OPEC: Higher Demand Forecast for Oil, Points to Tighter Markets in 2018

The Organization of the Petroleum Exporting Countries predicted higher demand for its oil in 2018 on Wednesday and said its production-cutting deal with rival producers was getting rid of a glut, pointing to a tighter market that could move into a deficit next year.

In a monthly report, OPEC said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast.

“With the market moving into the winter season, distillate fuel supplies are notably tight, representing a change from the excess supplies seen in the last two years,” OPEC said.

“OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels.”
The report illustrates growing confidence among OPEC officials that its supply cut is working.

In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers are cutting half as much, until March 2018.

According to Reuters, the 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the 2018 demand forecast, even though production climbed by about 89,000 bpd to 32.75 million bpd.

In a further sign that the supply excess is easing, OPEC said inventories in developed economies declined by 24.7 million barrels in August to 2.996 billion barrels, 171 million barrels above the five-year average.

OPEC and its allies want to bring stocks down to the five-year average and are discussing extending their supply restraint.

Suicide Attacks Hit Damascus Police Center

Three suicide bombers blew themselves up near the police headquarters in central Damascus on Wednesday, Syrian state media said, in the second such attack to hit the capital this month. Terror group ISIS later claimed that attack.

The blasts killed one person and injured six others, state television said, citing the interior ministry.
The suicide bombers tried to storm the police command center and clashed with guards before detonating explosive belts at the entrance, it said.

The police cornered the third attacker behind the building, where he blew himself up on the street, state media added.

Earlier this month, suicide bombers struck a police station in another part of the capital, with 17 people reported dead.

On that note, Syria’s Kurds were reportedly cited as ‘competitive’ against the pro-regime forces, seeking control over oil-producing areas, Syrian Foreign Minister Walid al-Moualem said on Wednesday.

“They (the Kurds) know well that Syria will not allow its sovereignty to be violated under any conditions,” Moualem told his Russian counterpart Sergei Lavrov during a meeting in Russia’s Black Sea resort of Sochi.

“They are now drunk on US assistance and support. But they need to understand that this assistance won’t last forever.”

Spanish PM Moves towards Suspending Catalonia’s Autonomy

Rajoy

Spanish Prime Minister Mariano Rajoy demanded on Wednesday that the Catalan regional government clarify if it considered itself independent or not following a speech by Catalan President Carles Puigdemont on Tuesday night.

This requirement is a necessary step before triggering Article 155 of the constitution, which would allow Madrid to suspend the region’s political autonomy.

Under that article, the central government could take control of the governance of a region, a never-before used provision that has been referred to as the “nuclear option”.

“The cabinet has agreed this morning to formally request the Catalan government to confirm whether it has declared the independence of Catalonia, regardless of the deliberate confusion created over its implementation,” Rajoy said in a televised address after a cabinet meeting to consider the government’s response.

Without giving a specific deadline for the Catalan government to reply, Rajoy said: “The answer from the Catalan president will determine future events, in the next few days.”

“The government wants to offer certainty to Spaniards, especially Catalans, it wants to avoid the confusion that has been generated by Catalan authorities.”

The premier’s move could deepen the confrontation between Madrid and Catalonia but it also signals a way out of Spain’s biggest political crisis since a failed military coup in 1981.

The prime minister would be likely to call a snap regional election after activating the constitutional mechanism allowing him to do so.

Puigdemont made a symbolic declaration of independence from Spain on Tuesday night but then immediately suspended it and called for talks with the Madrid government.

It is not yet clear if and when the Catalan government would answer Madrid’s call, but it now faces a conundrum, political analysts say.

If Puigdemont says he did declare independence, the government would likely trigger Article 155. If he says he did not declare it, then far-left party CUP would likely withdraw its support to his minority government.

“Rajoy has two objectives: if Puigdemont remains ambiguous, the pro-independence movement will get more fragmented; if Puigdemont insists on defending independence then Rajoy will be able to apply Article 155,” said Antonio Barroso, deputy director of London-based research firm Teneo Intelligence.

