 200 people drowned off the Libyan Afghanistan and Eritrea. As a policy, OPEC has not openly targeted specific oil prices for coast when two overloaded boats bound for Europe cap- The International Office of Migration, or IOM, has recorded over a decade, ever since it abandoned a $22 to $28 price band sized. 2,432 deaths linked to Mediterranean crossings this year, but instituted after a price crash in the late 1990s. But the comments Authorities around an unsettled world have struggled to countless more have vanished beneath the waves out of sight signal how big producers see the market playing out and that respond to the largest global movement of people since of rescuers. The official count was set to rise yesterday as OPEC’s strategy championed by Saudi Arabia is not a short-term World War II. In Europe, thousands of people a day are board- authorities counted the dead from three shipwrecks off the one, but rather a plan that needs time to work and they are willing ing flimsy boats to Italy or Greece, and thousands more are Libyan coast. to wait. placing themselves at the mercy of human-trafficking gangs Two ships went down on Thursday alone off the western Gulf oil insiders see no sign of Saudi Arabia wavering on its long- and ordinary thugs as entire families slog for days or weeks Libyan city of Zuwara. Hussein Asheini of Libya’s Red Crescent, term strategy. “This is not going to be two-three quarters’ adjust- through the countryside of the western Balkans toward what said at least 105 bodies had been recovered, adding: “a coast ments, this is going to be a two-three years’ adjustments,” said they hope will be a brighter future. guard team is still diving in and checking inside to see if Yasser Elguindi of economic consultants Medley Global Advisors. European officials were stunned by the grisly develop- there’s anyone else.” About 100 survivors, including nine OPEC reconfirmed the market-share strategy at its last meeting ments. “One is basically at a loss for words in view of the women and two girls, were rescued from the two boats, in June and the Gulf OPEC delegates were still expecting a recovery extent of suffering there,” German Chancellor Angela Merkel’s according to the United Nations High Commission for in prices towards the end of 2015, supported by higher global spokesman Steffen Seibert said of the Austrian deaths. Refugees and the IOM, and at least 100 more were believed to demand. But those sentiments have changed with the latest unex- The UN refugee agency says more than 300,000 migrants be missing. — AP (See Page 7) pected price drop, growing concern about the demand outlook in China and persistent oversupply. — Reuters LOCAL SATURDAY, AUGUST 29, 2015 Kuwait to build new airport in 1-1/2 years Backup terminal to handle 4m passengers KUWAIT: The Civil Aviation Directorate current terminal which will help accom- at the Kuwait International Airport. vehicles. He said some airlines will be General said that a new airport with a modate the increased traffic expected to He said the building of the new termi- moved to this back-up airport according capacity of up to four million passengers increase in the coming years until the nal will solve in part the congestion at to certain standards. per year will be built in Kuwait, said well new terminal is completed. the current airport terminal for many He said the number of passengers at informed sources. The airport will be The source added that the Central years. the airport reached more than nine mil- built with readymade buildings which Tenders Committee approved the He said the back-up building is lion last year exceeding the capacity of will be completed in one and a half request to introduce the tender for expected to accommodate four million the current building. So it is necessary to years, says Arabic daily Al-Qabas quoting designing, construction, furnishing, passengers and include all facilities for build the backup building to relieve the the sources. operational maintenance and mainte- departures and arrivals. It will have a car pressure and maintain the services level, It will be considered a backup for the nance of the back-up passenger terminal parking facility with a capacity of 1,700 the sources added. KUWAIT: State Minister for Cabinet Affairs Sheikh Mohammad Abdallah Al-Mubarak Al-Sabah with Colonel Omar Al-Marshoud and Colonel Mohammad Al-Shatti after conferring on them new brigadier ranks. New brigadier ranks for KFSD officers By Hanan Al-Saadoun Sabah conferred on Colonel Omar Al- Directorate Lieutenant General Yousuf Al- Administrative and Financial Affairs Brigadier Marshoud and Colonel Mohammad Al-Shatti Ansari, Deputy Director General for Saleh Al-Ansari and Acting Deputy Director KUWAIT: State Minister for Cabinet Affairs their new brigadier ranks in the presence of Prevention Sector Major General Khalid Al- General for Fighting Brigadier Jamal Al- Sheikh Mohammad Abdallah Al-Mubarak Al- Director General of Kuwait Fire Service Mikrad, Acting Deputy Director General for Bulaihees. Defense ministry VIVA announces fourth daily draw denies reports on winners of its prepaid campaign KUWAIT: VIVA, Kuwait’s fastest- August 2015 are: Ahmad Salah tions designed to create an of naval arms growing and most developed Altararwah, Lionida Martinez, exceptional customer experience telecom operator, announced the Aala’ Abdulaziz Mohamed Thiab, and reward its prepaid customers KUWAIT: Defense Ministry’s naval force continuously con- fourth lucky winners of its weekly Belli Sourcha Beili, Mebeerat Sisai for their continued trust in VIVA.