Latest Market News

Opec+ members delay output increases to December

  • Spanish Market: Condensate, Crude oil
  • 06/09/24

Opec+ members have opted to delay their plan to start increasing output by two months, against the backdrop of a sharp fall in prices and growing concerns about the oil demand outlook.

Eight members of the group — Saudi Arabia, Russia, Iraq, the UAE, Kuwait, Kazakhstan, Algeria and Oman — are now scheduled to start unwinding 2.2mn b/d of "voluntary" crude production cuts from December, instead of October, over a 12-month period, the Opec secretariat said on 5 September.

The plan had carried a proviso that the unwinding was subject to "market conditions". And the return of this supply is still not a foregone conclusion. The eight members retain the "flexibility to pause or reverse the adjustments as necessary", the secretariat says. If they go ahead with the updated plan, their collective output targets will rise by around 180,000 b/d in December.

The delay to the output increase came as Atlantic basin benchmark North Sea Dated fell close to $75/bl on 5 September, its lowest since December, on concerns over oil demand in China and the US. Beijing imported 1.3mn b/d less crude in July than June, taking its monthly tally of receipts down to 10mn b/d, the lowest in nearly two years. The oil price drop has not taken place in isolation, JP Morgan says. "Alongside commodities, US 10-year treasury yields have tumbled (-70bp) and the US dollar index came down by almost 2pc, signalling a shift in the assessment of macroeconomic risk in the US and globally."

The Opec+ delay means that any unwinding of its cuts will not come until after the 5 November US elections. But with gasoline prices there not seen at concerning levels and edging down, oil prices are not viewed as much of an election issue.

The decision could help establish a floor under prices, which have fallen despite an oil blockade in Libya that has driven the country's production down to around 300,000 b/d, from almost 1mn b/d. Opec+ may also have sought to add further support to prices by emphasising assurance by overproducers Iraq, Kazakhstan and Russia on "planned compensation schedules". Promised belt tightening from the three would effectively wipe out most barrels coming back to the market until October 2025 — as long as they deliver.

For now, the eight members have chosen to buy time and gain more clarity on how the markets develop in the fourth quarter, while also seeking to tighten the noose on compliance. Come early November, those members will have to determine if the market can handle the incremental increase — if not, Opec+ might be up for some hard decisions in December.

Compliance and compensation

Compliance by some serial overproducers improved in August, Argus estimates. Russia, which has tended to exceed its targets in recent months, saw its output fall by 70,000 b/d to 8.98mn b/d, bang on its formal output target. And Kazakhstan finally started to deliver on its pledge to start compensating for exceeding its targets, with its output in August coming in 40,000 b/d below its effective target under its compensation plan. The biggest overproducer was usual suspect Iraq, which was 200,000 b/d above its formal target and 290,000 b/d over its effective target under its latest plan to compensate for overproducing.

Overall production by Opec+ members subject to cuts was barely changed, easing by 10,000 b/d in August, as falls from Russia and Kazakhstan were offset by increases from Nigeria and the UAE. This drove the alliance's output down to 33.82mn b/d, around 30,000 b/d below its collective target. But the forced outages in Libya drove the group's overall output down by a hefty 300,000 b/d. Libya, like Iran and Venezuela, is exempt from production targets.

Opec+ crude productionmn b/d
AugJul*Target†± target
Opec 921.5421.4521.23+0.31
Non-Opec 912.2812.3812.62-0.34
Total 33.8233.8333.85-0.03
*revised †includes additional cuts where applicable
Opec wellhead productionmn b/d
AugJulTarget†± target
Saudi Arabia8.969.008.98-0.02
Iraq4.204.254.00+0.20
Kuwait2.402.382.41-0.01
UAE2.982.942.91+0.07
Algeria0.910.910.910.00
Nigeria1.541.461.50+0.04
Congo (Brazzaville)0.260.240.28-0.02
Gabon0.230.210.17+0.06
Equatorial Guinea0.060.060.07-0.01
Opec 921.5421.4521.23+0.31
Iran3.333.35nana
Libya0.921.20nana
Venezuela0.880.88nana
Total Opec 12^26.6726.88nana
†includes additional cuts where applicable
^Iran, Libya and Venezuela are exempt from production targets
Non-Opec crude productionmn b/d
AugJul*Target†± target
Russia8.989.058.98+0.00
Oman0.760.760.76+0.00
Azerbaijan0.490.480.55-0.06
Kazakhstan1.371.411.47-0.10
Malaysia0.330.340.40-0.07
Bahrain0.180.180.20-0.02
Brunei0.090.090.080.01
Sudan0.020.020.06-0.04
South Sudan0.060.050.12-0.06
Total non-Opec12.2812.3812.62-0.34
*revised †includes additional cuts where applicable

