US leans harder on Opec+ to boost output: Update
Adds views from Opec+ delegates
US president Joe Biden's administration is urging Opec+ members to move faster to unwind the crude production cuts they made last year, citing concerns that unchecked fuel price increases will undermine the global economic recovery.
Opec+ "must do more to support the recovery" by accelerating the timeline for offsetting production declines it made last year when Covid-19 lockdowns peaked, White House national security adviser Jake Sullivan said today. The administration says it has been engaging with Opec+ members to stress that point.
"At a critical moment in the global recovery, this is simply not enough," Sullivan said.
Opec+ members last month agreed to increase their collective output target by 400,000 b/d each month until April next year, followed by monthly production increases of 432,000 b/d until last year's cuts are fully reversed, with the possibility to pause output rises for three months depending on market conditions. That timeline would have Opec+ fully unwind last year's cuts as soon as September 2022 or as late as December 2022.
The US administration has a more direct way of affecting Opec+ production levels, but that is tied to the outcome of stalled US-Iran nuclear talks. Lifting US sanctions against Tehran would boost global supply once Iran restores its production and export capacity.
US regular grade retail gasoline prices for the week ending on 9 August averaged $3.17/USG, the highest in nearly seven years, according to the US Energy Information Administration. A surge in travel demand this summer, the economic recovery and only modest increases in domestic crude production have put upward pressure on prices.
Biden's administration last month leaned on Opec+ members publicly for the first time to reach a deal on production increases, partly because of concerns about gasoline prices in the US. But the diplomatic push on Opec+ to boost output, at the same time as the administration constrains production on federal land, will give Republicans further ammunition to argue Biden's policies are unfair on domestic energy producers.
"Begging the Saudis to increase production while the White House ties one hand behind the backs of American energy companies is pathetic and embarrassing," US senator John Cornyn (R-Texas) said.
The effort also undercuts Biden's strategy of reducing US dependence on fossil fuels as a way to help address climate change.
The White House is separately leaning on other federal agencies to make sure the prices consumers pay at the pump are competitive. National Economic Council director Brian Deese today asked Federal Trade Commission (FTC) chair Lina Khan to use the agency's tools to monitor gasoline prices and investigate if there was any "illegal conduct" that might be causing the rise.
"The FTC could examine the asymmetrical phenomenon in oil and gas markets in which [gasoline] prices tend to rise more quickly to adjust to spikes in oil prices than they fall when the price of oil declines," Deese wrote.
The letter was also sent to the US Commodity Futures Trading Commission (CFTC), the US Federal Energy Regulatory Commission and the US Justice Department. The CFTC has yet to release a comprehensive study offering a full analysis of the crash in the Nymex front-month WTI crude price on 20 April 2020 when it settled at negative $37.63/bl, and instead has only completed an interim report.
Make your rival an ally
Since the Opec+ coalition was formed in 2016, the US has played the part of both a political ally to some of the group's members and a production rival, whose shale output becomes increasingly more cost-effective as production cuts prop up global oil prices. But economic considerations have trumped diplomatic entreaties in determining Opec+ policy.
The group sets its sights on market stability, factoring in global inventories, producer and buyer interests, and the extent to which price levels affect oil sector investment and the long-term supply outlook. Two Opec+ delegates flagged that the market, as it stands, is unlikely to be able to accommodate a more accelerated pace of output growth than currently planned, with one of them adding that the spread of the Covid-19 Delta variant has contributed to market uncertainty. A third delegate noted that Opec+ is already set to deliver a substantial increase in production, as the rising quotas come on the back of Saudi Arabia ending its extra 1mn b/d cut last month.
However, there are some lingering questions over the ability of some Opec+ member countries to meet their higher production targets. In west Africa, a lack of investment and natural decline at mature fields drove Angola's July output to the lowest since early 2005. Some Opec+ countries — notably Saudi Arabia, Kuwait, Iraq and the UAE — are working on growing their crude capacity, which could in theory compensate shortfalls elsewhere, although the coalition insists that individual deal participants comply with their quotas.
