Log in


TOKYO/LONDON, July 10, 2018 (News Wires) - Oil prices rose by more than $1 dollar per barrel on Tuesday due to growing global supply outages, with Norway shutting down one oilfield as hundreds of workers began a strike and Libya saying its production more than halved in recent months.

The disruptions add to supply worries around the world. Venezuela's production has collapsed due to a lack of investment and Iranian exports have suffered due to US sanctions. OPEC, meanwhile, has little capacity to fill the gap as demand for oil quickens.

Benchmark Brent oil futures rose by $1.13 per barrel, or 1.4 per cent, to $79.20 per barrel by 09:15 GMT, following a 1.2-percent climb on Monday. US light crude futures were up 53 cents, or 0.7 per cent, at $74.38.

Mounting supply concerns could push Brent above $85 per barrel, MUFG Bank said in a note.

"Renewed geopolitical supply-side disruptions stemming from Canada, Iran, Libya, Venezuela and the US raises the likelihood of oil trade interruptions and with it upside risks to oil prices in the near term," MUFG said.

Hundreds of workers on Norwegian offshore oil and gas rigs went on strike on Tuesday after rejecting a proposed wage deal, leading to the shutdown of one Shell-operated oilfield.

That potentially adds to disruptions in other oil producers amid tensions in the Middle East.

Libya's national oil production fell to 527,000 barrels per day from a high of 1.28 million bpd in February following recent oil port closures, the National Oil Corp said on Monday.

The United States says it wants to reduce oil exports from Iran, the world's fifth-biggest producer, to zero by November, which would oblige other big producers to pump more.

Saudi Arabia, fellow members of the Organization of the Petroleum Exporting Countries and allies including Russia agreed last month to increase output to dampen price gains and offset global production losses in countries including Libya.

The market has grown concerned that if the Saudis offset the losses from Iran, that will use up global spare capacity and leave markets more vulnerable to further or unexpected production declines.

"The bottom line becomes the available spare capacity within OPEC ... and the markets have started to focus on that," said Victor Shum, vice-president for energy at IHS markets in Singapore.

Money managers raised their bullish bets on US crude in the week to July 3, the US Commodity Trading Commission said on Monday.

DUBAI, July 1, 2018 (Reuters) - Iran has asked fellow OPEC members to “refrain from any unilateral measures”, warning that would undermine the unity of OPEC, following reports that Saudi Arabia has raised its oil production to a record high this month.

As Tehran seeks ways to counter U.S. sanctions that would restrict its exports and eat into its market share, Iranian Oil Minister Bijan Zanganeh wrote to his UAE counterpart, Suhail al-Mazrouei, who holds the OPEC presidency in 2018, urging him to remind OPEC members to adhere to last month’s agreement.

“Any increase in the production by any member country beyond commitments stipulated in OPEC’s decisions ... would constitute breach of the agreement,” Zanganeh wrote in the letter seen by Reuters and reported by Iranian state media.

“I hereby request your excellency to remind OPEC member countries to adhere to their commitments ... refrain from any unilateral measures undermining the unity and independence of the OPEC,” he added.

OPEC agreed with Russia and other oil-producing allies on June 23 to raise output from July, with Saudi Arabia pledging a “measurable” supply boost, but giving no specific numbers.

OPEC and non-OPEC countries said they would raise supply by returning to 100 percent compliance with previously agreed output cuts, after months of underproduction. That would be roughly 1 million barrels per day of crude oil output increase according to OPEC officials.

But since then sources familiar with Saudi oil thinking have briefed the market about an imminent rise in Saudi output to a record. Last week, a source told Reuters that Saudi output would rise to 11 million bpd in July, a whole 1 million bpd above May.

Iran had been pushing hard for oil producers to hold output steady as U.S. sanctions are expected to hit its exports.

But Saudi Arabia, OPEC’s biggest producer, was keen to raise output to meet calls from U.S President Donald Trump and major consumers such as India and China to help cool oil prices and avoid shortages, according to Saudi officials including Energy Minister Khalid al-Falih.

Non-OPEC Russia, meanwhile, was under pressure from its own energy companies to lift caps on output and fight a steep rise in domestic fuel prices that was hurting President Vladimir Putin’s popularity, Russian sources have said.

In the end, Saudi Arabia and Russia pushed through a rise of about 1 million bpd at the Vienna meeting.

Washington said last week it was asking customers in Asia and Europe to reduce Iranian oil purchases to zero from November, and that it will not grant any waivers to sanctions.

In his letter, Zanganeh said that unilateral decisions by some OPEC members were weakening the exporting group and that OPEC should not let others take political measures against the group’s unity and independence.

