Saudi Arabia and OPEC are doomed.

[Swordsmyth]

Bahrain’s gross government debt could reach 102 percent in 2019 from 94.9 percent this year as the smallest oil producer in the Gulf struggles with one of the highest breakeven crude oil price levels globally, the International Monetary Fund said in the May edition of its Regional Economic Outlook for the Middle East and North Africa.
Bahrain will need oil to trade at US$113 a barrel this year if it wants to break even, second only to Libya, which needs oil at US$132 a barrel to make ends meet. In 2019, the breakeven price for the tiny kingdom will be US$110.6, according to International Monetary Fund calculations.

More at: https://oilprice.com/Energy/Energy-G...s-113-Oil.html

[Swordsmyth]

Saudi Arabia’s private non-oil sector grew at its slowest pace in at least nine years, as it continues to feel the pinch of the government’s austerity measures in response to the low oil prices and low oil revenues for the state, a survey of businesses showed on Thursday.
The Emirates NBD Saudi Arabia Purchasing Managers’ Index (PMI) dropped to just 51.4 in April, down from 52.8 in March, and the lowest reading of the index since the series began in August 2009. A reading below 50.0 means contraction, while the index above 50.0 means expansion of economic activity.
According to the firms surveyed, the slow growth in the private non-oil sector was due to subdued market demand, competitive pressures, and “unpredictable economic conditions”.
The April index marked a new low for the Saudi non-oil growth, following a previous record-low reading of the index for March. Non-oil private economic growth has been slowing over the past few months, especially after the introduction of a 5-percent value added tax (VAT) in January. Many firms cited VAT as dampening consumer demand in March.

More at: https://oilprice.com/Latest-Energy-N...n-9-Years.html

[Solodun]

Fracking oil and shale oil wells fade off in terms of production very quickly- they can peak in output in just a year or two and decline after that. This means you need a fairly steady addition of new wells just to maintain current levels of production...

[Swordsmyth]

The Houthi rebels in Yemen, officially known as Ansurallah, have vowed to intensify rocket attacks on Saudi Arabia’s critical oil infrastructure, warning that they are now manufacturing their own ballistic missiles to achieve those aims, the Financial Times reports.

The threat comes at a time when Houthi attacks on Saudi Arabia have begun to increase. Just this Saturday, Saudi Arabia’s air defense system intercepted four ballistic missiles over the southwestern region of Jizan. The debris of those missiles reportedly killed one person. Just a week prior, two other missiles were launched at the Saudi Arabian Oil Company (Aramco) facilities on the Red Sea.
At the beginning of April, the London-based IHS Jane’s Terrorism and Insurgency Center noted that the Houthis claimed to have carried out three separate rocket attacks on Aramco facilities in ten days, including an attack on a Saudi oil tanker, which suffered some damage and led to the intervention of a coalition naval vessel, which in turn repelled the attack.
The Houthis also unveiled their new Badr-1 surface-to-surface weapon system (a heavy artillery rocket system) approximately a week prior, which the rebels claimed they had used to attack Aramco facilities.
Mohammed al-Boukhaiti, a member of the Houthi political council, also told the Financial Times that these attacks were “only the beginning of the response” to the death of Houthi leader Saleh al-Samad, who was killed by Saudi air strikes in April.

“Yemenis will not pass on the death of Samad easily and they will do their best to take revenge for him,” Mr. Boukhaiti said.

Boukhaiti also dismissed allegations that Iran has supplied the Houthis with sophisticated missiles, claiming instead that the rebels have been developing and manufacturing their own rockets and drones.

“The Yemenis have added new systems for manufacturing missiles, so more missiles are targeting Saudi Arabia as a part of an escalation,” Mr. Boukhaiti also said.

The claim that Iran is responsible for the Houthis’ supply of arms is one that continues to skim the surface of mainstream discourse without being bolstered by any hard, credible evidence.
Despite this, these recent developments are raising fears that the war in Yemen may begin to spiral out of control even more so than it has already in the last three years. As even the Financial Times admits, so far into the conflict Saudi Arabia has struggled to make any decent advancement against the rebels. It is also worth noting that in recent times, the Houthis’ confidence only appears to be strengthening, and these recent attacks targeting vital Saudi infrastructure may only improve their standing in the conflict.

