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The OPEC Monthly Oil Market Report (MOMR) for March 2022 was published this week. The last month reported in each of the charts that follow is February 2022 and output reported for OPEC nations is crude oil output in thousands of barrels per day (kb/d). In most of the charts that follow the blue line is monthly output and the red line is the centered twelve month average (CTMA) output.

OPEC output increased by 440 kb/d according to secondary souces in February. January 2022 output was revised higher by 52 kb/d from what was reported last month and December 2021 output was revised lower by 35 kb/d compared to the February 2022 MOMR. Most of the increase in OPEC output was from Saudi Arabia(141 kb/d) followed by Libya (105 kb/d), Iran (44 kb/d), Iraq (36 kb/d), and Kuwait (32 kb/d). Six OPEC members saw increases of less than 27 kb/d (total of 101 kb/d for that group of 6 nations). Only two OPEC nations had lower output in February with a total decrease of 19 kb/d.

In the chart below OPEC 13 crude and Russian C+C are shown, I expect that OPEC 13 crude plus Russian C + C will likely top out at about 40500 kb/d, if sanctions are not removed from Iran and Venezuela, potential future increase for OPEC 13 and Russia is about 1000 kb/d without Iranian sanctions relief. If Russia falters due to ongoing sanctions and cannot increase output from the February 2022 level, potential OPEC capacity is reduced to about 700 kb/d.

…click on the above link to read the rest of the article…

Watch: Oil Production Ship Explodes Off Nigeria’s Coast

February 4, 2022

Watch: Oil Production Ship Explodes Off Nigeria’s Coast

Nigeria could be facing an environmental disaster as a floating, production, storage, and offloading (FPSO) vessel “Trinity Spirit” carrying 2 million barrels of crude exploded off the coast, according to The Independent.

The incident occurred on Thursday morning at the Ukpokiti oil field off Nigeria’s coast. Shebah Exploration & Production Company Ltd (SEPCOL), the owner of the FPSO vessel, confirmed the incident. According to Reuters, it’s believed the ship had ten crew at the time of the explosion though no one has been accounted for.

Dramatic images of the incident have surfaced on social media and show the large vessel fully engulfed in flames. Bloomberg’s Javier Blas confirmed the explosion and published images of the burning ship.

Videos show a thick black column of smoke rising from the partially sunken vessel as concerns about an environmental disaster mount.

SEPCOL’s CEO, Ikemefuna Okafor, said an investigation is already underway to find the source of what caused the explosion. The exec said Chevron and support from local communities had assisted with fire and spill management operations.

“At this time, there are no reported fatalities, but we can confirm that there were ten crew men on board the vessel prior to the incident and we are prioritizing investigations with respect to their safety and security,” he said.

It’s not entirely clear how many barrels of oil were on the vessel during the explosion, but it can hold up to 2 million.

Brent futures slumped 1.34%, or about $1.20 per barrel, to $88.26 as traders ignored the developments off the coast of Nigeria and focused their attention on whether OPEC+ will increase supply.

Goldman Sachs Group Inc. expects brent to be over $100 as the latest six-week rally has been underpinned by soaring demand, shrinking stockpiles, and backwardation in the futures curve.

…click on the above link to read the rest of the article…

Oil Rally Fueled By OPEC Production Shortfall

January 29, 2022

Oil Rally Fueled By OPEC Production Shortfall

In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target
OPEC’s underproduction fuels speculation about the cartel’s ability to ramp up production
Morgan Stanley: global spare oil production capacity will shrink from 6.5 million bpd at the moment to just 2 million barrels daily by the middle of the year

That OPEC’s spare oil production capacity was a problem that was only going to get worse with time became clear last year when the first reports began to emerge that the cartel and its partners led by Russia are not adding as much oil to their monthly output as agreed. Now, the gap between commitment and output has deepened, adding fuel to an already strong price rally.

In December, OPEC+ added 253,000 barrels daily to its combined production falling well short of its 400,000-bpd target for yet another month in a growing row. Naturally, this fueled concern about the security of global supply amid forecasts from the International Energy Agency that oil demand is going to exceed pre-pandemic levels later this year.