“Either way Rajoy’s aim would be to first restore the rule of law in Catalonia and this could at some point lead to early elections in the region”.

Puigdemont had been widely expected to unilaterally declare Catalonia’s independence on Tuesday after the Catalan government said 90 percent of Catalans had voted for a breakaway in an October 1 referendum that Spain had declared illegal and which most opponents of independence boycotted.

Madrid responded angrily to Puigdemont’s speech, saying the Catalan government could not act on the results of the referendum.

“Neither Mr. Puigdemont nor anyone else can claim, without returning to legality and democracy, to impose mediation… Dialogue between democrats takes place within the law,” Deputy Prime Minister Soraya Saenz de Santamaria said.

Invoking Article 155 would make prospects of a negotiated solution to the Catalonia crisis even more remote.

The article allows the central government to take some or total control of any of its 17 regions if they do not comply with their legal obligations. This would begin with a Cabinet meeting and a warning to the regional government to fall into line. Then, the Senate could be called to approve the measure.

A spokesman for the Catalan government said earlier on Wednesday that if Madrid went down this road, it would press ahead with independence.

“We have given up absolutely nothing…We have taken a time out…which doesn’t mean a step backwards, or a renunciation or anything like that,” Catalan government spokesman Jordi Turull told Catalunya Radio.

Socialist opposition leader Pedro Sanchez said he would back Rajoy if he had to activate Article 155 and said he had agreed with the prime minister to open a constitutional reform within six months to discuss how Catalonia could fit better in Spain.

It was not clear how the Catalan government would respond to the offer.

About 2.3 million Catalans — or 43 percent of the electorate in the northeastern region — voted in the referendum. Regional authorities say 90 percent were in favor and declared the results valid. Those who opposed the referendum had said they would boycott the vote.

UN: Myanmar Clearance Operations Aim to Prevent Rohingya’s Return

Rohingya

The United Nations human rights office accused on Wednesday security forces in Myanmar of not only violently driving away Muslim Rohingya from their homes in Rakhine state, but of also implementing “clearance operations” to prevent their return.

The security forces have torched homes, crops and villages to prevent the Rohingya’s return. More than half a million have fled to neighboring Bangladesh to escape the brutal “systematic” crackdown, said the UN.

In a report based on 65 interviews with Rohingya, who have arrived in Bangladesh in the past month, the UN said that the clearance operations had begun before insurgent attacks on police posts on August 25 and included killings, torture and rape of children.

UN High Commissioner for Human Rights Zeid Ra‘ad al-Hussein – who has described the government operations as “a textbook example of ethnic cleansing” – said in a statement that the actions appeared to be “a cynical ploy to forcibly transfer large numbers of people without possibility of return”.

“Credible information indicates that the Myanmar security forces purposely destroyed the property of the Rohingyas, scorched their dwellings and entire villages in northern Rakhine State, not only to drive the population out in droves but also to prevent the fleeing Rohingya victims from returning to their homes,” the latest report by his Geneva office said.

The destruction by security forces, often joined by “mobs” of armed Rakhine Buddhists, of houses, fields, food stocks, crops, and livestock make the possibility of Rohingya returning to normal lives in northern Rakhine “almost impossible”.

Myanmar security forces are believed to have planted landmines along the border in an attempt to prevent Rohingya from returning, it said, adding: “There are indications that violence is still ongoing”.

Myanmar on Tuesday launched its first bid to improve relations between Buddhists and Muslims since the eruption of deadly violence inflamed communal tension and triggered an exodus of some 520,000 Muslims to Bangladesh. It held inter-faith prayers at a stadium in Yangon.

A team of UN human rights officials, who went to Cox’s Bazar, Bangladesh, from September 14-24, met victims and eyewitnesses and corroborated their accounts.

