Latest news with #OpecPlus
The National
a day ago
- Business
- The National
Opec+ agrees another accelerated oil output for July
Opec+ has agreed to maintain its monthly oil output of 411,000 barrels per day for July, as it boosts supply amid trade tension-induced economic uncertainty. Analysts say the move is a possible gesture to appease US President Donald Trump's desire for lower crude prices. The hike marks the third consecutive month that the group, led by Saudi Arabia and Russia, will raise production at the same level, Opec+ said in a statement following a virtual meeting on Saturday. The decision was "in view of a steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories", the group said. Opec+ noted that gradual increases may be paused or reversed "subject to evolving market conditions", giving them the "flexibility will allow the group to continue to support oil market stability". The accelerated unwinding of Opec+'s own restriction programme is expected to boost the market's supply surplus into the second half of 2025 "when demand prospects are fragilised by trade tensions", Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, told The National. Mr Trump, meanwhile, has repeatedly called for lower oil prices to boost the domestic US oil industry. "We don't yet know if Opec+'s latest moves are to please Mr Trump or to [align] certain members" with the group's quotas, Ms Ozkardeskaya said. "Yet the rising supply will likely continue to apply negative pressure on prices – unless there is a sudden shift in the tariff picture like ruling of the tariffs." Oil prices started 2025 strongly. The closing price of Brent, the benchmark for two thirds of the world's oil, peaked at more than $82 a barrel on January 15, while West Texas Intermediate, the gauge that tracks US crude, hit almost $79 per barrel also on that day. However, crude prices have since waffled and have been particularly jolted by Mr Trump's sweeping global tariffs that he announced on April 2, which have disrupted stock markets and reignited fears of a global recession, especially as US trade partners – most notably China – unleashed retaliatory levies. Since then, Brent and WTI have slipped more than 16 per cent and 15 per cent, respectively, and the uncertainty surrounding Mr Trump's flip-flopping over his tariff policies have put pressure on oil prices. In March, Opec+ said it would proceed with a 'gradual and flexible' unwinding of voluntary production cuts of 2.2 million bpd starting in April, adding 138,000 bpd per month until September 2026. The planned return of production cuts – originally made by eight Opec+ members, including Saudi Arabia, Russia, the UAE and Iraq, in November 2023 – had been pushed back several times amid concerns about growing supply in the market. In March, the alliance released a new schedule for seven member nations to make further oil output cuts to compensate for exceeding their quotas. The plan includes monthly cuts ranging from 189,000 bpd to 435,000 bpd, with the reductions scheduled to last until June 2026. Opec has been losing global market share in recent years. In 2024, their output was less than 27 million bpd, down from 30 million bpd a decade ago and after having peaked of 34 million bpd in 2016. "In addition to trying to enforce stronger discipline within the group, Opec sees [increasing output] as a good opportunity to place pressure on higher cost oil producers, including US shale, and win back some market share," analysts at Jadwa Investment said. "This policy has the added benefit of bolstering good relations with the US given President Trump's stated desire for lower oil prices to bring down inflation in the US and force a diplomatic solution to the Russia-Ukraine war." How Opec+ policy evolves during 2025 will largely depend on internal compliance issues and the broader developments in the oil market, with hikes seen to scale down should global crude inventories start to build up, they added. The UAE's Minister of Energy and Infrastructure, Suhail Al Mazrouei, this week said Opec+ should be 'mindful' about oil demand, and that the group is 'doing their best' to balance the market and ensure there is enough investment into the supply. Mr Al Mazrouei's comments are "constructive", said Giovanni Staunovo, a strategist at Swiss bank UBS. "Opec+ crude exports are stable versus April, suggesting higher compliance and domestic demand keeps exports in check," the told The National. At its ministerial meeting on Wednesday, Opec reiterated its "continued commitment ... to achieve and sustain a stable oil market".