“Any unilateral production increase beyond member countries’ commitments under the OPEC’s decisions would prompt U.S. to take actions against Iran,” he wrote.

“OPEC decisions by no means warrant any action by some of its member countries in pursuit of the call for production increase by the U.S., politically motivated against Iran and publicly declared.”

VIENNA, June 23, 2018 (News Wires) - OPEC nations and oil-producing countries not in the cartel said Saturday they have agreed to share increased oil production a day after OPEC announced it would pump more crude oil - a move that should help contain the recent rise in global energy prices.

Russia and other oil-producing allies said after their meeting in Vienna with OPEC countries they would endorse a nominal output increase of 1 million barrels crude oil per day.

The Organization of the Petroleum Exporting Countries said in a statement that both member and non-member oil producing countries "decided that countries will strive to adhere to the overall conformity level, voluntarily adjusted to 100 per cent."

The statement did not say how exactly the production increase would be split between OPEC and non-OPEC nations.

Saud Arabia's minister of energy, Khalid Al-Falih, said after Saturday's meeting that the exact allocation for each country would depend among other things on their production capacities.

"Saudi Arabia obviously can deliver as much as the market would need, but we're going to be respectful of the 1 million barrel cap - and at the same time be respectful of allocating some of that to countries that deliver it," Al-Falih said.

Questions remain over the ability of some OPEC nations - Iran and Venezuela in particular - to increase production as they struggle with domestic turmoil and sanctions.

US President Donald Trump had been calling publicly for the cartel to help lower prices by producing more. And after OPEC's deal Friday, Trump tweeted: "Hope OPEC will increase output substantially. Need to keep prices down!"

Al-Falih said after Saturday's meeting in Vienna that tweets from Trump were "reflective of his concern for American consumers."

Al-Falih also said leaders from other countries including India, China and South Korea had also expressed concerns to him that their economies were "starting to feel the pinch of higher oil prices."

Taking a somewhat different stance, Russian Energy Minister Alexander Novak said Saturday's endorsement to increase oil production was based on "fundamental principles, on research done by our teams, by teams of our friends and colleagues, the OPEC secretariat."

"Twitter is not one of the instruments we base our decisions on," Novak added, referring to Trump.

CAIRO, June 23, 2018 (MENA) - Egypt's Minister of Petroleum Tarek el Mulla asserted Egypt's support to efforts of the OPEC to enhance joint cooperation among the oil producing states in order to maintain a balanced and fair global oil market of benefit to both producers and consumers.

Addressing the 4th ministerial meeting of member states of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, held in Vienna under the chairmanship of UAE Minister of Energy and Industry Suhail al Mazroui, Mulla praised the historically unprecedented support among the OPEC and non-OPEC members to create equilibrium in the world petroleum market.

The historic cooperation agreement announced in December 2016 is considered a milestone that categorically changed the entire energy scene and led the world petroleum market gradually to stability and sustainability, he said as quoted by the Ministry of Petroleum in a press release on Saturday.

The minister pointed out to the ambitious reform program carried out by Egypt to overcome challenges and restore economic balance, citing the liberalization of the exchange rate, reforming the taxation system and improving social protection programs.

The Egyptian petroleum and gas sector is exerting strenuous efforts to restore its role as a key player in the world petroleum market, he said.

Egypt attended the meeting as observer upon an invitation from the OPEC.


MOSCOW, June 23, 2018 (News Wires) - OPEC and its allies gathered for a third successive day of meetings Saturday in Vienna to give the final sign-off to an oil-production increase.

Major producers outside the Organisation of Petroleum Exporting Countries - including Russia, Mexico and Kazakhstan - will meet ministers from the cartel Saturday to endorse a nominal output increase of 1 million barrels a day, which in real terms would add about 700,000 barrels a day of crude to the market starting next month.

The non-members have already agreed to ratify the deal, which was sealed yesterday after a last minute compromise between Saudi Arabia and Iran, said delegates. Talks in the Austrian capital will focus on how to distribute the increase among each nation, they said, asking not to be identified because the agreement hasn’t yet been formalised.

“I think 1 million at this point is pretty reasonable,” Russian Energy Minister Alexander Novak told reporters in Vienna. “This is in line with current view on what should be done for the market.”

Yesterday’s agreement was a fudge in the time-honoured tradition of Opec, committing to boost output without saying which countries would increase or by how much. It gives Saudi Arabia and Russia - holders of the largest spare capacity in the group - the flexibility to respond to disruptions and moderate prices at a time when US sanctions on Iran and Venezuela threaten to throw the oil market into turmoil.

The terms of the deal were rather convoluted. The group’s agreed production increase of 1 million barrels a day was described as “nominal” by Saudi Energy Minister Khalid Al-Falih. In reality, the accord will add a smaller amount of oil to the market because a number of countries are unable to raise their output.

