OPEC, non-OPEC States Commit to Production Reduction

Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
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OPEC, non-OPEC States Commit to Production Reduction

Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)
Ministers during a press conference following the Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC) (SPA)

After ministers of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC independent producers finished their meeting in Jeddah and attended a luncheon, US President Donald Trump bashed on oil prices, which he considered "artificially" high.

“Looks like OPEC is at it again. With record amounts of Oil all over the place, including the fully loaded ships at sea. Oil prices are artificially Very High! No good and will not be accepted!” Trump Tweeted.

Energy ministers, including Russian Minister Alexander Novak and OPEC Secretary General Mohammed Barkindo, defended their position strongly, saying that without OPEC, the US oil industry could not continue its production, given that US producers are the first to benefit from high prices.

The Russian minister said that prices are determined by the market.

UAE Energy Minister Suhail al-Mazroui, who heads OPEC's ministerial conference this year, told reporters after lunch that there was no such thing as artificial prices.

The Joint OPEC/Non-OPEC Ministerial Monitoring Committee (JMMC), which monitors the deal, met on Friday in Jeddah, Saudi Arabia, to discuss producers' commitment to implementing a cut-off agreement and discuss prices.

Following the meeting, OPEC issued a statement announcing that, based on the Report of the Joint Technical Committee (JTC) for the month of March 2018, following successive months of record-breaking performances, OPEC and participating non-OPEC countries have achieved a conformity level of 149 percent with their voluntary production adjustments, the highest level so far.

The meeting reviewed the developments in the oil markets and levels of production of the participating countries, the work of the committee and the results of decisions issued in the previous meetings.

It is noteworthy that JMMC hold a meeting every two months under the chairmanship of the Kingdom, to discuss the commitment of countries to the agreement, which includes Kuwait, Venezuela, Algeria, Saudi Arabia, Russia and Oman.

OPEC Sec-Gen Mohammad Barkindo said members of the oil producers group were friends of the US and have a vested interest in its growth and prosperity.

Barkindo made his remarks after Trump sent a tweet criticizing OPEC over high oil prices.

"The Declaration of Cooperation by 24 producing countries in Dec. 2016 which was implemented faithfully since 2017 has not only arrested the decline but rescued the oil industry from imminent collapse," Barkindo said.

Iraqi Oil Minister Jabar al-Luaibi said oil prices are “not very high” following Trump's tweet. “Everything is now fine and the market is stabilizing,” Luaibi told the press.

UAE Energy Minister Suhail Mohamad al-Mazrouei also said oil prices were not artificially high.

Oil prices fell after the US president criticized OPEC, but it is still heading for a weekly gain.

Brent crude oil futures LCOc1 gained 28 cents, or 0.4 percent, to settle at $74.06 per barrel. West Texas Intermediate crude futures CLc2 for delivery in June, the most active US contract, were up 7 cents at $68.40. The May WTI contract, which expired on Friday, CLc1 gained 9 cents, or 0.1 percent, to settle at $68.38.

The United States can only legitimately influence oil by withdrawing from its strategic reserve, which it has done from time to time.

Saudi Energy Minister Khalid al-Falih said OPEC and its allies were far from reaching their goal and that the reduction of oil stocks needs to continue.

"The countries involved in the reduction of oil production have shown a commitment to seeking a balance in the global oil market where the levels of the OECD's trade stock have been adjusted from a peak of 3.12 billion barrels in July 2016 to 2.83 billion barrels in March 2018, a decrease of 300 million barrels," Falih was quoted by Saudi Press Agency (SPA).

Falih expressed his appreciation to the importance of Russia's role in the declaration of cooperation describing Russia as an effective element in reaching the agreement and its success over the past months. He also praised the important role played by the Russian Energy Minister who co-chaired the JMMC since its inception at the beginning of 2017.

Falih stressed the importance of monitoring the market and the commitment of the oil-producing countries, indicating that the success achieved at the level of the Joint Ministerial Committee to monitor oil production in 2017 will be going on in 2018.

Aside from OPEC's supply management, crude prices also received support from expectations that the US would re-impose sanctions on Iran, a member of the organization.

OPEC and non-OPEC oil producers could begin easing up on output curbs before the end of the year, according to Russian Energy Minister Alexander Novak.

“The agreement lasts until the end of the year. In June, we can discuss, among other issues, a question about reduction of some quotas during this time, if it is expedient from the market’s point of view,” Novak said ahead of the JMMC meeting, TASS news agency reported.

