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Analysis | Oil Production Cut Could Be 10% Real, 90% Illusion

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Analysis | Oil Production Cut Could Be 10% Real, 90% Illusion


Ministers from the OPEC+ group of oil-producing international locations agreed to chop their collective output goal by 2 million barrels a day from November after they met on Wednesday. How a lot their precise manufacturing falls may very well be as little as one-tenth of the headline determine.

Though the group contains 23 international locations, the burden of the newest minimize can be shared by simply three — Saudi Arabia, the United Arab Emirates and Kuwait. Many of the others are already pumping thus far beneath their quota ranges that their output will nonetheless fall in need of their new allocations.

Estimates of OPEC+’s September manufacturing counsel that, collectively, it’s lagging the deliberate degree by about 3.6 million barrels a day.

When the brand new targets come into impact on Nov. 1, solely eight international locations can be required to pump much less crude. Along with the three Gulf Arab neighbors, small reductions also needs to come from South Sudan, Algeria, Gabon, Iraq and Oman.

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The entire discount required of them is simply 890,000 barrels a day. That’s nonetheless a big minimize, however a good distance from the headline determine.

Nevertheless, don’t anticipate the minimize to be even that a lot. You’ll be able to overlook about South Sudan, Gabon and possibly even Iraq.

OPEC’s personal knowledge present that South Sudan not solely exceeded its quota each month because the present deal got here into impact in Could 2020, however that it by no means minimize a single barrel of manufacturing. It will be stunning if it started now.

Gabon has proven an analogous lack of resolve. Its output has been beneath its cap in only one month out of the settlement’s 29-month historical past, OPEC’s knowledge present.

As for Iraq, the nation’s oil minister wasted no time after Wednesday’s deal was finalized to guarantee oil consumers that the settlement wouldn’t have an effect on his nation’s exports. With little room to tweak home use, that basically means no minimize in manufacturing both.

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That whittles the listing down to 5.

The reductions required from Algeria and Oman complete 32,000 barrels a day; that’s little greater than a rounding error within the evaluation of the group’s total manufacturing.

The cuts required of Saudi Arabia and its neighbors quantity to 790,000 barrels a day, however even that may very well be offset by growing output from another members of the group.

Nigeria, Angola and Malaysia are all contending with dwindling manufacturing capability and have been pumping beneath their targets for a lot of months. That’s not prone to change. Russia, too, is struggling. It was already discovering it troublesome to maintain tempo with its rising allocation earlier than President Vladimir Putin ordered his troops into Ukraine, and the scenario has solely gotten worse within the months because the invasion.

However Kazakhstan is totally different. Output is working greater than 560,000 barrels a day beneath goal on a mix of deliberate upkeep at one in every of its greatest fields and a fuel leak at one other. The completion of the upkeep this weekend ought to enable the return of about 260,000 barrels a day. The remaining will take longer, however the nation’s vitality minister says it must be again earlier than the top of the month — simply in time to offset the deliberate minimize.

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If he’s proper, the efficient output minimize, measured from present manufacturing, may very well be decreased to as little as 230,000 barrels a day — hardly price getting labored up about.

However a month later, the scenario might look very totally different. European Union sanctions on Russian crude exports come into impact on Dec. 5 — the day after the producer group is because of maintain its subsequent assembly. The restrictions goal most seaborne shipments to the bloc’s members, which have already dropped to about 660,000 barrels a day from 1.6 million barrels in January.

Russia has efficiently diverted a lot of the crude shunned by European consumers to India, Turkey and China; however the sanctions, which additionally search to restrict shipments to non-European international locations, may have a a lot larger affect. Russia’s personal fleet of tankers isn’t giant sufficient to maneuver all of the oil that might must be diverted from Europe. That would power manufacturing cuts. A proposed worth cap on Russian crude would present the Kremlin a manner out — exempting from sanctions these cargoes offered at or beneath a yet-to-be-agreed worth — however Moscow appears decided to not take it.

If the Kremlin decides to halt manufacturing as a substitute of accepting a capped worth, which appears possible, the OPEC+ minimize of two million barrels a day may abruptly turn into very actual.

One factor’s positive, crude’s on a curler coaster experience for the remainder of 2022.

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This column doesn’t essentially replicate the opinion of the editorial board or Bloomberg LP and its house owners.

Julian Lee is an oil strategist for Bloomberg First Phrase. Beforehand, he was a senior analyst on the Centre for International Vitality Research.

Extra tales like this can be found on bloomberg.com/opinion



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Washington

BIZ BUZZ: Antonios go to Washington

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BIZ BUZZ: Antonios go to Washington


Donald Trump is scheduled to be inaugurated—again—as the president of the United States on Jan. 20 in Washington.

Among those who will witness his return to power as the 47th president of the world’s largest economy are some of his old friends from the Philippines.

We’re talking about Century Properties Group founder and chair Jose EB Antonio and his wife, Hilda.

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Going with them is their third son, Jose Roberto, who had just been appointed managing director of the J. Antonio Group Inc. in charge of resort-related projects.

It may be recalled that the Trumps and the Antonios struck up a friendship decades ago in New York when Trump was more known as a property developer, just like the Antonios. Some of their children also went to business school together.

And then, the Antonios also brought the Trump brand into one of the office buildings in its Century City development in Makati City.

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But the elder Antonio will be there not just as a personal friend invited by the Trumps to attend the inauguration but also to represent President Marcos as his ambassador-at-large tasked with inviting more investments into the Philippines.

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With a friend in the White House, the Antonios are confident that more investments as well as visitors will flow toward the Philippines. —Tina Arceo-Dumlao

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Clark hits the Belle’s eye

In July 2024, Belle Corp. gave us a teaser about applying for a gaming license from “government regulators.”