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

US light vehicle sales surged in September


03/10/24
03/10/24

US light vehicle sales surged in September

Houston, 3 October (Argus) — Domestic sales of light vehicles rebounded in September, increasing to a seasonally adjusted rate of 15.8mn on the strength of greater truck purchases. Sales of light vehicles — trucks and cars — rose from a seasonally adjusted annual of rate 15.3mn in August, the Bureau of Economic Analysis reported today. Sales have whipsawed the previous four months, but September's rate largely was in line with the 15.7mn unit rate in September 2023. The US Federal Reserve last month cut its target rate for the first time since 2020, bringing it down by 50 basis points from its 23-year highs as inflation has been easing. Lower inflation and Fed easing, which ripples across credit markets, make it more affordable for people to purchase new vehicles. Fed policymakers have penciled in another 150 basis points worth of cuts through 2025, as they hope to head off any weakening in the labor market that could scuttle the wider economy. Higher overall sentiment about the US economy, fueled by a robust 3pc growth in gross domestic product (GDP) in the second quarter, healthy labor conditions and consumer spending also have encouraged consumers to spend. Sequentially, light truck sales increased by 3.1pc to a 12.8mn unit rate in September, while sales of cars rose by 4.4pc to a 3mn unit rate in the same time period. By Alex Nicoll Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Libya lifts force majeure as oil blockade ends


03/10/24
03/10/24

Libya lifts force majeure as oil blockade ends

London, 3 October (Argus) — Libya has begun to ramp up crude production after state-owned NOC lifted force majeure on all fields and terminals today. This should restore Libya's crude production to more than 1.2mn b/d, from an estimated 500,000 b/d. NOC declared force majeure after much of Libya's output was forced offline by a blockade imposed by the country's eastern-based administration in late August. Libya's eastern-based parliament earlier this week approved an agreement to resolve a leadership crisis at the central bank, which had prompted the blockade. NOC also lifted force majeure at the El Sharara oil field, which was shut down before the blockade. Output at the field, which normally produces about 260,000-270,000 b/d, has started, a source told Argus . By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US tries to shape Israel's response to Iran: Update


02/10/24
02/10/24

US tries to shape Israel's response to Iran: Update

Updates with additional comments by President Biden starting in second paragraph. Washington, 2 October (Argus) — US president Joe Biden today called on Israel to keep its expected retaliatory strike proportionate after an Iranian missile attack on Tuesday. "We'll be discussing with the Israelis what they're going to do," Biden told reporters. The US and other G7 countries agree "that they have a right to respond, but they should respond in proportion", he said. The US would not support an attack by Israel on sites associated with Iran's nuclear program, Biden said. For its part, the immediate US response would include new sanctions, he said. Biden reached out to fellow leaders of the G7 group of advanced democracies on Wednesday "to coordinate on a response to this attack, including new sanctions", the White House said. The US Treasury Department today imposed sanctions on two additional tankers allegedly engaged in transporting Iranian crude to China. The Gabon-flagged Izumo and the Marshall Islands-flagged Frunze allegedly also transported Russian crude in contravention of the G7 price cap on Russian exports, Treasury said. Including today's action, the US sanctions list now totals 302 tankers and other vessels accused of facilitating Iran's oil and other commodity exports since 2019, including 68 tankers added by Treasury's sanctions enforcement arm this year. That has not succeeded in stopping the flow of Iranian crude to China, as Tehran has developed a sophisticated network of intermediaries and "shadow fleet" tankers to bypass US sanctions. Biden, who ordered US naval and military assets in the region to shoot down Iranian missiles aimed at Israel, promptly declared Tehran's barrage of missiles to have been ineffective. The nearly 200 missiles launched by Iran appeared to be targeting military sites but did not cause significant damage, and the only reported fatality is of a Palestinian civilian in the West Bank, according to the White House. The White House is holding consultations with Israel to help shape its response to the attack. "Iran made a big mistake and it will pay for it," Israeli prime minister Benjamin Netanyahu said following the Iranian attack, which came hours after Israel launched a ground invasion of Lebanon. Netanyahu referenced the aerial strikes that decapitated the leadership of the Iran-backed Hezbollah militant group in Lebanon, noting that "the regime in Tehran does not understand our determination to defend ourselves and to exact a price from our enemies". Tehran, in turn, said "we will respond in a more severe manner" if Israel retaliates with strikes against Iran. A previous Iranian missile attack on Israel in April led to a restrained Israeli retaliation on targets inside Iran, with the US, China and other regional powers intervening to prevent a further escalation. The Biden administration has tried to balance support for Israel's self-defense with efforts to prevent an escalation of the conflict that could engulf the world's largest oil producing region on the eve of the 5 November US presidential election. The Iran-Israel confrontation featured at Tuesday's televised debate between the US vice-presidential candidates, but neither offered an explicit plan for how the US should respond to the Iranian attack. The response from US lawmakers similarly fell along partisan lines, with the Democrats backing efforts by the White House to prevent further escalation, while the Republicans called for a stronger response. Iranian "oil refineries need to be hit and hit hard because that is the source of cash for the regime to perpetrate their terror", senator Lindsey Graham (R-South Carolina) said. Graham made similar calls in April and in October 2023, at the outset of the Gaza conflict. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US tries to shape Israel's response to Iran attack


