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Crude rally rooted in geopolitics: Opec+ delegates

  • Spanish Market: Crude oil
  • 25/01/22

The recent rally in oil prices has been stoked by geopolitical risks and fuel switching, rather than demand-side improvements alone, some Opec+ delegates told Argus. This shift in focus away from demand could suggest that the coalition is leaning towards another monthly increase of just 400,000 b/d in crude quotas when it next meets on 2 February, after it failed to achieve its output target last month.

Some Opec+ delegates suggested that the current price surge has been led by geopolitics. Four incidents have rattled some of the group's largest producers in January alone, including protests in Kazakhstan and a 24-hour outage at the Iraq-Ceyhan pipeline. Abu Dhabi intercepted a missile in an attack claimed by the Houthis yesterday, after a similar event on 17 January killed three people and caused a fire at oil tanks in the UAE. Although the incidents did not cause any significant output losses, they threatened some of the few Opec+ producers with spare production capacity.

As Ice Brent futures with March delivery are nearing $88/bl today, questions are being raised over a prospective Opec+ response to curtail prices. The group has repeatedly taken the path of least resistance through 400,000 b/d monthly target increases to unwind its outstanding cuts by the end of this year.

The IEA last week signalled that Opec+ efforts to bring back 4.4mn b/d of crude output this year could tighten the group's spare capacity — mainly in Saudi Arabia and the UAE — to 2.6mn b/d in the second half of 2022.

Meanwhile, de facto non-Opec leader Russia — which is gradually nearing its 10.23mn b/d limit, as estimated by the IEA — only increased flows by 10,000 b/d in December, even though the country gained an extra 100,000 b/d in its quota volume. Output recovery can prove difficult after halting a well, even if quotas allow increases, said Pavel Zavalny, chairman of the energy committee in Russia's lower parliamentary house the Duma. Potential US and EU sanctions in the event of a Russian invasion of Ukraine could also weigh on the country's supply.

Argus estimated that Opec+ deal participants fell 650,000 b/d short of their collective December target, as a result of infrastructural issues, underinvestment and sabotage. But at the moment, most Opec+ countries would probably reject a mechanism that allowed other coalition members to raise their output and make up for the shortfalls, two delegates said. These objections would likely simmer down as the deal progresses and more countries in the group begin exhausting their capacity, one of the two sources added.

Some delegates pointed to the demand outlook being destabilised recently by fears that the Covid-19 Omicron variant could trigger a new wave of lockdowns. But the IEA recently raised its global oil demand estimates by 200,000 b/d for 2021 and 2022 — resulting in growth of 5.5mn b/d and 3.3mn b/d, respectively — as a result of softer-than-expected Covid restrictions. US bank Goldman Sachs and UK lender Barclays have raised their oil price forecasts for this year, both citing a lower-than-expected Omicron effect to date.

One Opec+ delegate suggested that some of this demand growth could be short-lived, warning that consumption could be buoyed by fuel switching, as was the case late last year in response to shortages in gas and other energy markets.

Demand growth could be partly met by rising production from those Opec members exempted from the output restraint deal. Libyan output recovered to 1.2mn b/d by 17 January, after the restart of four fields in the west of the country. Venezuelan production rose to a 22-month high of 750,000 b/d in December, thanks to higher imports of Iranian condensate and the use of domestic refinery products to dilute extra-heavy crude supply. Iranian production has largely plateaued near 2.46mn-2.47mn b/d in recent months, but remains at highs last seen in April 2019.

Key consumers are also attempting to make additional supply available through a US-led, six-nation co-ordinated draw from strategic petroleum reserves, although only Washington has so far released crude as part of the initiative. The US, India and Japan all urged Opec+ to consider accelerating its production increases in the fourth quarter last year.


