CCTV Transcripts

CCTV Script 21/09/18


— This is the script of CNBC's news report for China's CCTV on September 21, 2018, Friday. 

The OPEC ministerial conference on weekend drew attention from markets. Let's see how did the market react before this meeting? First, Saudi Arabic and Iran, No.1 and No.2 oil producers in OPEC, said $80 plus is a reasonable price for Brent oil.

WTI light crude oil closed above $70/barrel overnight, and Brent crude oil traded more than $78/barrel now, voices think Saudi hope the oil price keep at current level as this price-around $80/barrel- can maximize its revenue while the U.S. urge it to get rice down; thus, $80/barrel is in line with Saudi's profit. From Nov, U.S. sanction could hit Iran's crude oil exports, and Iran hopes to minimize its loss to the biggest extent.

Iran's exports have largely down since May as the U.S. sanction against Iran will take effect soon. Iran's crude oil exports have declined around 35% from April to now. So markets think, if Iran continues to cut its supply, then reserve capacity will under the pressure of oil supply, and that may fuel oil price. So the prospect of increasing oil price puts Trump administration under political pressure before mid-term election, then we saw Trump tweeted overnight,

"We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The OPEC monopoly must get prices down now!", after this twitter released, prices fell slightly. With the coming of mid-term election and effective day of sanctions against Iran energy industry, we may see more pressure from Trump and that to Saudi will strengthen, may cause the gap between Saudi Arabic and Iran bigger.

And this kind of disagreement may steer OPEC's policy, the difference lies in Iran is trying to maintain its oil exports under sanctions from the U.S., Saudi is a potential beneficiary as if Iran, which is the 3rd biggest producer in OPEC cuts sales, then international buyers will but crude oil more from Saudi. But Iran shows a hard stance, saying Saudi is in tandem with other oil producers grabbing Iran's market shares, and Iran will veto if OPEC meeting doesn't have rights to ask member states to improve production and the meeting's decision pose a threat to Iran. Therefore, all of that put the meeting under uncertainty, those signals may indicate OPEC has no plans to increase production in response to dwindling supplies from Iran, and Saudi Arabic is in no rush to cut prices. We may see a inaction result from the weekend meeting, but OPEC is still likely to increase production, because Russia crude oil production has hit history high since soviet collapse, and those productions will encroach on OPEC' market shares. We will keep an eye on this issue.