Saudi Arabia Lifts Oil Market

Here are some thoughts about Saudi Arabia's energy policy, and Tesla. 

Saudi Arabia Lifts Oil Market With Support for Renewing Production Agreement

By Neanda Salvaterra

Saudi Arabia, the world’s top exporter of crude, has told major producers that it wants to extend an agreement to cut oil production for another six months, write Summer Said and Benoit Faucon.

“Saudi support is essential for the 13-member Organization of the Petroleum Exporting Countries to renew its supply cut deal at its next meeting, in Vienna on May 25,” the Journal reports.

Last year OPEC and external producers including Russia committed to eliminate about 1.8 million barrels of oil a day in a bid to rebalance the oil market and raise petroleum prices.

The agreement helped raise oil prices about 20%.

OPEC countries appear to be adhering to the agreement after three months, the cartel said Wednesday in its closely watched monthly market report.

Saudi Arabia, Venezuela, Angola Iran and Kuwait were all pumping at or below their pledged levels, while other countries were missing the mark by small amounts.

Oil  prices gained on Wednesday. Brent crude, the global oil benchmark, rose 0.64% to $56.59 a barrel on London’s ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.59% at $54.11 a barrel.

CONGRESSMEN WARN VENEZUELA DEFAULT COULD LEAD TO RUSSIAN CONTROL OF U.S. OIL ASSETS

A default by Venezuela’s state-owned oil firm could move the Russian government closer to gaining control of U.S. refineries and pipelines, U.S. lawmakers say.

House of Representatives Jeff Duncan (R., S.C.) and Albio Sires (D., N.J.) wrote to the Treasury this month, urging a review of a $1.5 billion loan that state-owned Russian oil giant PAO Rosneft made last year to Petróleos de Venezuela SA.

As collateral PdVSA, as the firm is known, put up 49.9% of the equity in Citgo Petroleum Corp. The subsidiary has three refineries in the U.S., and a network of terminals and pipelines running across 24 states.

Lawmakers warn that a PdVSA default on the Rosneft loan would give Russians control over critical assets and undermine U.S. energy security.

Venezuela has been hurt by a recession that has left the country and PdVSA saddled with a debt of about $15.9 billion due over the course of the next two years. Investors are worried that Venezuela will default on its debt this year.

TESLA VALUE ‘INEXPLICABLE’ SAYS AUTONATION CEO

The head of the U.S.’s largest car-dealership chain says he is befuddled by Tesla’s rise to the position of number one automaker by market value, write Mike Spector and Christina Rogers.

Tesla “is either one of the great Ponzi schemes of all time” or will eventually work out for investors, said AutoNation Inc. Chief Executive Mike Jackson during an interview in New York on Tuesday.

“On Monday a surge in Tesla Inc. stock trading gave it the title of largest U.S. auto maker by market value. By the market’s close in New York, however, Tesla’s gains had edged down, leaving its market value at $50.95 billion compared with GM’s $51.18 billion,” the Journal reports.

The upstart Silicon Valley car maker surpassed traditional automakers after the industry delivered disappointing March sales results.

Still, GM is the largest auto maker in the U.S. by market share, making up 17.3% of the sales last year, according to Autodata Corp. Tesla had a 0.2% share, which beat Ferrari and Maserati.

This article first appeared in the Energy Journal by the Wall Street Journal