Sources familiar with the meeting told Reuters that Novak told his OPEC and non-OPEC counterparts in a closed-door meeting that Moscow was committed to the deal on cutting output until the end of 2018.

The OPEC, non-OPEC ministerial panel said commercial oil stock levels of Organisation for Economic Co-operation and Development (OECD) were 2.83 billion bbl in March 2018, still above the level seen before the oil market downturn.

Three industry informed sources stated this week Saudi Arabia would be happy to see crude rise to $80 or even $100 a barrel indicating Riyadh will likely seek no changes to the deal in June.

Energy Minister Falih said OPEC and non-OPEC compliance with the output deal reached 149 percent in March. The deal’s success has helped relations between Russia and Saudi Arabia.

Germany’s Handelsblatt newspaper reported on Friday UAE oil minister Mazrouei saying that he believes more oil producers need to join OPEC and non-OPEC producers in curbing supply.



China's Russian Oil Imports to Hit New Record in February as India Cuts Back

Oil tankers are seen at a terminal of Sinopec Yaogang oil depot in Nantong, Jiangsu province, China (Reuters) 
Oil tankers are seen at a terminal of Sinopec Yaogang oil depot in Nantong, Jiangsu province, China (Reuters) 
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China's Russian Oil Imports to Hit New Record in February as India Cuts Back

Oil tankers are seen at a terminal of Sinopec Yaogang oil depot in Nantong, Jiangsu province, China (Reuters) 
Oil tankers are seen at a terminal of Sinopec Yaogang oil depot in Nantong, Jiangsu province, China (Reuters) 

China's Russian oil imports are set to climb for a third straight month to a new record high in February as independent refiners snapped up deeply discounted cargoes after India slashed purchases, according to traders and ship-tracking data.

Russian crude shipments are estimated to amount to 2.07 million barrels per day for February deliveries into China, surpassing January's estimated rate of 1.7 million bpd, an early assessment by Vortexa Analytics shows.

Kpler's provisional data showed February imports at 2.083 million bpd, up from 1.718 million bpd in January, according to Reuters.

China has since November replaced India as Moscow's top client for seaborne shipments as Western sanctions over the war in Ukraine and pressure to clinch a trade deal with the US forced New Delhi to scale back Russian oil imports to a two-year low in December.

India's Russian crude imports are estimated to fall further to 1.159 million bpd in February, Kpler data showed.

Independent Chinese refiners, known as teapots, are the world's largest consumers of US sanctioned oil from Russia, Iran and Venezuela.

“For the quality you get from processing Russian oil versus Iranian, Russian supplies have become relatively more competitive,” said a senior Chinese trader who regularly deals with teapots.

ESPO blend last traded at $8 to $9 a barrel discounts to ICE Brent for March deliveries, while Iranian Light, a grade of similar quality, was last assessed at $10 to $11 below ICE Brent, the trader added.

Uncertainty since January over whether the US would launch military strikes on Iran if negotiations for a nuclear deal failed to yield Washington's desired results curbed buying from Chinese teapots and traders, said Emma Li, Vortexa's China analyst.

“For teapots, Russian oil looks more reliable now as people are worried about loadings of Iranian oil in case of a military confrontation,” Li said.

Part of the elevated Russian oil purchases came from larger independent refiners outside the teapot hub of Shandong, Li added.

Vortexa estimated Iranian oil deliveries into China – often banded by traders as Malaysian to circumvent US sanctions - eased to 1.03 million bpd this month, down from January's 1.25 million bpd.

 

 

 


Oil in Spotlight as Trump's Iran Warning Rattles Sleepy Markets

FILE - In this Oct. 21, 2013, file photo, smoke billows from an oil refinery in Kawasaki, southwest of Tokyo. (AP Photo/Koji Sasahara, File)
FILE - In this Oct. 21, 2013, file photo, smoke billows from an oil refinery in Kawasaki, southwest of Tokyo. (AP Photo/Koji Sasahara, File)
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Oil in Spotlight as Trump's Iran Warning Rattles Sleepy Markets

FILE - In this Oct. 21, 2013, file photo, smoke billows from an oil refinery in Kawasaki, southwest of Tokyo. (AP Photo/Koji Sasahara, File)
FILE - In this Oct. 21, 2013, file photo, smoke billows from an oil refinery in Kawasaki, southwest of Tokyo. (AP Photo/Koji Sasahara, File)

Oil prices stabilized on Tuesday as investors assessed supply disruption risks after Iran conducted naval exercises near the Strait of Hormuz ahead of nuclear talks with the United States later in the day.

