Recession risks a key factor in Opec+ discussions: UAE

  • Market: Crude oil
  • 05/10/22

The impact of a potential recession on oil market fundamentals will be one of the issues dominating discussions when Opec+ ministers meet in Vienna today to decide on production targets for next month, according to UAE energy minister Suhail al-Mazrouei.

"Recession is one of the fundamental factors that we are all looking at," al-Mazrouei said. "We look at recession... we look at the supply and demand, and we all know that the recession is affecting the supply and demand. What is the decision? You have to wait."

Concerns about the effect of an inflation-driven economic slowdown on global oil demand are looming large over the ministerial meeting.

Delegates say the group will examine proposals to reduce production quotas by as much as 2mn b/d in November. If agreed, this would be the biggest cut since the group reduced quotas by 9.7mn b/d at the start of the Covid crisis in 2020.


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30/05/24

California diesel inventories hit all-time low: CEC

California diesel inventories hit all-time low: CEC

Houston, 30 May (Argus) — Combined California diesel stocks fell to the lowest level in California Energy Commission (CEC) history in the week ended 24 May. Combined diesel inventories — including in-state CARB, non-California EPA and renewable diesel — totaled 2.3mn bl after significant draws across grades, despite a sharp increase in-state CARB diesel output during the week, according to CEC data going back to 2005. In-state CARB diesel stocks totaled 1.37mn bl by the end of the week and marked a 13pc drop from the week prior. Other diesel fuel inventories contracted by nearly 17pc to 929,000 bl. Production of in-state CARB diesel jumped by nearly 40pc in the week to 128,000 b/d, while other diesel output — including non-California EPA and renewable diesel — plummeted by more than 44pc to average 51,000 b/d. In-state CARBOB gasoline production dipped by 2.8pc to average 800,000 b/d from the week prior, although inventories added a nominal 1.8pc to a nine-week high of 6.10mn bl. Total gasoline production trended 2.7pc lower at 879,000 b/d. California jet fuel production jumped by nearly 18pc to 321,000 b/d, the highest level since 19 April. Inventories grew by 0.6pc to 3.24mn bl, continuing a trend of largely stable volumes since 10 May. Crude throughputs increased by 9.4pc to 1.44mn b/d as stocks shrank by 19pc to 11.1mn bl — the lowest volume since January 2024. By Jasmine Davis California refining throughputs and storage Commodity 24-May-24 17-May-24 ± Throughputs '000 b/d Crude 1,440 1,316 124 CARBOB 800 823 -23 Total gasoline 879 904 -25 Jet fuel 321 273 48 California distillate 128 92 36 Inventories '000 bl Crude 11,098 13,670 -2,572 CARBOB 6,098 5,988 110 Jet fuel 3,235 3,215 20 California distillate 1,373 1,586 -213 California Energy Commission Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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ExxonMobil's Nigeria sale inches forwards


30/05/24
News
30/05/24

ExxonMobil's Nigeria sale inches forwards

Lagos, 30 May (Argus) — ExxonMobil's long-delayed sale of its Nigerian shallow-water oil and gas business to London-listed Seplat is one step closer, with the US major having agreed a settlement with state-owned NNPC that removes a legal obstacle to a regulatory review of the deal. Exxon agreed the $1.58bn divestment, for its 40pc stake in more than 90 shallow-water and onshore platforms, in February 2022. The assets generate around 95,000 b/d of oil equivalent (boe/d). Completion has been delayed by a dispute over pre-emption rights provided for in an NNPC-Exxon joint operating agreement, and the state-owned firm got a court injunction blocking the deal in July 2022. Ministerial approval, appearing to ignore the court injunction, was first granted and then withdrawn in August 2022. Nigerian upstream regulator NUPRC said at the start of May that Exxon and NNPC would have to reach a settlement before a review could be conducted or any recommendation for its approval submitted to the petroleum minister. Before recommending any deal for ministerial approval, the regulator said it has to determine if intending buyers have the financial resources and technical expertise to manage their acquisition targets, and whether sellers or buyers will be responsible for environmental remediation, host community obligations and decommissioning liabilities. NUPRC also said the government had set 31 August as a deadline to clear Nigeria's backlog of unapproved upstream deals. NNPC did not reveal the terms of today's settlement, which comes after Nigeria's president Bola Tinubu, who doubles as petroleum minister, and his two junior petroleum ministers met ExxonMobil upstream president Liam Mallon and its Nigerian business' managing director Shane Harris on 28 May. "[The] president has given a clear directive to [NNPC's chief executive Mele Kyari] and I to resolve the issue of divestment, and we are doing whatever we can to achieve that", junior minister Heineken Lokpobiri said at the meeting. By Adebiyi Olusolape Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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E3 seeks IAEA action against Iranian nuclear activity


