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Tag: OPEC

  • OPEC ‘lost over $1tr to drop in oil prices’

    OPEC ‘lost over $1tr to drop in oil prices’

    The Organisation of Petroleum Exporting Countries (OPEC) lost over $1trillion in revenues from the drop in crude prices globally, the Secretary-General of the body, Mohammad Sanusi Barkindo, has said.

    The OPEC chief, in a chat with reporters at the ongoing meetings of the International Monetary Fund (IMF)/The World Bank Group in Washington DC, said the energy sector also suffered a cumulative investment loss of 26 per cent and 22 per cent in 2015 and 2016.

    The prospects for 2017 do not look any better, he said.

    His words: “OPEC member nations have in the last three years lost over $1trillion in terms of revenue. In terms of investments into this industry, we have seen over 26 per cent reduction in 2015 and in this year so far, we are predicting a further contraction of about 22 per cent. And as I had mentioned in plenary, the prospects for 2017 are also looking very bleak.”

    He lamented that for the first time in recent memory, OPEC is  not only having three consecutive years of depressed oil prices, but also seeing contraction in capital investment, particularly in the upstream for three consecutive years.

    Barkindo warned that “this is a very serious development that is threatening future supplies to the global community with the consequences on the fragile state of the economies”.

    What most forecast agencies failed to get correctly was the length of time it was going to take for the market to rebalance, he said, pointing out that it was  not only OPEC that missed the target, “but most agencies, including the IMF and World Bank which came up with models that were found wanting.

    “Nobody expected this cycle to last this long and with the severe consequences on the huge revenues that we have lost,” Barkindo said,  adding: “This is perhaps the longest cycle that we have seen in recent times, it’s taken us now into the third year of this correction.”

    Barkindo said in response to the threat to the global economy as a result of shocks from the fall in crude oil prices, OPEC, on the 28th of September, “ took a proactive and timely decision to agree on a range of ceiling of 32.5 million barrels per day to 33 million barrels per day production for its 14 members”  “This is the first time that OPEC has taken such a decision since 2008.”

    The objectives of this decision,  said the OPEC chief, “was to restore stability in the market and address the issue of high inventories,” which he put at a billion barrels, “depressing prices”.

  • OPEC output rises as Nigeria, Libya boost supply

    OPEC crude production rose to a record in September, according to a Bloomberg survey, driven by returning output from Libya and Nigeria, members who will likely be exempt from last week’s deal to cut supply.

    According to the survey, overall production from the Organization of Petroleum Exporting Countries (OPEC) increased by 170,000 barrels a day from the previous month to 33.75 million barrels a day, the survey of analysts, oil companies and ship-tracking data showed. Nigeria and Libya added a combined 190,000 barrels a day, which compensated for a drop in output from Saudi Arabia and Angola.

    Production from Nigeria and Libya is returning after internal unrest crippled the countries’ oil infrastructure. Together with Iran, they will likely be exempt from a preliminary deal agreed by OPEC in Algiers September 28 to cut production for the first time in eight years in an effort to revive prices. West Texas Intermediate crude capped the biggest monthly gain since April following the news.

    Libya will reach 600,000 barrels a day by the end of this month, according to Ibrahim Al-Awami, head of Libya’s National Oil Corporation’s oil measurement department. The country with Africa’s largest crude reserves produced an average of 340,000 barrels a day in September, up from 260,000 in August.

    Nigeria increased production by 7.9 per cent to 1.5 million barrels a day. The returning barrels came as a delivery halt was lifted on Royal Dutch Shell Plc’s Bonny Light stream early last month. Bonny Light was one of four Nigerian grades under force majeure – a legal clause that allows companies to halt shipments without breaching contracts – for reasons including attacks by militants and saboteurs who seek to thwart export-pipeline operations absent a share of the revenues.

    Iran’s production rose by 10,000 barrels a day to 3.63 million barrels a day. The rapid increase in output that followed the easing of sanctions in January has slowed in recent months, as production has neared pre-sanctions levels.

