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Tag: OPEC

  • Brent hits $45 as OPEC, Russia disagree on daily production cuts

    Brent hits $45 as OPEC, Russia disagree on daily production cuts

    Oil prices took a worse turn on Friday evening after Russia rejected the proposal to cut daily oil production by 1.5 million barrels. This development further dented the already battered market.

    After the meeting, Russia refused to support the move, arguing that it was too early to predict the impact of a coronavirus outbreak on global energy demand. This means bigger trouble for oil dependent nations like Nigeria as prices continue to fall below their budget benchmark for the year. Nigeria had a benchmark of $57 per barrel in the 2020 budget.

    As at the time of filing this report, the international benchmark, Brent Crude, plunged by 8.20 percent equivalent to $4.09 to trade at $45.90, while the US crude, the West Texas Intermediate fell by a staggering 8.45 percent or $3.88 to $42.02 per barrel.

    With the failure of this deal, OPEC members and non-OPEC producers can produce the commodity at will in an already oversupplied market after the existing deal for output cuts expire at the end of March.

    And with an oil-glut imminent, prices will have no choice but to continue dropping.

    On Thursday, OPEC members backed an additional 1.5 million barrels per day of oil cuts until the end of 2020, equal to around 1.5 percent of global demand, a much bigger and more extended move than expected of 600,000 barrels per day.

    They also called for extending existing OPEC+ cuts of 2.1 million barrels per day, meaning the proposed combined total of the cuts envisaged would have been 3.6 million bpd or about 3.6 percent of global supplies.

    But they made the proposal on the condition that Russia and other non-producers will agree to the deal, but with the disagreement, analysts foresee a bad stain on a market already faced with the disruption by the coronavirus.

  • Coronavirus: Brent Falls to $54 as Russia Rejects OPEC Cuts

    Coronavirus: Brent Falls to $54 as Russia Rejects OPEC Cuts

    Brent Crude futures fell below $55 per barrel on Friday as major futures recorded a fifth consecutive weekly loss, with Russia saying it was not ready to adhere to cuts recommended to help the global market affected by the spread of the coronavirus.

    On the back of this, Brent crude shed 46 cents or 0.84 percent to trade at $54.47 per barrel, while the WTI crude fell back to the $50 mark after losing 61 cents equivalent to 1.2 percent to trade at $50.32 per barrel.

    In the latest development concerning the coronavirus, over 630 people have been confirmed dead and this continues to affect demand with more than 31,000 cases of the deadly pneumonia like virus in the country of China, the world’s largest importer of oil.

    The Organisation of the Petroleum Exporting Countries (OPEC) and its allies are seeking to extend oil cut up to 2.3 million barrels per day till June 2020 to help prices which are hit by the virus spread.

    After a three-day extended dialogue between members of the cartel, there was a suggestion for extra 600,000 barrels per day, but Russia Energy Minister, Mr Alexander Novak, said the leader of the OPEC allies needed more time to assess the situation and was not ready to commit.

    He also estimated that global demand would drop by 150,000 to 200,000 barrels per day this year due to the epidemic that originated in Wuhan City, China last December.

    It is known that Russia is more interested in extending the period of the current cut of 1.7 million barrels per day till June not that which will see an additional 600,000 bpd. This is however subject to approval by producers in OPEC+ who are to meet in Vienna on March 5-6, although the meeting could be brought forward because of concerns surrounding the virus.

    The effect of the virus on dwindling prices is more important than many analysts believe as even a strong growth in US employment failed to help the market as it normally would. A report on US employment on Friday showed that the economy added 225,000 jobs in January

  • Crude Oil Prices Rebound as OPEC Push for Further Cuts

    Crude Oil Prices Rebound as OPEC Push for Further Cuts

    Major crude futures prices returned to gaining ways by 3 percent on Wednesday as the Organization of the Petroleum Exporting Countries (OPEC) and its producer allies are considering further output cuts to counter the effect of the coronavirus on global oil demand.

