Altria Quit Vaping Market in Secret Deal With Juul, FTC Says

Altria Quit Vaping Market in Secret Deal With Juul, FTC Says(Bloomberg) -- Altria Group Inc. pulled out of the e-cigarette market in the fall of 2018 because of a secret deal with rival Juul Labs Inc. -- not because of the public-health concerns it cited publicly at the time, according to U.S. antitrust officials.The Federal Trade Commission revealed the agreement between the two companies in an antitrust complaint made public Friday. The complaint cites new evidence about the negotiations between the two companies that resulted in Altria’s $12.8 billion investment in Juul in December 2018.The complaint from the FTC, which sued on Wednesday to block the deal and ordered Altria and Juul to unwind the investment, states that Altria pulled its MarkTen product from the market as a condition of investing in Juul.Juul’s “executives made clear their position that Altria could not remain a competitor in the relevant market if there was to be a deal,” according to the complaint. During negotiations, Juul insisted, “and Altria recognized, that Altria’s exit from the e-cigarette market was a non-negotiable condition for any deal.”Altria had told the Food and Drug Administration in an Oct. 25, 2018, letter that it believed kids shouldn’t use tobacco and it would remove its e-cigarette products MarkTen Elite and Apex by MarkTen from the market, and remove all flavors except for menthol and mint from its other, similar products. On Dec. 7 of that year, the maker of Marlboro cigarettes announced it was winding down the rest of the e-cigarette business. Less than two weeks later, Altria had a deal to take a 35% stake in Juul.Altria was facing intense competition at the time from Juul, which was the market leader with 70% of the market at the time, according to the FTC. The $12.8 billion investment, which Altria has since written down, eliminated competition between the two companies, leaving consumers with reduced choice, according to the FTC.Juul spokesman Austin Finan said in a statement that the company disagrees with the “factual and legal allegations” in the FTC’s complaint and “will respond through the appropriate administrative process.”“We believe that our investment in Juul does not harm competition and that the FTC misunderstood the facts,” said Murray Garnick, Altria’s executive vice president and general counsel. He said he’s disappointed with the FTC’s decision and “believe we have a strong defense and will vigorously defend our investment.”Hotel MeetingAccording to the FTC’s complaint, in August 2018, executives and board members from the two companies, including Juul’s then-Chief Executive Officer Kevin Burns and Altria CEO Howard Willard, met at the Park Hyatt hotel in Washington without any lawyers to discuss a deal. As talks continued that month, Juul made it clear that Altria had to exit the market, according to the complaint. When Altria tried to modify the non-compete terms, Juul “responded negatively and reiterated its demands,” the FTC said in the complaint.Negotiations stalled, and Altria executives knew they had to meet Juul’s insistence on not competing if talks were to restart, according to the complaint. In October, Altria’s Willard made assurances to Juul’s CEO and board members. What exactly he promised is redacted in the complaint. But Juul’s Burns forwarded Willard’s letter to Juul’s chief legal officer with a “simple note” and talks resumed.“Altria’s agreement to exit the relevant market eliminated one of JLI’s most dangerous rivals,” the FTC said, referring to Juul. “As a large, well-established, and well-funded company with long­ standing relationships and significant shelf space with retailers nationwide, Altria had the resources and infrastructure to drive sales and compete aggressively.”The FTC claims the companies cannot show the investment led to any efficiencies that would outweigh the lack of competition the deal resulted in. They also say the new contract the companies negotiated in January eliminated Altria’s marketing help, “further reducing the scope of theoretical benefits from the agreements.”Under the revised terms, Altria limited its help to advising Juul on a regulatory application seeking permission from the FDA to continue selling its e-cigarettes in the U.S. The changes also gave Altria a way out of the non-compete agreement should Juul’s application be denied.Altria noted that just before it announced the deal in December 2018, it said it was withdrawing its e-cigarette products for reasons other than youth appeal. It cited “the current and expected financial performance of these products,” as well as regulatory restrictions.And according to the final deal’s non-compete clause, Altria could keep competing with Juul’s products via its Green Smoke and MarkTen and MarkTen Elite brands, subject to certain conditions.(Updates with details from the complaint and background starting in the ninth 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.

