(Bloomberg) -- The U.S. sanctioned Iran’s minister of petroleum and some related entities as tensions between the two nations continue to rise in the days before the U.S. presidential election.The Treasury Department announced sanctions against Minister Bijan Namdar Zanganeh in a statement on Monday, saying Iran uses its oil industry to fund activities of the Islamic Revolutionary Guard Corps and its elite Quds Force.“The regime in Iran uses the petroleum sector to fund the destabilizing activities of the IRGC-QF,” Treasury Secretary Steven Mnuchin said in a statement Monday. “The Iranian regime continues to prioritize its support for terrorist entities and its nuclear program over the needs of the Iranian people.”Zanganeh is a veteran of Iran’s oil industry who is widely seen as a skillful technocrat who shepherded the Islamic Republic’s market-share revival within OPEC after the 2015 nuclear deal. He is also seen as one of President Hassan Rouhani’s most moderate aides.The architect of the Iranian oil industry’s post-sanctions recovery, Zanganeh helped secure several multibillion dollar joint-ventures with foreign investors, including France’s Total SA and China National Petroleum Corp., before the Trump era abruptly ended Iran’s tentative economic recovery.Iran’s OPEC Veteran Weathers Storms From Trump to Saudi ArabiaSince Donald Trump reimposed sanctions on Iran and sought to wipe-out the country’s crude exports from global markets, Zanganeh has maintained a strict policy of not publicly discussing Iranian output and production levels and has frequently condemned the U.S. president for his efforts to directly influence and intervene in OPEC policy and decisions.A public affairs official at the Ministry of Petroleum in Tehran said Zanganeh had not yet officially responded to the decision and declined to comment further on the matter.Monday’s move will have little impact on current oil prices with existing sanctions already keeping most Iranian crude out of the global market. Brent is trading just above $40 a barrel, down about $5 a barrel since late summer as the latest pandemic surge sweeps through Western Europe and the U.S.Blacklisting BanksNevertheless, the Trump administration has ramped up its already intense pressure on Iran ahead of the Nov. 3 election, partly to help ensure a potential Joe Biden administration won’t have as much room to ease sanctions. The U.S. announced sweeping new restrictions on Iran’s financial sector this month, as well as blacklisting 18 banks which has escaped earlier sanctions.Trump has said he thinks Iran will return to the negotiating table after he wins reelection, something Rouhani’s government has repeatedly rejected. Biden has signaled he’d be open to talks with Iran if it agrees to return to the terms of the 2015 nuclear accord and consider a broader agreement.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Cenovus Energy Inc. is getting more than just a rival Canadian oil producer with its acquisition of Husky Energy Inc. It’s also shoring up its defenses against an anti-oil sands movement that could get a boost if Joe Biden is elected as the next president of the U.S.Calgary-based Cenovus said Sunday morning it’s reached a C$3.8 billion ($2.9 billion) all-share deal to buy Husky, which is controlled by Hong Kong billionaire Li Ka-shing. Li and his CK Hutchison Holdings Ltd. will own about 27% of the combined firm if the deal goes through.Oil sands companies in Alberta sell their crude at a discount to West Texas Intermediate because export pipelines are usually too full to accept all the oil that producers want to ship. That discount can be steep at times -- $20 a barrel or more -- and is currently more than $10.The situation could get worse if Biden wins the Nov. 3 election and makes good on his promise to rescind the permit granted by President Donald Trump for the development of Keystone XL, the biggest of three major Canadian export pipelines under construction.By acquiring Husky’s refineries in Ohio and Wisconsin, Cenovus will reduce its exposure to that problem. The merged company will be able to refine as much as 70% of its crude directly in the U.S. Midwest, the biggest market for Canadian crude, meaning the company won’t have to sell as much oil locally at depressed prices.“Our firm view is that Keystone is not going to be built,” Jeffrey Craig, an analyst at Toronto-based Veritas Investment Research Corp., said of the proposed 830,000-barrel-a-day line from Alberta to Nebraska. Access to Husky’s heavy-oil refineries is “probably the biggest reason to do this deal,” he said.Investors did not react positively Monday, with Cenovus shares falling nearly 15% at one point. They were down more than 8% to C$4.47 as of 1:46 p.m. in Toronto. Husky shares rose 13% to C$3.57. The acquisition will make Cenovus more like rivals Suncor Energy Inc. and Imperial Oil Ltd., which have larger refining businesses and are therefore less exposed to pipeline risk.As concern about climate change has increased, Canada’s oil sands companies have faced criticism about