US President Donald Trump said on Monday that he would participate "indirectly" in the Geneva talks, adding that he believed Tehran wanted to reach an agreement. Trump said at the end of the week that regime change in Iran would be the "best thing that could happen."

Brent crude futures fell 0.2 percent to $68.59 a barrel by 01:06 GMT, after rising 1.3 percent on Monday.

US West Texas Intermediate crude was at $63.73 a barrel, up 84 cents, or 1.34 percent, but that gain incorporated all price movement on Monday, as the contract was not settled that day due to the US Presidents Day holiday.

Many markets were closed on Tuesday for the Lunar New Year, including China, Hong Kong, Taiwan, South Korea and Singapore.

"The market remains jittery amid ongoing geopolitical uncertainty," Daniel Hynes, an analyst at ANZ Bank, said in a research note.

He added: "Should tensions in the Middle East ease, or tangible progress be made on the Ukrainian situation, the risk premium currently embedded in oil prices may quickly dissipate. However, any negative outcome or further escalation could be positive for oil prices."

Iran began military exercises on Monday in the Strait of Hormuz, a vital international waterway and a major oil export route from Gulf countries, which have called for diplomacy to end the conflict.

Meanwhile, Citigroup said that if Russian supply disruptions continue to keep Brent crude within a range of $65 to $70 a barrel in the coming months, OPEC+ is likely to respond by increasing production from spare capacity.

Three sources in OPEC+ said the organization is inclined to resume increasing oil production from April, as the group prepares for peak summer demand, and higher prices are reinforced by tensions over US-Iranian relations.

"We expect, in the base case, that two oil deals will be reached, one with Iran and the other with Russia and Ukraine, by or during the summer of this year, which will contribute to a decline in prices to $60-62 a barrel of Brent," Citigroup said.


Greece… Chevron’s Gateway to Strengthening Europe’s Energy Security

The lease allows Chevron to lead the search for gas in four deep-sea blocks, south of the Peloponnese peninsula and the island of Crete (AFP)
The lease allows Chevron to lead the search for gas in four deep-sea blocks, south of the Peloponnese peninsula and the island of Crete (AFP)
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Greece… Chevron’s Gateway to Strengthening Europe’s Energy Security

The lease allows Chevron to lead the search for gas in four deep-sea blocks, south of the Peloponnese peninsula and the island of Crete (AFP)
The lease allows Chevron to lead the search for gas in four deep-sea blocks, south of the Peloponnese peninsula and the island of Crete (AFP)

A consortium led by US oil major Chevron signed exclusive lease agreements on Monday to look for natural gas off southern Greece, expanding the United States' presence in the eastern Mediterranean. The deal doubles the amount of Greek maritime acreage available for exploration and is the second in months involving a US energy major as the European Union seeks to phase out supplies from Russia and the US seeks ‌to replace them.

Exxon ‌Mobil in November joined Energean and Helleniq to search ‌for ⁠gas in another ⁠offshore block in Western Greece. Monday's agreement allows Chevron - which also plans to expand production in Israel - to lead the search for gas in four deep-sea blocks, south of the Peloponnese peninsula and the island of Crete, stretching across 47,000 square kilometers (18,147 square miles). It follows Chevron and Helleniq Energy, Greece's biggest oil refiner, last year winning an international tender.

GREECE SEEKS TO BE A GATEWAY FOR US GAS

Greece, which ⁠has no gas production and relies on gas imports ‌for power generation and domestic consumption, has revived ‌its quest for gas exploration after a 2022 energy price shock driven by Russia's ‌invasion of Ukraine. It also aims to be a gateway for US ‌liquefied natural gas transported via the Vertical Gas Corridor, a route that carries gas from Greece to central Europe and Ukraine. US Ambassador to Greece Kimberly Guilfoyle said US LNG flowing through Greece had strengthened the alliance between the United States and Europe.

"It redraws, ‌quite simply, the energy map of Europe, creating a durable alternative to Russian gas not just for one season ⁠but for generations ⁠to come," Guilfoyle said during a presentation of the contracts in Athens. The European Union is building renewables capacity to cut greenhouse emissions, but has acknowledged the need for natural gas as a transition fuel to help stabilize the grid when intermittent wind and solar energy are not available.

The Greek parliament will need to approve the lease contracts before the Chevron-led consortium can start seismic research later this year. Greece has said the consortium has up to five years to locate potential recoverable deposits and any test drilling would not take place before 2030-2032.