30/05/24
News
30/05/24

E3 seeks IAEA action against Iranian nuclear activity

Dubai, 30 May (Argus) — The E3 group — a diplomatic coalition comprising France, the UK and Germany — has prepared a draft resolution against Iran for the UN's nuclear watchdog the IAEA to consider at its board of governors meeting next week. The draft focuses on a probe into two previously undeclared nuclear sites in Iran and suggests the possibility that IAEA chief Rafael Grossi might provide a more "comprehensive report" on Tehran's nuclear activities than his regular quarterly ones. But it stops short of asking the IAEA to refer Iran to the UN Security Council for non-compliance, a diplomatic source with knowledge of the matter told Argus . "The E3 has prepared a draft resolution and circulated it, despite opposition by the US," the source said. "They have also begun negotiations with other members of the board of governors to ensure the largest number of votes… which will give the adopted resolution weight." The draft builds on three previous resolutions against Iran "but will stop short of a very important step — referring the issue to the UN Security Council as a situation of non-compliance, which would require an intervention," the source said. Since June 2020, the IAEA's board of governors has adopted three resolutions against Iran in response to insufficient co-operation on outstanding issues relating to its legal obligations under its Non-Proliferation Treaty (NPT) Safeguards Agreement. The board of governors will convene on 3 June for a week-long meeting, where "the draft resolution is surely going for a vote," the source said, an indication that unanimity among the 35 board members is unlikely. The US is keen to manage tensions with Tehran at a highly sensitive time for the country following the death of its president and foreign minister in a helicopter crash earlier this month. An editorial published by Iran's state news agency Irna on 29 May suggests Washington's concerns may not be unfounded. "As per previous experience, if a resolution is issued against Iran, Tehran will react to it and take countermeasures," the editorial said. Iran responded to two previous IAEA resolutions in June and November 2022 by removing more than 20 IAEA surveillance cameras at its nuclear facilities, and starting the production of 60pc enriched uranium at its Fordow nuclear site. "Based on history, issuing this resolution will be more detrimental to those issuing it than to Iran," Irna said. Building blocks "What is happening right now is the process of accumulation of resolutions, so that when the day comes and the IAEA makes a referral to the UN Security Council, there will be enough resolutions to make a case for action at the security council level," the source noted. Concerns among western officials over Iran's nuclear activity have been mounting since Tehran began breaching restrictions in 2019 in response to former US president Donald Trump's decision to pull Washington out of a 2015 nuclear deal between Iran and a group of world powers. Iran is enriching uranium to up to 60pc purity, according to the IAEA. Near 90pc is considered to be weapons grade. By Bachar Halabi and Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Nuevo gobierno de México enfrentará panorama difícil


