The rosy future of the offshore East Mediterranean (East-Med) gas boom is in jeopardy. The current COVID-related economic downturn, combined with the dramatic drop in demand for oil and gas worldwide, has already led to several delays for major offshore gas projects in Cyprus, Lebanon, Israel, and Greece. Offshore E&P budgets have been cut by all oil and gas companies, leaving no room for high-risk natural gas developments in the East Med in the coming years. At the same time, geopolitical and military tensions between Turkey and the other players in the region, Cyprus, Egypt, Greece, and even Israel is rising fast. Ankara’s unexpected but strong support for the Libyan Tripoli-based government which is fighting out a long-lasting conflict against East Libyan general Haftar’s LNA forces hasRead More »
Oil prices rallied early on Friday as the market expects a weekend meeting of OPEC and its Russia-led allies to roll over the current levels of the OPEC+ production cuts by another month after June.As of 8:31 a.m. EDT on Friday, WTI Crude was up 2.97 percent at $38.52. Brent Crude was surging 3.88 percent to $41.50, after topping $40 a barrel earlier this week for the first time since early March, when Saudi Arabia and Russia broke up the previous OPEC+ pact and started an oil price war for market share. This month’s OPEC+ meeting hasn’t lacked the drama surrounding the group’s previous meetings. Initially, the OPEC+ group was aiming for holding the meeting on June 4, earlier than the initial plans to hold the teleconference on June 9 and 10. Russia and Saudi Arabia—the two leaders of theRead More »
Saudi Arabia is likely to increase the price for its oil bound for Asia in July, a Reuters survey of five refinery sources showed on Monday. This is the second consecutive month for oil price hikes in Saudi Arabia, which come on the back of reduced supply out of the Middle East region due to the OPEC+ cuts.The pricing of Saudi crude, typically released around the fifth of each month, generally sets the trend for the pricing for Asia of other Gulf oil producers such as Kuwait, Iraq, and Iran. The pricing of Saudi Aramco, the Kingdom’s oil giant, affects as much as 12 million barrels per day (bpd) of Middle Eastern crude grades going to Asia.According to the Reuters survey, refiners in Asia expect Saudi Arabia to raise the price for its flagship Arab Light crude grade for July by $3.80 perRead More »
Two months ago, Russia said no to Saudi Arabia’s proposal for deeper oil production cuts. It was enough to start a price war that, coinciding with the Covid-19 pandemic, wiped out billions in oil revenues for both Russia and Saudi Arabia while forcing them to enact even deeper cuts than previously discussed.Some say the price war was never about Saudi Arabia and Russia. They say it was about U.S. shale. If that is accurate, what happens when the U.S. shale patch regains enough strength to start ramping up production again? It might sound premature to talk about production ramp-ups with West Texas Intermediate still below $40 a barrel and likely to stay below this crucial mark for a while. But eventually, prices will hit the mark: shale producers have cut a solid chink of their output,Read More »
Baker Hughes reported on Friday that the number of oil and gas rigs in the US fell again this week by 21, falling to 318, with the total oil and gas rigs sitting at 665 fewer than this time last year—a more than 67% drop off in a single year.The number of oil rigs decreased for the week by 21 rigs, according to Baker Hughes data, bringing the total to 237—a 560-rig loss year over year. It is the fewest number of active oil rigs in play since mid-2009.The total number of active gas rigs in the United States held at 79 according to the report. This compares to 186 rigs a year ago.The significant fall in the rig count over the last couple of months is also reflected in the EIA’s estimate for oil production in the United States, which fell again this week to 11.5 million barrels of oil per dayRead More »
The OPEC+ coalition appears determined to ease the global oil glut and lift the oil prices that had cratered in April because of OPEC+ wrangling and crashing global demand in the pandemic.Oil prices have rallied since the start of the new OPEC+ cuts. These cuts, along with curtailments in North America, have combined with improved global oil demand and the new notion that the worst of the demand collapse is likely behind us, to instill confidence in the market that it is now heading for a deficit.The more bullish sentiment, however, raises another question—will producers be tempted by rising crude oil prices to disregard quotas within OPEC+? Will U.S. shale resume drilling activity sooner than the market needs it?OPEC and its partners in the pact realized early last month that they hadRead More »
West Texas Intermediate has been on a roll, rising above $30 a barrel last week for the first time in two months. This, however, may be about to end.The number of active drilling rigs in the United States has been falling for nine weeks straight and is now 60 percent lower than it was in late March, Reuters’ John Kemp said in his weekly column on prices. That’s when hedge funds began scooping up WTI contracts, Kemp noted, accurately predicting that the price level at the time was unsustainable.Indeed, despite posting its first negative price ever last month, the U.S. benchmark has been doing better now, thanks almost exclusively to the deep production cuts that shale drillers have been forced to implement. And yet the situation remains extremely volatile with the downward potential forRead More »
Oil prices have rallied significantly, rising $10 in two weeks as markets are increasingly convinced that global demand for crude is picking up once again.Deep output cuts and the reopening of some of the largest economies in the world have brightened the outlook for oil, but many analysts are now beginning to question whether this rally isn’t already overdone. So why are oil prices still rocketing as analysts warn of ballooning inventories and continued weak demand for aviation fuel?Looking at the data, the first signs of real demand recovery are coming from the Far East, where Chinese refiners have embarked on a buying spree, capitalizing on ultra-low crude prices in heavy hit markets such as Brazil, Oman, and West Africa. Spurred by Beijing’s call to action, factories and farmers areRead More »
