Is The $110 Trillion Renewable Revolution Feasible? (30 April 2020): By Alan Mammoser - A new report from the International Renewable Energy Agency (IRENA) show that, to save the planet, a massive transformation of the world’s energy system will need to occur, in which a large-scale shift to renewables and new carbon-free fuels is accompanied by a precipitous decline of hydrocarbons. The report gives solid numbers on what the world will look like in 2050 if the goals of the Paris Climate Accord are achieved. In Global Renewables Outlook 2050, the Abu Dhabi-based agency builds on its earlier Global Energy Transformation: A Roadmap to 2050 reports, which were published during the past two years. These keystone reports, which provide an overall vision for IRENA’s efforts, give global and large regional views of a new energy landscape in which nations successfully tackle the climate challenge. (Source: Oil Price)
Russia Calls For Market Share Target For OPEC+ (29 April 2020): By Tsvetana Paraskova - It would make sense for the OPEC+ coalition of oil producers to begin monitoring the group’s market share to measure how effective the OPEC+ actions are, Russian Energy Minister Alexander Novak told news agency Interfax in an interview published on Wednesday. Asked to comment on an idea of Gazprom Neft’s chief executive Alexander Dyukov that OPEC+ should switch its gauge for effectiveness of the deal by looking into the market shares of the countries part of the coalition, Novak said: “Generally, it will be necessary to track indicators such as inventories, supply, and demand, but then it also makes sense to switch to targeting market share which belongs to OPEC+ considering the rise in global demand.” (Source: Oil Price)
Brent Oil Price Could Double By December (28 April 2020): By Tom Kool - WTI is witnessing wild price swings as U.S. producers send their crude to the Strategic Petroleum Reserve because commercial storage tanks are close to reaching capacity. Oilprice.com’s Michael Kern has warned of the possibility of negative oil prices later this month, saying that the reopening of the U.S. economy will prove crucial for crude consumption, and that ‘’If the reopening doesn't go as planned, however, it could lead to even more devastation, and in turn, even more downward pressure on oil prices.’’ While many analysts now predict Q2 crude demand to fall by up to 30 million bpd, some other analysts think we may have already seen the worst. EIA data last week (Weekly Petroleum Status Report April 22nd) showed a stabilization in the consumption of petroleum products, and as the U.S., Europe, and China are relaxing coronavirus measures, the demand for oil products is expected to slowly recover during the month of May. (Source: Oil Price)
South Korea Has Run Out Of Oil Storage (27 April 2010): By Tsvetana Paraskova - South Korea, the country with the fourth-largest commercial storage capacity in Asia, has just run out of room to store more oil, sources familiar with the matter told Bloomberg on Monday, as available storage capacity everywhere in the world in shrinking fast amid the demand collapse. South Korea’s total commercial storage capacity on land, at around 38 million barrels, is fully booked, Bloomberg’s sources say, while storage capacity is also depleting fast in India, a key oil consumer in Asia and the world’s third-largest importer of crude oil. While South Korea’s land storage capacity has been filled up, the Singapore Strait is full of tankers carrying fuel as demand has slumped and as land storage in the region has diminished, analysts and analytics firm tell Bloomberg. (Source: Oil Price)
Could Low Oil Prices Spark A New War In The Middle East? (26 April 2020): By Haley Zaremba - It may seem that the worst-case scenario has already come to pass, as United States crude prices plunged far below zero on Monday, with the West Texas Intermediate crude benchmark closing out the day at negative $37.63 per barrel and the international Brent Crude benchmark hitting an 18-year low. While oil prices have since recovered considerably, however, many industry experts say that it’s more than likely that we haven’t seen the worst of it yet. The problems that drove oil prices so low to begin with still persist. It all began with a drop in oil demand as the novel coronavirus epidemic turned into a pandemic as it spread around the globe, shutting down major economic sectors and supply chains. When Russia and Saudi Arabia, the leading members of OPEC+, met to strategize, however, the talks turned sour and quickly devolved into an all-out oil price war and an oil glut of a whopping 10 million barrels of oversupply per day. When the oversupply threatened to exceed available storage, owning oil became a liability, and oil prices plunged below zero in the U.S. (Source: Oil Price)
