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OPEC Trims 2016 Estimates for Rival Supplies as U.S. Oil Suffers

OPEC trimmed estimates for supplies from outside the group in 2016 as the slump in prices takes its toll on the U.S. shale-oil industry. The Organization of Petroleum Exporting Countries cut 2016 estimates for non-OPEC output by 110,000 barrels a day, its Vienna-based secretariat said Monday in its monthly market report. Still, the group sees non-OPEC supply expanding slightly next year, while the International Energy Agency on Friday predicted a contraction of 500,000 barrels a day, the biggest since 1992. Saudi Arabia told OPEC it curbed output in August to a six-month low. “There are signs that U.S. production has started to respond to reduced investment and activity,” OPEC said in the report. “Indeed, all eyes are on how quickly U.S. production falls.” West Texas Intermediate crude futures have tumbled more than 50 percent in the past year, triggering an unprecedented cutback in drilling that threatens to end the […]

Posted On : Published By : Tom Whipple
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OPEC Is About to Get Even Bigger

There’s been a lot of debate as to whether OPEC’s decision to protect its market share would work. Some thought that the policy shift from protecting price to protecting market share would eventually lead to a breakup of the organization, as weaker members would revolt or bolt. That, however, doesn’t appear to be the case, as its membership is poised to actually grow in December when it welcomes Indonesia back as a member. What Indonesia brings to the table Indonesia is poised to rejoin the oil group after a seven-year hiatus. It originally left due to a slide in its oil output, as it couldn’t overcome the declining production from legacy fields. In fact, its current daily output of 870,000 barrels is just half of what it was in its peak in the late 1970s. Further, that oil output isn’t even enough to meet its own internal demand, which […]

Posted On : Published By : Tom Whipple
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Honor ceiling, Iran tells OPEC

OPEC members, notably Iran, are ignoring production agreements to the detriment of oil prices, Iran’s Oil Ministry says. File photo by Maryam Rahmanian/UPI TEHRAN, Sept. 10 (UPI) — The Organization of Petroleum Exporting Countries will have to review production levels to make room for Iran or face consequences, Iran’s Oil Ministry said. An opinion piece published by SHANA, the Oil Ministry’s official news website, said crude oil markets are skewed toward the supply side by 2 million barrels. Once all sanctions pressures ease, Iran could add another 1 million barrels of oil per day to the global marketplace almost immediately, it said. Iranian Oil Minister Bijan Zangeneh said his country could become the second-largest producer in the Organization of Petroleum Exporting Countries, after Saudi Arabia, within seven or eight months of sanctions relief. The minister said Iran will increase net oil production by more than 1.5 million bpd, bringing […]

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New IEA chief Birol calls for ‘partnership’ with China on first official trip

The then-chief economist of the International Energy Agency Fatih Birol speaks during a question and answer session at the Oil & Money conference in London in this file photo taken on October 1, 2013. The International Energy Agency’s new chief called on Wednesday for a "greater partnership" between his organization and China, the world’s largest energy consumer, in his first official trip. Fatih Birol, who took over the top post at the Paris-based IEA this month, told an audience of Chinese officials and foreign diplomats in Beijing that a top priority during his four-year tenure will be to strengthen ties with emerging powers that are non-members. "China is at the top of the list," he said. China is the world’s second largest oil importer, although it has been challenging the United States more and more for the No.1 spot, with its crude buys and the strength of its demand […]

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Golden age of OPEC has passed: Rosneft CEO

The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured at its headquarters in Vienna, Austria, August 21, 2015. The Golden Age of OPEC countries to keep oil markets balanced passed when the group decided not to cut production in November last year to end a price rout, the chief executive of Russian oil major Rosneft said. "The Golden Age of this organization has passed," Igor Sechin said during the Financial Times’ Commodities Retreat in Singapore on Monday. "If quotas (for production) had been observed, global oil markets would have been rebalanced by now," he added, referring to OPEC’s decision in November 2014 to keep production near record highs in defense of market share over prices. Oil prices have fallen to below $50 per barrel since June 2014 as record global output has started to outweigh consumption. Sechin said an average oil price of $70 dollar […]

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OPEC May Recognize ‘Lower For Longer’ Pushes Their Prices, Too

Raising the specter of a global financial crisis, members of the Organization of the Petroleum Exporting Countries (OPEC) appear poised for a new approach in dealing with oil-producing nations outside of the cartel. Or at least, one that’s different from the tactic taken last year. Looking to flex its global muscle as the predominant oil producer in the world, OPEC leader Saudi Arabia refused to cut its production and after Chinese demand waned, the move proved to the global economy the Keynesian theory that oversupply makes for discounted prices. Within 10 months, oil sold per barrel for less than half its previous price. OPEC’s potential about-face is evident in the regular bulletin the organization provides. The July-August 2015 missive leads with a piece called, “Cooperation Holds the Key to Oil’s Future.” “International crude oil prices in July suffered their largest monthly decline since Lehman Brothers collapsed in the United […]

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OPEC oil output in August falls from record on Iraq disruption: survey

A man fills up his 1976 Chevy Nova with gasoline at a PDVSA gas station in Caracas January 12, 2015. OPEC oil output fell in August from the highest monthly level in recent history, a Reuters survey found on Wednesday, as disruptions to flows on Iraq’s northern pipeline halted supply growth from the group’s second-largest producer. Largely stable output from Saudi Arabia and other Gulf members of the Organization of the Petroleum Exporting Countries indicated they are not wavering in their focus on defending market share instead of prices. OPEC supply fell in August to 31.71 million barrels per day (bpd) from a revised 31.88 million bpd in July, according to the survey, based on shipping data and information from sources at oil companies, OPEC and consultants. Oil has weakened due to surging output and is trading below $50, not far from a more than six-year low close to […]

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OPEC Split on Need for Long-Term Oil-Price Forecasts

OPEC’s strategy review is due for completion later this year. The previous edition produced in 2010 estimated crude would trade in a range of $70 to $86 a barrel through to 2020, then climb to $106 by 2030. Saudi Arabia and its Gulf allies are at odds with Iran and other OPEC members over whether the organization should include oil-price forecasts in its long-term strategy report, according to three of the group’s delegates. The Gulf kingdom, which has led the Organization of Petroleum Exporting Countries in a battle against rival producers, is seeking to exclude price assumptions from the report, according to the delegates, who asked not to be identified because the document isn’t public. The disagreement reflects internal divisions over whether OPEC policy should focus on prices or the stability of the oil market, one of the delegates said. Oil prices plunged to a six-year low last month […]

Posted On : Published By : Tom Whipple