This latest forecast could be confusing to many who follow the agency’s output. In December, the IEA said that oil demand growth was going to slow down this year. It also forecasted a possible oversupply on the oil market for the current quarter, citing the effect of the Omicron variant on fuel consumption and rising non-OPEC production.

To be fair, the agency noted the oversupply would materialize if several things happen, among them, Saudi Arabia and Russia pumping at record rates as “remaining OPEC+ cuts are fully unwound.” Yet it appears to have greatly underestimated the resilience and strength of demand. No wonder a lot of other forecasters are talking about oil reaching and topping $100 per barrel.

…click on the above link to read the rest of the article…

September Non-OPEC Oil Production Slips

January 16, 2022

September Non-OPEC Oil Production Slips

Below are a number of oil, crude plus condensate (C + C ), production charts for Non-OPEC countries created from data provided by the EIA’s International Energy Statistics and updated to September 2021. Information from other sources such as OPEC, the STEO and country specific sites such as Russia, Brazil, Norway and China is used to provide a short term outlook for future output and direction for a few countries and the world.

September Non-OPEC production declined by 44 kb/d to 48,482 kb/d. The biggest changes in production occurred in the US, -381 kb/d and Russia, +290 kb/d.

Using data from the January 2022 STEO, a projection for Non-OPEC oil output was made for the time period October 2021 to December 2023 (Red graph). Output is expected to reach 52,208 kb/d in December 2023, which is 291 kb/d lower than the December 2019 pre-covid peak of 52,499 kb/d.

Output in October is expected to rebound to 49,347 kb/d, an increase of 865 kb/d. The majority of the 865 kb/d increase will come from the recovery of US production in October, 651 kb/d, and close to 250 kb/d from OPEC.

Above are listed the world’s 11th largest Non-OPEC producers. The original criteria for inclusion in the table was that all of the countries produced more than 1,000 kb/d. The last two have currently fallen below 1,000 kb/d.

In September, these 11 countries produced 84.3% of the Non-OPEC output. On a YoY basis, Non-OPEC production increased by 1,689 kb/d while on a MoM basis production decreased by 44 kb/d to 48,482 kb/d. World YoY September output was up by 4,992 kb/d.

Production by Country

The EIA reported Brazil’s September production increased by 3 kb/d to 3,001 kb/d. According to this source, October output dropped by 223 kb/d to 2,778 kb/d in October and then rebounded to 2,852 kb/d in November. (Red Markers).

…click on the above link to read the rest of the article…

Oil Producers Aren’t Keeping Up With Demand, Causing Prices to Stay High

January 14, 2022

Oil Producers Aren’t Keeping Up With Demand, Causing Prices to Stay High

OPEC Plus, the United States and others have been slow to ramp up output, lagging production goals.

Credit…Brandon Thibodeaux for The New York Times

Nearly two years ago the world’s oil producers slammed on the brakes and drastically cut production as the pandemic gripped the world’s economies. The sharp pullback came with an implicit promise that as factories reopened and planes returned to the air, the oil industry would revive, too, gradually scaling up production to help economies return to prepandemic health.

It isn’t exactly turning out that way. Oil producers are finding it harder than expected to ramp up output. Members of the cartel OPEC Plus, which agreed to cut output by about 10 million barrels a day in early 2020, are routinely falling well short of their rising monthly production targets.

“In a lot of places, once output has been reduced, it is not easy to bring it back,” said Richard Bronze, the head of geopolitics at Energy Aspects, a London-based research firm.

Production in the United States, the world’s largest oil producer, has also been slow to recover from its one-million-barrel-a-day plummet in 2020, as companies and investors are wary of committing money amid climate change concerns and volatile prices. The Energy Information Administration forecasts that U.S. crude output in 2022, while rising, is likely to average half a million barrels a day below 2019 levels.

This global pattern of lagging production has helped push oil prices to seven-year highs, stoking inflation, which has become a political issue in the United States and elsewhere. Brent crude, the international standard, is close to $84 a barrel, while West Texas Intermediate, the American benchmark, is selling for close to $82.