Mortgage Firms Teeter Near Crisis That Regulators Saw Coming

Mortgage Firms Teeter Near Crisis That Regulators Saw Coming(Bloomberg) -- Nonbank financial firms spent years lobbying against tougher regulation and stricter capital requirements, arguing that their emerging dominance in mortgage lending didn’t pose a risk to the financial system.Now, many of those companies say they are in desperate need of a bailout to stave off bankruptcy and a potential collapse of the U.S. housing market.Any rescue might not come quickly, as regulators are holding off on providing additional help to see if policies already put in place ease the industry’s expected cash crunch, according to people familiar with the matter. That could lead to anxious moments for Quicken Loans, Freedom Mortgage, Mr Cooper Group Inc. and other nonbank mortgage firms.Read More: U.S. Holds Off on Extending Virus Aid to Mortgage ServicersFederal mortgage watchdogs didn’t predict a pandemic like coronavirus grinding the economy to halt, but many of them did see a potential nonbank liquidity crisis coming. Their efforts to impose more safeguards ran aground against mortgage-industry resistance and bureaucratic reticence to slow the fastest growing source of U.S. home loans, according to industry experts and former government officials.When government-owned Ginnie Mae tried to require stress tests and higher capital and liquidity requirements, some “nonbanks were violently opposed to the idea,” said former Ginnie president Michael Bright. One small lender told Bright that if an event similar to the proposed stress scenario were to take place, he’d just hand Ginnie the keys to his firm.Shaky FoundationsThe rise for nonbanks in the mortgage sector and now their pain shows the shaky ground on which much of the post-crisis financial world has been built. Shadow lending has soared, with firms outside the oversight of the Federal Reserve and other regulators helping to fuel a decade-long credit boom. These companies lack access to many of the government subsidies and funding sources that make banks more stable.Read More: Why the Mortgage Market Needs Its Fixes FixedMortgage servicers Mr Cooper, PennyMac Financial Serivices and Ocwen Financial Corp. all slipped Friday in New York trading. Mr Cooper plunged 19% to $5.51 as of 9:44 am, while PennyMac slid 5.9% to $16.85 and Ocwen declined 13% to $0.33.While the 2008 housing crash was caused by risky mortgages and fraud, the 2020 crisis isn’t the result of bad decisions by lenders. Loads of workers have lost jobs as a result of coronavirus, putting their ability to make loan payments at risk. That point hit home Thursday when the Labor Department reported that a record 6.6 million Americans applied for unemployment benefits last week.As part of the $2 trillion stimulus bill passed in March, Congress mandated that mortgage servicers allow borrowers to delay payments on government-backed loans for as long as a year. Moody’s analytics Chief Economist Mark Zandi estimates that roughly 15 million households -- about 30% of Americans with home loans -- could miss payments if the economy remains dormant through the summer or longer.Under agreements with Ginnie, Fannie Mae and Freddie Mac, servicers themselves must advance the money when borrowers postpone payments and it can take months before they are reimbursed. Congress didn’t provide explicit funding to help servicers with that problem, and some of the companies say they don’t have the liquidity to handle it themselves.Unfair BlameMortgage Bankers Association Senior Vice President Pete Mills said it’s unfair to punish nonbanks for being unprepared for a calamity like the coronavirus because it couldn’t have been predicted.