    As at Wednesday night, the Brent crude was trading up by $1.66 or 3.08 percent to $55.64 per barrel, while the US West Texas Intermediate crude was up by $1.55 or 3.12 percent to settle at $51.16 per barrel.

    The OPEC+ joint technical committee on Tuesday weighed the effect of the coronavirus outbreak on demand loss as OPEC and its allies are struggling to contain the oil market.

    According to reports, the OPEC+ panel did not discuss cuts on Tuesday, but will do that into the second half of the meeting on Wednesday. It was hinted that there were concerns that OPEC’s largest producer, Saudi Arabia, was pushing for more cuts, while Russia, the leader of the non-OPEC group of producers part of the deal, was pushing back.

    There are considerations of pushing for an additional cut of at least 500,000 barrels per day and even 1 million barrels daily to return the market to stability and also stop oversupply.

    OPEC and some non-OPEC allies such as Russia have been curbing production by 1.7 million barrels after signing an agreement to prevent an oil glut and support oil prices above $60 per barrel in December with the deal set to expire in March but with the latest development, the market may see some extra measures from the alliance.

    On Wednesday, prices held gains even after data showed that US crude inventories rose by 3.4 million barrels in the week to January 31.

    Also believed to have helped the market were reports that a team of researchers in China had found that drugs Abidol and Darunavir can limit the virus. It was also reported that a British scientist had made a significant breakthrough in the race for a vaccine by reducing part of the normal development time from two to three years to only 14 days.

    However, the World Health Organization (WHO) played down the media reports, saying there were no known effective cure against the virus yet.

    The latest numbers showed that death toll from the coronavirus outbreak in has risen to 490, with 24,324 people infected, and almost 30 countries affected.

  • Nigeria, other OPEC members Consider Output Cut Extension Till End of 2020

    Nigeria, other OPEC members Consider Output Cut Extension Till End of 2020

    Nigeria and other members of the Organisation of the Petroleum Exporting Countries (OPEC) are in talks to extend oil production cut through the year of 2020, reports have said.

    Quoting a source, a Russain news agency, TASS, said discussions were still in the early stages. It was further disclosed that there was an understanding among the cartel members to extend the latest cuts which expires in March till the end of the year.

    It was also stated that it was unlikely that the cartel will decide to relax the cut in March because the market is still very bearish in its demand growth outlook and there is also the threat of oversupply.

    At the OPEC+ meeting in December, the group and its Russia-led partners decided to deepen the oil production cuts by 500,000 barrels per day in the first quarter of 2020 to brings total production reductions at 1.7 million barrels per day.

    The latest agreement will expire at the end of March and OPEC and its allies are set to meet in the Austrian capital, Vienna on March 5 and 6 to decide how to proceed with the deal.

    According to Saudi Arabia’a Energy Minister, Prince Abdulaziz bin Salman, said on Thursday that all options were on the table for the next summit of the OPEC+ coalition, including further cuts in oil production.

    OPEC will have to address the oversupply in the market in the first half this year, and the cartel is likely to extend the production cuts through the end of 2020.

    At the WEF, the International Energy Agency (IEA) said it expects a surplus of 1 million barrels per day in the first half of the year.

    This is one of the many challenges facing oil as demand is depleting in the largest importer of oil, China with the spread of the coronavirus with the Chinese government imposing a series of warnings and restrictions on key travel routes as authorities step up efforts to contain the spread of the outbreak, which began in China’s Wuhan city.

  • Oil prices jump as OPEC, others agree 500,000 b/d cut

    Oil prices rose on Friday as the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed to deepen output cuts to 500,000 additional barrels per day as the two-day meeting concluded in Vienna, Austria on Friday.

    This new deal reached means the production cut will move from 1.2 million to 1.7 million less production per day.

