Trump seeks output cuts from Saudis, Russians: Update 3

: Crude oil, Natural gas, Oil products
20/04/02

Adds with further remarks from Trump

President Donald Trump said he expects and "hopes" Saudi Arabia and Russia will cut their oil output by 10mn-15mn bl, following discussions with the leaders of two Opec+ members.

Trump announced the possible cuts today through a Tweet, after talking with Saudi crown prince Mohammad bin Salman, who he said had spoken with Russian president Vladimir Putin. The White House has not released further details, such as the timing of the output cut or if the amount would be 10mn-15mn bls or the far larger amount of 10mn-15mn b/d.

"I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry!" Trump said in a post on Twitter. He added the cut "could be as high as 15 Million Barrels."

Brent prompt-month crude futures briefly surged past $34/bl on the news, up from $26/bl earlier in the day, but dropped below $30/bl as further details trickled out that have raised questions about the likelihood of such production cuts.

Trump today raised the possibility that Saudi Arabia and Russia may not curtail output, in which case he said there is an alternative option. "But I would rather not see that other alternative." Trump yesterday said his approach will be "tough" if the two countries are unable to reach a deal.

Asked whether he had agreed to US production cuts, Trump said: "No, we did not discuss that."

Putin, Saudi talks denied

The Kremlin denies there was a conversation between the crown prince and Putin. Putin's spokesman told state-run newswire RIA Novosti there was "no such conversation," after Trump said the conversation occurred.

Saudi Arabia today called for an urgent meeting of Opec+ members with the goal of seeking a "fair solution to restore a desired balance of the oil markets," according to the government-owned press agency SPA. But the statement said the meeting should involve a "group of other countries," suggesting output cuts might need support from other producers. The US in 2019 was the world's largest oil producer.

Trump late yesterday said he was "confident" the two Opec+ members would reach a deal on oil production, in response to a price collapse that has upended global markets. Trump has declined to offer specifics on what an agreement would entail, or if the US would need to make its own commitments to lower production.

US shale producers have floated the idea of reinstating policies to restrict oil production in Texas. Former US energy secretary Rick Perry earlier this week said his advice to Trump would be to ban foreign crude imports for 60-90 days. But large oil producers and refiners oppose the idea.

The American Petroleum Institute and the American Fuels & Petrochemical Manufacturers said yesterday in a letter to Trump such a move would "jeopardize gains" in energy dominance in the US.

Russia not ruling out talks

Russian energy minister Alexander Novak earlier today said he did not rule out resuming talks with Saudi Arabia, and said there was no incentive for Russia to boost production now.

"Everyone is suffering now", Novak said on Echo of Moscow radio. "Russia does not increase production now as there is no economic sense."

Asked if Russia would seek to revive talks with Saudi Arabia and other members of the Opec+ coalition, Novak said: "This is one of the options and we do not rule out it if becomes necessary". But he said no ministerial-level talks have taken place.

After the Opec+ agreement on production restraint broke down in early March, Novak said that Russia could increase production by 200,000-300,000 b/d and had the potential to add 500,000 b/d.

Those comments were made after Saudi Arabia's state-controlled Aramco said it would boost its supplies to its international and domestic customers to 12.3mn b/d of crude in April. This provoked a sharp fall in the price of crude, which has since been exacerbated by measures taken to prevent to spread of the coronavirus epidemic.

Texas talks to Russia

A member of Texas' primary oil and gas regulator, Texas Railroad Commission member Ryan Sitton, said today he spoke with Novak about taking 10mn b/d out of global supply.

"While we normally compete, we agreed that #COVID19 requires unprecedented level of int'l cooperation," Sitton wrote on Twitter.

Sitton said he looked forward to speaking with Saudi oil minister Abdulaziz bin Salman "soon."

Sitton has said he thinks it is "worth discussing" whether to use the commission's pro-rationing powers to curtail the state's crude production — potentially by up to 10pc — if Trump could reach a deal with Saudi Arabia and Russia to make similar production cuts.

The commission has not used its pro-rationing authority in decades, and commission chairman Wayne Christian has expressed reservations about taking such a step.

By Chris Knight, David Ivanovich and Ben Winkley

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.