Iran Reaches Production Milestone At World’s Largest Gas Field (25 April 2020): By Simon Watkins - Reaching natural gas production of one billion cubic metres per day (Bcm/d) has been one of the three core hydrocarbons resource strategies of Iran since the Islamic Republic began to seriously develop the supergiant South Pars non-associated gas field in 1990, alongside producing 5.7 million barrels per day (bpd) of oil and building out a world-class petrochemicals sector. As highlighted by OilPrice.com, Iran is currently working quietly towards the oil output and petchems sector targets, but it also announced last week that it is finally to achieve its monumental and long-awaited gas production target this Iranian calendar year (ending on 20 March 2021). At the same time, it also announced that its flagship Persian Gulf Star Refinery (PGSR) – essential to Iran’s new-found gasoline self-sufficiency – is ramping up its refining capacity. (Source: Oil Price)
Goldman Sachs Expects Another Oil Price Crash (24 April 2020): While it may be tempting to argue that the worst is behind us for oil price given the historic collapse in WTI which crashed to negative $40 on Monday as holders of May WTI futures panicked to sell their holdings at any price - even paying the "buyer" for taking possession of the deliverable barrels - Goldman's chief commodity strategist Jeffrey Currie reminds us that it is important to remember that unlike bonds and stocks, "commodities are spot assets, not anticipatory assets and must clear current supply and demand, which still remain extremely out of balance in all markets." (Source: Oil Price)
Saudi Arabia To Take On Billions In Debt To Survive The Oil Price Crisis (23 April 2020): By Irina Slav - Saudi Arabia may have to borrow as much as $58 billion this year to cover a budget shortfall caused by the oil price slump, Bloomberg reports, citing Finance Minister Mohammed al-Jadaan. Al-Jadaan told media this week that the Kingdom might issue bonds worth $26.57 billion (100 billion riyals) this year in addition to an earlier issue of $31.88 billion (120 billion riyals) worth of debt. Saudi Aramco, for its part, is considering a $10 billion sale in part of its pipeline business, Bloomberg reported on Thursday. “The kingdom went through similar crises in its history – maybe even worse – and was able to pass through them,” Al-Jadaan said. “This is not an exception.” (Source: Oil Price)
How Much Longer Will Indian Oil Demand Slump? (22 April 2020): By Viktor Katona - Merely a month ago India was perceived as one of the main potential winners of the oil price slump – with Middle Eastern differentials dropping beyond any reasonable level, its refiners were bound to print money with its massive downstream capacities. Now India is on the brink of becoming one of the key contributors to the price weakness. Local hydrocarbon production is ailing as oil is still to surpass the breakeven cost of Indian output that currently hovers around $35-37 per barrel. India’s downstream is struggling to stay relevant with the government-mandated lockdown that has minimized demand for refined products and compounded refiners’ access to labor with the nationwide movement restrictions. (Source: Oil Price)
China Refines More Oil Than The U.S. For The First Time Ever (21 April 2020): By Tsvetana Paraskova - The unprecedented situation on the oil market these days has led to yet another industry first. For the first time ever, Chinese refinery throughput has surpassed refinery crude processing in the United States as China emerges from the lockdown. At the same time, U.S. fuel demand continues to plummet amid lockdowns in many states. According to the chart below by OilX, Chinese refiners are cranking up runs as the country emerges from the two-month-long lockdown. In contrast, refinery runs at U.S. refineries are plummeting, to the point that China is currently processing more crude oil at its refineries than the world’s top oil consumer, the United States. (Source: Oil Price)