More at: https://www.zerohedge.com/news/2018-...now-what-means

[Swordsmyth]

Two senior Iranian government officials have said oil prices shouldn’t be too high, with the comments indicating the divide between Riyadh and Tehran on oil pries is deepening.
First, Oil Minister Bijan Zanganeh said over the weekend that Iran was all for a “reasonable” oil price, suggesting the current price level is unreasonable and the result of “manufactured tensions.” A reasonable oil price, on the other hand, would be positive for producers, encouraging them to continue pumping while at the same time reducing the risk of excessive market volatility, state news agency Shana reported.
Then, Zanganeh’s deputy for international and commercial affairs, Amir Hossein Zamaninia, elaborated on what a reasonable price is for Tehran: between US$60 and US$65 a barrel. That’s US$10-15 lower than the current level, at which Brent and WTI are trading as the market awaits President Trump’s decision on whether to reimpose economic sanctions on Iran.

More at: https://oilprice.com/Latest-Energy-N...il-Prices.html

[Swordsmyth]

Iraq has signed an agreement with supermajor BP that would triple the oil production from the Kirkuk oil fields in northern Iraq to more than 1 million bpd, Iraq’s Oil Minister Jabbar al-Luiebi said at the signing on Monday.

More at: https://oilprice.com/Latest-Energy-N...llion-Bpd.html

[Swordsmyth]

Trump’s decision to kill the Iran deal could put an end to the OPEC agreement.
As has been widely discussed in the aftermath of President Trump’s decision to withdraw from the Iran nuclear deal, the return of sanctions on Iran could disrupt oil shipments, with estimates ranging from essentially nothing to as much as 1 million barrels per day of Iranian supply going offline.
But the decision also could put an end to the OPEC agreement.


Wednesday afternoon, Saudi oil minister Khalid al-Falih went further, tweeting that OPEC and Russia would “ensure market stability.”

I am in close contact with #OPEC ’s Presidency, #Russia and the #US , and will be connecting with other producers and major consumers over the next few days to ensure market stability.
— ???? ??????|Khalid Al Falih (@Khalid_AlFalih) May 9, 2018

And as John Kemp of Reuters points out, this arrangement clears up the tweet from President Trump in April in which he blasted OPEC for high prices. “In retrospect, the president’s tweet on April 20 blaming OPEC for high oil prices can be seen as part of the negotiating process to reach an understanding with Saudi Arabia,” Kemp wrote for Reuters.
The implication is that the U.S. will work to isolate Iran, potentially curbing supply by hundreds of thousands of barrels per day. Saudi Arabia would resolve any price spike by adding barrels back onto the market.
But if Saudi Arabia ramps up output, it would essentially have to back out of the OPEC agreement. Any unilateral increase in supply would violate the spirit of the pact, and would likely lead to less restraint from other members. Recognizing the risk here, a source told the FT on Wednesday that Saudi Arabia would not increase supply on its own, and would instead work with OPEC and Russia to coordinate their action.

To avoid the entire group returning to full production, there would need to be some sort of adjustment to the production limits for all of the participating countries. But it isn’t as simple as merely adjusting the output limits higher – it was incredibly difficult to get all OPEC members on board for the original agreement. Any changes will be problematic. The other possibility is that OPEC members simply start to cheat, even if the deal remains unchanged.

More at: https://oilprice.com/Energy/Energy-G...OPEC-Deal.html

[Swordsmyth]

Energy Transfer Partners plans to build a 600,000-bpd oil pipeline from the Permian to the Houston Ship Channel and Nederland, Texas, as midstream operators race to add takeaway capacity in the fastest-growing U.S. shale play.
The planned ETP pipeline could be “easily expandable” to 1 million bpd, company executives said on the conference call for the Q1 results on Thursday, adding that the new pipeline would likely come into service in 2020.

Booming Permian oil production has started to constrain takeaway capacity from the region, putting downward pressure on Midland crude oil prices compared to the prices in Houston.
“The almost historical widening of that basis will certainly help our margins in the coming quarters,” Reuters quoted senior ETP executive Marshall McCrea as saying.
Crude oil volumes on ETP’s Permian Express 3 averaged “a couple of hundred thousand” barrels of oil per day in Q1, and the company continues to assess possible further expansion of that pipeline, ETP said on the conference call.
Other operators are also announcing plans or commit to projects to move the growing Permian oil production out of West Texas to the ports.
Enterprise Products Partners announced plans in December to convert one of its natural gas liquids (NGL) pipelines from the Permian to the Texas Gulf Coast to crude oil service. The conversion, expected to be completed in the first half of 2020, would provide the partnership with total crude oil pipeline capacity of over 650,000 bpd from the Permian to Enterprise’s crude oil hub in the Houston area.