24/09/20

US Democrats defend Venezuela sanctions policy

Washington, 20 September (Argus) — President Joe Biden's administration is justified in holding fire on new sanctions against Venezuela, a decision that will allow Chevron to maintain its foothold in the country, Democratic lawmakers said today. The Biden administration has indicated it does not plan to respond to the Venezuelan government's crackdown on the political opposition by imposing tougher sanctions against Caracas' oil sector. The decision helps prevent a sudden economic crisis in Venezuela that would result in increased immigration, House Foreign Affairs Committee member Joaquin Castro (D-Texas) said today. House Foreign Affairs Committee's western hemisphere panel chair Maria Salazar (R-Florida) today accused Chevron and other foreign oil companies operating in Venezuela of underwriting the Maduro government's campaign of repression. "American and European oil companies led by Chevron, Repsol, Eni and Maurel & Prom have increased their oil pumping, and their profits are directly fueling the tyrannical machinery of oppression," Salazar said. "I am very much pro energy sector, making a lot of money, but there are lines you do not cross when profiting from other people's miseries." Salazar showed charts purporting to show that Chevron has made $5bn in revenues since the Biden administration allowed it to resume Venezuela operations in December 2022. "I would like to use your Chevron charts in my Natural Resources Committee — I am putting that on the record," representative Sydney Kamlager-Dove (D-California) told Salazar. The Democrats on the House Natural Resources Committee earlier this week held a discussion on "Holding Big Oil Accountable for Extortion, Collusion, and Pollution." Salazar contended that the Biden administration had a political reason to protect Venezuela's oil sector. "We know very well that we are in an election cycle and that the White House needs cheap gas at the pump." US crude imports from Venezuela averaged 190,000 b/d in January-June, less than 3pc of total imports, according to Energy Information Administration data. Chevron was not immediately available to comment. Chevron, Repsol and Eni have exemptions from US sanctions allowing them to load Venezuelan crude, but those exports are typically made under crude-for-debt arrangements, rather than for cash. Much of the Venezuelan oil sector is already subject to US sanctions, forcing PdV to rely on shadow fleet tankers and intermediaries to channel exports to buyers in China's Shandong region. Maduro proclaimed himself the winner of the 28 July election and has forced his election rival Edmundo Gonzalez to flee the country after issuing an arrest warrant against him earlier this month. The Venezuelan opposition has produced electoral records to show that Gonzalez likely won the 28 July presidential election, a claim backed by Washington. But the Biden administration has not recognized Gonzalez as president-elect. US officials appear to believe they still have time to figure out the best combination of diplomacy and sanctions to enable a power transition in Venezuela before Maduro's current term expires in January. "There's a lot that can happen between an election and the inauguration, and that's certainly the way we're looking at the situation now," deputy assistant secretary of state Kevin Sullivan told the House Foreign Affairs Committee panel today. Not recognizing Gonzalez as president-elect prevents Maduro from casting his rival as an American proxy, Castro said. "I would argue that we tried that with [Juan] Guaido, and it all fell apart." The US administration under former president Donald Trump in January 2019 recognized Venezuelan opposition leader Juan Guaido as the country's legitimate leader and imposed severe sanctions to force Maduro from power. Guaido fled to the US in 2022. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Citgo auction result delayed by last-minute motions

24/09/20

Citgo auction result delayed by last-minute motions

Houston, 20 September (Argus) — The US court-appointed special master who has been tasked with overseeing the auction of Venezuelan state-owned PdV's US refining subsidiary, Citgo, Robert Pincus, plans to object to a last-minute motion by the Venezuelan government to delay the sale process by four months. Caracas and PdV filed a motion on 17 September looking to pause the sale of Citgo, which is being auctioned off to settle debts owed by PdV. Pincus is also dealing with last-minute legal challenges outside of the Delaware courts overseeing the sale by "alter-ego" claimants looking to "circumvent" the sales process and "jump the line" for enforcing claims against PdV, he said. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Libya blockade pushes European buyers to other crudes

24/09/20

Libya blockade pushes European buyers to other crudes

London, 20 September (Argus) — Libya is still exporting crude nearly a month after its eastern-based administration imposed a blockade on oil fields and terminals, but a significant reduction in loadings has prompted key European customers to turn to alternative grades. Libya exported around 389,000 b/d of crude in the 1-19 September period, according to Argus tracking data, a sharp drop from 932,000 b/d during the same period in August when Libya's pre-blockade crude output was close to 1mn b/d. Assuming Libya is keeping some crude for domestic refining and power generation, current production may now be closer to 500,000 b/d — up from previous Argus estimates of around 300,000 b/d . The September exports are largely occurring under state-owned NOC's crude-for-products programme. This potentially bypasses the central bank, which has been at the centre of the political impasse that sparked the blockade . Nearly half of Libyan loadings so far this month, or 189,000 b/d, have headed to Italy, according to Argus tracking. But Italy's Libyan intake averaged 329,000 b/d over January-August, so the country has sought alternatives to replace the shortfall this month. Two cargoes of Algeria's light sweet Saharan Blend amounting to 67,000 b/d arrived in Italy in the 1-19 September period, after no cargoes in August and just one in July. Exports of Caspian light sour CPC Blend to Italy have jumped to 561,000 b/d so far this month, up from 410,000 b/d over 1-19 August and 520,000 b/d over 1-19 July, according to port reports. Availability of CPC Blend was constrained in August by maintenance at Kazakhstan's 600,000 b/d Tengiz field. Around 92,000 b/d of Libyan crude headed for Spain in the first eight months of this year, but none has loaded for the country so far in September. Exports of CPC Blend to Spain rose to 96,000 b/d over 1-19 September, up on the 37,000 b/d shipped during the same periods in each of August and July. By Melissa Gurusinghe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iraq’s Somo sells rare Qayara crude cargo in tender