Oil Prices Hit $1 Following A 90% Crash (20 April 2020): By Josh Owens - For decades, oil bears have made grand claims about oil prices crashing to $1. It was never really a claim that industry professionals would take seriously, with most observers viewing it either as fear-mongering or hyperbole. On Monday the 20th of April 2020, WTI front-month contracts fell to the $1 handle. When you take into account both inflation and global breakeven prices – this truly is a historic day for oil. While some producers around the world - Saudi Arabia most notably - may claim to be able to produce oil at this price, the true breakeven price for every IOC and NOC globally is significantly above $1 and generally accepted to be $50+. Some analysts have been calling for sub-$10 prices since the OPEC+ meeting was first announced. The fundamentals, they argued, were outside of the control of any oil cartel. Now, with no end in sight for the near-global quarantine caused by COVID-19 and oil storage nearing capacity, demand has all but dried up. (Source: Oil Price)
Qatar And Russia Fight For LNG Supremacy As Prices Fall To Historic Lows (19 April 2020): By Viktor Katona - The 2020 drastic oil price drop, induced by the ever-frightening coronavirus and the Saudi-Russian spat, has ravaged business interests all across the world. US oil producers are facing a new reality – instead of a seemingly watertight growth trajectory, 2020 will most probably witness a decline in annual oil output by some 0.5mbpd, to the level of 11.76mbpd if one is to believe the last EIA forecast. Small and medium-sized US producers are bracing for a series of bankruptcies, the ones with more robust political connections are trying to salvage a deal that would provide some hope for a quick price hike, all the while the majors are cutting CAPEX and postponing major investments. Yet it is not only oil producers who should brace for a tiny revolution – LNG exporters will be the next in line, as can be judged from the current state of things in Europe. (Source: Oil Price)
The Oil Sector That Will Suffer The Most (17 April): By Editorial Dept - Oilfield service providers continue to be hit hard. Having suffered during the last oil price crisis, it looks like this group will not be spared this time around either. Baker Hughes booked a $15 billion in non-cash goodwill impairment for Q1, and is expected to cut its 2020 capex by 20%. Schlumberger has furloughed employees, cut executive salaries by 20%, cut its dividend by ¾, and booked an $8.5 billion impairment charge. Halliburton has cut 600 layoffs in Texas and Oklahoma. Weir Group expects to see a reduction in exploration and development capital expenditure of 30%. All the same, the Saudis enjoyed a quadrupling of oil exports to the United States, amid an oil price war, from February to the first half of April. The US imported 1.46 million bpd of Saudi oil in the first two weeks of April. (Source: Oil Price)
Storage Fears Drive Oil Below $18 (17 April 2020): By Tom Kool - Fears of global crude storage hitting capacity are now dominating markets, sending oil prices falling towards $15. WTI fell below $18 per barrel in early trading on Friday, as a deepening gloom swept over the market. China reported a contraction in GDP of 6.8 percent for the first quarter. OPEC affirmed in its Oil Market Report that demand would fall by 6.9 mb/d this year. Storage fears are now beginning to dominate market sentiment. U.S. DOE considers paying drillers not to drill. In the latest scheme to prop up indebted shale drillers, the U.S. Department of Energy is reportedly considering paying oil and gas companies to keep their reserves undrilled. The idea seems farfetched, and is based on the notion that undeveloped projects would act as “storage.” The reserves could be drilled later and sold later, with proceeds going to the government. The proposal would require appropriations from Congress. (Source: Oil Price)
Shell Looks To Become Net Zero Energy Company By 2050 (16 April 2020): By Tsvetana Paraskova - Oil supermajor Shell announced on Thursday its ambition to become a net-zero emissions energy business by 2050 at the latest, joining other majors such as BP and Eni in unveiling plans to curb carbon emissions. Shell will be working with its customers to address the emissions which are produced when they use the fuels they buy from Shell, the supermajor said. “Society’s expectations have shifted quickly in the debate around climate change. Shell now needs to go further with our own ambitions, which is why we aim to be a net-zero emissions energy business by 2050 or sooner. Society, and our customers, expect nothing less,” Shell’s chief executive Ben van Beurden said, adding that even at the times of immediate challenge such as the COVID-19 pandemic, the company should not lose focus on the long term. (Source: Oil Price)