They documented Myanmar security forces “firing indiscriminately at Rohingya villagers, injuring and killing other innocent victims, setting houses on fire”, the report said.

“Almost all testimonies indicated that people were shot at close range and in the back while they tried to flee in panic,” it said. “Witness accounts attest to Rohingya victims, including children and elderly people, burned to death inside their houses.”

Several interviewees indicated that a “launcher”, most probably a rocket propelled grenade launcher, was used to set houses on fire, the report added.

Girls just five to seven years old had been raped, often in front of relatives, and sometimes by several men “all dressed in army uniforms”, it said.

The social welfare, relief and resettlement minister has been quoted as saying that “according to the law, burned land becomes government-managed land,” it said, noting the government has previously used this law to prevent the return of displaced.

Rohingya men under 40 were arrested up to a month before August 25 without charge, creating a “climate of intimidation and fear”.

“In some cases, before and during the attacks, megaphones were used to announce: ‘You do not belong here – go to Bangladesh. If you do not leave, we will torch your houses and kill you’,” the UN said.

Teachers as well as cultural, religious and community leaders have also been targeted in the latest crackdown “in an effort to diminish Rohingya history, culture and knowledge”, the report said.

“Efforts were taken to effectively erase signs of memorable landmarks in the geography of the Rohingya landscape and memory in such a way that a return to their lands would yield nothing but a desolate and unrecognizable terrain,” it added.

During the briefing on the report, a senior UN human rights official called on Myanmar leader Aung San Suu Kyi to stop the violence and discrimination against the Rohingya.

“Our ask of Aung San Suu Kyi is certainly to immediately stop the violence,” Jyoti Sanghera, head of the Asia and Pacific region of the UN human rights office.

Sanghera voiced concern that Rohingya who have fled to Bangladesh might be “incarcerated or detained” on return to Myanmar, where she said they lacked citizenship and other civil and political rights.

Trump Requests $4.9B to Ease Puerto Rico Fiscal Crisis

US President Donald Trump asked Congress on Tuesday for a loan of $4.9 billion to help the cash-strapped government of Puerto Rico as it struggles to recover from Hurricane Maria.

Puerto Rico’s central government and various municipalities and other local governments are suffering unsustainable cash shortfalls as Maria has choked off revenues and strained resources.

The White House request came as the oversight board charged with resolving Puerto Rico’s debt crisis warned the US territory was at risk of being unable to pay for essential services such as salaries for teachers, first responders and healthcare providers.

“The best estimate of the Financial Oversight and Management Board (FOMB) and government is that the commonwealth will run out of money at the end of this month,” the board told US Treasury Secretary Steven Mnuchin in a letter on Tuesday evening.

Weighed down by nearly $72 billion in debt, Puerto Rico struggled with liquidity even before the most powerful hurricane in almost 90 years wiped out the island’s power grid, homes and other infrastructure nearly three weeks ago.

It will take months and billions of dollars to rebuild the grid, and the impacts of the storm have cratered the economy of Puerto Rico, home to 3.4 million American citizens, which declared bankruptcy in May.

Puerto Rico Governor Ricardo Rossello had warned two weeks ago that his government was in a bind and would need lines of credit.

Trump’s loan proposal was “an important first step for the transformation” of Puerto Rico, Rossello said on social network Twitter on Tuesday.

In Show of Force, US Flies Bombers over Korean Peninsula

Korea

Two US strategic bombers flew over the Korean peninsula on Wednesday in a show of force by Washington against Pyongyang’s aggressive nuclear drive.

A South Korean Defense Ministry official said, requesting anonymity because of department rules, said the bombers simulated missile strikes off the peninsula’s east coast before flying with two South Korean jets to then stage similar drills off the west coast.

The two B-1B supersonic bombers flew from an air base in the US territory of Guam to South Korea for drills with that country’s jets.

The US military said in a separate statement it conducted drills with Japanese fighters after the exercise with South Korea, making it the first time US bombers have conducted training with fighters from both Japan and South Korea at night.