South China Morning Post
a day ago
- Business
- South China Morning Post
Opec+ agrees on sharp increase in July oil production to deepen price slump
Opec+ has agreed to surge oil output by 411,000 barrels a day for the third month in a row, doubling down on a historic policy shift that has sent crude prices sinking. Advertisement Key nations led by Saudi Arabia agreed during a video conference on Saturday to add that amount to the market in July, according to delegates. The surge follows equally sized increases scheduled for May and June, marking a clear break with years of efforts by the group to support global oil prices. 'Opec+ isn't whispering any more,' said Jorge Leon, an analyst at Rystad Energy A/S, who previously worked at the Opec secretariat. 'May hinted, June spoke clearly, and July came with a megaphone.' In a statement issued after the meeting, Opec+ cited a 'steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories' as its reasoning for the July increase. While there was ultimately a consensus for the July increase, some members expressed reservations. During Saturday's discussions, Russia was among members that recommended a pause in the supply increases, delegates said, asking not to be named because the information was private. Advertisement Oil briefly crashed to a four-year low under US$60 a barrel in April after the Organization of the Petroleum Exporting Countries (Opec) and its allies first announced that they would bolster output by triple the scheduled amount, even as faltering demand and President Donald Trump's trade war were already crushing the market.
The National
2 days ago
- Business
- The National
Oil prices head for second weekly drop ahead of Opec+ output decision on Saturday
Oil prices slipped on Friday and are heading for their second weekly decline as the Opec+ alliance prepares for its meeting this weekend, where it is expected to announce its third major output increase. Brent, the benchmark for two thirds of the world's crude, fell 0.31 per cent to $63.95 per barrel on Friday at 9.32am UAE time. West Texas Intermediate, the gauge that tracks US crude, also dropped 0.31 per cent to $60.75. The Brent benchmark posted a weekly loss of 1.28 per cent, while WTI dropped 1.3 per cent for the week. So far this year, the Brent benchmark has retreated by 12.7 per cent, while WTI has declined by 15.3 per cent. Concerns about a global economic slowdown due to US President Donald Trump's tariffs on trade partners, and retaliatory measures, have put pressure on oil prices. The oil alliance's meeting on Saturday to decide on July's production levels comes amid global trade tensions that have cooled demand prospects, analysts say. "The group is expected to bring an additional 411,000 barrels per day to the market starting in July, about 1 per cent of current production, citing rising demand as official justification," said Ipek Ozkardeskaya, a senior analyst at Swissquote Bank. Opec may be trying to 'appease Trump' or encourage some member states who were non-compliant in the past to abide by the quotas, she said. "Whatever the rationale, if trade tensions persist, the rising supply could send oil prices meaningfully lower." Looking ahead to the rest of the year, a drop of another $10 per barrel in the second half "can't be ruled out", Ms Ozkardeskaya added. The V8 (voluntary eight) Opec+ group still sees room for the market to absorb additional barrels, said Giovanni Staunovo, strategist at UBS Switzerland. "Higher temperatures require more oil to generate power to cool buildings, the Hajj pilgrims will further support travel demand, but also sanctions weighing on exports from Venezuela drive demand for barrels from the Middle East," he added. Despite the 411,000 bpd quota increase for May, Opec+ crude exports are stable compared with April, suggesting "higher compliance and domestic demand keep exports in check", he added. Earlier this week, the UAE's Minister of Energy and Infrastructure Suhail Al Mazrouei said that, despite a growing focus on renewable energy, Opec+ should be 'mindful' about oil demand. The oil group, led by Saudi Arabia and Russia, is 'doing its best' to balance the market and ensure there is enough investment into supply, he said. 'If this group was not there, there will be chaos … you will be seeing shocks and that is not good news for consumers,' the minister added.
Times of Oman
3 days ago
- Business
- Times of Oman
Opec+ agree to establish mechanism setting production baselines
London: The Opec+ alliance, in its 39th ministerial meeting, agreed to establish a mechanism to assess maximum sustainable production capacity, which will serve as a reference for production levels in the year 2027, while maintaining current production levels through the end of December 2026. Opec+ has been discussing new baseline production levels for years. These baselines are used by each member to determine any adjustments in output, either increases or cuts. In a statement following the meeting, the alliance said that the Opec Secretariat has been tasked with developing a mechanism to evaluate the maximum sustainable production capacity for participating countries. This assessment will be used as the basis for determining 2027 production levels for all nations party to the Declaration of Cooperation, signed on 10 December 2016, which has consistently been reaffirmed as the methodology for regulating output and enhancing market stability. The meeting also decided to maintain the total crude oil production level for both Opec members and non-Opec producers participating in the Declaration of Cooperation until 31 December 2026.