Saudi Energy Minister: Global Oil Cuts Could Reach 20 Million Bpd (15 April 2020): By Irina Slav - Global oil production cuts could end up rising to 20 million bpd, including forced reduction of output such as already underway in the United States, the Saudi Energy Minister, Abdulaziz bin Salman, told the Financial Times. “If prices stay within the border of $35-$40 a barrel . . . I wouldn’t be surprised if natural declines are even more severe as we move into the next few months,” Saudi Energy Minister, Abdulaziz bin Salman, said. (Source: Oil Price)
Saudi Arabia Claims The U.S. Was Not Their Target In The Oil War (14 April 2020): By Tsvetana Paraskova - Saudi Arabia did not intend for U.S. oil producers to suffer, Saudi Energy Minister, Prince Abdulaziz bin Salman, said in an interview with a select group of reporters, including Energy Intelligence’s Amena Bakr. “I made it clear that it was not on our radar or our intention to create any type of damage to their industry. My belief is that once this market stabilizes, and given the nature of shale oil and the shale industry, that they will be able to recover as the market recovers, as the world economy recovers. So I have no single doubt in the mind that in the future, they will rise again from the ashes and thrive and prosper,” the Saudi minister told reporters in the phone interview published by Energy Intelligence on Tuesday. Saudi Arabia is looking forward to a time when U.S. producers thrive once again in a market with higher oil demand, Abdulaziz bin Salman said. (Source: Oil Price)
Is Saudi Arabia Restarting The Oil War? (13 April 2020): By Tsvetana Paraskova - Saudi Arabia’s oil giant Aramco has just announced the pricing for its oil for May, with deeper discounts for customers in Asia for the second month in a row, despite Sunday’s historic global production cut deal. Aramco has delayed the announcement of its official selling prices (OSPs) for May several times in the past few days while producers were trying to unlock the ‘Mexican standoff’ in the talks on a 10-million-bpd production cut deal. After the deal was sealed on Sunday, Saudi Arabia’s state oil giant said on Monday that it would be cutting the price of its flagship Arab Light crude grade to Asia by another US$4.20 per barrel compared to April, to a discount of US$7.30 a barrel to the Oman/Dubai benchmark average, documents seen by Reuters showed. (Source: Oil Price)
Oil Price War Claims Another Victim (12 April 2020): By Alex Kimani - The oil price war has already claimed its first victim. Whiting Petroleum Corp. (NYSE: WLL), once the largest oil and gas producer in North Dakota's Bakken Shale, has filed for Chapter 11 bankruptcy becoming the first major shale producer to do so in the current year. Whiting has cited the "severe downturn" in oil and gas prices courtesy of the Saudi Arabia-Russia oil price war and COVID-19-related impact on demand. But this shale producer has no plans to go into a state of suspended animation: Whiting has announced that it will go ahead with full production claiming it has ample liquidity with $585M of cash on its balance sheet and has reached an agreement in principle with certain noteholders for a comprehensive restructuring. In short, Whiting’s playbook is to buy more time hoping for a rebound in energy prices to bail it out. (Source: Oil Price)
The Reality Of The End Of Oil (11 April 2020): By Robert Rapier - The Oil Age has powered the world for well over a century. There have been two general schools of thought about how it will ultimately end. There were those who believed that oil production would peak and begin to decline in the face of high global demand. This is essentially the peak oil argument, which many laymen mistakenly understand as “The world is running out of oil.” In reality, the argument wasn’t that the world was going to run out of oil, it was that oil production would begin a long decline and cause havoc in a world that is still highly dependent upon oil. This version of the end of oil became very popular just before the shale oil boom. The idea was neatly summarized in 2005 when the late Matt Simmons published Twilight in the Desert, in which he argued that oil production in Saudi Arabia was nearing terminal decline. In this version, there is no easy replacement for oil, so oil prices skyrocket above $100 a barrel (bbl) as people seek to maintain mobility. In fact, for a while it looked like this version might play out. But growing shale oil production largely burst that bubble in 2014, when it became clear that there was still a lot of oil to be produced. Fast forward a few years, and a new version of the end of oil began to take hold. In this version, exponential increases in electric vehicles (EVs) and ride-sharing are predicted to be two key factors that will make oil obsolete. (Source: Oil Price)