…click on the above link to read the rest of the article…

Deep freeze disrupts crude flows in oil sands and Bakken shale

January 8, 2022

Deep freeze disrupts crude flows in oil sands and Bakken shale

A deep-freeze in Canada and Northern U.S. is disrupting oil flows, causing a surge in crude prices just as American stockpiles are declining.

With temperatures from North Dakota to Northern Alberta below zero Fahrenheit (-18 Celsius), TC Energy Corp.’s Keystone pipeline was shut on Tuesday before resuming later the next day. In North Dakota’s Bakken shale, production has started to succumb to the freeze, sending local crude prices to their highest since November. Canadian oil has also jumped.

The disruptions mean less supplies at a time when U.S. stockpiles have been shrinking every week since mid-November and getting closer to September’s three-year low. Drillers have been slow to restore output to pre-pandemic levels as they prioritize shareholder returns over growth. This further supports growing predictions that the oil market will return to a deficit this year, with some like Pioneer Natural Resources Co. Chief Executive Officer Scott Sheffield expecting oil to range from US$75 to US$100 a barrel.

Embedded Image

Even though Western Canada and North Dakota are usually cold this time of year, temperatures have been lower than usual.

Western Canadian Select crude’s discount to the U.S. benchmark has shrunk by almost US$3 dollars since Dec. 27, to US$12.10 per barrel on Wednesday.

Bakken crude in the Clearbrook, Minnesota, hub rose 90 cents a barrel in the past two days to reach a US$1.25 premium to Nymex futures Wednesday, a two-month high. The same grade traded this week in Wyoming at a premium to New York futures for the first time since Nov. 18.

Keystone carries 590,000 barrels a day of Canadian oil from Alberta to the U.S. Midwest.

Prior to resuming operations, TC Energy said that its staff have been challenged by extremely cold temperatures impacting the oil flow through its Hardisty terminal. Temperatures there fell to about -24 degrees Celsius (-11 Fahrenheit) on Wednesday afternoon.

Meanwhile, Enbridge Inc. said it was seeking crude supplies for its main pipeline system across Canada and U.S. to keep its pipes running at scheduled rates.

OPEC’s Joint Ministerial Monitoring Committee Is About To Begin: Here’s What To Expect

January 4, 2022

OPEC’s Joint Ministerial Monitoring Committee Is About To Begin: Here’s What To Expect

OPEC+ is expected to continue with its plan to increase its production quota 400k BPD
The Omicron variant impact is expected to be mild and short-lived, according to the JTC findings
The meeting is expected to be smooth, but the issue of underproduction by some states may cause some friction

OVERVIEW: Tuesday’s Joint Ministerial Monitoring Committee (JMMC) will start at 12:00GMT/07:00EST followed by the OPEC+ meeting at 13:00GMT/08:00EST. Delegates suggested OPEC+ is expected to maintain plans to increase its February output quota by 400k BPD. The Joint Technical Committee (JTC) reviewed market fundamentals and downplayed the demand impact from the Omicron variant. The meeting is expected to be straightforward, but the issue of underproduction by some states (amid maintenance and underinvestment) may cause some friction among producers.

DEMAND DEVELOPMENTS: The Omicron variant’s mild diagnosis so far has alleviated much of the initial fears seen in the earlier days of discovery. Some positive noises have also been emanating from some European countries – a Danish health chief remarked the Omicron variant is bringing about the end of the pandemic, whilst a German COVID expert suggested Omicron could take the pandemic into an endemic situation – more comparable to a common cold or flu. The UK and US meanwhile refrained from imposing much stricter measures, albeit China stands by its “zero-COVID” policy. Elsewhere, participants also keep the US winter storms on the radar impacting activity and potentially oil transit, whilst some airlines cancelled hundreds of flights amid the weather.

SUPPLY DEVELOPMENTS: Some OPEC+ members are struggling to meet their upped production quotas amid a mixture of maintenance, underinvestment and domestic unrest. The IEA last month suggested producers missed their targets by 730k BPD and 650k BPD respectively. Meanwhile, Libya – currently exempt from OPEC+ quotas – shuttered a further 200k BPD of production to fix a broken pipeline.

