November 21, 2023
By Oil Price

Oil Markets on Edge Ahead of Critical OPEC+ Meeting

Oil markets are now fully focused on the upcoming OPEC+ meeting, with reports that the group may deepen cuts being counteracted by an apparent lack of unity amongst OPEC members on the issue.

Chart of the Week

- As OPEC+ prepares for its meeting on November 26, African producers are tacitly lamenting the oil group’s recalibration of 2024 production targets that will curb the maximum amount Nigeria or Angola can produce.

- Following tense negotiations in June, all African countries agreed they would be subjected to lower 2024 quotas unless they could demonstrate higher production capacity before November, partly explaining the bumper production figures from Nigeria and Angola.

- Nigeria, pumping only 1.38 million b/d on average in the first half of 2023, has been some 400,000 b/d below its OPEC quota, similar to Angola which still carries a 1.46 million b/d quota despite production averaging only slightly above 1 million b/d.

- Three upstream consultancies - Rystad, IHS, and WoodMac - have submitted their African production capacity figures to the OPEC secretariat and the OPEC+ meeting is believed to be deciding on their fate this Sunday. 

Market Movers

- Backed by BlackRock, Canadian power generation firm Capital Power (TSE:CPX) agreed to buy two natural gas-fired power plants in the US for $1.1 billion from Beal Financial, making it North America’s fifth largest operator.

- The merger of Chesapeake Energy (NASDAQ:CHK) and Southwestern Energy (NYSE:SWN) might be the next big thing in US M&A activity after investor Kimmeridge came out in support of the prospective deal.

- Australia’s Karoon Energy (ASX:KAR) agreed to buy a 30% stake from operator LLOG in the Who Dat and Dome Patrol oil fields in offshore Louisiana, paying $720 million to break into the US Gulf Coast.

Tuesday, November 21, 2023

Oil markets are once again on edge ahead of the OPEC+ summit this weekend, with calls for deeper cuts circulating concurrently to rumors of OPEC members not being ready to agree on any coordinated response. Hence, Monday’s spike that saw Brent move back to $82 per barrel had tapered off by Tuesday morning. Barring a surprise in this week's U.S. oil inventory report, all the attention will be geared toward Vienna over the weekend.

Argentina’s New President Lifts Commodity Stocks. Argentina’s oil stocks have soared by as much as 40% Monday after libertarian candidate Javier Milei was announced the winner of the presidential election run-off, pledging to nationalize YPF (NYSE:YPF), shrink the government, and cut taxes. 

Houthis Seize Israel-Linked Cargo Ship. Yemen’s Houthi militias have seized the Israel-linked cargo carrier Galaxy Leader as it was transiting the Red Sea, threatening to do the same with any other ships passing offshore Yemen and adding a new layer of maritime security risks for shippers. 

Russia Lifts Gasoline Export Ban. Citing surplus domestic supply and lower prices, Russia’s energy ministry scrapped restrictions on gasoline exports, introduced on September 21 to tackle fuel shortages over the country, with some 150,000 b/d expected to be exported from December on.

Saudi Arabia Keeps On Finding Gas. Saudi Arabia’s national oil firm Saudi Aramco (TADAWUL:2222) announced the discovery of two new natural gas fields in the Empty Quarter Desert in the country’s southern part, with both the al-Hiran and al-Mahakik prospects showing commercial gas flow rates.

Venezuela Nears Deal with Trinidad. Following months-long talks with Trinidad and Tobago as well as project operator Shell (LON:SHEL), Venezuela is expected to approve a 25-year license for the UK-based energy major to develop the 4.2 TCf Dragon field straddling their maritime border.

Lula Asks Petrobras to Generate More Jobs. Brazil’s President Lula da Silva asked the CEO of national oil firm Petrobras (NYSE:PBR) Jean-Paul Prates to modify the company’s 2024-2028 investment plan to prioritize local job creation, raising fears of more state intervention. 

High Waters Hinder Europe’s Largest Shipping Artery. After months of drought-induced freight restrictions, navigation along the river Rhine has been limited as vessels en route to Switzerland can no longer sail under bridges due to continuous rains. 

Sri Lanka Wants to Become a Nuclear Nation. The government of Sri Lanka has expressed its interest in setting up nuclear power plants as it seeks to produce cheap and reliable electricity, seeking to wean itself off its oil and coal dependence and meet its 2050 carbon neutrality target. 

US Still Can’t Find Source of Gulf Oil Spill. US emergency response crews are trying to locate the source of an oil spill in the US Gulf of Mexico reported near the Main Pass Oil Gathering (MPOG) pipeline some 19 miles off the coast of southeastern Louisiana, prompting a swift pipeline halt. 

Shell Pays UK Taxes Thanks to Windfall Tax. UK-based energy major Shell (LON:SHEL) recorded its first net corporate taxes in the UK last year after four consecutive years of zero payments thanks to tax credits on investment and platform decommissioning, paying $40.5 million in tax last year. 

Panama’s Copper Woes Get Real. Canadian miner First Quantum Minerals (TSE:FM) warned that if Panama’s month-long blockade of the controversial Cobre Panama copper mine doesn’t stop it would be forced to suspend operations at the site, even before the country’s Supreme Court decides on its future. 

Angola Hopes for Revival of Onshore Drilling. A total of 22 international and indigenous oil firms submitted 53 bids in Angola’s latest onshore licensing round in the mostly untapped Lower Congo and Kwanza basins, as Angolan authorities hope to find new sources of supply apart from offshore. 

China Seeks to Boost Domestic Biodiesel Consumption. Despite being one of the leading global exporters of UCO, China’s internal use of biodiesel has been lukewarm, prompting the National Energy Administration to launch several pilots to spur domestic consumption of the non-fossil fuel.

Tom Kool
Editor, Oilprice.com

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