Magellan Midstream Partners and Plains All American Pipeline plan to further expand the BridgeTex pipeline to a capacity of 440,000 bpd to deliver Permian oil from Midland and Colorado City, Texas, to the Houston Gulf Coast area.
Plains All American said in February that the planned Cactus II pipeline capacity is fully committed with long-term third-party shipper contracts totaling 525,000 bpd. The pipeline is targeted to be operational in the third quarter of 2019.
Phillips 66 Partners has received sufficient binding commitments on an initial open season to proceed with construction of the Gray Oak Pipeline system that could transport up to 700,000 bpd from West Texas to destinations in the Corpus Christi and Sweeny/Freeport markets.

More at: https://oilprice.com/Latest-Energy-N...-Pipeline.html

[Swordsmyth]

Russia’s second-biggest oil producer, Lukoil, has signed a development plan for the West Qurna-2 oil field in Iraq with local Basra Oil Company, targeting to double oil production from the field to 800,000 bpd by 2025, the Russian firm said on Friday.
Lukoil holds a 75 percent interest in West Qurna-2, Iraq’s state-run North Oil Company has 25 percent, while state Basra Oil Company helps manage the distribution of the compensation and revenues.
First commercial oil at West Qurna-2 was pumped at the end of March 2014. Current production at the field is 400,000 bpd, or 9 percent of Iraq’s total oil production, according to Lukoil.
The boost in production will come in stages, according to the project partners’ plan. In 2020, oil production at West Qurna-2 is expected to reach 480,000 bpd. The production plateau of 800,000 bpd is planned to be achieved in 2025.
“These indicators will be achieved as a result of drilling and commissioning of new production and injection wells, construction and launching of oil treatment, storage and transportation facilities and facilities for gas treatment and power generation,” Lukoil said in a statement.

More at: https://oilprice.com/Latest-Energy-N...00000-Bpd.html

[Swordsmyth]

US drillers added 13 rigs to the number of oil and gas rigs this week, according to Baker Hughes, adding 10 active oil rigs and 3 active gas rigs. The oil and gas rig count now stands at 1,045—up 160 from this time last year.

US oil production rose again in the week ending May 04, reaching 10.703 million bpd—the eleventh build in as many weeks—about 300,000 bpd shy the 11.0 million bpd forecast that many are predicting for 2018. Earlier this week, the EIA raised its US production forecast for 2018 and 2019, anticipating that the full-year production for the United States will be 10.7 million bpd, with 11.9 million bpd forecast for 2019—a 400,000 bpd increase over its forecast last month.

More at: https://oilprice.com/Energy/Energy-G...de-Output.html

[Swordsmyth]

Shale oil production in the United States will rise by a record-breaking 144,000 bpd from May to June, hitting 7.178 million bpd, the Energy Information administration estimated in its latest Drilling Productivity Report.
Hardly surprisingly, the Permian will lead the way with a 78,000-bpd increase in production, from 3.199 million bpd this month to 3.277 million bpd in June. The Permian will be followed by Eagle Ford, where average daily oil production will rise by 33,000 bpd from 1.354 million bpd to 1.387 million bpd.

More at: https://oilprice.com/Energy/Crude-Oi...king-Rate.html

[Swordsmyth]

The Permian basin has garnered much of the media attention when it comes to U.S. shale growth, but higher oil prices are putting more shale regions into profitable territory.
In years past, shale companies trumpeted their diversified holdings, noting their foothold in multiple shale basins in disparate parts of the country.
However, that started to change when oil prices cratered to as low as $30 per barrel. During the depths of the oil market downturn, U.S. shale production dipped but quickly rebounded, aided by soaring output from the Permian. While places like the Bakken and Eagle Ford struggled with oil prices below $50 per barrel, drillers could still make it work in the Permian. Shale companies large and small began shedding assets in undesirable locations in order to focus on the Permian.
But with WTI consolidating gains at $70 per barrel and looking to move higher, some of those castoff drilling locales are now back in the money. Since the beginning of 2017, the rig count in the Permian has skyrocketed by nearly 75 percent to 463 as of May 11. Even as the number of rigs in West Texas has soared, there have been smaller but a non-trivial uptick in the number of rigs in other locations, particularly in the last few months as oil prices surged to three-year highs.