24/09/20

Iraq’s Somo sells rare Qayara crude cargo in tender

Singapore, 20 September (Argus) — Iraq's state-owned oil marketer Somo sold a rare cargo of heavy sour Qayara crude via tender to US firm Valero Energy for loading in October. Somo had offered up to 2mn bl of Qayara (Qaiyarah) crude, to load between 25 September to 15 October, through a tender on the platform of price reporting agency Platts on 19 September. US firm Valero Energy was awarded 500,000 bl of Qayara for loading on 8-10 October at a $28.30/bl discount to the average of Dubai and Oman assessments, traders said. It was unclear if Valero intends to process the cargo at one of its refineries in northern America or the United Kingdom, or if the firm plans to resell the cargo. The Qayara volumes offered by Somo had been marked as free-destination and available for resale. Details of the cargo's specification was not listed in Somo's latest tender, but in a previous tender issued by Somo in 2023, the grade was specified as being of about 15.6°API and with sulphur content of about 6.3pc. By YouLiang Chay Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LNG-burning vessels well positioned ahead of 2025

24/09/19

LNG-burning vessels well positioned ahead of 2025

New York, 19 September (Argus) — Vessels outfitted with dual-fuel LNG-burning engines are poised to have the lowest marine fuel expense heading into 2025 when the EU will tighten its marine EU emissions trading system (ETS) regulations and add a new regulation, " FuelEU", from 1 January 2025. Considering both regulations, at current price levels, fossil LNG (also known as grey LNG) will be priced the cheapest compared with conventional marine fuels and other commonly considered alternative fuels such as biodiesel and methanol. The EU's FuelEU maritime regulation will require ship operators traveling in, out and within EU territorial waters to gradually reduce their greenhouse gas (GHG) intensity on a lifecycle basis, starting with a 2pc reduction in 2025, 6pc in 2030 and so on until getting to an 80pc drop, compared with 2020 base year levels. The FuelEU GHG intensity maximum is set at 85.69 grams of CO2-equivalent per MJ (gCO2e/MJ) from 2030 to 2034, dropping to 77.94 gCO2e/MJ in 2035. Vessel pools exceeding the FuelEU's limits will be fined €2,400/t ($2,675/t) of very low-sulphur fuel oil (VLFSO) energy equivalent. GHG emissions from grey LNG vary depending on the type of marine engine used to burn the LNG, but ranges from about 76.3-92.3 gCO2e/MJ, according to non-governmental environmental lobby group Transport & Environment. This makes a number of LNG-burning, ocean-going vessels compliant with FuelEU regulation through 2034. The EU's ETS for marine shipping commenced this year and requires that ship operators pay for 40pc of their GHG generated on voyages within, in and out of the EU. Next year, the EU ETS emissions limit will increase to 70pc. Even with the added 70pc CO2 emissions cost, US Gulf coast grey LNG was assessed at $639/t VLSFOe, compared with the second cheapest VLSFO at $689/t, B30 biodiesel at $922/t and grey methanol at $931/t VLSFOe average from 1-18 September (see chart). "In 2025, we expect [US natural gas] prices to rise as [US] LNG exports increase while domestic consumption and production remain relatively flat for much of the year," says the US Energy Information Administration. "We forecast the Henry Hub price to average around $2.20/million British thermal units (mmBtu) in 2024 and $3.10/mmBtu in 2025." Provided that prices of biodiesel and methanol remain relatively flat, the projected EIA US 2025 LNG price gains would not affect LNG's price ranking, keeping it the cheapest alternative marine fuel option for ship owners traveling between the US Gulf coast and Europe. LNG for bunkering global consumption from vessels 5,000 gross tonnes and over reached 12.9mn t in 2023, according to the International Maritime Organization (IMO), up from 11mn t in 2022 and 12.6mn t in 2021. The maritime port authority of Singapore reported 111,000t of LNG bunker sales and the port authorities of Rotterdam and Antwerp reported 319,000t in 2023 from all size vessels. Among vessels 5,000 gross tonnes and over, LNG carriers accounted for 89pc of LNG bunker demand globally, followed by container ships at 3.6pc, according to the IMO. The large gap between LNG global and LNG Singapore, Rotterdam, and Antwerp bunker demand, is likely the result of most of the demand taking place at the biggest LNG export locations where LNG carriers call, such as the US Gulf coast, Qatar, Australia, Russia and Malaysia. By Stefka Wechsler USGC bunkers and bunker alternatives $/t VLSFOe 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