“I don’t think there is a liquidity standard that could have dealt with this kind of ramp up” in expected delayed payments, said Mills, whose Washington-based group lobbies for the industry.Should servicers start to go under, federal agencies will have to rush to find other companies to take over the loans. Borrowers could have more difficulty working with their mortgage companies on loan modifications to alleviate some of the pain of the pandemic. Others will have fewer places to go to find new loans.If not solved, the epicenter of the nonbank crisis will be with Ginnie, which is part of the U.S. Department of Housing and Urban Development. The company guarantees $2.1 trillion in mortgage bonds containing loans to low-wealth borrowers, veterans and others.While nonbanks service about two-thirds of all mortgages, they handle nearly nine out of ten mortgages backed by Ginnie, according to the Urban Institute Housing Finance Policy Center.Banks RetreatAfter the financial crisis, large banks like JPMorgan Chase & Co. and Bank of America Corp. severely reduced the number of loans they were willing to make under Ginnie-supported programs. Mortgage lending was less profitable than other business lines, and some banks stayed clear because they were scarred by government penalties for alleged fraud.As the banks retreated, Quicken Loans, Freedom Mortgage, Mr Cooper Group Inc. and others filled the void. Nonbanks’ share of new mortgages has risen to 66% of the market from 40% in 2013, according to the Urban Institute.Freedom Chief Executive Officer Stan Middleman said most nonbanks could last several months without additional government support but that a liquidity facility would still be needed as a safety net if the crisis drags on beyond half a year. He said housing is too important to the economy for Washington to not intervene, adding that the severity of pain that the coronavirus has unleashed is unprecedented.“This is not like a flood in Missouri,” Middleman said. “This is everywhere all at once.”Repeated WarningsOver the past few years, academics and government regulators have sounded alarms that nonbanks don’t have the capital or liquidity to withstand an economic downturn. A 2018 paper by researchers at the Fed and the University of California-Berkeley warned that the nonbank mortgage sector “appears to have minimal resources to bring to bear in a stress scenario.”Read More: Mortgage Liquidity Squeeze Flagged as Risk to Powell, MnuchinThe MBA, the industry trade group, released its own white paper in 2019 calling the researchers’ warnings “overstated.”In December, the Financial Stability Oversight Council said nonbanks were a potential source of danger, a warning met with derision by some nonbank mortgage firms.“When it comes to loan servicers, the FSOC and regulators have spent years fretting about supposed hazards that do not really exist,” Freedom’s Middleman wrote in a January post on the MBA website. He said FSOC’s contention that nonbank servicers were a systemic risk was “bizarre,” though he did write that the government could help nonbanks find more stable sources of liquidity.Regulatory InactionBut while regulators seemed well aware of the potential issues, little was done to fix them.In 2017 and 2018, Ginnie required some of its largest lenders to present liquidity plans showing what lines of credit and capital they could draw on in a crisis. While some nonbanks appeared strong, others had credit lines that could be pulled by their lenders at any time for any reason, said Bright, making them poor funding sources during a downturn.Ginnie also asked lenders to subject themselves to stress tests, using a hypothetical economic calamity much less severe than the one being experienced today.With the bulk of its servicers facing a cash crunch, Ginnie late last month said it would activate a disaster-relief program that lets servicers apply to have Ginnie advance payments to bondholders itself. But that program won’t cover other parts of a mortgage payment, such as taxes, insurance and homeowners association payments.Rescue Inevitable?Now, nonbank mortgage firms say that many of them will go under if they don’t get a new lending facility from the Treasury Department and Fed.Former Ginnie president Ted Tozer, who was appointed by President Barack Obama, said coronavirus shows that nonbanks need a lender of last resort in the same way that banks are able to draw on the Fed in times of peril.“We need to find a solution so we’re not going through this every time we have some sort of crisis,” Tozer said.(Updates with share prices 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.