The Williston basin (which includes the Bakken) saw its rig count hit a recent low point at 45 at the start of this year, but the region has added 12 rigs since then. The Eagle Ford also saw the number of rigs dwindle over the course of 2017, before rebounding in February, adding 12 rigs in the past three months.



More importantly, higher levels of drilling are helping to revive flagging output in these areas. The Bakken was thought to have peaked at 1.26 mb/d at the end of 2014, but it is now close to surpassing that high point – production in the Bakken is expected to rise to 1.238 mb/d next month after bottoming out at 0.956 mb/d in December 2016.
The best days for the Eagle Ford were also thought to be in the past, hitting 1.7 mb/d in 2015 and declining since then. However, after bottoming out at 1.048 mb/d in August 2017, the South Texas shale field has rebounded to 1.353 mb/d.



More at: https://oilprice.com/Energy/Crude-Oi...-Comeback.html

[Swordsmyth]

More at: https://www.zerohedge.com/news/2018-...ing-oil-prices

[Swordsmyth]

India is seeking assurances from Saudi Arabia, OPEC's biggest producer, that oil prices will remain "stable and moderate," its government said in a statement on Friday.

Energy minister Dharmendra Pradhan spoke with Saudi oil minister Khalid Al-Falih late on Thursday to "express his concern about rising prices and its negative impact on consumers and the Indian economy," it said.

"We're not saying oil should be $25 a barrel, it should be at a price that is reasonable," Sanjay Sudhir, joint secretary for international cooperation at India's energy ministry, told CNNMoney. "$80 is way above a reasonable price, this is not a market-driven price."

Indian concerns about oil price rises are understandable. Low oil prices played a big role in making it the world's fastest growing major economy in the recent years.
Every $10 increase in the price of a barrel knocks 0.2% to 0.3% off India's growth rate, according to the country's latest economic survey.

More at: https://www.local10.com/automotive/i...ing-oil-prices

[Swordsmyth]

The airline industry is heading for rising fuel costs as crude oil prices surge, and the weakest of the European airlines may not make it through the winter, Michael O’Leary, chief executive at Europe’s largest budget carrier Ryanair, said on Monday.
“Spot prices close to $80 a barrel are going to lead to a significant shakeout in the industry as early as this winter,” O’Leary told Bloomberg Television, after Ryanair reported earlier today a 10-percent increase in its FY 2017/2018 profit.
“Some of those loss-making airlines who couldn’t make money when oil was at $40 a barrel certainly can’t survive,” O’Leary told Bloomberg.
Ryanair said in its FY 2018 release on Monday that “fuel will be a major cost headwind for the next 24 months.”
Ryanair is currently 90-percent hedged for FY19 at around US$58 per barrel compared to the spot price of nearly US$80 a barrel.

More at: https://oilprice.com/Energy/Energy-G...-Airlines.html

[Swordsmyth]

With the national average gas price continuing its trudge toward $3 a barrel, pushed by rising crude oil prices, GasBuddy is reporting that more Americans are planning stay-cations instead of traveling this summer as worries about rising gas prices intensify.
According to the annual survey, only 58% of respondents said they would take a trip this summer, a 24% decrease from last year. That's the lowest number since the summer of 2014, when crude oil prices were above $100 a barrel.

Asked about their reasons for delaying their plans, 39% blamed rising gas prices, compared with 19% in 2017.


More at: https://www.zerohedge.com/news/2018-...ing-gas-prices

[Swordsmyth]

Saudi Arabia, Russia and the rest of OPEC “are likely this week to discuss a controlled relaxation of over-compliance with the Opec and non-Opec production-cut target,” according to Argus Media. A Gulf source familiar with Saudi thinking told Argus that a “relaxation” is a “big possibility” at the upcoming meeting in Vienna on June 22.To be clear, it would not amount to an “unwinding” or a “removal” or a “phase out” of the production limits. Such a proposal is reportedly not under consideration. Instead, OPEC has a more modest proposal in mind – simply bringing production levels back up to the stated ceiling.
The discrepancy largely comes down to the catastrophic production losses in Venezuela. Output in the South American nation fell to just 1.43 million barrels per day in April, down nearly 700,000 bpd from 2016 levels. Crucially, Venezuela’s April production is 500,000 bpd below the level that it is allowed to produce (1.972 mb/d) as part of the OPEC agreement – and falling on an ongoing basis.
Because of those declines, the compliance rate for OPEC on the whole shot up to 181 percent in April, according to Argus Media.