Trump Strikes Deal With Mexico To Help Cut Oil Production In OPEC+ Deal (10 April 2020): By Tsvetana Paraskova - The United States is ready to help Mexico reach its production cut quota as part of the tentative OPEC+ deal, Mexico’s President Andres Manuel Lopez Obrador said on Friday, while the global pact to reduce production was in a kind of Mexican standoff early on Friday as Mexico was still balking at the large cuts it is asked to make. Lopez Obrador spoke with U.S. President Donald Trump on Thursday and the United States agreed to cut 250,000 bpd for Mexico to help it reach the 400,000-bpd cut OPEC+ is asking of it, the Mexican president said at a news conference on Friday, noting that he had informed OPEC+ of this development. (Source: Oil Price)
Mexico Rejects Global Plan To Cut Oil Production (9 April 2020): By Irina Slav - The deadly price war and coronavirus cocktail that threw most of the global industry into a panic seems to have missed one of the large national players: Mexico’s Pemex. While others are already cutting sizeable chunks of their planned spending, idling rigs, and revising drilling plans, Pemex is sticking with its plan to boost production. The Mexican state oil company has been fighting a consistent decline in oil production for years now and seems bent on turning things around despite the oil price crash. President Andres Manuel Lopez Obrador, after all, promised that Mexico’s oil output would hit 2.5 million bpd by 2024, the end of his term in office. The promise was made long before the surprise industry collapse that no one could anticipate, and it is noteworthy that Pemex has not changed its priorities. (Source: Oil Price)
Oil Spikes After Algeria Says OPEC+ Cuts Could Reach 10 Million Bpd (8 April 2020): By Julianne Geiger - The price of a West Texas Intermediate barrel of oil shot up on Wednesday afternoon by nearly 7% shortly after OPEC’s President gave the market fresh optimism about tomorrow’s virtual OPEC++ meeting. “The meeting will undoubtably be fruitful in order to rebalance the market through measures we will take tomorrow,” Mohamed Arkab, OPEC’s President and Algeria’s Energy Minister told state news agency APS, according to Reuters. While an intangible statement, the optimistic words spoken by the OPEC President seem to be just what the doctor ordered for the volatile markets as speculators try to make the most out of the oil-price plunge. As a result of today’s spike, trading of the biggest oil ETF, the United States Oil Fund (USO), had been halted temporarily. Trading of the USO has since resumed. The USO is trading up 4.03% as of 3:03pm EDT. (Source: Oil Price)
Exxon Cuts Spending By $10 Billion As Oil Prices Collapse (7 April 2020): By Tsvetana Paraskova - ExxonMobil is axing capital expenditure for this year by $10 billion, quantifying on Tuesday the capex cuts it announced last month in response to the oil demand and oil price collapse. The most significant reductions will take place in the Permian Basin. Shortly after the price of oil collapsed in early March, Exxon said that it was looking to “significantly reduce spending as a result of market conditions caused by the COVID-19 pandemic and commodity price decreases.” On Tuesday, the U.S. supermajor quantified this ‘significant reduction,’ saying that its capital investments for 2020 are now expected to be 30 percent lower, at around $23 billion, down from the previously announced capex of some $33 billion. Exxon will also cut its cash operating expenses by 15 percent, driven by deliberate actions to increase efficiencies and reduce costs. (Source: Oil Price)
Superpowers Clash Ahead Of Most Important Oil Meeting Ever (6 March 2020): By Tsvetana Paraskova - Russia is ready to hold constructive talks aimed at stabilizing the oil market, and those talks don’t have alternative, Vladimir Putin’s press secretary Dmitry Peskov said on Sunday. Russia did not support the end of the OPEC+ deal, Peskov told Russian television channel Rossiya 24 on Sunday. President Putin and Russia as a whole are inclined to take part in a constructive negotiation process –which doesn’t have alternative right now – to stabilize the international energy market, Peskov added. Saudi Arabia, Russia, and many other oil producers were set to video-meet on Monday to discuss ways of supporting collapsing oil prices by potentially cutting 10 million bpd, or even 15 million bpd, of global oil production. Over the weekend, however, Saudi Arabia and Russia traded accusations, claiming that the other was the reason the OPEC+ pact collapsed last month, widening the rift between the two former allies and leading to a postponement of the Monday meeting to Thursday, April 9. (Source: Oil Price)