Russian Producers Ready for Oil Cuts to Stop Price Rout

Russian Producers Ready for Oil Cuts to Stop Price Rout(Bloomberg) -- Russia’s oil industry is ready to agree to cuts in production together with Saudi Arabia and other major producers in a desperate bid to halt the slide in prices, according to five people familiar with the efforts.While the Kremlin hasn’t confirmed a willingness to take part in reducing crude output by 10 million barrels, as announced by U.S. President Donald Trump Thursday in a Tweet that drove Brent oil prices up as much as 47%, Russian producers are ready for coordinated action, said the people, who spoke on condition of anonymity because the matter isn’t yet public.President Vladimir Putin will meet oil executives and officials to discuss the situation on the world energy markets later on Friday, the Kremlin said.The Russian reversal reflects alarm at the sudden collapse in demand sparked by the coronavirus pandemic, which threatens a worldwide recession this year. As recently as two weeks ago, Putin was resisting any concessions in the stand-off with Saudi Arabia since Moscow pulled out of a supply-limit agreement with the Organization of Petroleum Exporting Countries over demands for deeper cuts in output. That prompted Saudi Arabia to flood the market with oil, driving prices to an almost two-decade low amid a glut in supply because of a sharp fall-off in consumption.Russia and Saudi Arabia could reach a deal to restrict output at an April 6 meeting of OPEC and other oil-producing nations aimed at increasing prices to $30, according to Andrey Kortunov, director of the Kremlin-founded Russian International Affairs Council. “Thirty dollars would be a lot better than twenty,” he said. “No one here expected oil prices to plunge so deeply.”At the same time, it’s important that the U.S., the world’s largest oil producer, should participate, Kortunov said. Even if formally the Trump administration can’t commit to private companies scaling back output, it should facilitate that, said Kortunov. The rock-bottom prices have devastated U.S. oil producers, making swathes of the industry uneconomic. Trump is meeting industry officials Friday.Russia may agree to a three-way arrangement with Saudi Arabia and the U.S., said four people at Russian oil producers. For Putin, the likelihood of all sides making compromises should reduce the risk of appearing weak by agreeing to reduce oil production.New MembersThe Energy Ministry didn’t immediately respond to a request for comment. The Kremlin referred questions to the Energy Ministry.The OPEC+ coalition wants oil producers outside the existing group to attend next week’s meeting, a delegate said, asking not to be named talking about confidential discussions. If global producers are willing to participate, a cut of 10 million barrels a day is realistic, the delegate said.Saudi Arabia, which was producing around 9.7 million barrels a day before the collapse of the OPEC+ agreement on March 6, had vowed to pump over 12 million barrels a day in April, giving it the ability to instantly cut almost three million barrels.Russia produced an average of 11.294 million barrels of crude oil and condensate in March. While officials insist that Russian crude remains competitive even at such low oil prices, the plunging demand risks sapping the ability to keep pumping at the same levels.Russia isn’t likely to cut as much as promised, according to Dmitry Perevalov, an oil trader who’s the former vice-president of producer Slavneft.“Maybe we will cut some oil output but no will be able to check up on it,” Perevalov said. “The price will go up and that’s the main thing for everyone.”Difficult TimesThe efforts that reductions would require are unprecedented and may have negative long-term effects for the oil industry, according to Dmitry Marinchenko, senior director at Fitch Rating.“Under earlier deals with OPEC, Russia has always reduced the output gradually, yet this time around, the cut needs to be made right away,” he said. Producers would probably need to shut down some wells, while reopening wells can be nearly impossible given Russia’s geological conditions, or prohibitively expensive.Economically, the impact of coronavirus is already wreaking such havoc that any oil deal will at best mitigate the damage. Russia is rewriting its budget to prepare for oil prices at $20 a barrel, according to people familiar with the discussions. Russia will ramp up borrowing by 1 trillion-1.5 trillion rubles ($13 billion-$19 billion) this year as a result, they said.“If the forecasts of a 15 million- to 20 million-barrel reduction in demand turn out to be right, then no production cut will help raise oil prices,” said Kirill Tremasov, head of research at Loko-Invest in Moscow and a former Economy Ministry official. “The Russian government is doing the right thing, preparing for difficult times and a low oil prices. There are no other options.”(Updates with comments starting in 12th 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.

