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$60 to $70 is a fair price for a barrel of oil, Egypt’s petroleum minister says

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There is a fair price for a barrel of oil and OPEC and its non-OPEC partners are close to achieving it through their deal to cut production, according to Egypt’s Petroleum Minister Tarek El-Molla.

“It is in the range between $60 and $70 a barrel … somewhere in this bracket of price,” El Molla told CNBC on Sunday when asked if oil prices were at an acceptable level to keep producers and consumers happy.

“If prices of crude increase significantly we would start to see inflation and an exaggeration in the slowdown in consumption from the other side. If we see prices go down below a certain price then we will see a slowdown in investments,” he said.

“So, actually, the fair equation is to have a balanced price between the producers and the consumers whereby each party is happy and to continue the growth of the global economy.”

Egypt is a significant oil and natural gas producer in the Middle East although it’s not a member of OPEC and its output is dwarfed by members of the oil producing group and other non-OPEC producers like Russia.

Egypt is aiming to boost production modestly in 2019, to 670,000 barrels a day, although its output still trails that of others in the region. The latest figures from OPEC’s monthly report in January showed that Egypt’s oil producing neighbors to the west, Libya and Algeria, produced 928,000 barrels a day and a million barrels a day respectively in December. OPEC lynchpin Saudi Arabia produced 10.5 million barrels a day.

OPEC and non-OPEC producers including Russia (collectively known as ‘OPEC plus’) have collaborated in recent years on cutting or increasing their oil production in a bid to stabilize oil prices which have been volatile since 2014.

They last agreed in December to cut oil production by 1.2 million barrels a day in order to put a floor under prices, which have fallen due to rising oil supply and lackluster demand amid an uncertain global growth outlook.

On Monday morning, Brent crude futures were trading at $61.87 a barrel while West Texas Intermediate (WTI) crude futures was trading at $52.25 a barrel. Prices took a dip in the early trading session on Monday after data showed drilling activity in the U.S., now the world’s largest oil producer, had increased again, pointing higher production.

The OPEC-Plus deal has not yet been realized fully with Russia slower to meet the desired output cut. Once the 1.2 million barrel a day cut was reached, El Molla said “I think it will adjust, and reach, the desired outcome of price.”

Speaking to CNBC’s Dan Murphy at the Egypt Petroleum Show, ‘EGYPS, ‘taking place in Cairo, El Molla said oil markets were “somehow close” to a price that can keep both oil producers happy because although oil prices have fallen from peaks of around $114 a barrel in mid-2014, production costs have also fallen with technological advances.

“With the advancement of technology, new ways of producing oil have added new volumes to the market and this technology means you’re reducing the cost per barrel, and what might have been accepted a few years ago back when we were talking about $100, or $90 or $80, a barrel oil wouldn’t be accepted now.”

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Venezuela skirts U.S. sanctions by funneling oil sales via Russia

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President Nicolas Maduro is funneling cash flow from Venezuelan oil sales through Russian state energy giant Rosneft as he seeks to evade U.S. sanctions designed to oust him from power, according to sources and documents reviewed by Reuters.

The sales are the latest sign of the growing dependence of Venezuela’s cash-strapped government on Russia as the United States tightens a financial noose around Maduro, who it describes as a dictator.

With its economy reeling from years of recession and a sharp decline in oil production, Venezuela was already struggling to finance imports and government spending before Washington imposed tough restrictions on state oil company PDVSA in January.

Oil accounts for more than 90 percent of exports from the OPEC nation and the lion’s share of government revenues. Maduro has accused U.S. President Donald Trump of waging economic war against Venezuela.

Since January, Maduro’s administration has been in talks with allies in Moscow about ways to circumvent a ban on clients paying PDVSA in dollars, the sources said. Russia has publicly said the U.S. sanctions are illegal and it would work with Venezuela to weather them.

Under the scheme uncovered by Reuters, Venezuelan state oil company PDVSA has started passing invoices from its oil sales to Rosneft.

The Russian energy giant pays PDVSA immediately at a discount to the sale price avoiding the usual 30-to-90 day timeframe for completing oil transactions and collects the full amount later from the buyer, according to the documents and sources.

“PDVSA is delivering its accounts receivable to Rosneft,” said a source at the Venezuelan state firm with knowledge of the deals, who spoke on condition of anonymity for fear of retaliation.

Major energy companies such as India’s Reliance Industries – PDVSA’s largest cash-paying client – have been asked to participate in the scheme by paying Rosneft for Venezuelan oil, the documents show.

Rosneft, which has heavily invested in Venezuela under President Vladimir Putin, did not immediately respond to a request for comment.

Venezuela’s oil ministry, its information ministry, which handles media for the government, and PDVSA did not respond to questions.

Asked about the transactions, a spokesperson for Reliance said it had made payments to Russia and Chinese companies for Venezuelan oil. The spokesperson said the payments were deducted from money owed by Venezuela to those countries, but did not provide further details.

“We are in active dialogue with the U.S. Department of State on our dealings on Venezuelan oil to remain compliant with U.S. sanctions,” the spokesperson said.

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Toyota shows off electric vehicle concept Rhombus

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Toyota brought a crop of hybrid and fully electric vehicles to the Shanghai Auto Show this year.

The Rhombus, pictured above, is a concept car for a battery-powered electric vehicle targeted at consumers born after 1990, according to a release. The vehicle was developed by TMEC, the company’s research and development base in China.

A single swivel seat at the front replaces the typical two-seat driver’s row, while two seats in the back make up a lounge-like area.

Toyota said it plans to roll out more than 10 battery electric vehicle models globally in the next five or six years, with a sales target of more than 5.5 million electrified vehicles worldwide by 2030.

The C-HR and IZOA battery electric models that premiered in Shanghai will be the first such vehicles to launch in China under the Japanese automaker’s brand. Sales are expected to begin next year.

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Russia Stable Runet law will further separate country from internet

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The new Stable Runet law would give the Russian communications regulator, known as Roskomnadzor, broader powers to monitor network traffic and potentially provide a “kill switch” to disconnect Russia from the wider internet in the event of cyberattack. Essentially, the law is meant to help create a digital drawbridge between Russia and the rest of the world that the country can raise in an emergency.

While the Kremlin says the law is meant to increase security, many observers, especially human rights groups, have speculated it will further increase censorship initiatives from Putin’s government.

That’s because the law was proposed by the same group of lawmakers in Russia who recently passed a law criminalizing the spread of online news that disrespects the government, said Aleksandr Yampolskiy, CEO of network security rating company SecurityScorecard.

“First, they made the language very broad. If you operate a network in Russia, you are required to create a way to have government oversight of that information,” he said.

The law also lacks specifics, Yampolskiy said, an indication the Kremlin is building in some wiggle room for how exactly it will be enforced.

“The language is deliberately vague and broad, so that will also be something for [business] to consider, since it’s unclear what you are going to have to do to comply,” he said.

But it will probably become another tool to enforce positive messaging about Putin’s government, Yampolskiy said.

The law also doesn’t provide much information as to how it will be accomplished technologically, said Natalia Gulyaeva, head of the Moscow intellectual property, media and technology practice group for law firm Hogan Lovells.

“Theoretically, the law encompasses installing new equipment on data transfer points in order to secure functionality of [the] Russian part of Internet in case of any global shutdowns,” she said. “The authors of the law have not provided any comments on the technical side of the law.”

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