The flights came after a South Korean lawmaker was reported to have revealed that North Korean hackers may have stolen highly classified military documents.

Rep. Lee Cheol-hee, a lawmaker for the ruling Democratic Party who sits on the National Defense Committee, said defense sources told him that North Korean hackers last year stole the classified US-South Korean war plans, including parts of Operational Plan 5015, which includes procedures for a “decapitation strike” on the North’s leadership if a crisis breaks out or appears imminent.

The Defense Ministry after an investigation said in May that North Korea was likely behind the hacking of the Defense Integrated Data Center in September last year, but had refused to confirm media speculation that the decapitation strike plan was compromised.

Defense officials refused to comment Wednesday.

Lee, who didn’t specify his sources, said the plans allegedly stolen by the North include operations for tracking the movement of the North’s leadership, isolating their hideouts, executing air assaults and follow-up actions for securing and eliminating targets, which would obviously include North Korean leader Kim Jong Un.

“There is an urgent need for the military to change and update parts that were stolen by North Korea,” Lee said.

A preemptive strike against Pyongyang’s leadership would be difficult to undertake, but it’s widely seen as the most realistic of the limited military options Seoul has to deny a nuclear attack from its rival.

Meanwhile, US President Donald Trump met top defense officials to discuss how to respond to any threat from North Korea.

Tensions have soared between the United States and North Korea following a series of weapons tests by Pyongyang and a string of increasingly bellicose exchanges between Trump and North Korean leader Kim Jong Un.

North Korea has launched two missiles over Japan and conducted its sixth nuclear test in recent weeks as it fast advances toward its goal of developing a nuclear-tipped missile capable of hitting the US mainland.

Trump hosted a discussion on Tuesday on options to respond to any North Korean aggression or, if necessary, to prevent Pyongyang from threatening the United States and its allies with nuclear weapons, the White House said in a statement.

Trump was briefed by Secretary of Defense James Mattis and Chairman of the Joint Chiefs of Staff General Joseph Dunford at a national security team meeting, the statement said.

Catalonia Suspends Declaration of Independence for Talks with Madrid

Catalonia

Crisis talks will be held in Spain on Wednesday after Catalan leaders suspended a declaration of independence on Tuesday in favor of dialogue with Madrid.

Prime Minister Mariano Rajoy will chair an emergency cabinet meeting a day after Catalan leader Carles Puigdemont signed a suspended declaration of independence and called for negotiations with Madrid.

Puigdemont said on Tuesday that he had accepted “the mandate of the people for Cataloniato become an independent republic” following a banned referendum earlier this month.

In a much-anticipated speech to the Catalan parliament, ringed by thousands of protesters and hundreds of armed police, Puigdemont made only a symbolic declaration on Tuesday, claiming a mandate to launch secession but suspending any formal steps to that end.

“We aren’t criminals, nor crazy, nor coup plotters, nor abducted,” he said. “We are normal people who ask to be allowed to vote and who have been ready for all the dialogue necessary to achieve it in an agreed way.

“I assume … the mandate that Catalonia become an independent state in the form of a republic,” he said to prolonged applause.

“I propose suspending the effects of the declaration of independence to undertake talks in the coming weeks without which it is not possible to reach an agreed solution.”

Spain’s political establishment rounded on Puigdemont following the declaration, and support among separatists in Catalonia was mixed.

Deputy prime minister Soraya Saenz de Santamaria told reporters shortly after the signing that Puigdemont was “a person who doesn’t know where he is, where he’s going or with whom he wants to go”.

But the speech pleased financial markets, boosting the euro on hopes that his gesture would mark a de-escalation of Spain’s worst political crisis since an attempted military coup in 1981.

Rajoy has vowed to use everything in his power to prevent independence and has refused to rule out imposing direct rule over the semi-autonomous region — an unprecedented move many fear could lead to unrest.

At stake is the future of a region of 7.5 million people, one of Spain’s economic powerhouses, whose drive to break away has raised concern for stability in the European Union.