Big Oil Raises Debt To Ride Out Price Crash (5 April 2020): By Tsvetana Paraskova - As prices crashed, the supermajors resorted to one of the last tools they have before starting to potentially consider the painful idea of cutting dividends, taking on more debt. International oil majors reacted within days to one of the biggest and fastest oil price collapses in recent history. All slashed capital expenditure (capex) guidance, vowed to reduce operating costs, and suspended share buybacks. But that wasn’t enough. So the supermajors resorted to one of the last tools they have before starting to potentially consider the painful idea of cutting dividends. This tool is tapping the bond markets for money to plug cash shortfalls at $30 oil. (Source: Oil Price)
IEA: OPEC Can’t Save The Oil Market (3 April 2020): Even if the OPEC+ group and other major oil producers in the world were to agree to deep production cuts, they would be unable to prevent what is sure to be an enormous global inventory build this quarter due to unprecedented demand destruction, Fatih Birol, Executive Director of the International Energy Agency (IEA), told Reuters on Friday. The measures many countries have taken to try to flatten the curve of the coronavirus pandemic are destroying unprecedented volumes of oil demand as more than 3 billion people—from India to Europe to the United States—remain in lockdown. (Source: Oil Price)
China's Plan To Capitalize On The Oil Price War (3 April 2020): By Haley Zaremba - China is hurting. The entire global economy has taken a huge hit from the spread of the coronavirus, but so far none have been hit as hard as China, where the COVID-19 pandemic originated. The world’s second-largest economy came to a grinding halt back in January, leading to a historic economic slump for the nation that has seen nothing but growth in recent years. Last month Business Day reported that “China suffered an even deeper slump than analysts feared at the start of the year” as “industrial output plunged 13.5% in January and February from a year earlier, retail sales fell 20.5%, and fixed-asset investment dropped 24.5%. The unemployment rate jumped to a record 6.2% in February, when the outbreak worsened and much of the economy was shut down.” (Source: Oil Price)
What Happens If The World Runs Out Of Oil Storage? (2 April 2020): By Irina Slav - It was only a matter of time, really. With demand decimated by the coronavirus and Saudi Arabia on the oil warpath, the imbalance between oil supply and demand deepened dramatically, raising the question of what happens when the world's oil tanks and tankers fill up. The answer? Nothing good. Earlier this month, oil data analytics firm OilX warned that oil in storage around the world could reach 1 billion barrels before long. This week, Reuters quoted shipping industry sources as saying that as much as 80 million barrels of oil are hanging out in floating storage. OilX has calculated that this oil in floating storage could be even more, at some 100 million barrels. (Source: Oil Price)
Who Is Really Responsible For The Oil Price War (1 April 2020): By Fares Kilzie - At the end of March, Urals spot prices in northwestern Europe fell below $15 per barrel, a huge drop from the end of February when Urals spot prices had exceeded $50. Many observers attributed such a strong price collapse to the breakdown of the OPEC+ deal, and they blamed Russia for the suspension of the agreement. The breakdown of the agreement, however, was inevitable from the moment the OPEC+ deal was first signed in 2016. Russia agreed to cooperate with a very weak OPEC in order to salvage the balance of the market as well as to better its own economic status by raising revenues and achieving price stability for all members of the deal. In the end, Russia accomplished these goals. A decrease in production led to an increase in oil prices. From 2016 to 2018, the average annual price of a barrel of Brent rose from $44.1 to $71.1, according to the World Bank, and the Russian budget deficit (3.7 percent Of GDP in 2016, according to IHS) was replaced by a surplus (2.8 percent of GDP in 2018). (Source: Oil Price)