    Oil output in Saudi Arabia – the world’s biggest crude exporter – dropped by 60,000 barrels a day as temperatures retreated from mid-summer highs, triggering a drop in domestic air conditioning usage. Angolan production dipped 40,000 barrels a day.

    OPEC agreed to limit output to a range of 32.5 to 33 million barrels a day, reversing a two-year-old policy to pump at will. The group will reveal more details about this agreement, including each country’s targets, when it meets at the end of November in Vienna.

  • Nigeria, Libya boost OPEC’s crude supply

    Nigeria, Libya boost OPEC’s crude supply

    Organisation of Petroleum Exporting Countries (OPEC) crude production rose to a record in September, according to a Bloomberg survey.

    The increased supply position was driven by returning output from Libya and Nigeria, members who will likely be exempt from last week’s deal to cut supply.

    Overall production from member countries increased by 170,000 barrels a day (bpd) from the previous month to 33.75 million bpd, the survey of analysts, oil companies and ship-tracking data showed. Nigeria and Libya added a combined 190,000 bpd which compensated for a drop in output from Saudi Arabia and Angola.

    Production from Nigeria and Libya is returning after internal unrest crippled the countries’ oil infrastructure. Together with Iran, they will likely be exempt from a preliminary deal agreed by OPEC in Algiers on September 28 to cut production for the first time in eight years in an effort to revive prices. West Texas Intermediate crude capped the biggest monthly gain since April following the news.

    Libya will reach 600,000 bpd by the end of this month, according to Ibrahim Al-Awami, Head of Libya’s National Oil Corp.’s oil measurement department. The country with Africa’s largest crude reserves produced an average of 340,000 bpd in September, up from 260,000 in August.

    Nigeria increased production by 7.9 per cent to 1.5 million bpd. The returning barrels came as a delivery halt was lifted on Royal Dutch Shell Plc’s Bonny Light stream early last month. Bonny Light was one of four Nigerian grades under force majeure — a legal clause that allows companies to halt shipments without breaching contracts — for reasons including attacks by militants and saboteurs who seek to thwart export-pipeline operations absent a share of the revenues.

    Iran’s production rose by 10,000bpd to 3.63 million bpd. The rapid increase in output that followed the easing of sanctions in January has slowed in recent months, as production has neared pre-sanctions levels.

    Oil output in Saudi Arabia — the world’s biggest crude exporter — dropped by 60,000bpd as temperatures retreated from mid-summer highs, triggering a drop in domestic air conditioning usage. Angolan production dipped 40,000 bpd.

    OPEC agreed to limit output to a range of 32.5 to 33 million bpd, reversing a two-year-old policy to pump at will. The group will reveal more details about this agreement, including each country’s targets, when it meets at the end of November in Vienna.

  • Oil prices hit $50 as OPEC deal nears reality

    Oil prices hit $50 as OPEC deal nears reality

    Oil prices rose to the highest since August and traded above $50 a barrel yesterday, following optimism surrounding the new oil production deal by the Organisation of Petroleum Exporting Countries (OPEC).

    The body agreed in Algeria, in September, to cap production at not more than 33 million barrels per day.

    According to Reuters, December Brent crude futures were last up 40 cents at $50.59 a barrel, off a session low of $49.74, while U.S. crude futures rose 42 cents to $48.66 a barrel, above the day’s low at $47.78.

    OPEC basket of 14 crude stood at $44.63 per barrel, according to the cartel’s secretariat.

    At its meeting in Algiers, OPEC set up a committee to work out the oil production level of every member country.

    “The Conference opted for an OPEC-14 production target ranging between 32.5 and 33.0 mb/d, in order to accelerate the ongoing drawdown of the stock overhang and bring the rebalancing forward,” OPEC said in a statement.