The proposal under consideration for the Vienna meeting would be to allow slightly higher levels of production. Because most of the participating nations are already producing close to their maximum, additional supply would have to come from a relatively short list of nations, namely, Saudi Arabia, Russia, the UAE and Kuwait.
OPEC could still keep its production limits in place, but allow spare capacity nations to add supply back to the market, but only a little bit so the collective ceiling is not breached.
As Argus points out, allowing for higher levels of production from Gulf countries at the expense of Iran and Venezuela could potentially undercut cohesion among the group. Already fierce regional rivals, Iran might perceive the “relaxing” of production limits as a way for Gulf nations to take its market share. OPEC’s influence is only as powerful as the group’s willingness to work together, so future coordination could be undermined if a decision in Vienna stokes animosity between some of the cartel’s top producers.
Still, with oil passing $80 per barrel and pricing risk skewed to the upside, OPEC might be compelled to add more barrels back onto the market.

More at: https://oilprice.com/Energy/Crude-Oi...tion-Cuts.html

[Swordsmyth]

Shell has made a large deepwater exploration discovery in the U.S. Gulf of Mexico, just 13 miles from its Appomattox project that is expected to start production by the end of 2019, the oil major said on Thursday.
The Dover discovery is Shell’s sixth in the Norphlet geologic play in the U.S. Gulf of Mexico, and is considered an attractive potential tieback due to its proximity to Appomattox.
“Dover showcases our expertise in discovering new, commercial resources in a heartland helping deliver our deep water growth priority,” said Andy Brown, Upstream Director for Royal Dutch Shell. “By focusing on near-field exploration opportunities in the Norphlet, we are adding to our resource base in a prolific basin that will be anchored by the Appomattox development,” Brown added.
The Appomattox project, in which the operator Shell holds 79 percent and Nexen Petroleum Offshore USA owns the other 21 percent, is planned to have peak annual production of 175,000 barrels of oil equivalent per day (boe/d).
Shell expects its global deepwater production from already discovered and established areas to exceed 900,000 boe/d by 2020.
In the U.S. Gulf of Mexico, Shell announced last month the final investment decision for the Vito deepwater development, with a forward-looking, break-even price estimated to be less than $35 per barrel. Vito, which will be Shell’s 11th deepwater host in the Gulf of Mexico, is currently scheduled to start producing oil in 2021, with peak production of around 100,000 boe/d.

More at: https://oilprice.com/Energy/Energy-G...Of-Mexico.html

[Swordsmyth]

US drillers added 13 rigs to the number of oil and gas rigs this week, according to Baker Hughes, with oil rigs increasing by 15 and gas rigs dipping by 2. The oil and gas rig count now stands at 1,059—up 151 from this time last year. The Permian basin saw the biggest increase in the number of rigs, at 11.

More at: https://oilprice.com/Energy/Energy-G...il-Prices.html

[Swordsmyth]

OPEC’s largest producer Saudi Arabia and its key non-OPEC partner in the production cut deal, Russia, are discussing lifting the combined oil production of the countries from the pact by some 1 million bpd, potentially easing the cuts in response to supply concerns amid rising oil prices, Reuters reported on Friday, citing sources familiar with the talks.

More at: https://oilprice.com/Energy/Oil-Pric...put-Boost.html

[Swordsmyth]

Saudi Aramco’s much-hyped initial public offering is “most likely” to take place in 2019, Saudi Energy Minister Khalid Al-Falih said on Friday, likely confirming that plans for the IPO have been pushed from this year to next.
“We’re simply waiting for a market readiness for the IPO,” al-Falih said at the St. Petersburg International Economic Forum in Russia.
Since the Saudis initially floated the idea to list 5 percent in their state oil giant, officials had been insisting that the IPO will take place in the second half of 2018, until in March al-Falih himself hinted that there might be a delay and the share sale could slip to 2019.