In Brussels, there was a sense of relief that the euro zone’s fourth-largest economy now had at least bought some time to deal with a crisis that was still far from over.

European Council President Donald Tusk had urged Puigdemont not to proclaim independence. And French President Emmanuel Macron rejected Puigdemont’s call for European Union mediation, saying he was confident Madrid could handle the situation.

One EU official said Puigdemont “seems to have listened to advice not to do something irreversible”.

Spain and Catalonia now enter into the unknown, as Madrid has repeatedly said independence is not up for discussion.

Marc Cazes, a student in Barcelona, said: “I did not expect independence to be declared today because of all the processes that the government of Spain has begun, both with police actions and with threats.”

Catalonia pressed ahead with an independence referendum on October 1 that the central government said breached Spain’s constitution.

The Catalan government said 90 percent of those who voted backed independence but turnout was only 43 percent as many opponents of independence stayed at home.

Demands for independence in Catalonia, which has its own language and cultural traditions, date back centuries.

But a 2010 move by Spain’s Constitutional Court to water down a statute that gave Catalonia additional powers, combined with a deep economic meltdown in Spain, sparked a surge in support for independence.

Kenya’s Opposition Leader Odinga Withdraws from Presidential Election Re-Run

Kenya’s opposition leader Raila Odinga withdrew on Tuesday from a court-ordered re-run of the presidential election, saying the vote would not be free or fair and leaving President Uhuru Kenyatta as the only candidate.

The election re-run is scheduled for Oct. 26.

According to Reuters, Kenyatta said the election would proceed as planned, promising to get more votes than he did in August and saying his party had no time for “empty rhetoric and divisive politics”.

The election board said on Twitter it was meeting and would communicate the way forward.

But the announcements could further prolong nearly three months of political uncertainty that has worried citizens and blunted growth in Kenya, East Africa’s biggest economy and a staunch Western ally in a region roiled by conflict.

An ally of Odinga called for nationwide protests from Wednesday, raising the prospect of more clashes between police and demonstrators.

For now though there was little sign that the demonstrations could boil over into ethnic clashes. Protests and ethnic violence killed 1,200 people after a disputed 2007 election.

In his announcement, Odinga repeated previous criticism of the election board, called the Independent Electoral and Boundaries Commission (IEBC), for not replacing some officials, who he blamed for irregularities in the Aug. 8 poll.

Official Says Saudi Arabia to Offer Nuclear Reactor Construction Project in 2018

Saudi Arabia plans to award a construction contract for its first nuclear reactors by the end
of 2018, a senior government official said on Tuesday.

“With sponsorship from the highest levels in the state, the contract will be signed by the end of 2018,” Maher al Odan, the chief atomic energy officer of King Abdullah City for Atomic and
Renewable Energy, told a news conference in the capital Riyadh.

On that note, TASS reported last week that Russian state nuclear corporation Rosatom has sent its proposals to the Saudi party for the construction of a nuclear power plant in Saudi Arabia, head of Rosatom Alexei Likhachev.

“Of course, we have sent it,” he said, when answering the relevant question.

“I hope that we will reach an agreement on cooperation in peaceful atom and other areas, such as mobile sources of nuclear energy, small and medium-sized power sources, scientific research,” he noted.

“Saudi Arabia has got down to creating its own nuclear power industry. The first step has been taken – a request was sent for a parade of vendors prepared to build a major nuclear power plant,” he said.

Likhachyov said Rosatom hoped for cooperation with Saudi Arabia in building nuclear power plants and in creating mobile power sources.

Saudi Arabia’s population has grown from 4 million in 1960 to almost 30 million in 2014. It is is the main electricity producer and consumer in the Gulf States, with 312 TWh gross production in 2014, 152 TWh from oil and 160 TWh from gas – a 32% increase over the previous two years.