the carbon emissions produced from mines and steam-injected wells in northern Alberta. In alliance with some indigenous groups, environmentalists have gone to court to stop pipelines and, more recently, appealed directly to banks not to fund projects.The region’s carbon footprint has become an issue for investment firms that are growing more concerned with the environmental and social risks taken by the companies they own. Norway’s massive wealth fund, for example, cut its holdings of Canadian oil sands stocks, including Cenovus and Suncor.For ESG data on Cenovus, click hereEnvironmentalists’ efforts have partly paid off. Keystone XL’s future remains in doubt 12 years after it was first proposed by TC Energy Corp. The Trans Mountain pipeline expansion to Vancouver and Enbridge Inc.’s Line 3 are under construction, but only after years of delays that brought new oil sands development to a near halt.For Cenovus, the Husky deal means that pipeline risk “has been materially decreased,” Chief Executive Officer Alex Pourbaix said on a conference call Sunday. “I’ve been talking to investors for three years, telling people I was optimistic the pipes were going to come.”Two years ago, Alberta’s government was forced to impose output limits on producers when oil sands production overwhelmed pipeline capacity, causing a glut of crude to form in Western Canada that temporarily depressed local prices to discounts as large as $50 a barrel.Those limits are due to be lifted in December after the collapse in oil demand caused by the Covid-19 pandemic prompted the industry to shut in some production.(Updates with share price reaction in seventh paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Libya is set to restart the last of its major oil fields following a cease-fire in its civil war, a milestone for the OPEC member that’s been largely offline since January.Oil dropped after the state energy firm lifted force majeure on exports from El Feel on Monday. The move will bolster the Tripoli-based National Oil Corp.’s attempt to boost Libyan production to 1 million barrels each day within a month.The return of Libyan barrels is hindering OPEC+ as it tries to prop up crude prices amid a resurgence in coronavirus cases and with many major economies imposing lockdowns again. The oil producers’ alliance was set to ease supply cuts by almost 2 million barrels a day in January but may be forced into a delay.Crude production from Libya’s western deposit of El Feel, or Elephant in Arabic, will reach normal rates of around 70,000 barrels daily within a few days, the NOC said. Force majeure is a clause in contracts allowing deliveries to be suspended.Monday marks “the end of closures at all Libyan oil fields and ports,” the NOC said.Libya’s output has risen rapidly over the past six weeks after Khalifa Haftar, a commander in the long-running war, ended a blockade of most energy facilities imposed in January. His representatives agreed to a permanent truce with the United Nations-recognized government of Prime Minister Fayez al-Sarraj on Friday. The two sides are set to meet in Tunisia next month to appoint a unity government.While Libya has been in chaos since a 2011 revolt that overthrew former dictator Muammar al-Qaddafi, its oil industry has proved resilient. A rise in production from mid-2016 proved more sustainable than many traders expected, with the country’s output averaging around 1 million barrels a day in both 2018 and 2019.The speed of the latest recovery has again taken markets by surprise and put pressure on oil prices, which have been hammered since the virus spread around the world. Brent crude dropped 2.4% to $40.78 per barrel as of 1:41 p.m. in London, deepening its fall this year to 38%.Libya’s daily output has risen to 690,000 barrels from less than 100,000 in early September. Sharara, the country’s biggest field, reopened around two weeks ago, while the last two oil ports still closed -- Ras Lanuf and Es Sider -- restarted on Friday.The Arab nation won’t be able to pump at December’s levels of around 1.2 million barrels a day due to damaged infrastructure and budget constraints, according to the NOC. The war has damaged storage tanks, pipelines and well heads, and it will cost hundreds of millions of dollars to fix them properly, the NOC has said.Libya holds Africa’s largest oil reserves. Due to its strife, the nation was exempted from supply cuts that OPEC+ -- a partnership of the Organization of Petroleum Exporting Countries and others such as Russia -- agreed to in April at the height of the pandemic. The group, led by Saudi Arabia and Russia, initially cut output by 10 million barrels a day, roughly a 10th of global production.Russian President Vladimir Putin said last week he didn’t rule out a delay in the OPEC+ alliance’s scheduled output hike at the start of next year. Saudi Energy Minister Prince Abdulaziz bin Salman said Monday the oil market is going through “serious harsh times.”(Updates oil price in eighth paragraph; output level in ninth.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.