    “The Conference decided to establish a High Level Committee, comprising representatives of Member Countries, supported by the OPEC Secretariat, to study and recommend the implementation of the production level of the Member Countries.

    “Furthermore, the Committee shall develop a framework of high-level consultations between OPEC and non-OPEC oil-producing countries, including identifying risks and taking pro-active measures that would ensure a balanced oil market on a sustainable basis, to be considered at the November OPEC Conference.”

    Once the OPEC deal is implemented, oil prices are expected to rally at prices higher than $50 per barrel.

  • Oil glut may continue into 2017, says OPEC

    Oil glut may continue into 2017, says OPEC

    The Organisation of Petroleum Exporting Countries (OPEC) raised its forecast of oil supplies from non-member countries in 2017.

    It said new fields coming online and U.S. shale drillers would add to cheap crude supply resulting in larger surplus in the market next year.

    According to Reuters, demand for crude from OPEC will average 32.48 million barrels per day (bpd) in 2017, OPEC said in a monthly report on Monday. That is down 530,000 bpd from the previous forecast.

    The prospect of a larger surplus than expected adds to the challenge of OPEC and non-members such as Russia, who are making a renewed attempt to restrain supplies. Oil is trading at $47 a barrel, half its level of mid-2014, as a supply glut that OPEC hoped would banish sticks around.

    OPEC revised up its 2016 and 2017 non-OPEC supply forecasts, citing factors including the start up of Kazakhstan’s Kashagan oilfield and a lower-than-expected decline in U.S. shale output, and said the immediate outlook was for more production.

    “It is expected that there will be higher non-OPEC production in the second half of 2016 compared to the first half,” OPEC said in the report.

    OPEC expects non-OPEC supply to rise by 200,000 bpd in 2017, versus a previously forecast 150,000 bpd decline. The revision is mostly due to Kashagan, OPEC said, as the long-delayed giant field finally starts up.

    On top of that, the forecast for this year was revised up by 180,000 bpd.

    OPEC itself kept output near a multi-year high in August, pumping 33.24 million bpd, according to figures OPEC collects from secondary sources, down 23,000 bpd from July’s figure, the report said.

    The July figure is the highest since at least 2008, according to a Reuters review of past OPEC reports.

    Near-record OPEC output, and higher supply from outside, could make it harder for OPEC and Russia to come up with steps to support the market. Producers are expected to meet in Algeria on the sidelines of the September 26-28 International Energy Forum.

    An attempt by producers to agree to a production freeze in April failed as Iran, wanting to boost oil exports that had been restrained by Western sanctions, refused to join and Saudi Arabia insisted all producers took part.

    The August output figures in the report at least show no further large supply increases in top OPEC producers. As previously reported, Saudi Arabia told OPEC it reduced output by 40,000 bpd from July’s record high of 10.67 million bpd.

    Iran told OPEC it pumped 3.63 million bpd, steady from July’s 3.62 million bpd, a slowdown in the rate of growth earlier in the year after the lifting of sanctions in January.

    The OPEC report stopped short of predicting when supply and demand would rebalance, although it said signs of higher-than-expected demand in some big consumers would contribute to “a reduction in the imbalance of market fundamentals” in coming months”.

    At the start of 2016, OPEC expected the rebalancing to happen this year.

    With demand for OPEC crude in 2017 expected to average 32.48 million bpd, the report indicates there will be an average surplus of 760,000 bpd if OPEC keeps output steady. Last month’s report pointed to a small, 100,000 bpd surplus.

    In the report, OPEC made no change to the global demand outlook, predicting demand growth of 1.15 million bpd in 2017.

  • OPEC secretary, Iran minister meet over market

    OPEC secretary, Iran minister meet over market

    A meeting between Organisation of the Petroleum Exporting Countries (OPEC) Secretary-General Mohammed Barkindo and Iran’s oil minister to discuss global oil market conditions and crude prices has started in Tehran, the ministry’s official website said.