Trump Push for Deal to Cut Oil Supply Draws Disbelief

Trump Push for Deal to Cut Oil Supply Draws Disbelief(Bloomberg) -- With just one tweet, U.S. President Donald Trump conjured up the prospect of a global oil alliance to rescue the industry from the worst shock in history. The question is whether it evaporates just as quickly.After the president’s social-media intervention on Thursday, oil traders are frantically assessing whether Saudi Arabia, Russia and possibly even the U.S. -- the world’s three biggest producers -- are poised to strike a once-unthinkable grand bargain to cut daily supplies in unison by 10 million to 15 million barrels.It’s unclear whether it’s feasible -- or even legal -- for such a coalition to come together. Or indeed whether it would be enough to tame the tsunami of unwanted crude now bearing down on world markets, which could be two to three times bigger than the cut touted by Trump.“It’s too little, too late,” said Ed Morse, head of commodities research at Citigroup Inc. “Cuts are required immediately, and unless they happen, the price is going to go down significantly and force them to happen.”There’s no doubt that the industry could benefit from some intervention. With global oil demand slashed roughly a third by the coronavirus pandemic, a gusher of surplus crude threatens to overwhelm the world’s storage tanks in a matter of months. The meltdown is exacerbated by the dispute between Moscow and Riyadh, prompting the Gulf kingdom to push unprecedented volumes of crude at customers in a tussle for market share.Texas Two-StepTrump’s claim that the two belligerents are ready to end their price war pushed the Brent crude price up by 21% on Thursday. The global benchmark gave up some of those gains Friday, falling by 3.2% as of 11:32 a.m. in Singapore. The Saudis partially backed up their U.S. ally with a call for all producers to meet and stabilize the market.Yet the kingdom stopped well short of promising production cuts and maintained its insistence that any deal would require cooperation not just from fellow members of the Organization of Petroleum Exporting Countries and their former ally in the Kremlin, but from all major producers including the U.S. itself. Russia was quick to deny any agreement had been reachedTexas, home to the nation’s shale-oil revolution, has shown some willingness to join in, with the head of the state’s regulator and some companies saying they should participate in production curbs.Trump’s tweet contained no such pledge. Still, a meeting between the president and several CEOs from oil majors scheduled for Friday is further fanning speculation that the White House is receptive to an even wider form of collaboration.Difficult DealThe deal between Riyadh and Moscow that created the OPEC+ group was a long time coming. It was only after two years of rock-bottom oil prices and several false starts that the alliance came together in late 2016. Even then, they were slow to boost crude prices and the group was dogged by accusations that some countries -- including Russia -- were reneging on their promises.Rebuilding the same alliance and adding even more producers into the pact would be a major challenge.“The more people are at the table, the more difficult it is to get a deal,” said Pierre Andurand, whose Andurand Commodities Discretionary Enhanced Fund soared more than 140% last month through bearish bets on crude. “I find it difficult to believe that a deal like that could be agreed quickly.”Even if political and industry leaders in the U.S. backed collaboration with OPEC in principle, operators in the U.S. shale patch would somehow need to parcel out their share of any collective cutback. American anti-trust laws, unless they were changed, would make any such effort fraught with legal risks.Nor is it certain that the Saudis and Russia are ready to heal their split. The two fell out last month when Riyadh failed to convince Moscow to cut production in response to the demand slump caused by the virus. Angered by the splintering of the coalition they’d led for three years, the kingdom responded with an aggressive supply surge to a record 12 million barrels a day and deep price cuts aimed at Russia’s traditional markets.The Saudis still appear to be adamant that all producers must play their part in eliminating the supply surplus. Russia, meanwhile, is holding to the view -- in public at least -- that production curbs are futile compared with the scale of demand destruction inflicted by widespread lockdowns to slow the virus.“It’s very clear that Saudi Arabia is maintaining its position,” Amrita Sen, chief oil analyst at consultants Energy Aspects Ltd. said in a Bloomberg TV interview. “It will cut only if everyone else cuts.”(Corrects name of fund in 12th 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.