    On the back of this, the international oil benchmark, the Brent crude futures, traded up at $64.36 per barrel after gaining 97 Cents or 1.53 percent, while the WTI crude rose by 72 cents equivalent to 1.23 percent to trade at $59.15 per barrel.

    There had been talks that the cartel and its allies will discuss the necessary issues concerning oil supply in 2020 when they meet in the Austrian capital city of Vienna on December 5 and 6 with reports showing that oil cut could be extended by 400,000 barrels per day.

    However, after the conclusion of the meeting on Friday, Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, told reporters that the kingdom’s quota would be an additional 167,000 barrels per day.

    He also noted that they would continue to exceed their quota by an additional 400,000 barrels a day, which means the overall production cut will be closer to 2.1 million barrels a day depending on other countries, particularly Nigeria and Iraq willingness to abide by their allocation.

    On its part, Russia, through its Energy Minister, Alexander Novak, said the country’s quota would be 300,000 barrels per day during the first three months of 2020 as condensates would no longer be quoted as part of output for countries.

    The cartel and its allies had earlier in January agreed to cut production output by 1.2 million barrels per day in a deal that would run till March 2020.

    However, one thing that isn’t clear is when this new deal will run through but the allied group said it plans to review the policy at an extraordinary meeting scheduled for March 5-6, 2020.

  • OPEC declares support for Global Maritime Security Conference

    -Commends Nigeria for hosting conference

    The Organization of Petroleum Exporting Countries (OPEC) has commended the Federal Government of Nigeria for accepting to host the Global Maritime Security conference which it says will go a long way to address concerns of security of the maritime domain of the entire Gulf of Guinea.

    This was as the Chairman of the Association of African Maritime Administration, AAMA, Dr Dakuku Peterside confirmed the participation of over 70 countries in the upcoming Global Maritime Security Conference scheduled to hold from the 7th – 9th of October in Abuja, Nigeria.

    The Secretary General of OPEC Mohammed Sanusi Barkindo, in a statement to the organizing committee of the conference, noted that the Gulf of Guinea is strategic to the stability of oil production globally, adding that the Gulf of Guinea is a major shipping route and any infraction in the area is largely felt beyond the region.

    In his words “ The strategic importance of the Gulf of Guinea is undisputed and any disruptions in the area have a direct negative impact on our industry and indeed of global concern. This conference is timely in bringing together the relevant and critical stakeholders to allow them to discuss in a constructive manner what concerted action could be undertaken to ensure the sustainable use and long term security of this important and strategic body of ocean”.

    Mohammed Sanusi Barkindo also said that the conference will create renewed confidence in investment in the oil and gas sector in the Gulf of Guinea, thus having a multiplier effect of addressing the challenges associated with the sector globally.

    Meanwhile, the chairman of the Association of African Maritime Administration, AAMA, Dr Dakuku Peterside said the conference provides the platform for stakeholders of all shades to brainstorm and collectively find a to resolve the challenges of maritime insecurity in the Gulf of Guinea.

    Dr Dakuku who is also the Director General of the Nigerian Maritime Administration and safety Agency, NIMASA assured participants of a successful event in Nigeria.

    The Global Maritime Security Conference 2019 is a high-level Maritime Security Conference to facilitate a clearer understanding of the challenges of maritime security in the Gulf of Guinea region and develop tailored solutions as well as coordinate efforts at strengthening regional and international collaborations to extinguish maritime threats in the region.

    Expected participants include Relevant Government Ministries And Agencies, Navy and Coast Guards, Regulatory bodies, Maritime Lawyers and Professionals, Foreign Missions and Diplomats, Policy Makers and Researchers Institutions and Nongovernmental Organizations amongst Others

  • Nigeria, Saudi Arabia, others sign new OPEC Charter

    The Organisation of the Petroleum Exporting Countries (OPEC) and the non-member countries of the organisation (OPEC+) on Tuesday signed a draft `Charter of Cooperation’ in a bid to further strengthen their partnership.