    According to Reuters, “The meeting between the OPEC official and Minister (Bijan) Zanganeh started Tuesday. Barkindo arrived in Tehran on Monday night,” SHANA, the ministry’s information service, said.

    Members of the OPEC will meet on the sidelines of the International Energy Forum (IEF), which groups producers and consumers, in Algeria on September 26-28.

    They are expected to seek to revive a global deal to stabilise oil output levels. Non-OPEC member Russia, the world’s top oil producer, is also expected to attend the IEF.

    Hit by global oversupply, oil prices collapsed to as low as $27 per barrel earlier this year from as high as $115 in mid-2014, but have since recovered to around $47.

    Attempts by OPEC and non-OPEC oil exporters to reach a pact on freezing output earlier this year foundered because Iran, OPEC’s third-largest producer, declined to participate.

    Iran has said it would cooperate in talks to freeze output only if fellow exporters recognised its right to regain market share after the lifting of international sanctions in January under a nuclear deal with six major powers.

    A senior Iranian official said on Monday Iran was ready to raise its output to four million barrels per day in a couple of months depending on market demand.

    OPEC kingpin Saudi Arabia and Russia agreed on Monday to set up a task force to review oil market fundamentals and to recommend measures and actions that would secure market stability.

    Also a survey by Bloomberg has showed that Nigeria’s crude oil production declined by 130,000 barrel per day (bpd) in August to an average of 1.44 million bpd as oil firms make efforts to fix pipelines damaged by the Niger Delta militant groups.

    The country suffered the biggest decline among members of OPEC. The oil market has suffered long supply glut. However, oil production by the 14 OPEC member states rose by 120,000 barrels a day to average 33.69 million per day in August as against 33.24 bpd in July.

    Libya’s production also dropped by 40, 000 bpd to 260, 000 bpd as the country’s political factions continued to fight over the control of oil export terminals. Iraq led the increase, by a supply of 70,000 bpd to 4.48 million a day, after the government resumed flows from Kirkuk through a northern export pipeline controlled by the nation’s Kurds, signalling progress in a long-standing dispute over payments, the survey stated.

    Iran raised production by 60, 000 barrels a day to 3.62 million as it continues its return to global markets after the end of international sanctions in January. Saudi Arabia, the group’s biggest and most powerful member, raised output by 30 000 barrels a day to an all-time high of 10.69 million a day.

  • OPEC, others for oil freeze forum

    OPEC, others for oil freeze forum

    Members of the Organisation of Petroleum Exporting Countries (OPEC) and other oil producing countries are discussing an output-freeze deal next month in Algiers, Algeria as OPEC’s biggest producers are pumping flat-out, the group’s former president said.

    While a similar initiative failed in April, an agreement can be reached as Saudi Arabia, Iran, Iraq and non-member Russia are producing at, or close to, maximum capacity, Chakib Khelil said in a Bloomberg Television interview.

    Khelil steered OPEC in 2008, the last time it implemented an output cut, which was announced in Algeria in December of that year. In an interview, former Qatari Energy Minister Abdullah bin Hamad al-Attiyah was convinced there is a need for an accord.

    “All the conditions are set for an agreement,” Khelil said from Washington. “Probably this is the time because most of the big countries like Russia, Iran, Iraq and Saudi Arabia are reaching their top production level. They have gained the entire market share they could gain.”

    While oil prices have advanced since OPEC announced it would hold informal talks in the Algerian capital next month, analysts from UBS Group AG to Commerzbank AG doubt any freeze deal will be completed, and comments from Saudi Arabia and Nigeria have kept expectations low. Talks collapsed in April as Saudi Arabia insisted Iran would have to limit its production, a condition the country rejected as it ramped up exports previously curbed by sanctions.

    As producers are almost pumping at full-tilt, the impact of any accord to prevent further increases would essentially be “psychological,” Khelil said. That would nonetheless have a benefit for the market, according to the Algerian, who was also the country’s energy minister from 1999 to 2010. The global crude oversupply is already diminishing, and markets will probably reach “complete equilibrium” next year, Khelil said.

