Oil prices fall on speculation OPEC+ will cut production

Oil prices fell on Tuesday morning as speculation continued that the top eight OPEC+ producers will reverse their voluntary production cuts.

– Crude output from Iraq’s semi-autonomous Kurdistan region continues to rise as industry organizations said production topped 350,000 b/d in recent weeks, the highest since early 2023.

– Iraq, OPEC+’s biggest overproducer which has pledged to cut production by 1.44 million bpd over the next 12 months as part of a compensation plan, has now vowed to confront Kurdish authorities over the surplus of production.

– International oil companies operating in Kurdistan have expanded into new projects for the first time since the closure of the 2023 pipeline to Ceyhan, with DNO mobilizing a rig to drill a new well in the Tawke license and Gulf Keystone starting round-the-clock transport operations . .

– Baghdad has threatened to withhold the Kurdish regional government’s share of the federal budget unless it cuts production to just 46,000 b/d and curbs a widespread smuggling network to Turkey and Iran.

Market movers

– Co-founder of US offshore manufacturer Talos Energy (NYSE:TALO) abruptly left the company without providing a reason for the move, which is believed to be related to the company’s lackluster stock performance.

– The US Commodity Futures Trading Commission has fined TOTSA, the trading arm of the French energy major TotalEnergies (NYSE:TTE)for trying to rig European gasoline futures contracts, setting up a $48 million fine.

– Most of the energy Shell (LON:SHEL) signed a 10-year contract with Turkey’s Botas to supply up to about 4 billion cubic meters per year from 2027, diversifying Ankara’s options after a recent 10-year deal with ExxonMobil.

Tuesday, September 03, 2024

Libya’s upstream segment has taken an almost complete turn off with 60% of production shut down due to the nationwide oil embargo, but that story has so far been overshadowed by wild speculation over OPEC+ politics. The top eight OPEC+ producers are expected to begin lifting voluntary output curbs by a 180,000 b/d increase in October, sending oil prices lower as Bent tumbles to $73.

China’s crude oil imports are recovering from the July crisis. According to Kpler, China’s crude imports averaged 10.5 million b/d in August, up nearly 1 million b/d from an 18-month low in July, but remain well below any monthly average in February-June.

Restarting Libya is a blur in the summer fog of war. According to multiple sources, Libya’s Sarir, Mesla and Nafoura oil fields have been instructed to resume production amid an ongoing oil blockade by Field Marshal Haftar, but only to feed local energy plans and small refineries in the east.

The Houthis strike again, nearly hitting the Saudi tank. Houthi militias almost hit the Saudi-flagged oil tanker Amjad, operated by the state-owned shipping company. Bahri (TADAWUL:4030) while attacking the Blue Lagoon I ship which was sailing alongside, carrying fuel oil from Russia.

North Sea tax hike to drain UK revenue. According to industry group Offshore Energies UK, the Labor government’s windfall tax increases for North Sea oil and gas producers would result in a $16 billion drop in government revenue between 2025 and 2029, while accelerating the decline in UK production .

Power outages return in Venezuela. Venezuela faced a nationwide blackout on Friday, with power outages blamed on a cyber attack on the Guri hydroelectric dam, with operations at the José export terminal as well as crude oil upgrading systems halted for a day.

Teck revamps corporate structure after Glencore deal. The Canadian mining giant Teck Resources (NYSE:TECK) will restructure its assets into two regional business units in North America and Latin America following the $7 billion divestment of metallurgical coal assets to Swiss trader Glencore.

Nigeria’s megarefinery begins gasoline production. Nigeria’s 650,000 bpd Dangote refinery has started producing gasoline after months of commissioning work, with the plant’s stated goal of ending the African country’s costly dependence on fuel imports now within reach.

Qatar doubles down on fertilizers. QatarEnergy has announced its 2030 goal to double production of urea, a key fertilizer component, from 6 million tonnes annually to 12.4 mtpa, finding additional ways to refine natural gas into higher-value products.

India is considering building a new refinery. State-controlled refining in India Bharat Petroleum (NSE:BPCL) and upstream firm ONGC are jointly exploring building a new refinery as the country’s demand continues to grow strongly and refining capacity will reach 9 million b/d by 2030.

Chevron hopes to resolve its Cyprus dilemma. American oil major Chevron (NYSE:CVX) has amended its production plan for its long-delayed 3.5 TCf Aphrodite gas field in Cyprus and submitted it to Cypriot authorities with costs rising to $4 billion as it seeks to build a floating offshore production facility.

Indonesia will build its own SPRs. Indonesia wants to set aside about 10 million barrels of crude to create a strategic oil stockpile in a country that typically refines 800-900,000 bpd, a new government regulation that also calls for the creation of a reserve inventory of 10 million barrels of gasoline.

ADNOC enters the bond market. ADNOC, the UAE’s national oil company, has begun an international roadshow as it seeks to raise 5-, 10- and 30-year debt, believed to be linked to its upcoming acquisition of German chemicals market Covestro in a transaction worth $13. billion.

China’s Sinochem to exit Permian JV. Chinese state oil company Sinochem plans to divest its 40 percent stake in the Permian-focused upstream joint venture Wolfcamp, which it operated with the U.S. oil major. ExxonMobil (NYSE:XOM)currently producing approximately 44,000 boe/d of which 75% is oil.

By Michael Kern for Oilprice.com

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