OPEC+ Pushes for Others to Join a Global Output Cut; Oil Rallies

OPEC+ Pushes for Others to Join a Global Output Cut; Oil Rallies(Bloomberg) -- The OPEC+ coalition is pushing for other major oil producers to join it in a deep reduction of global crude output to stem the historic rout in prices.A global cut of 10 million barrels a day is a realistic goal, according to a delegate, who spoke on condition of anonymity. OPEC+, an alliance led by Saudi Arabia and Russia, has already scheduled a virtual meeting on Monday and wants other nations to join talks as soon as possible.The 10 million figure was first touted by President Donald Trump on Thursday, who called for a coordinated production cut. He made no indication whether the U.S. would take part. For Saudi Arabia, it’s essential that producers including the Americans join in.Trump is meeting oil executives later on Friday.There are enormous obstacles to any deal. Russia was quick to deny on Thursday that any agreement had been reached. Even if an accord can be struck, a cut of 10 million barrels would barely dent the glut of oil that has been created by the economic fallout of the coronavirus pandemic. Traders estimate the lost demand could be as high as 35 million barrels.Oil JumpsBrent crude, which jumped more than 40% on Thursday after Trump’s announcement before paring gains, rose 11% on Friday. It’s still down 50% this year as the virus fight grounds planes and shutters huge swaths of the global economy.In some corners of the market, physical prices have gone negative and some producers are expected to start suspending output as there’s not enough space to store the excess crude. Tankers have filled up fast as ships are being used as storage rather than transport.Oil-producing nations around the world are feeling the pain of the price war, which started a month ago after Russia refused to take part in a round of cuts. Saudi Arabia aggressively discounted its crude days later, in a move to seize customers from Russia’s traditional markets.Shale producers in the U.S. are struggling and national finances are under pressure. Russia, for example, is now expecting oil prices at $20 a barrel this year and will ramp up borrowing to make up for a budget shortfall.Saudi Arabia will also have to make deep budget cuts as oil accounts for the vast majority of its revenue. The kingdom’s next move in the price war could come as soon as Sunday, when it sets official prices for its crude exports. The operation could be postponed, however -- as it was last month -- to avoid prejudicing the Monday meeting.Washington’s OptionsTrump will meet on Friday oil executives, who are battling among themselves as to what the administration should do.The White House has considered tariffs on foreign oil imports to protect U.S. producers, though the idea is opposed by some top Trump advisers led by Larry Kudlow, the director of the National Economic Council, according to people familiar with the matter.The idea of a U.S. production cut, probably executed by capping exports, is also on the table at the White House, though many oil industry representatives have warned that the approach would cause the U.S. to cede the very “energy dominance” Trump has repeatedly celebrated.Trump said on Thursday he expected a deal -- but made no mention of any role for the U.S.“It would be great for Russia, it would be great for Saudi Arabia -- I hope they make that deal but that’s what they told me,” he said. “Can something happen where it doesn’t happen? I guess? In which case there’s another alternative, but I’d rather not see the other alternative.”In his tweet, Trump said he had spoken to Crown Prince Mohammad bin Salman, who had in turn spoken with Russian President Vladimir Putin. But a Kremlin spokesman, Dmitry Peskov, said the conversation hadn’t happened and that no production cut had been agreed to with the Saudis.Russia hasn’t yet confirmed its attendance at the OPEC+ meeting, according to one delegate. But Russia has long said it’s open to talks, and the industry may find itself forced into production cuts anyway because of the slump in demand, potentially bolstering the case for a coordinated response.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.