    Qatar’s Al-Attiyah, speaking by phone, said the re-balancing is proceeding slowly and there is a need for global producers to act together and speed up the process. He said it’s “really hard to say” whether anything will be agreed in Algiers.

    “OPEC and other producers need to do something because for the market to rebalance on its own that will take a lot of time,” Al-Attiyah said. “Even next year, we have to be cautious and not expect that the market will rebalance quickly.”

    Still, both former ministers agreed that a freeze, even if it’s only symbolic, would revive the bullish mood among oil investors and traders.

    “The freeze deal will not have a huge impact on fundamentals but it will help improve the market sentiments,” Al-Attiyah said. “At the end, a step taken is better than doing nothing.”

    Russia’s output hovers near an all-time high of 10.85 million barrel per day. With Russian output touching new heights, its Energy Minister Alexander Novak said his country was consulting with Saudi Arabia and other producers to jointly cap production “if necessary,” Arabic newspaper Asharq al-Awsat reported.

  • OPEC, others head for oil output freeze

    OPEC, others head for oil output freeze

    Members of the Organisation of Petroleum Exporting Countries (OPEC) and other oil producing countries are in discussion to strike an output-freeze deal next month in Algiers, Algeria as OPEC’s biggest producers are already pumping flat-out, the group’s former president said.

    While a similar initiative failed in April, an agreement can now be reached as Saudi Arabia, Iran, Iraq and non-member Russia are producing at, or close to, maximum capacity, Chakib Khelil said in a Bloomberg Television interview. Khelil steered OPEC in 2008, the last time it implemented an output cut, which was announced in Algeria in December of that year. In a separate interview, former Qatari Energy Minister Abdullah bin Hamad al-Attiyah was convinced there is a need for an accord.

    “All the conditions are set for an agreement,” Khelil said from Washington. “Probably this is the time because most of the big countries like Russia, Iran, Iraq and Saudi Arabia are reaching their top production level. They have gained the entire market share they could gain.”

    While oil prices have advanced since OPEC announced it would hold informal talks in the Algerian capital next month, analysts from UBS Group AG to Commerzbank AG doubt any freeze deal will be completed, and comments from Saudi Arabia and Nigeria have kept expectations low. Talks collapsed in April as Saudi Arabia insisted Iran would have to limit its production, a condition the country rejected as it ramped up exports previously curbed by sanctions.

    As producers are almost pumping at full-tilt, the impact of any accord to prevent further increases would essentially be “psychological,” Khelil said. That would nonetheless have a benefit for the market, according to the Algerian, who was also the country’s energy minister from 1999 to 2010. The global crude oversupply is already diminishing, and markets will probably reach “complete equilibrium” next year, Khelil said.

  • OPEC output up by 300,000 bpd on Nigeria’s recovery

    OPEC output up by 300,000 bpd on Nigeria’s recovery

    Organisation of the Petroleum Exporting Countries’ (OPEC) oil production increased by 300,000 barrels per day (bpd), with Nigeria contributing additional 150,000 in June.

    OPEC’s overall output of 32.73 million bpd shot the body’s output to an eight-year high with Libya tentatively recovering along with steady increases from Saudi Arabia and Iran, according to an S&P Global Platts survey of OPEC, said oil industry officials.

    “OPEC’s 300,000-barrel-per-day output rise, sends a strong message over its unwavering market share strategy,” said Eklavya Gupte, Senior Editor for S&P Global Platts.

    “If the situation persists, the case for a return to some kind of production cap may gain traction,” he added.

    Venezuela acted as a check on the overall level though, as the crisis-hit country’s production continues to hit fresh lows. The bloc’s top producer, Saudi Arabia, increased its output further to produce an average 10.33 million bpd in June in order to meet domestic demand. Last summer, Saudi Arabia produced as much as 10.45 million bpd.