Abe Faces Off against Tokyo Governor as Election Campaign Begins in Japan

Abe

Campaigning for the lower house election kicked off in Japan on Tuesday with Prime Minister Shinzo Abe seeking to fend off a challenge from the Tokyo governor.

Up for grabs are 465 seats in the more powerful of Japan’s two-chamber parliament.

The October 22 election pits Abe’s Liberal Democratic Party-led coalition against the less than one-month-old Party of Hope headed by popular Governor Yuriko Koike, a former LDP lawmaker often floated as a possible first female premier.

Her upstart new party has pledged to rid the government of cronyism in a challenge to Abe’s near-five year hold on power.

Abe says he needs to renew his mandate to cope with a “national crisis” stemming from North Korea’s nuclear and missile threat and the demographic time-bomb of Japan’s fast-ageing population.

“We should stay unwavering,” he said. “It is the policies, rather than a boom or slogans, that can open the future.”

The 63-year-old Abe called the poll amid opposition disarray and an uptick in approval ratings that had slid due to a series of scandals over suspected cronyism.

But, the sudden emergence of Koike’s party, which also appeals to conservative voters, could upset Abe’s calculation. The main opposition Democratic Party imploded last month and a big chunk of its candidates are running on the Party of Hope ticket.

Koike, who defied the LDP last year to run for governor, calls her fledgling party a “reformist, conservative” group free from the fetters of vested interests — an often popular campaign slogan in Japan.

“We have a surplus of things in this country, but what we don’t have is hope for the future,” said Koike, 65, kicking off her campaign outside one of Tokyo’s major train stations.

Koike has repeatedly said she won’t run for a seat which would make her eligible for the premiership and has declined to say whom her party would support for the post, leaving the door open to a variety of possible tie-ups including with Abe’s LDP.

Others outside the station were less convinced by Koike’s talk of cleaner politics, while trusting Abe to safeguard national security.

“I doubt she can deliver politics free from vested interests,” said Minori Hiramatsu, a 28-year-old mother of one who was on her way to a job interview.

“Abe has problems domestically, but he is the best person to protect us from North Korean threats.”

The LDP-led coalition is defending a two-thirds “super majority” in parliament’s lower house, so losing its simple majority would be a major upset. Abe’s LDP had 288 seats in the lower house before it was dissolved for the election, while its junior partner the Komeito had 35.

Recent opinion polls show the LDP in the lead and some analysts think Abe could still pull off another landslide victory.

A soggy performance for the LDP, however, could stir calls from inside the party to replace Abe or deny him a third term as leader in September 2018, ending his chances of becoming Japan’s longest-serving premier.

The Party of Hope echoes Abe’s LDP on security and diplomacy – it backs tough sanctions on North Korea and controversial security legislation enacted in 2015 to expand the military’s role overseas.

Koike also agrees with Abe that Japan’s post-war, US-drafted, pacifist constitution should be amended, though not necessarily on what changes are needed.

On economic policies, Koike’s party has sought to differentiate itself by calling for an end to nuclear power by 2030 and a freeze on a sales tax hike planned for 2019.

Abe wants to keep nuclear power as a key part of Japan’s energy mix, and raise the sales tax and spend more of the revenues on education and child care.

A center-left Constitutional Democratic Party of Japan, formed from the liberal wing of the failed Democratic Party, is wooing voters dissatisfied with both conservative options.

Constitutional Democratic Party leader Yukio Edano said Abe’s nearly five years of pro-business policies have escalated Japan’s social divide.

“We must regain decent lives,” Edano said. “We are going to change politics into one that is based on the people’s voices, not one that comes down from up above.”

Koichi Nakano, an international politics professor at Sophia University in Tokyo, says the election could be a transition to a less stable political environment as party alliances and re-groupings may continue after the election.

A favorable result for Koike’s party and its possible alliance with Abe’s ruling party would mean a dominance of ultra-conservatives. In that case, Nakano said, “Japan wouldn’t have a viable party system with any significant competition to speak of.”