Downside risk for tomorrow’s OPEC+ meeting

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After more than two years of coordinated production cuts, OPEC+ has reached the point where it no longer has to increase production targets and needs to rethink the future of the 23-nation oil group.

– Most analysts expect no or just very moderate changes to OPEC+ September 2022 production guidance – With the June numbers already at a whopping 320% compliance rate, additional supply remains the main challenge for members.

The deteriorating demand outlook will play a role in the decision-making of OPEC+ as the group wants to keep oil prices high enough to generate ample profits without impeding sufficient supply to the market.

With Russia facing a series of sanctions from 2023 onwards and thus vulnerable to lower production, Saudi Arabia is seeking to keep the OPEC+ oil market coordinating force, preferring to avoid sudden market shocks as Riyadh finally grew to enjoy a long period of gains.

market movers

Saudi Aramco (Tadawul: 2222) It is said that he bought an American lubricant product Valvoline (NYSE: VVV) It is seeking to expand its foothold in the downstream business, for a reported $2.65 billion.

– The largest manufacturer of electric car batteries in the world, which is China CATL (SHE: 300750) It saw the resignation of its vice president Huang Xilin this week, with founder and chairman Zeng Yuchun taking over as general manager, sending the stock up 5% on Monday alone.

– one of the largest wind turbine producers in the world, Siemens Gamesa (BME: SGRE) It is considering laying off about 10% of its current workforce, or 2,500 jobs, against the background of another directive reduction in 2022.

Tuesday 02 August 2022

One oil major after another is announcing massive quarterly earnings and share buyback programs, with the likes of BP, Marathon and Devon Energy joining the list this week. Meanwhile, Brent crude prices have faltered at $100 a barrel so far this week. If tomorrow’s OPEC+ meeting turns into another campaign of smoke and mirrors, the structural weakness in demand resulting from weak global manufacturing data and the ongoing struggle in Europe to contain Russian energy extortion could re-emerge, pushing oil further into double-digit territory.

The imposition of taxes on US crude imports raises questions. President Biden’s $433 billion tax and climate bill, which will likely see a Senate vote this week already, aims to levy a 16.4-cents-per-barrel tax on crude oil and imported products, raising concerns that this would Inflation is inadvertently fueling as USGC oil refineries rely on heavy crude. from Latin America and elsewhere.

The United States is targeting Iran’s oil trade again. The US Treasury and the US State Department imposed sanctions on six other companies, based in Hong Kong, Singapore and the United Arab Emirates, for allegedly facilitating trade in Iranian oil and petrochemical products, the third round of blacklisting in the past two months.

OPEC urges Russia to stay in the oil group. Haitham al-Ghais, the new Secretary-General of OPEC, said that Russia’s participation in OPEC + is vital to the success of the agreement, adding that the group does not control oil prices but controls the market in terms of supply and demand.

Nord Stream Blame is a game that never stops. With markets still having no idea where the ill-fated Nord Stream 1 turbines are located, Russia said there is not much it can do to replenish pumping along the pipeline as it continues to provide only 20% of plate capacity with only one turbine running.

Iran indicates its readiness for a new round of talks. As the European Union continues to propose new initiatives to bridge the gap between the United States and Iran, with Brussels presenting a new draft text on reviving the Joint Comprehensive Plan of Action, Tehran has said it is ready to start new talks provided they lead to a “reasonable and stable” agreement.

Australia wants to keep gas at home. Australia is considering curbing its LNG exports after a national watchdog indicated more natural gas is needed to meet the needs of its east coast amid a significant drop in onshore production, with some constraints likely looking into 2023.

Luxembourg is moving to freeze the assets of Ecuador. Banks in Luxembourg were ordered to freeze assets held by Ecuador after Latin America failed to pay $391 million to Anglo-French oil company Perenco, as a result of its illegal termination of a production sharing agreement.

ADNOC finds marine gases. The Emirates National Oil Company ADNOC with a block operator ENI (NYSE: E) And PTTEP, discovered the second gas game in Offshore Block 2, adding 1-1.5 TCf to a lower-depth target assessed earlier this year, all just three years after it was awarded the ground in its first-ever bidding round in Abu Dhabi.

Major Nigerian export halted amid leaks. The Shell (LON: SHEL) –The Forcados terminal has been in operation since July 17 after a leak from a subsea hose was discovered, with August shipments already postponed to September as the 200,000 bpd stream remains distorted by force majeure events.

American diesel has become the new favorite of hedge funds. According to CFTC figures, hedge funds and other money managers bought the equivalent of 9 million barrels of US diesel futures in the week ending July 26, in a sign that the slow build-up of intermediate distillates is causing problems for diesel prices going forward.

Copper in tensions after a giant Chilean sink. Chilean authorities have launched an official investigation into a giant hole in the Alcaparrosa mine they operate Lundin Mining (TSE: LUN)is 82 feet in diameter, which could dictate problems with copper production in the northern regions of Chile, which comprises roughly 30% of global copper production.

China is a pioneer in offshore shale oil exploration. With China’s upstream sector increasing focus on oil shale, the state-controlled oil company CNOOC (HKG: 0883) It has successfully tested production at the Weiye-1 well, the country’s first-ever offshore shale oil well.

Texas is struggling with unbearable heat. The Electrical Reliability Council of Texas (ERCOT) has issued a warning that Lone Star power use will again break records this week, with peak demand expected on Wednesday at 80.076 megawatts (the previous all-time high was reached two weeks ago., when 78,828 megawatts).

By Tom Cole for Oilprice.com

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