    The charter now replaces the `Declaration of Cooperation’, which was reached in Dec. 2016 between the two groups.

    Speaking at the end of the 6th OPEC and non-OPEC Ministerial Meeting in Vienna, Mr Salvador Fernandez, President of the bloc’s Council reaffirmed the continued commitment of the member countries to a stable market as stipulated in the cooperation.

    “Participating producing countries are committed to promoting the interest of producing nations.

    “The efficient, economic and secure supply to consumers and a fair return on invested capital as well as the return of confidence and investment to the oil industry,” Fernandez said.

    Fernandez, who is also the Venezuelan Petroleum Minister, said that the meeting focused on recent oil market developments and immediate prospects as well as collaborative efforts by members.

    Mr Alexandra Novak, Russia’s Energy Minister and Co-chair of the meeting, described the charter as not only “historic, but a basis for solidifying cooperation.

    “It is not only a historic document which solidifies our cooperation, but also a solid foundation for future analysis of the market and basis for decision-making to stabilise the market.’’

    Novak, who noted the successes achieved through the Declaration of Cooperation, said that the market was currently in a better shape than it used to be.

    “To further stabilise the market, we have decided to significantly intensify monitoring in bid to forestall potential uncertainties that could destabilise the market,” he said.

    News Agency of Nigeria ( NAN) reports that the new agreement is seen as a move by the bloc to remain relevant in the oil market which has been transformed by booming U.S. shale oil output.

    Nigeria and 13 other OPEC member nations as well as some non-member countries have already signed the charter.

  • OPEC re-elects Nigeria’s Mohammed Barkindo as Secretary-General

    The Organization of Petroleum Exporting Countries (OPEC ) on Monday night announced the re-election of Nigeria’s Mohammed Barkindo as Secretary General for a three-year tenure.
    Barkindo, who is an accomplished oil technocrat with a wealth of experience in the oil and gas sector, was first elected as Secretary General of the bloc in 2016.
    Addressing newsmen at the end of the 176th meeting Of OPEC member nations, Mr Salvador Fernandez, President of the conference, also announced a nine- month extension of the global oil production cut under the “ Declaration of Cooperation “ among member states.
    The “Declaration of Cooperation”, an outcome of the Joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting held on Dec. 10, 2016, was effective for an initial period of six months.
    The declaration constitutes an unprecedented milestone in the history of the OPEC because, for the first time ever, the member countries of the organization coordinated with 11 non-members in a concerted effort to accelerate the stabilization of the global oil market through voluntary production adjustments, which amounted to approximately 1.8 million barrels per day.
    The Second Joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting, which was held on May 25, 2017 decided to extend the voluntary production adjustments for another nine months beginning July 1, 2017.
    According to the bloc, the sustainable oil market stability sought by the declaration is in the interests of producers, consumers, investors, and the global economy at large.
    Similarly at the third joint OPEC-Non-OPEC Producing Countries’ Ministerial Meeting on Nov. 30, 2017, it was agreed to amend the Declaration of Cooperation so that it will take effect for the entirety of 2018.
    The core principles of transparency, equity and fairness which have underpinned the Declaration of Cooperation infused all aspects of OPEC’s interactions with its non-OPEC oil producing partners, including cooperation at a research and technical level.
    The News Agency of Nigeria (NAN) reports that the two-day conference will continue on Tuesday with the 6th OPEC and non-OPEC Ministerial meeting

  • Oil slips to $71, hit by talk of higher OPEC production

    Brent oil slipped to around 71 dollars a barrel on Tuesday, pressured by expectations of higher U.S. inventories and concern about Russia’s willingness to stick with OPEC-led supply cuts.

    Analysts on average expect U.S. crude stockpiles to have risen by 1.9 million barrels last week, the fourth straight increase.

    The first of this week’s stockpile reports is due at 2030 GMT from the American Petroleum Institute.