02/10/24
02/10/24

US tries to shape Israel's response to Iran attack

Washington, 2 October (Argus) — US president Joe Biden's administration is working to moderate a likely retaliatory strike by Israel after an Iranian missile attack on Tuesday. The US would not support an attack by Israel on sites associated with Iran's nuclear program, Biden told reporters today. Biden reached out to fellow leaders of the G7 group of advanced democracies today "to coordinate on a response to this attack, including new sanctions," the White House said. The US Treasury Department today imposed sanctions on two additional tankers allegedly engaged in transporting Iranian crude to China. The Gabon-flagged Izumo and the Marshall Islands-flagged Frunze allegedly also transported Russian crude in contravention of the G7 price cap on Russian exports, Treasury said. Including today's action, the US sanctions list now totals 302 tankers and other vessels accused of facilitating Iran's oil and other commodity exports since 2019, including 68 tankers added by Treasury's sanctions enforcement arm this year. That has not succeeded in stopping the flow of Iranian crude to China, as Tehran has developed a sophisticated network of intermediaries and "shadow fleet" tankers to bypass US sanctions. Biden, who ordered US naval and military assets in the region to shoot down Iranian missiles aimed at Israel, promptly declared Tehran's barrage of missiles to have been ineffective. The White House is holding consultations with Israel to help shape its response to the attack. "Iran made a big mistake and it will pay for it," Israeli prime minister Benjamin Netanyahu said following the Iranian attack, which came hours after Israel launched a ground invasion of Lebanon. Netanyahu referenced the aerial strikes that decapitated the leadership of the Iran-backed Hezbollah militant group in Lebanon, noting that "the regime in Tehran does not understand our determination to defend ourselves and to exact a price from our enemies." Tehran, in turn, said "we will respond in a more severe manner" if Israel retaliates with strikes against Iran. The previous Iranian missile attack on Israel, in April, led to a restrained Israeli retaliation on targets inside Iran, with the US, China and other regional powers intervening to prevent a further escalation. The Biden administration has tried to balance support for Israel's self-defense with efforts to prevent an escalation of the conflict that could engulf the world's largest oil producing region on the eve of the 5 November US presidential election. The Iran-Israel confrontation featured at Tuesday's televised debate between the US vice-presidential candidates, but neither offered an explicit plan for how the US should respond to the Iranian attack. The response from US lawmakers similarly fell along partisan lines, with the Democrats backing efforts by the White House to prevent further escalation, while the Republicans called for a stronger response. Iranian "oil refineries need to be hit and hit hard because that is the source of cash for the regime to perpetrate their terror," senator Lindsey Graham (R-South Carolina) said. Graham made similar calls in April and in October 2023, at the outset of the Gaza conflict. By Haik Gugarats 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