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06/02/25

Crude Summit: Asset-backed oil trades on the rise

Crude Summit: Asset-backed oil trades on the rise

Houston, 6 February (Argus) — Asset-backed trading is becoming commonplace in the oil industry as companies up and down the supply chain bring capabilities in-house, delegates heard at the Argus Americas Crude Summit in Houston, Texas, today. "Traditionally, long term hedging was popular, and it still is, but in general we've seen a move towards the front end of the curve," said CME Group's managing director and global head of energy and environmental products Peter Keavey. "The risks are really in the prompt," said Keavy. "We're seeing a lot of hedging in the short term [and] that also is reflective of asset-based optimization." HC Group managing partner Paul Chapman has also noticed a continued shift in trading by banks, which either exited or scaled down operations in 2014 and 2015, to those directly in the industry. "I would argue that pretty much every single business around the world — producer, miner, refiner, retailer of fuels and major — is on some spectrum of developing some asset trading," said Chapman. "And it's driven by a need to capture more margin." Changing trade flows have naturally had a bearing on who becomes more involved in individual markets. "Over the past five years, European players have more and more exposure to US molecules, whether it be crude oil or natural gas," said Keavey, which has driven the growth of trade of WTI, RBOB, gasoline, and heating oil in international markets. Changing energy policy, and policies to reach other political objectives, have a tendency to shape energy flows, whether they are intended or not, the speakers said. The Russian-Ukraine conflict is a prime example, and there are clear signs that US president Donald Trump's second term in office will do the same. "As this world gets more shaped by trade wars and there's more and more government intervention, that itself starts to break down some of the fundamentals of how some of these markets work," said Chapman. Keavey expects Canadian crude to continue to flow even under a Canada-US trade war, but "the question is, what disruption happens to the pricing?" By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Crude Summit: Discipline still reigns in US upstream


06/02/25
06/02/25

Crude Summit: Discipline still reigns in US upstream

Houston, 6 February (Argus) — Spending restraint remains the guiding force for the US upstream sector, according to Jesse Thompson, senior business economist at the Federal Bank of Dallas. "The industry is playing it very cautiously," Thompson said today at the Argus Americas Crude Summit in Houston, Texas. "Capital discipline is still very much the order of the day." What has surprised many is that output keeps going up, despite the fact that the rig count continues to retreat. That can be attributed to productivity gains, such as the practice of speeding up drilling times, and targeting of longer lateral wells, with fewer people employed in the industry, he said. US crude production growth is seen ending this year up 200,000 b/d, compared with 300,000 b/d in 2024, Thompson said. Despite the perception by some that all the low-hanging fruit has already been picked and productivity gains will ease up, they continue to defy expectations. "And then every year they beat their own production numbers," Thompson said. Turning to the domestic economy, consumption growth is running above trend based on the latest data, Thompson said. And the consensus among forecasters is that GDP growth is seen around 2pc this year. By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Amos to buy Sinopec Venezuelan oil, gas assets


06/02/25
06/02/25

Amos to buy Sinopec Venezuelan oil, gas assets

Caracas, 6 February (Argus) — US upstream start-up Amos Global Energy Management has agreed to buy some of Chinese Sinopec's oil and natural gas interests in Venezuela with an eye on US sanctions eventually easing there, the Houston-based firm said. Venezuela's state-owned PdV is the majority owner of the stake to be sold, which is part of the PetroParia joint venture with Sinopec in the Gulf of Paria. "Sinopec did not develop it better because of clashes with PdV management, but the potential to export gas to Trinidad and Tobago from the property is clear", Maracaibo-based analyst ChemStrategy said. Trinidad and Tobago has discussed developing gas fields that straddle its border with Venezuela to stem its downturn in production. But US sanctions on Venezuela's crude sector have slowed progress, and the administration of President Donald Trump has not indicated that it will change course . Amos "believes that this purchase will ultimately bring the investments needed to develop oil and gas production opportunities" there and in other nearby properties, including in a previous agreement in the same Gulf of Paria with Inepetrol. PdV officials and pro-Maduro lawmakers in Caracas said they were aware of the plan but declined to offer additional details. Amos has been seeking capital and arming agreements to be "prepared to increase Venezuelan production when existing sanctions are lifted." Amos is led by chief executive Ali Moshiri who retired as president of Chevron Africa and Latin America exploration and production in March 2017. Completion of the sale will require approval from the US Treasury's Office of Foreign Assets Control and the Venezuelan hydrocarbons ministry, Amos said. By Carlos Camacho Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