    A spike in air-conditioning demand has traditionally boosted the volume of crude burned directly in the kingdom’s power plants during the summer months. In addition, domestic refining also picked up.

    The sharp increase in OPEC’s June production affirms a continuation of its market share strategy.

    Meanwhile, OPEC added a new member in the month, Gabon, and next month Nigeria’s Mohammed Barkindo will take over as the group’s secretary-general.

    This comes at a critical juncture for OPEC, after a spate of infighting and disagreements. Analysts said these two decisions which were taken at the June meeting could lay the groundwork for future cooperation on bigger issues.

    The largest rise in output came from Nigeria, where production rose 150,000 bpd to 1.57 million bpd, due largely to the return of its largest export grade, Qua Iboe, as production and exports resumed at the end of May.

    Nigerian production hit 30-year lows in May as militancy continued in the country’s oil rich Niger Delta.

    The situation remains volatile. Barely 10 days after a 30-day ceasefire deal with the Federal Government, militants claimed a round of fresh attacks in the Niger Delta at the start of July, marking a major setback after weeks of respite.

    Libyan oil production rose 60,000 b/d to 310,000 b/d in June as exports from the eastern port of Marsa el-Hariga resumed in late May after a three-week blockade caused by a dispute between the country’s two rival national oil company factions.

    The North African country’s production remains less than a quarter of its 1.6 million bpd production capacity, but early in the month Libya’s National Oil Corp agreed to unify its rival administrations under one management structure, a positive step for the country’s beleaguered oil sector.

    Analysts, however, said production could only see a sustained increase if the new national unity government unites with several other factions to reopen the country’s two largest oil terminals — the 340,000 bpd Es-Sider and 220,000 bpd Ras Lanuf facilities.

    Iranian output in June climbed to 3.63 million bpd, its highest since June 2011, and very close to pre-sanctions levels, according to Platts OPEC survey data.

    Iran’s oil output rise has been swift since sanctions were lifted on January 16, increasing 740,000 bpd compared with last December.

    The decline in Venezuelan crude output accelerated further, with production falling by 120,000 bpd in June to 2.15 million bpd, the lowest since February 2003, S&P Global Platts data showed.

  • Saudi King hosts OPEC Secretary Barkindo to Iftar

    King Salman Bin Abdulaziz of Saudi Arabia at the weekend hosted Organization of the Petroleum Exporting Countries (OPEC) Secretary General-designate Dr Mohammed Sanusi Barkindo to Iftar at the Royal Palace in Makkah.

    He assured the in-coming Secretary General of Saudi Arabia’s continuous support for OPEC especially at this critical time for the global oil industry.

    King Salman noted that as a founding Member of OPEC, Saudi Arabia would continue to render support to the organisation and make necessary sacrifices for the unity and progress of the group.

    The Custodian of the Two Holy Mosques congratulated Barkindo and Nigeria for emerging OPEC Secretary General after four years of impasse.

    The King commended President Muhammadu Buhari for his determination to change Nigeria for the better, and assured of Saudi Arabia’s support.

    Barkindo thanked the King for the honour done him, President Buhari and Nigeria with the invitation to iftar and conveyed the greetings and gratitude of President Buhari and the good people of Nigeria to the King for supporting Nigeria’s candidate even when they were also in the race.

    He appealed to the King to continue to provide leadership to OPEC, noting that the unity of purpose demonstrated at the June Conference of the Organisation was exemplary and needs to be sustained especially during these challenging times for the oil industry.

    Barkindo commended the King for his Vision 2030 project pointing out that its relevance goes beyond Saudi Arabia to all OPEC Member Countries.  It is a project that all OPEC Member Countries should emulate, he said.

    Barkindo, who was appointed OPEC Secretary General by the 169th Meeting of the OPEC Conference on June 2, is expected to assume duty at the OPEC Secretariat, Vienna, on August 1.