A Practical Exercise Suggestion for Peak Oil Sceptics

November 26, 2021

A Practical Exercise Suggestion for Peak Oil Sceptics

(Translated from Spanish by Amelia Burke, originally published in two parts.)

When someone calls into question the existance of a peak in the production (extraction) of a non-renewable resource, which oil is, you should invite them to study carefully the curves of the Energy Export Databrowser. This Databrowser is formed using data from British Petroleum’s annual energy statistics. If necessary, round off with the data from the Hallock et al. document ”Forecasting the limits to the availability and diversity of global conventional oil supply: Validation” (Energy 64, 2014, 130-153). Then ask them to explain why —if everything depends on our human ingenuity and anything is possible given the amount money which is put into it, and given the God of Technology— there are already 50 oil producing countries that have exceeded their peak of production and are carrying on downhill. That is, except (temporarily) the U.S.A., specialists in rooting around in the filth of shale, with lots of technology and fabricated money.

And for those in our still relatively comfortable country who begin to worry that there might be actually be a peak and wonder what it could mean and when we think it might happen, I would confront them with a vision which is not quite so eurocentric as the one we are used to. I would invite them, with those calculations at hand, to do a little adding up in order to try and clarify it for themselves, based on counting the number of post-peak producer countries. Let them try by themselves to sketch out a possible date for the peak, or a slightly undulating plateau perhaps. I would tell them that more than 50 oil producing countries are already in decline, visible decline or terminal oil-bearing decline. In other words, the when, is something now in the past for no less than 50 countries…

…click on the above link to read the rest of the article…

Pretty Please? US Trying To Persuade Russia To Lift Oil Output

November 25, 2021

Pretty Please? US Trying To Persuade Russia To Lift Oil Output

Interfax is reporting Thursday that the United States is urging Russia to raise oil output in order to lower global prices, following the Biden administration’s Tuesday announcement it plans release 50 million barrels of crude from the U.S. Strategic Petroleum Reserve, amid predictions of $100 oil.

“The US has been putting pressure on OPEC and its partners in recent weeks to raise oil output, overtures which have been rebuffed,” Bloomberg reports based on statements from the Russian Foreign Ministry indicating the ongoing US attempt to persuade Moscow.

“OPEC meets next week, and officials will be mulling whether to continue easing its output curbs by 400k BPD per month, or perhaps pause given nations of consumers will be releasing a total of 70-80mln barrels ahead,” the report notes.

Perhaps the Kremlin would be more willing to play nice at a moment Washington comes calling, hat in hand, if it weren’t subject of US sanctions against Russian officials and constant allegations of political ‘interference’ in the West, with Putin widely cast in American media as this decade’s big bad geopolitical bogeyman.

At the end of October Russian President Vladimir Putin hinted that the OPEC+ cartel might put out more barrels than was previously announced, but also noted “Not all countries are able to significantly raise oil production.”

“Currently, the OPEC+ countries are increasing production volumes, even slightly more than they agreed to do, but not everyone can do it. Not all oil-producing countries are able to quickly increase oil production. This is a long-term process, a long cycle,” Putin said at the time in front of the Valdai discussion forum.

He then took his familiar swipe at the European and Western hysteria and obsession with “going green”…

…click on the above link to read the rest of the article…

Why U.S. Shale Won’t Go To War With OPEC+

November 10, 2021

Why U.S. Shale Won’t Go To War With OPEC+

OPEC+ will be very happy with where oil prices currently are and is unlikely to change its course anytime soon
The U.S. does have the ability to increase production, but U.S. shale does not have support from either the government or shareholders to boost production significantly
The two bearish variables that could drag prices down in the near term are a strong dollar and the continuation of inventory builds

For years, the Kingdom of Saudi Arabia’s economy has suffered from low oil prices. Since 2014 when it increased supplies to try and break American shale producers, Saudi Arabia has had to struggle with a flooded market. Its cash reserves have been drawn down by hundreds of billions and it had to sell a small percentage of its prize asset, Saudi Aramco. At the same time, Saudi Arabia’s Vision 2030 plan fell behind in its lofty goals of diversifying its economy. I discussed this at some length in a prior Oilprice article. Now with the price of Brent – the benchmark against which Saudi Arabia prices its production – finally back above the $80 mark, the Kingdom is beginning to refill its coffers. So it was no great surprise when the Saudis and the Russians, the two principal members of the OPEC+ cartel, roundly rejected a demand from President Biden to increase production to ease the world’s energy crisis.