The Trump administration claims that the U.S. is “transitioning to greatness,” and that energy companies are going to see “massive gains.” U.S. Secretary of Energy Dan Brouillette says there is “stability” in the oil market, and that economic activity will “explode” on the other side of the pandemic.Meanwhile, back in reality, U.S. oil production continues to decline as drillers shut in wells and cut back spending. Output has already declined by 1.1 million barrels per day (mb/d), and more losses are likely. New data from Rystad Energy predicts U.S. oil production declines of roughly 2 mb/d by the end of June.“Actual production cuts are probably larger and occur not only as a result of shut-ins, but also due to a natural decline from existing wells when new wells and drilling decline,”Read More »
Oil prices rose early on Tuesday after OPEC’s Middle East heavyweights pledged additional cuts, instilling hopes in the market that further production reductions could help accelerate the drawdown of the enormous oil oversupply.As of 10.38 a.m. EDT on Tuesday, WTI Crude was surging 5.05 percent to $25.36, and Brent Crude was up 1.62 percent on the day at $30.12.On Monday, the world’s top oil exporter and OPEC leader, Saudi Arabia, said it would cut oil production by an additional 1 million barrels per day (bpd) in June on top of its promised cuts as part of the OPEC+ production cut deal.Under the OPEC+ deal in effect from May 1, Saudi Arabia has pledged to cut its oil production to 8.5 million bpd. With the additional voluntary reduction in June, the Saudis would produce 7.492 million bpdRead More »
Oil prices turned higher on Monday, erasing earlier losses after the world’s top oil exporter and OPEC leader, Saudi Arabia, said it would cut oil production by an additional 1 million barrels per day (bpd) on top of its promised cuts as part of the OPEC+ production cut deal.As of 8:43 a.m. EDT on Monday, WTI Crude was up 2.02 percent at $25.18, and Brent Crude was trading up 0.97 percent on the day to $31.28.Oil prices began Monday’s trading session in the red as the market began to fear that the eased lockdowns could lead to a second wave of COVID-19 cases, as some data in China, South Korea, and Germany could suggest. By the early morning EDT, however, prices reversed their earlier losses and jumped after Saudi Arabia put out a statement saying that it would be significantlyRead More »
By Dave Forest of Oilprce.com
A lot of hope has been pinned on liquefied natural gas (LNG) exports as an outlet for surging North American gas supply.
But a couple of events the past week show that getting LNG exports off the ground may be more difficult than most observers have predicted.
The biggest potential setback came in western Canada, where it appears that the newly-elected Canadian federal government is making a move to limit offshore shipments of petroleum.
Local press reported that new Prime Minister Justin Trudeau has directed the country’s Transport Ministry to impose a ban on crude oil tankers for the northern coast of British Columbia. With the directive now expected to be formalized with other government departments including fisheries, natural resources and environment.
That’s a tough development for oil export projects like the planned Northern Gateway pipeline which was supposed to carry heavy oil to the British Columbia coast for export — but now appears likely to fall by the wayside.
The anti-tanker directive also calls into question planned LNG developments on Canada’s west coast.
A number of plans are on the books for LNG export terminals here, from firms like Shell and Petronas. But the ban on oil tankers raises the issue of whether LNG vessels might also come under scrutiny — and potential restrictions — from the government.
By Colin Chilcoat of Oilprice.com
Regarding the Middle East and its oil, the late Sheikh Rashid Bin Saed Al Maktoum, longtime Emir of Dubai and Prime Minister of the United Arab Emirates, once famously remarked:
“My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel.”
It’s an apt reminder of the finite nature of oil resources, and, of course, the wealth it brings. But, and this is what the Sheikh was getting at, it’s also a call for prudence and thoughtful transformation. Outside of Dubai, the overhaul of oil-based economies is wholly incomplete, but it’s an idea that holds no less relevance as the region prepares for what could be an even greater challenge: climate change.
According to a study by Jeremy Pal of Loyola Marymount and Elfatih Eltahir of the Massachusetts Institute of Technology, large areas of the Persian Gulf may well be uninhabitable by the end of the century. Specifically, the research, published in Nature Climate Change, posits that greenhouse gases will continue to accumulate in the atmosphere at their current pace, sending temperatures to intolerable seasonal highs and increasing the frequency and severity of extreme heat waves.
By Nick Cunningham of Oilprice.com
Iraq is one of the major reasons why OPEC has been able to increase oil production over the past year, even as oil prices have dropped to six-year lows.
The war-torn country averaged 3.2 million barrels per day (mb/d) of production in 2014. But despite the onslaught from ISIS and the collapse in oil prices, Iraq succeeded in achieving steady gains in output, surpassing 4.1 mbd in September. Along with Saudi Arabia’s increase of around 600,000 barrels per day since 2014, Iraq has accounted for a majority of OPEC’s production gains over the past year, allowing the cartel to produce more than 31.5 mb/d – well in excess of its stated production target of 30 mb/d.
However, although Iraq has succeeded in defying gravity thus far, the cracks in the country’s oil success story are starting to show.
Related: Statoil’s North Sea Success Provides Hope For World’s Depleted Fields
Genel Energy Plc, a London-based oil exploration company that is concentrated in the Kurdistan region of Iraq, trimmed its production forecast for the year, due to the late payments from the Kurdish Regional Government (KRG). The Iraqi central government in Baghdad and the KRG have been at odds over oil sales.