Free Malaysia Today
3 days ago
- Business
- Free Malaysia Today
Opec must squeeze US shale much more to win oil price war
Benchmark US oil prices have dropped by nearly a quarter since January to US$61 a barrel, in response to Opec+'s strategy and concerns over trade wars. (File pic) LONDON : Oil drillers in the US shale heartland are slowing down operations, a sign that the Organization of the Petroleum Exporting Countries' (Opec) high-stakes price war is starting to pay off, but Saudi Arabia will need to exert a lot more pain to make a lasting impact on market share. US oil producers upended the global market in the early 2010s, as the innovative 'fracking' drilling technique allowed them to tap vast onshore shale formations. Consequently, the US, long the world's top oil consumer, became its leading producer as of 2018. It currently pumps around 13.5 million barrels per day (bpd), around 13% of world supplies. The rising tide of US oil has long irked the Opec, which has seen its market share steadily erode over the past two decades. Saudi Arabia, Opec's de-facto leader, in 2014 sought to curb surging US output by flooding the market with cheap oil. This effort bankrupted a number of shale producers, but it only temporarily paused the country's ascent as companies adapted to lower prices and the industry consolidated. Price war redux Riyadh and its allies, a group known as Opec+, are now giving it another go. They surprised the market earlier this year by announcing that they would rapidly unwind 2.2 million bpd of production cuts introduced in 2024. The group is expected to announce further increases in production later this week. Benchmark US oil prices have dropped by nearly a quarter since January to around US$61 a barrel in response to Opec+'s strategy as well as concerns over US President Donald Trump's trade wars. At these prices, many shale wells are not profitable, as frackers require an oil price of between US$61 and US$70 a barrel to expand production, according to a survey conducted by the Dallas Federal Reserve Bank. Sure enough, nimble frackers have already responded by paring back drilling activities to conserve cash. The number of US onshore oil drilling rigs dropped by eight to 465 last week, the lowest since November 2021, according to energy services firm Baker Hughes. Crucially, drillers in the Permian Basin in West Texas and eastern New Mexico, which accounts for nearly half of US production, cut three rigs, bringing the total down to 279, also the lowest since November 2021. Crude production from new Permian wells, a measure of productivity, slightly improved in April, but that was largely offset by declines in other basins. Multiple indicators suggest activity is set to decelerate further. Importantly, Frac Spread Count, which measures the number of crews actively performing hydraulic fracturing, has seen a 28% annual drop to 186, according to energy consultancy Primary Vision, an indication that production could fall sharply in the coming months. Another measure to watch is drilled but uncompleted wells (DUCs), or partially completed wells that can start production quickly, offering operators flexibility to withhold production until market conditions improve. DUCs have risen by 11% since December 2024 to 975 in the Permian Basin. Down but not out While the latest data on shale drilling activity suggests US production will continue to slow, it is far from falling off a cliff. The US energy information administration reduced in May its forecasts for US production in 2025 and 2026 by around 100,000 bpd to 13.4 million bpd and 13.5 million bpd, respectively, compared with 13.2 million bpd last year. Production in the Permian Basin is forecast to average 6.51 million bpd in 2025, down from its previous estimate of 6.58 million bpd. However, that would still mark a significant increase from 6.3 million bpd in 2024. Opec+ may find it even harder to have a sustainable impact now than it did in 2014 as the US shale landscape is significantly different from a decade ago. True, 15 years of intensive oil and gas drilling have depleted a large chunk of the most profitable shale acreage. However, shale drillers have in recent years adopted much stricter spending discipline, focusing on returning value to shareholders in contrast with last decade's focus on growing production. Independent US oil and gas producers have so far reduced their planned 2025 spending commitments by an aggregate 4% to US$60 billion, while output is expected to remain largely flat, according to consultancy RBN Energy. Also, production today is concentrated in the hands of far fewer companies, such as Exxon Mobil and Chevron. These energy majors have developed highly efficient drilling techniques and boast strong balance sheets that leave them better equipped to withstand the Opec assault. Current oil prices are therefore likely to temporarily curb US production but not lead to the type of sharp deceleration seen in 2014. Opec+ will therefore need to deepen and extend its price war for many months if it seeks to fundamentally change the oil production balance of power.