Despite the rumor mill running wild that the gaming-focused investment firms of delisted subsidiary Premium Leisure Corp. had plans to conquer Clark, Belle opted to keep quiet.

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Nearly half a year later, Belle hailed Clark as “the next gaming and tourism hub” and confirmed that they had, indeed, applied for a gaming license specifically to develop an integrated resort in the former American air base.

Belle president and CEO Armin Raquel Santos likewise expressed optimism on his company’s growth prospects, “and bullish on the Philippine gaming market and its resilience despite industry headwinds.”

”Belle, through its gaming subsidiaries, continues to explore and pursue related ventures and high-growth opportunities in the gaming space that will enhance shareholder value while delivering its commitments to all stakeholders,” the company quoted Santos as saying.

Though much still remains unsaid about Belle’s plans for Clark, it is clear that the gaming industry is still attractive despite some weakness and hiccups—Bloomberry Corp.’s earnings, for instance, and Davao-based businessman Dennis Uy’s long-stalled Cebu casino project.

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Let’s see if Belle will go against the odds. —Meg J. Adonis

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What Washington State’s head coach said after Gonzaga game

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What Washington State’s head coach said after Gonzaga game


Washington State men’s basketball head coach David Riley could point to a few factors that led to Gonzaga pulling away from the Cougars during the second half of Saturday night’s showdown at the McCarthey Athletic Center.

For starters, the Bulldogs’ 15-5 scoring run to start the second half certainly didn’t help the Cougs’ cause. Neither did Ryan Nembhard, who came out of the halftime break even more refreshed after sitting on the bench for the final 9:34 of the first half due to foul trouble. Turnovers and miscues on the defensive end of the floor also started to pile up for WSU, which led by six points in the first half only to trail by three at the break and fall behind by 21 in the second half while the Zags nailed 10 3-pointers and scored 20 points off 16 turnovers.

Consider Saturday night, then, a perfect storm for the Bulldogs (14-4, 5-0 WCC). Led by Graham Ike’s 21 points, Gonzaga pulled away for an 88-75 victory over its in-state rival in a thriller from the Kennel.

Here’s what Riley had to say after the game.

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On what changed for WSU in the second half:

“It was a hard-fought game, and I feel like we had it slip away from us early in that second half where we didn’t stay connected as much, and I personally didn’t do a good enough job of having us ready for the fight. They got some 50-50 balls. They got a couple offensive rebounds, just some toughness plays that second half that hurt us. And that comes down to, we have game plan stuff, we’re gonna have X’s and O’s, we’re gonna have great plays from different players and bad plays from different players, but that fight for 40 minutes, I think, was the difference, and they came out with a little more fire than us.”

On Ryan Nembhard’s impact in the second half after sitting most of the first half:

“He did a good job with their pace. I think he gets them up the floor really well. I felt like it was a lot of factors that second half, and he played a part in that and started isolating some of our bigs when we made a couple of adjustments. [Nembhard is a] good player.”

On WSU’s defensive breakdowns that led to 10 3-pointers for Gonzaga:

“A couple of execution errors. I think one of them we didn’t have a ball screen right, one of them we didn’t order our post defense right. Kind of going into the half that was our thing, when things get tough, or they throw in a 25-second possession, we got to execute all 30 seconds of the shot clock. And I think it was more just cover stuff. We didn’t have that many space cadet errors. I think it was more just kind of one guy doing something that wasn’t exactly right in coverage.”

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What Gonzaga’s Mark Few said after win vs. Washington State

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What Gonzaga’s Mark Few said after win vs. Washington State


The Gonzaga men’s basketball team pulled away from Washington State for an 88-75 victory in the first meeting between the in-state rivals in over a decade.

Graham Ike led the way with 21 points on 8-for-11 from the field, Nolan Hickman added 19 points and the Bulldogs (14-4, 5-0 WCC) earned their fifth straight win to open league play by putting the Cougars (13-5, 3-2 WCC) away early in the second half. After ending the first half on an 8-2 scoring run, the Zags came out of the second half with a sense of urgency on both ends, sparking a 15-5 scoring run to make it a double-digit margin.

Here’s what Gonzaga head coach Mark Few had to say after the game.

On what he told the team at halftime that led to the strong start to the second half:

“I just told them, ‘hey, we’re in a we’re in a battle. It’s a great game. Both teams are competing really hard, and we’re at our best when we’re in attack mode.’ And they did a great job of taking the message and I thought we really went out and turned defense into offense, and we knew that was going to be a big key for us. [The Cougars] are hard to guard, they’re big and they’re physical, and [WSU coach David Riley] does a really lot of nice stuff on on offense that exploits mismatches. But our guys battled tonight, so I was really proud of them.”

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On the team’s performance while Ryan Nembhard was on the bench for the final 9 minutes of the first half:

“They played great. I told them that in the locker room that that was huge. We haven’t really had to do that all year. And this guy [Nolan Hickman] stepped up. He was amazing tonight. I mean, seven boards … defensively in there, battling in the post. I mean, he did a lot of stuff that, as I said, he’s now, he set a high standard, so kind of be counting on that moving forward, but he and Dusty [Stromer] both really helped during that stretch and [Khalif Battle] and obviously having Ben [Gregg] and then Graham was rock solid all night.”

On the team’s effort on the defensive end of the floor in the second half:

“I thought our effort and our making plays, I thought it was definitely up there [with the best of the season], and just the physicality that it took. Because, again, they’re so much bigger than us at several of those spots. And again, you just don’t see the post-up thing like this, where your guards are getting constantly posted. But so in that way, we fought, we were physical and kind of had to navigate our way through a lot of different actions. There’s staggers and some curls and some switches and all that. For the most part, we did pretty good.”



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