OIL: Saudi Aramco Suspends Offshore Rig Contracts Amid Capacity Expansion Halt
Saudi Aramco could suspend as many as 23 offshore rig contracts with several drilling contractors according to Energy Intelligence sources. The move comes following the decision by Saudi Arabia earlier this year to halt plans to expand its oil capacity expansion from 12mbpd to 13mbpd by 2027.
- At the start of this week Saudi Aramco had issued suspension notices to six drilling players for up to 18 rigs and is expected to further downsize its offshore drilling fleet according to Offshore Engineer.
- Two planned expansion projects, Safaniyah and Manifa, are on hold.
- The suspension mechanism offers enough flexibility for the rigs to complete new deployments before resuming work in Saudi Arabia post suspension.
- The original term of the suspended contracts will automatically be extended for a period equal to the suspension for each rig.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
GILTS: J.P.Morgan Recommend Tactical 10s20s Gilt Steepeners
Late on Friday J.P.Morgan wrote “the 10s/20s gilt curve looks modestly too flat vs. the 20s/30s gilt curve and, given upcoming 20Y supply, alongside the general RV flatness of 10s/30s, we enter tactical 10s/20s gilt curve steepeners (gilts Jan33/Jan44).”
EQUITIES: Barclays call seller
BBL (19th April) 170c sold at 8.75 and 8.25 in 5.3k.
- OI in that strike stands at ~26.7k.
STIR: Softening In Labour Market Surveys Sees Light Dovish Flows In BoE Pricing
Signs of a continued cooling labour market (per lower tier survey data) leaves BoE-dated OIS pricing ~69bp of ’24 cuts vs. ~66bp shortly after the open.
- The first 25bp cut is once again fully discounted come the end of the Aug ’24 MPC.
- SONIA futures are unchanged to +6.0.
- UBS now expect the BoE’s first cut to come in August (from May prev.), while they now see 75bp of ’24 cuts (100 bp), which is close to market pricing.
- Further out, they still see 175bp of rate cuts in ’25, looking for Bank policy rate to sit at 2.75% at the end of '25.
- Key short term domestic risk events are today’s comments from BoE hawk Mann and tomorrow's UK labour market data.
| BoE Meeting | SONIA BoE-Dated OIS (%) | Difference Vs. Current Effective SONIA Rate (bp) |
| Mar-24 | 5.200 | +1.2 |
| May-24 | 5.166 | -2.2 |
| Jun-24 | 5.071 | -11.7 |
| Aug-24 | 4.922 | -26.6 |
| Sep-24 | 4.787 | -40.1 |
| Nov-24 | 4.624 | -56.4 |
| Dec-24 | 4.496 | -69.3 |