Every minister seemed to have his own interpretation of what this meant for the market. Iran saw no more than 500,000 additional barrels a day, Nigeria predicted 700,000 and Iraq said it could be as much as 800,000. The official communique from the meeting didn’t mention any specific production numbers, instead pledging that the group would focus on restoring its output cuts to the level originally agreed in 2016.

Some traders were far from confident that such an agreement will meet the multiple challenges Opec faces. The situation in Venezuela is volatile, with a wide range of predictions of how much further its production could slump as its industry unravels. There are also growing signs that the renewed US sanctions on Iran could have a larger impact than the 1 million-barrel-a-day reduction in exports seen in 2012.

Iran doesn’t believe its customers will get waivers from the US government that would allow them to continue crude purchases, Oil Minister Bijan Namdar Zanganeh said in a Bloomberg television interview yesterday. American officials are said to have asked Japan to completely halt oil imports from Iran, going beyond the cuts demanded during the Obama-era sanctions.

Crude prices surged yesterday following the vaguely worded Opec agreement. West Texas Intermediate crude jumped 4.6 per cent to $68.58 a barrel, the biggest gain in six months.

US President Donald Trump, whose tweets played a part in prompting Saudi Arabia to push for a production increase, indicated yesterday that he’ll be watching the progress of their new agreement closely.


VIENNA, June 22, 2018 (News Wires) - OPEC agreed on Friday on a modest increase in oil production from July after its leader Saudi Arabia persuaded arch-rival Iran to cooperate amid calls from major consumers to help reduce the price of crude and avoid a supply shortage.

Two OPEC sources said the group agreed that OPEC and its allies led by Russia should increase production by about 1 million barrels per day (bpd), or 1 per cent of global supply.

The real increase will be smaller because several countries that recently underproduced oil will struggle to return to full quotas while other producers will not be allowed to fill the gap, OPEC sources have said.

The United States, China and India had urged OPEC to release more supply to prevent an oil deficit that would hurt the global economy.

Saudi Arabia and Russia said they were happy to pump more but Iran had criticised the idea as it faces export-crippling US sanctions.

Iran, OPEC's third-largest producer, had demanded OPEC reject calls from US President Donald Trump for an increase in oil supply, arguing that Trump had contributed to a recent rise in prices by imposing sanctions on Iran and Venezuela.

Trump slapped fresh sanctions on Tehran in May and market watchers expect Iran's output to drop by a third by the end of 2018. That means the country has little to gain from a deal to raise OPEC output, unlike top oil exporter Saudi Arabia.

However, Saudi Energy Minister Khalid al-Falih appears to have convinced his Iranian peer Bijan Zanganeh to support the increase just hours before Friday's OPEC meeting.

OPEC and its allies have since last year been participating in a pact to cut output by 1.8 million bpd. The measure has helped rebalance the market in the past 18 months and lifted oil to around $75 per barrel from as low as $27 in 2016.

But unexpected outages in Venezuela, Libya and Angola have effectively brought supply cuts to around 2.8 million bpd in recent months.

Brent oil prices were up 1.9 per cent on Friday as the output boost had been largely priced in and was seen as modest.

"It will be enough for now but not enough for the fourth quarter to address a decline in Iranian and Venezuelan exports," said Gary Ross, head of global oil analytics at S&P Global.

"There isn´t a lot of spare capacity in the world. If we lose a million bpd of output from Venezuela and Iran in the fourth quarter, where will all these barrels come from? We are in for higher prices for longer," he said.

The OPEC meeting began around 10:00 GMT and was continuing after two and a half hours.

Falih has warned the world could face a supply deficit of up to 1.8 million bpd in the second half of 2018 and that OPEC's responsibility was to address consumers' worries.

"We want to prevent the shortage and the squeeze that we saw in 2007-2008," Falih said, referring to a time when oil rallied close to $150 per barrel.

OPEC's deal to release more supply centres on the idea of returning to 100 percent compliance with existing, agreed cuts. Current compliance is around 40-50 percent above target because of production outages in Venezuela, Libya and Angola.

Zanganeh has said that if OPEC returned to regular compliance, the group would raise output by around 460,000 bpd. Iran has objected to having members with additional capacity such as Saudi Arabia fill Venezuelan output gaps.

Falih also said the real increase for OPEC and non-OPEC would be smaller than the nominal gain of 1 million bpd. He said OPEC could meet again in September to adjust the deal.

OPEC sources also said Iran had demanded that US sanctions be mentioned in the group's post-meeting communique.

The United States, which rivals Russia and Saudi Arabia for the position of world No.1 oil producer, is not participating in the current supply pact.

Page 1 of 3