More at: https://oilprice.com/Latest-Energy-N...y-In-2019.html

[Swordsmyth]

When Saudi Arabia and Russia announced a new policy to revive oil production last week, one thing was missing: most of the other partners in their grand coalition.
With oil supplies tightening and prices soaring, the two countries agreed to restore some of the output they halted as part of an accord with 22 other producers, drawn from the Organization of Petroleum Exporting Countries and beyond. The trouble is, officials from several producers, both inside OPEC and outside, said they disapproved of the proposal to raise output and saw difficulties in reaching a consensus when they meet in Vienna next month.
“It might be a contentious meeting,” said Ed Morse, head of commodities research at Citigroup Inc. in New York.
The matter is particularly sensitive because Russia and the Saudis are proposing raising production to make up for losses from other members, notably a worsening slump in Venezuelan supply and a potential drop in Iran as renewed U.S. sanctions kick in. Those countries have nothing to gain from looser output caps, and plenty to lose if oil prices extend Friday’s steep decline.

Most producers weren’t consulted about the Saudi-Russia policy to revive output. Suhail Al Mazrouei, United Arab Emirates energy minister and current holder of OPEC’s rotating presidency, said the group as a whole will decide whether to adjust output.
“No decisions made by two countries or three countries are going to be taken,” he said in an interview in St. Petersburg, Russia, on Friday after meeting with his Saudi and Russian counterparts. “We respect all the member countries.”
Saudi Arabia and Russia could simply go ahead with their plan without the blessing of their cohorts. Because they’re the only countries capable of increasing production significantly, the impact on the market would be almost as great if they chose to go it alone.
“If the rest are not on board, Saudi will do it alone, so it’s not much of a choice,” said Roger Diwan, an analyst at consultant IHS Markit Ltd. in Washington.
Yet the success of the 24-nation alliance that agreed to the supply cuts seems to be valuable to the kingdom, and so they may prefer a more diplomatic route by seeking consensus. If so, it would be a tough sell.


More at: https://www.bloomberg.com/news/artic...e-opec-meeting

[goldenequity]

French energy major Total joins $25 billion Russian Arctic LNG project
https://twitter.com/RT_com/status/1001032776156663809

[Swordsmyth]

Increased U.S. crude oil exports to Asia, supported by a wide WTI-Brent spread, are eating into Asian market shares of OPEC and Russia, the cartel’s ally in the production cut pact.
The United States is expected to export 2.3 million bpd of crude oil in June, including 1.3 million bpd bound for Asia, according to estimates by a senior executive at a U.S. oil exporter who spoke to Reuters.
U.S. crude exports hit a record high 2.566 million bpd in the second week of May, EIA data shows.
The record-high U.S. oil production and the emerging constraints in the takeaway capacity has pushed WTI Crude to the widest discount to Brent Crude in three years—at around $9 a barrel, while Brent prices have been supported by geopolitical concerns of possible supply disruptions from the Middle East and plunging production in Venezuela.
Asian refiners have seized the opportunity to boost the cheaper U.S. crude oil imports and are cutting some pricier imports from the Middle East, particularly after Saudi Arabia’s recent pricing policies that raised prices for the Asian markets.

“We’re diversifying a lot to other regions. If Saudi Aramco still doesn’t reduce prices next month and ADNOC [Abu Dhabi National Oil Company] follows, we will increase our U.S. crude purchases,” a Southeast Asian oil buyer told Reuters.

More at: https://oilprice.com/Energy/Crude-Oi...e-In-Asia.html

[devil21]

I don't have time to find it atm but I read an article a few days ago that stated that oil emissions related environmental regulations will kick in by 2020 that makes the sulfur-heavy oil from the Gulf States (SA was named specifically but all oil from the region is similar) much more difficult to use. Probably relevant to this thread, if you want to find it @Swordsmyth .

[Swordsmyth]

I don't have time to find it atm but I read an article a few days ago that stated that oil emissions related environmental regulations will kick in by 2020 that makes the sulfur-heavy oil from the Gulf States (SA was named specifically but all oil from the region is similar) much more difficult to use. Probably relevant to this thread, if you want to find it @Swordsmyth .

The bunker fuel supply and availability landscape is set to change when IMO’s global 0.5% fuel sulphur content
cap regulation is enforced from 2020. Shipowners have a few options to choose from for them to comply with the
regulation, while refiners are expected make changes to refinery configuration and production in response to market
demand. Thus far, there is no silver bullet solution ahead of 2020 and the involved parties will have to decide on the
most appropriate approach to take so as to suit their operations and remain commercially sustainable in the long run

The International Maritime Organization (IMO) will enforce a new 0.5% global sulphur
cap on fuel content from 1 January 2020, lowering from the present 3.5% limit. The
global fuel sulphur cap is part of the IMO’s response to heightening environmental
concerns, contributed in part by harmful emissions from ships