Related news posts
Iran's president dies in helicopter crash
Iran's president dies in helicopter crash
Dubai, 20 May (Argus) — Iran's president Ebrahim Raisi has died in a helicopter crash alongside his foreign minister Hossein Amir-Abdollahian, state media reported early today. The two were confirmed dead more than 12 hours after news broke on 19 May afternoon that a helicopter carrying them had suffered "a hard landing" in Iran's East Azerbaijan province as he was returning from Azerbaijan, where he had inaugurated the Qiz Qalasi dam, alongside his Azeri counterpart Ilham Aliyev. "Ayatollah Seyed Ebrahim Raisi, the eighth president of the Islamic Republic of Iran, who had an air accident on Sunday evening as he was returning to [the Iranian city of] Tabriz from the inauguration ceremony of the Qiz Qalasi dam…reached martyrdom, along with his companions," Iran's state news agency Irna reported. The governor of Iran's East Azerbaijan province, Malek Rahmati, and Ayatollah Mohammad Ali al-Hashem, the representative to the province of Iran's supreme leader Ayatollah Ali Khamenei were also on board the helicopter. More than 50 search and rescue teams were dispatched, with support from allied countries, including Russia. Moscow said on 19 May it had sent 47 specialists, all-terrain vehicles and a BO-105 helicopter. Difficult weather conditions, nightfall, and the mountainous terrain had "complicated efforts" by the search and rescue teams to first locate the exact site of the crash, and then reach it, said Iran's interior minister Ahmad Vahidi. But officials on 20 May reported that the search had narrowed, with the head of Iran's Red Crescent Pir Hossein Kolivand confirming at around 06:00 local time (02:30 GMT) that the wreckage had been found. On arriving at the site, rescuers confirmed that there were "no signs of life." Images shared by state media showed only the helicopter's tail had remained intact, with the entirety of the helicopter's cabin significantly damaged and charred. The investigation into the cause of the crash is continuing, but all Iranian officials are pointing to the bad weather as the primary reason for the helicopter losing control. Iran's cabinet held an extraordinary meeting in the aftermath of announcement of the president's death. This was chaired by the country's first vice president Mohammad Mokhber, who will assume the president's powers and functions with the approval of the supreme leader, as per the constitution. A council, consisting of the speaker of the parliament, head of the judiciary and the first vice president, will now be obliged to arrange for a new president to be elected within a maximum of 50 days. This requires that an election now be held on or before 9 July. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Houston refiners weather hurricane-force winds: Update
Houston refiners weather hurricane-force winds: Update
Adds Calcasieu comment, update on flaring reporting Houston, 17 May (Argus) — Over 2mn b/d of US refining capacity faced destructive winds Thursday evening as a major storm blew through Houston, Texas, but the damage reported so far has been minimal. Wind speeds of up to 78 mph were recorded in northeast Houston and the Houston Ship Channel — home to five refineries with a combined 1.5mn b/d of capacity — faced winds up to 74 mph, according to the National Weather Service . Further South in Galveston Bay, where Valero and Marathon Petroleum refineries total 818,000 b/d of capacity, max wind speeds of 51 mph were recorded. Chevron's 112,000 b/d Pasadena refinery on the Ship Channel just east of downtown Houston sustained minor damage during the storm and continues to supply customers, the company said. ExxonMobil's 564,000 b/d Baytown refinery on the Ship Channel and 369,000 b/d Beaumont, Texas, refinery further east faced no significant impact from the storm and the company continues to supply customers, a spokesperson told Argus . Neither Phillips 66's 265,000 b/d Sweeny refinery southwest of Houston nor its 264,000 b/d Lake Charles refinery 140 miles east in Louisiana were affected by the storm, a spokesperson said. There was no damage at Motiva's 626,000 b/d Port Arthur, Texas, refinery according to the company. Calcasieu's 136,000 b/d refinery in Lake Charles, Louisiana, was unaffected by the storm and operations are normal, the refiner said. Marathon Petroleum declined to comment on operations at its 593,000 b/d Galveston Bay refinery. Valero, LyondellBasell, Pemex, Total and Citgo did not immediately respond to requests for comment on operations at their refineries in the Houston area, Port Arthur and Lake Charles. A roughly eight-mile portion of the Houston Ship Channel from the Sidney Sherman Bridge to Greens Bayou closed from 9pm ET 16 May to 1am ET today when two ships brokeaway from their moorings, and officials looked in a potential fuel oil spill, according