BP puts Gelsenkirchen refinery in Germany up for sale


06/02/25
06/02/25

BP puts Gelsenkirchen refinery in Germany up for sale

Hamburg, 6 February (Argus) — BP said today it will begin seeking buyers for its Ruhr Oel business, which includes the 257,800 b/d Gelsenkirchen refinery and an associated petrochemicals plant in western Germany. The UK company hopes to reach a sales agreement in 2025, although the exact timing will depend on approval of local competition authorities, it said. The sale should have no affect on short-term supply of oil products in western Germany as the refinery will keep up normal production in the interim, the company said in a press release. BP had said it planned to downsize Gelsenkirchen , shutting four unitsand reducing its crude capacity by a third. The shutdown of the affected units is scheduled for the end of the 2025 and will go ahead, BP told Argus . Potential buyers are not yet known. BP is the latest in a series of companies looking to sell or reduce their refinery shares in Germany. Shell is still searching for a buyer for its 37.5pc stake in the PCK consortium's 226,000 b/d Schwedt refinery, in eastern Germany, after a sale to UK energy firm Prax fell through in late December. Shell was also in discussions to sell its 32.25pc stake in the Miro's consortium's 310,000 b/d Karlsruhe refinery to czech company MERO CR in 2024, which did not result in a sales agreement. Shell is further on track to shut down the Wesseling plant at its 334,000 b/d Rhineland refinery complex. Russian state-controlled Rosneft intends to sell its German subsidiaries, Rosneft Deutschland and RN Refining & Marketing, which are held under the trusteeship of the Federal Network Agency. These assets include a controlling stake in the PCK joint venture, a 24pc share in the Miro's consortium and a 28.6pc share in the Bayernoil joint venture, operator of the 207,000 b/d Neustadt-Vohburg refinery in Bavaria. ExxonMobil announced its intention to sell its 25pc stake in the Karlsruhe refinery to Austria's Alcmene, a subsidiary of Estonia's Liwathon, in 2023. The sale fell through in July 2024 after a German court upheld a ruling banning the company from selling its stakes in the Miro consortium following an injunction filed by Shell. BP also operates the 95,000 b/d Lingen refinery in western Germany. This is unaffected by the sale plan for Gelsenkirchen. By Natalie Müller Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Australia's Beach cuts FY24-25 oil, gas output target


06/02/25
06/02/25

Australia's Beach cuts FY24-25 oil, gas output target

Sydney, 6 February (Argus) — Australian independent Beach Energy has narrowed its oil and gas output guidance for the year to 30 June 2025, given delays in bringing the Western Australian (WA) 250 TJ/d Waitsia gas plant on line. Beach will produce 18.5mn-20.5mn bl of oil equivalent/d (boe/d) in 2024-25, it said in its half-year results to 31 December. It revised the top end of its previous forecast of 17.5mn-21.5mn boe down because of delays at Waitsia, which is operated by joint venture partner Japanese trading house Mitsui. Beach has maintained its guidance for first sales gas at Waitsia in April-June. The Adelaide-based firm last month reported its output at 10.2mn boe in July-December 2024, 15pc higher on the year, leading Beach to raise the bottom end of its guidance. The five Waitsia LNG swap cargoes that Beach has executed to date have brought forward revenue for the firm, which reported A$139mn ($87.1mn) from the two shipped in July-December 2024. A fifth cargo was lifted from Australian independent Woodside Energy's 14.4mn t/yr North West Shelf (NWS) LNG terminal in January, while a possible sixth may occur before the end of June. "We have opportunities for additional swaps in the market and we're looking very closely… I'm hoping to get another [cargo] out before the half-year," chief executive Brett Woods said on 6 February. About 35pc of the gas exported via swap cargoes to date were from Beach's own 20 TJ/d (534,000 m³/d) Xyris gas plant, meaning it will not need to be swapped back, Woods said. Beach expects 8-10 cargoes/yr of Waitsia gas to be shipped until 2028, with scope to further extend the project's LNG exports following the WA government's changes to onshore gas export rules. Waitsia partners hold a gas processing agreement with the NWS JV running until the end of 2028. Beach will start its Offshore Gas Victoria programme in 2025 as part of its ambition to become a major domestic gas supplier. This includes drilling the Hercules gas prospect in Victoria state's offshore Otway basin in April-June, described as a "large scale opportunity" with prospective reserves of 100bn ft³ (280mn m³). No change was made to Beach's 2024-25 capital expenditure guidance of A$700mn-$800mn. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

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