More at: http://www.seatrade-maritime.com/ima...Sulphur-p2.pdf

[Swordsmyth]

Norway’s oil industry is putting more money into exploration than expected, the country’s industry regulator told Reuters. What’s more, investments are seen to continue rising next year and in 2020, the chief of the Norwegian Petroleum Directorate, Bente Nyland said.
This year, state major Equinor and other oil companies plan to drill 45 exploration and appraisal wells, versus an expected number of 35 and up from 34 drilled last year.
In early May, the Norwegian statistics authority SSB released the results of a survey that revealed oil companies plan higher spending on new exploration but lower investments in mature fields. For 2019, the Norwegian oil industry planned to spend US$4.01 billion (33.3 billion kroner) on new exploration activities, up from US$3.07 billion (25.5 billion kroner)
Earlier this month, Norway announced the latest oil licensing round in mature areas on the Norwegian Continental Shelf, expanding this year’s predefined area by 103 blocks in the Norwegian Sea and the Barents Sea. Companies have until September 4, 2018, to bid, and the government aims to award the new production licenses in early 2019, the Norwegian Ministry of Petroleum said in a statement.

More at: https://oilprice.com/Latest-Energy-N...-Expected.html

[Swordsmyth]

The huge discount of WTI Crude to Brent Crude has been supporting cheaper U.S. crude barrels bound for Asia, while West African cargoes, priced off dated Brent, have grown difficult to sell to Asian customers.
The wide WTI-Brent spread—$9 a barrel on Wednesday compared to $3-$4 a barrel just three months ago—is putting pressure on the arbitrage opportunity for West African grades, including crude varieties from OPEC members Angola and Nigeria, trading and market sources told Platts today. A recent increase in freight costs on the West Africa-Asian routes is also adding to the pressure.
Last week, Asian refiners took just a handful of Angolan crude oil cargoes in the first round of trading for the July tenders, while many Asian customers opted for large volumes of U.S. crude oil instead, market sources told Platts.
For example, Taiwan’s refiner CPC, which usually buys West African crude grades, purchased 8 million barrels of WTI Midland instead of any crude varieties from West Africa for delivery in July, according to trading sources.
“The whole West African market is changing a lot because of the growth in US oil,” a trader told Platts.
“Plus, you have Brazilian production going up, and a lot of those medium cargoes like Lula are getting shipped to China at very cheap levels, which will really curb the WAF flow to Asia,” the trader noted.

More at: https://oilprice.com/Latest-Energy-N...s-To-Asia.html

[Swordsmyth]

Shell said on Thursday that it had started early production at a deepwater subsea development in the U.S. Gulf of Mexico a year ahead of schedule and at a forward-looking, break-even price of less than $30 per barrel of oil.
Shell began early production at the Kaikias development that has an estimated peak production of 40,000 barrels of oil equivalent per day (boe/d), adding more production in its key deepwater focus area, the Gulf of Mexico.

More at: https://oilprice.com/Latest-Energy-N...-Schedule.html

[Swordsmyth]

Saudi Arabia may raise again its official selling prices (OSPs) for oil bound for Asia in July, and the price of its flagship Arab Light crude could reach its highest since February 2014, a Reuters survey of five refiners and traders showed on Friday.
The possible increase could come as Asian demand for Middle Eastern crude oil is growing ahead of the peak summer oil consumption period, and as the Dubai oil benchmark has gone deeper into backwardation—the market situation in which front-month prices are higher than prices further out in time—a sign of rising demand for prompt deliveries.
According to the Reuters survey, Saudi Aramco may raise the OSP for Arab Light to Asia by as much as US$0.40 per barrel to a premium of US$2.30 a barrel to the Oman/Dubai Middle East benchmark. This would be the highest OSP for Arab Light in Asia in more than four years—since February 2014 when the OSP was set at a US$2.45 premium to Oman/Dubai.
Although they expect such a rise, most of the survey respondents hope that the increase for Arab Light would be smaller, due to weaker jet fuel margins and to potential Saudi concern that a big price hike would make its Arab Light grade uncompetitive compared to other Middle Eastern crudes and Russian grades of similar quality.
Moreover, with rising U.S. oil exports to Asia and the wide WTI Crude discount to Brent Crude, Asian refiners have seized the opportunity to boost the cheaper U.S. crude oil imports and are cutting some pricier imports from the Middle East, particularly after Saudi Arabia’s recent pricing policies that raised prices for the Asian markets.

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