to the US Coast Guard. The portion that closed provides access to Valero's 215,000 b/d Houston refinery, LyondellBasell's 264,000 b/d Houston refinery and Chevron's Pasadena refinery. Emissions filings with the Texas Commission on Environmental Quality (TCEQ) are yet to indicate the extent of any flaring and disruption to operations in the Houston area Thursday evening, but will likely be reported later Friday and over the weekend. Gulf coast refiners ran their plants at average utilization rates of 93pc in the week ended 10 May, according to the Energy Information Administration (EIA), up by two percentage points from the prior week as the industry heads into the late-May Memorial Day weekend and beginning of peak summer driving season. The next EIA data release on 22 May will likely reveal any dip in Gulf coast refinery throughputs resulting from the storm. By Nathan Risser Houston area refineries Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Brazil's Rio Grande do Sul reallocates gas supply
Brazil's Rio Grande do Sul reallocates gas supply
Sao Paulo, 17 May (Argus) — Natural gas supply in Brazil's Rio Grande do Sul had to be redistributed because of the historic floods in the state, with diesel potentially making its way back as an power plant fuel to leave more gas available for LPG production. Gasbol, the natural gas transportation pipeline that supplies Brazil's south, does not have capacity to meet demand from the 201,000 b/d Alberto Pasqualini refinery (Refap), state-controlled Petrobras' Canoas thermal power plant and natural gas distributors in the region, according to Petrobras' then-chief executive Jean Paul Prates said earlier this week. The Santa Catarina state gas distributor has adjusted its own local network to meet peak demand in neighboring Rio Grande do Sul via the pipeline transportation network. The Canoas thermal plant is running at its minimum generation at 150GW, with 61pc coming from its gas turbine. The plant was brought on line to reinstate proper power supply after transmission lines in the south were affected by the floods. Petrobras plans to use a diesel engine to increase power generation. The current approved fuel cost (CVU) for diesel in the Canoas plant is of R1,115.29/MWh. Petrobras is also operating Refap at 59pc of its maximum installed capacity, at 119,506 b/d. Heavy showers in Rio Grande do Sul since 29 April brought unprecedented flooding to the state, causing a humanitarian crisis and infrastructure damage. The extreme weather has left 154 people dead, 98 missing and over 540,000 people displaced, according to the state's civil defense. By Rebecca Gompertz Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Houston area refiners weather hurricane-force winds
Houston area refiners weather hurricane-force winds
Houston, 17 May (Argus) — Over 2mn b/d of US refining capacity faced destructive winds Thursday evening as a major storm blew through Houston, Texas, but the damage reported so far has been minimal. Wind speeds of up to 78 Mph were recorded in northeast Houston and the Houston Ship Channel — home to five refineries with a combined 1.5mn b/d of capacity — faced winds up to 74 Mph, according to the National Weather Service . Further South in Galveston Bay, where Valero and Marathon Petroleum refineries total 818,000 b/d of capacity, max wind speeds of 51 Mph were recorded. Chevron's 112,000 b/d Pasadena refinery on the Ship Channel just east of downtown Houston sustained minor damage during the storm and continues to supply customers, the company said. ExxonMobil's 564,000 b/d Baytown refinery on the Ship Channel and 369,000 b/d Beaumont, Texas, refinery further east faced no significant impact from the storm and the company continues to supply customers, a spokesperson told Argus . Neither Phillips 66's 265,000 b/d Sweeny refinery southwest of Houston nor its 264,000 b/d Lake Charles refinery 140 miles east in Louisiana were affected by the storm, a spokesperson said. There was no damage at Motiva's 626,000 b/d Port Arthur, Texas, refinery according to the company. Marathon Petroleum declined to comment on operations at its 593,000 b/d Galveston Bay refinery. Valero, LyondellBasell, Pemex, Total, Calcasieu and Citgo did not immediately respond to requests for comment on operations at their refineries in the Houston area, Port Arthur and Lake Charles. A roughly eight-mile portion of the Houston Ship Channel from the Sidney Sherman Bridge to Greens Bayou closed from 9pm ET 16 May to 1am ET today when two ships brokeaway from their moorings, and officials looked in a potential fuel oil spill, according to the US Coast Guard. The portion that closed provides access to Valero's 215,000 b/d Houston refinery, LyondellBasell's 264,000 b/d Houston refinery and Chevron's Pasadena refinery. By Nathan Risser Houston area refineries Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more