    “We have already seen these inventories going higher in the last week’s print,” said Naeem Aslam, Chief Market Analyst at TF Global Markets in London.

    “The rising inventory data has raised many questions for investors – no one wants to see the oil glut again.”

    Brent crude, the global benchmark, was down 12 cents at 71.06 dollars a barrel at 0801 GMT. U.S. West Texas Intermediate (WTI) crude gained six cents to 63.46 dollars.

    While OPEC-led supply cuts have boosted Brent by more than 30 per cent this year, gains have been limited by worries that slowing economic growth could weaken demand for fuel.

    Oil also fell on Monday after comments from Russia raised concern that the OPEC-led supply-cutting pact may not be renewed.

    Russia and the producer group may decide to boost output to fight for market share with the U.S., TASS news agency сited Finance Minister Anton Siluanov as saying.

    The Organisation of the Petroleum Exporting Countries and other producers including Russia, an alliance known as OPEC+, have been cutting output since Jan. 1.

    They will decide in June whether to continue the arrangement.

    “There is a growing concern that Russia will not agree on extending production cuts and we could see them officially abandon it in the coming months,” said Edward Moya, Senior Market Analyst at OANDA.

  • Oil prices rise as OPEC cuts supply

    Oil prices rise as OPEC cuts supply

    Oil prices were near 2019 highs on Tuesday, supported by supply cuts led by producer club OPEC.

    U.S. sanctions against oil producers Iran and Venezuela are also boosting prices, although traders said the market may be capped by rising U.S. output.

    U.S. West Texas Intermediate (WTI) futures were at 59.10 dollars per barrel at 0314 GMT, virtually unchanged from their last settlement and close to the 2019 high of 59.23 dollars reached the previous day.

    Brent crude oil futures were up 10 cents at 67.64 dollars per barrel, also close to this year’s peak of 68.14 dollars reached late last week.

    In China, Shanghai crude futures, launched in March last year, bounced 4.5 per cent from their last close to 467.6 yuan (69.64 dollars) per barrel, also near 2019 highs of 475.7 yuan a barrel reached during a brief spike in February.

    In dollar-terms, this pushed Shanghai crude into a premium over Brent.

    The Organisation of the Petroleum Exporting Countries (OPEC) on Monday scrapped its planned meeting in April, effectively extending supply cuts that have been in place since January until at least June, when the next meeting is scheduled.

    OPEC and a group of non-affiliated producers including Russia, known as OPEC+, started withholding supply to halt a sharp price drop in the second-half of 2018, when markets came under pressure from surging output as well as an economic slowdown.

    “The OPEC+ deal has brought stability to crude prices and signs of an extension have taken crude higher,” said Alfonso Esparza, senior market analyst at futures brokerage OANDA.

    Prices have been further supported by U.S. sanctions against oil exports from Iran and Venezuela, traders said.

    Because of the tighter supply outlook for the coming months, the Brent forward curve has gone into backwardation since the start of the year, meaning that prices for immediate delivery are more expensive than those for dispatch further in the future, with May Brent prices currently around 1.20 dollar per barrel more expensive than December delivery Brent.

    Outside OPEC, analysts are eyeing U.S. crude oil production, which has soared by more than 2 million barrels per day (bpd) since early 2018, to around 12 million bpd, making America the world’s biggest producer ahead of Russia and Saudi Arabia.

    Weekly output and storage data will be published by the Energy Information Administration (EIA) on Wednesday.

    On the demand-side, there is concern that an economic slowdown will erode oil consumption.

    Bank of America Merrill Lynch said in a note that economic “risks are skewed to the downside” and that “we forecast global demand growth of 1.2 million bpd year-on-year in 2019 and 1.15 million bpd during 2020.”

    The bank said it expected “Brent and WTI to average 70 dollars per barrel and 59 dollars per barrel respectively in 2019, and 65 dollars per barrel and 60 dollars per barrel in 2020.”