Two major oil companies operating in the middle east, ENI and TOTAL third-quarter earnings reflect the uptick in oil prices, now having reached a two year high.
The international benchmark for oil, Brent Crude, got closer to US$60/barrel after Saudi Arabia's crown prince indicated the oil giant would support an extension to the agreement by all OPEC nations to cut oil production in 2017. Brent Crude, however, is at its highest possibly after the OPEC agreement to cut production (the extension of this agreement) and the geopolitical conflict in Iraq.
Jeffrey Halley, a senior market analyst at futures brokerage Oanda in Sinapore supported Saudi Arabia's role in the market:
"Oil raced higher overnight with Brent finishing in sight of the magical $60 a barrel mark, spurred on by Saudi remarks supporting the oil production cut through to the end of 2018."
As a result, the average price of Brent is now 14% higher than the same quarter in 2016. Italian ENI, therefore, has reported an adjusted net profit of US$267 million, instead of the reported loss of US$569 million in 2016. ENI Chief Executive, Claudio Descalzi said, “[This year] we expect to achieve organic coverage of investments and dividends, entirely paid in cash, at a Brent price of $60 a barrel as planned, or $45 a barrel when taking into account our dual exploration model initiatives."
ENI’s production will rise 5 per cent this year to 1.84 million barrels of oil equivalent per day, while investments will decline 18 per cent.