Saudis Face Pricing Dilemma as Oil War Enters Second Month

Saudis Face Pricing Dilemma as Oil War Enters Second Month(Bloomberg) -- Vanishing demand and alternative grades at never-seen-before prices are fueling expectations that Saudi Aramco will need to price its crude at aggressively low levels this month to keep its customers satisfied.The world’s biggest oil exporter is due to announce its official selling prices for May shipments this Sunday. It comes a month after the kingdom discounted April supplies by the most in at least 20 years as it embarked on a price war with Russia that sent oil markets into a tailspin.See also: Aramco Set to Price Oil at Deepest Discount in Decades: SurveyWhere to pitch prices will be a tricky balancing act for Saudi Arabia. Set them too high and customers will buy as little as their term contracts allow against a backdrop of weak demand and rapidly filling storage tanks. If they’re too low, however, the self-inflicted pain of the price war could become intolerable.Asian refiners are being spoiled for choice due a flood of cheap crude from the U.S. and Russia. Varieties such as West Texas Intermediate, Mars and Urals are being offered and sold at sharp discounts, according to six officials and traders from processors across the region. The relative strength of Middle East’s Dubai benchmark versus London’s Brent isn’t doing Gulf sellers any favors.For buyers in China, for example, Mars was sold at discounts of $8 a barrel or more against London’s Brent futures on a delivered basis. That’s likely to be lower than Saudi’s Arab Light crude after the addition of freight and other costs, should Aramco reduce its prices in-line with market expectations.While cargoes from state-run Aramco may warrant a slight premium for supply security, official Saudi prices need to reflect the glut of crude and more affordable alternatives in the spot market, said the officials and traders who asked not to be identified due to internal company policy.Aramco officials didn’t immediately comment when contacted by email.Not Business-as-UsualSaudi Aramco releases OSPs every month, with buyers saying how much oil they want a few days after the prices are set. Customers have the option to take volumes in a range around what’s stipulated under long-term contracts. Once the nominations are made, the Saudis inform buyers of the supplies they’ll get in what’s known as the allocation process.See also: Top Indian Refiner Invokes Force Majeure for Some Mideast CrudeThis month promises to be different though. Indian state-owned refiners have said they’re looking to back out of crude purchases after declaring force majeure on oil imports following a nationwide lockdown that’s sent fuel demand plummeting.U.S. President Donald Trump has also thrown a wildcard into the mix, suggesting Thursday that he’s brokered a deal with the Saudis and Russia to cut production, spurring a surge in oil prices. The OPEC+ coalition is now rushing to pull together a virtual meeting of its members -- and possibly other oil-producing nations -- on Monday following Trump’s claim, according to two delegates. As well as North American and Russian alternatives, supplies from other Persian Gulf producers are available to Asian buyers. Abu Dhabi’s state-owned marketer Adnoc and Iraq’s SOMO have been offering April and May supplies of grades such as Murban, Das, Upper Zakum and Basrah in the last week or two.With so many options on offer, Saudi Aramco will need to pull out all the stops to attract buying interest for the 12 million-plus barrels a day of oil it’s pumping. Demand for the kingdom’s crude is also being challenged by a fleet of tankers that are heading toward Asia on bets the world’s main demand center is a good place to hoard oil until market conditions improve.(Updates with chart and mention of OPEC+ meeting in 10th 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.

As oil sinks, some companies float idea of 'zero clause' in trades

As oil sinks, some companies float idea of 'zero clause' in tradesAfter the worst quarter for oil prices in history, some oil producers have begun to include protection in their contracts to avoid being forced to pay buyers for the oil they pump if prices slide below $0 a barrel. Crude prices in key physical markets - including the United States, Canada, Mexico and Europe - have fallen through $10 a barrel, far below comparable futures prices, as demand slumps and storage fills. Oil prices have been hammered by the collapse in demand after the coronavirus outbreak and the sudden end of an OPEC-led supply reduction pact.

Trump touts 'great' Saudi-Russia oil deal to halt price rout, but details unclear

Trump touts 'great' Saudi-Russia oil deal to halt price rout, but details unclearU.S. President Donald Trump said on Thursday he had brokered a deal with top crude producers Russia and Saudi Arabia to cut output and arrest an oil price rout amid the global coronavirus pandemic, though details of how cuts would work were unclear. Trump said the two nations could cut output by 10 to 15 million barrels per day (bpd) - an unprecedented amount representing 10% to 15% of global supply, and one that would require the participation of nations outside of OPEC and its allies. Russia and Saudi Arabia have been at odds since early March, when they failed to agree on a deal curbing output as the coronavirus spread around the globe.