29/05/24
News
29/05/24

Nuevo gobierno de México enfrentará panorama difícil

Mexico City, 29 May (Argus) — El nuevo gobierno de México, que asumirá el cargo en octubre, se enfrentará al peor escenario fiscal para un nuevo presidente en décadas, lo que añadirá presión al sector energético. La candidata presidencial Claudia Sheinbaum tiene una sólida ventaja sobre su contendiente Xóchitl Gálvez a escasos días de las elecciones del 2 de junio, de acuerdo a las últimas encuestas. Pero independientemente de la candidata que gane las elecciones, el gobierno entrante se enfrenta a un espiral deficitario que puede requerir recortes profundos y posponer los proyectos prometidos en la campaña. Carlos Ramírez, antiguo jefe del fondo de pensiones Consar de México y actual director de políticas públicas y asesoría de riesgos políticos de Integralia, dijo que el escenario más probable es el de pragmatismo forzado. En caso de ganar, Sheinbaum tendrá oposición continua, pues las proyecciones indican que la oposición asegurará suficientes escaños en ambas cámaras para evitar que el partido Morena obtenga mayorías calificadas, de acuerdo con Ramirez. El déficit federal alcanzó los Ps452,000 millones ($27 mil millones) en el primer trimestre de 2024, más del triple que en el primer trimestre de 2023, entre el gasto preelectoral y la prisa por completar los proyectos insignia del presidente mexicano Andrés Manuel López Obrador: la refinería de Olmeca en Dos Bocas, el corredor interoceánico de Tehuantepec y el Tren Maya de 1,554km. Si se anualiza, el déficit podría alcanzar 6pc del PIB, un nivel nunca visto desde 1988, dijo el Instituto Mexicano de Ejecutivos Financieros (IMEF). "Viendo cuánto se gastó en estos proyectos en el primer trimestre, sabemos que esto no fue suficiente [para completarlos]", dijo Víctor Herrera, jefe de estudios económicos del IMEF. Añadió que el déficit será difícil de reducir rápidamente, y llevarlo a un nivel "prudente" de alrededor de 3 puntos del PIB significaría no solo no terminar los proyectos de infraestructura este año, sino también encontrar recortes de Ps1,000 millones en el presupuesto de 2024. Herrera dijo que el IMEF prevé que el déficit 2024 alcance los 5 puntos porcentuales del PIB probablemente, una cifra reflejada la semana pasada por la agencia de calificación Moody's. Sheinbaum "no abandonará Dos Bocas, el Corredor o el Tren Maya", dijo Ramirez, añadiendo que esto solo sumará presión a Sheinbaum para retrasar su propia agenda, principalmente dirigiéndose a los cuellos de botella de energía e infraestructura para la atracción de inversión al país. También ha detallado su plan por $13 mil millones en inversiones para proyectos de energía limpia. Pero al financiar sus proyectos, dijo Moody's, la trayectoria del crédito soberano de México depende de la capacidad de la próxima administración para ejecutar la consolidación fiscal y evitar un mayor deterioro. La cuestión de Pemex Las perspectivas de financiación podrían empeorar si el gobierno continúa ofreciendo apoyo extraordinario a la empresa estatal Pemex sin modificar el modelo de negocio hacia la rentabilidad, una perspectiva compartida por Ramirez, el IMEF y Moody's. "Aunque esperamos que el próximo gobierno continúe apoyando a [Pemex], la estrategia empresarial actual de la compañía estatal de petróleo ha aumentado sus riesgos crediticios", dijo la agencia. Y mientras que Sheinbaum y la candidata de la oposición Gálvez están de acuerdo en la importancia de la transición a las energías renovables, "Sheinbaum probablemente seguirá expandiendo el negocio de refinerías, lo que traerá mayores pérdidas." Moody's dijo que el próximo gobierno también tendrá menos capital político que la administración actual, "permitiendo que la gobernanza y los riesgos sociales se vuelvan más destacados", añadió Moody's, aunque Sheinbaum tenga el apoyo continuo de López Obrador. "Esperamos que mantenga en gran medida el modelo de negocio existente para Pemex, haciendo hincapié en la soberanía energética, aunque ha declarado la necesidad de una estrategia de transición energética", afirmó Moody's. Dicho esto, "México se está quedando atrás en sus planes de transición hacia las energías limpias después de años de baja inversión", añadió Moody's. Sin embargo, Sheinbaum busca continuar apoyando a la empresa eléctrica estatal CFE como la fuerza dominante en el sector de la energía eléctrica. México va en camino para no alcanzar sus objetivos de energía limpia, y los cortes de energía se han vuelto más frecuentes, lo cual es atractivo para los inversores. Por James Young Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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Rising Guyana-USG crude flows benefit Suezmaxes


29/05/24
News
29/05/24

Rising Guyana-USG crude flows benefit Suezmaxes

Houston, 29 May (Argus) — Surging Guyanese crude exports to the US Gulf coast may benefit Suezmax crude tankers as a potential new export market develops for the South American country's booming production. Citgo's 167,500 b/d Corpus Christi refinery in Texas has taken three 1mn bl cargoes of medium sweet Payara Gold in May, with a fourth Suezmax, the Nordic Hawk , transiting the Corpus Christi ship channel on 29 May, according to ship tracking data from Kpler. If the Nordic Hawk and the Aframax onto which it lightered discharge by the end of the month, the refinery's imports of Payara Gold would top 100,000 b/d in May, up from 60,000 b/d in April and 32,000 b/d in March, according to Kpler. US Gulf coast refiners last year imported just two Suezmax-size cargoes of Guyanese crude, or about 5,500 b/d. The primary destinations for the country's roughly 370,000 b/d of oil exports last year, about 85pc of which were hauled on Suezmaxes, were Europe, which took about 60pc, and the US west coast, which took about 25pc via re-export on the Trans-Panama pipeline, according to Vortexa data. A new market to the US Gulf coast would add to already-rising Suezmax demand in Guyana, where tonne-miles this year through 20 May increased by 45pc from the same period last year and by almost fivefold from the same period in 2022, Vortexa data show. Charterers moving Guyanese crude often opt for the economies of scale offered by 1mn bl Suezmaxes compared with smaller 700,000 bl Aframaxes. The start of production at the 220,000 b/d Prosperity floating production, storage, and offloading vessel (FPSO) in November 2023 helped boost Guyana's oil production to 625,000 b/d in April , according to government data. Output in April exceeded the country's rated capacity by 65,000 b/d following improvements at the older Liza 1 and Liza 2 projects in the deepwater Stabroek block. Mexican substitute? Increased US Gulf coast imports of Guyanese crude come as crude imports from Mexico fall, exerting downward pressure on rates for Aframaxes since March. US Gulf coast imports of Mexico's medium sour Isthmus have led the declines, falling to about 135,000 b/d from 1 March through 27 May compared with about 220,000 b/d over the preceding three-month period, according to Vortexa data. "Given the expectation of depressed Mexican crude exports going forward, the push and pull for Guyanese barrels between the US and Europe is likely to be stronger than ever," Kpler analyst Matt Smith wrote in a research note. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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