Up to this point, there had been some lingering concern on the part of OPEC+ that too high a price would reinvigorate the shale industry that had finally come to heel in early 2020. Restraint on the part of shale drillers since then has encouraged them that a new “war” for market share won’t be the result…

…click on the above link to read the rest of the article…

Peak oil, economic growth and the big lie

November 9, 2021

Peak oil, economic growth and the big lie

In the commentary on Peak Oil recently published in the leading scientific journal Nature, James Murray (the founding director of the University of Washington’s Program on Climate Change) and David King (the Director of the Smith School of Enterprise and the Environment, University of Oxford) made the following statement,

Historically, there has been a tight link between oil production and global economic growth. If oil production can’t grow, the implication is that the economy can’t grow either. This is such a frightening prospect that many have simply avoided considering it.

Why do we find the idea of the end of economic growth so frightening? The reason is what I call, ‘The Big Lie’.

The ‘Big Lie’ of our economic system is that anyone can get rich. Most of the world’s population will not see wealth in their lifetimes, either because of the circumstances of their birth, or because they chose the wrong career path, did not work or study hard enough or did not think it so important to pursue personal monetary gain.

However we all take comfort from the idea that it might be possible to improve our lot or even that, if we make the right choices, we could become rich. Most of us believe that anyone can become wealthy if they truly work hard enough for it. But in a world where finite resources are passing their peak extraction rates this is no longer true: if it ever was.

The great majority of people in our society do not understand economics. Judging by economists’ ability to predict the behaviour of the economy, most of them do not understand economics either. Yet, most people believe they understand the idea of economic growth, or at least the “growth” part. The end of growth does not sound positive.

…click on the above link to read the rest of the article…

Saudis Respond To Biden: Your Energy Crisis Isn’t Our Problem

November 5, 2021

Saudis Respond To Biden: Your Energy Crisis Isn’t Our Problem

US gas prices at the pump (national average) are at $3.421, having soared since President Biden was elected – much like they did when President Obama was elected – to some of the highest prices in history…

President Biden refuses to take any blame for this. Instead of realizing the climate-crisis-focused policies are impacting the fossil fuel supply chain before the replacements are ready to fill the void, he has blamed COVID and OPEC+ – driving America to be more dependent on foreign oil rather than increase production domestically.

“Oil is not the problem… The problem is the energy complex is going through havoc and hell.”

Of course, always wanting to signal their virtue and follow the narrative – and amid the farce that is COP26 – Democrats have decided that this is the right time to offer a bill that stops banks from financing fossil fuel plans.

Senators Edward Markey and Jeff Merkley introduced the bill which would would require the Federal Reserve to mandate that major banks stop the financing of projects that emit greenhouse gas emissions.

The legislation would prohibit financing of new or expanded fossil fuel projects by 2022 and prohibit the financing of all fossil fuel projects by 2030. It would also prohibit thermal coal financing by 2025.

Which, of course, will lead to less development, lower supply, and higher and higher prices…

…click on the above link to read the rest of the article…

Oil Jumps As Investors Expect Cartel To Balk At Biden’s Demands To Boost Output: OPEC+ Preview

November 4, 2021

Oil Jumps As Investors Expect Cartel To Balk At Biden’s Demands To Boost Output: OPEC+ Preview

OPEC+, which meets later Thursday via video conference, has shown little signs it plans to waver from its plan to raise oil production gradually, despite pressure from senile presidents and consuming nations to temper high prices.

The OPEC+ alliance’s plan is to raise output by 400k b/d each month to remove previous cutbacks. That’ll increase the collective December target for 20 nations to 40.094m b/d…

… and all analysts in a Nov. 2 Bloomberg survey expect OPEC+ to ratify that today

Meanwhile, overnight Bloomberg reported quoting delegates and diplomats, that the U.S. had asking OPEC+ to increase production in December by between 600k-800k b/d, between 50% and 100% higher than the planned increase. And since OPEC+ will throw up all over this proposal – previously, both the Iraqi (Oct. 30) and Nigerian (Oct. 25) ministers said the planned 400k b/d increase is enough – the report noted that the US will accept the minimum 400k b/d increase if it comes with a pledge for other OPEC+ members to compensate if some fall short. Earlier this week we learned that OPEC delivered only about half of its October output increase as Angola and Nigeria struggled to pump more.

Sepratately, the U.S. and other consuming nations could potentially release oil from government- strategic stockpiles if they deem it an emergency, although such a move would hardly look prudent at a time when the entire world is pretending to care about the environment.

Going back to today’s OPEC+ meeting, Saudi Arabia cautioned that the coronavirus pandemic, which caused demand to plunge in 2020, is not yet over, while Iran has emerged as another variable: with nuclear talks due to resume Nov. 29, there’s a growing possibility of an eventual lifting of U.S. sanctions, potentially unleashing more than 1m b/d of crude for export on global markets.

…click on the above link to read the rest of the article…

Biden says he worries that cutting oil production too fast will hurt working people

November 1, 2021

Biden says he worries that cutting oil production too fast will hurt working people

President Biden spent three days in Rome talking to world leaders before and during the G-20. He held a formal press conference before heading to the UN climate summit in Glasgow.

Brendan Smialowski/AFP via Getty Images

President Biden said on Sunday that the world can’t immediately stop using oil and said OPEC and Russia need to pump more of it, even as he pushes the world to pledge to cut climate-changing carbon emissions at the Glasgow climate summit this week.

After three days of meeting with world leaders in Rome, where he attended the G-20 summit, Biden said he is worried that surging energy costs are hurting working class families.

“On the surface it seems like an irony,” Biden said of simultaneously calling on major oil producers to pump more as he heads to the COP26 climate change summit. “But the truth of the matter is … everyone knows that idea that we’re going to be able to move to renewable energy overnight … it’s just not rational,” he said.

Biden said the idea that Russia, Saudi Arabia and other producers are holding back to boost prices “is not right.” With gas prices averaging $3.40 a gallon in the US, according to AAA, Biden said families are feeling it.

“It has profound impact on working class families just to get back and forth to work,” Biden said. He talked about the issue with other major oil-consuming countries at the G-20, but told reporters he was reluctant to reveal any of their plans to spur producers to pump more.

White House Putting Pressure on OPEC to Increase Oil Production Amid ‘Supply Issues,’ Rising Energy Prices

October 28, 2021

An oil pump jack pumps oil in a field near Calgary, Alberta, Canada, on July 21, 2014. (Todd Korol/Reuters)

EXECUTIVE BRANCH

White House Putting Pressure on OPEC to Increase Oil Production Amid ‘Supply Issues,’ Rising Energy Prices

The White House on Tuesday promised to put pressure on members of the Organization of the Petroleum Exporting Countries (OPEC) to increase production amid declining supplies and rising energy prices.

Press secretary Jen Psaki told reports at a press briefing that the president is “mindful” of the increased prices consumers are facing when it comes to their energy bills and that he “reserves a range of options,” to combat the situation.

Psaki said the administration is focusing on raising its concern with “supply issues as it relates to oil” on the international stage.

“There’s a power of the president of the United States engaging on that front,” she said. “That issue has been raised at [national security adviser Jake Sullivan’s] level, at a range of levels throughout government, but certainly the supply … and putting additional pressure on OPEC is something that certainly our national security team will continue to do.”

The administration is “concerned” over the high gas prices and has asked the Federal Trade Commission (FTC) to investigate the matter, Psaki said.

“I will also note that as it relates to gas prices, we remain concerned about trends we have seen where even as supply has increased at times over the last several months, we’ve still seen heightened prices,” she said. “We’ve asked the FTC to look into that.”

Jerry Simmons, president of the Domestic Energy Producer Alliance (DEPA), has blamed Biden administration policies for hindering U.S. oil and gas companies from producing energy commodities, and securing American energy independence and lower prices for American families.

…click on the above link to read the rest of the article…

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