Uncertainty continues to dominate oil markets, although demand concerns appear to be overcoming supply shocks to push oil prices toward a monthly loss.
Friday, August 30th, 2024
It's been a volatile week for oil markets, with Libya's oil blockade sending a supply shock through markets before traders refocused on concerns around Chinese demand. At the same time, Iraq has been ratcheting up pressure on Kurdish producers to cut output, and the US has released some constructive macroeconomic data. Early on Friday morning, oil prices had swung back into the red, with Brent trading at $78.54 and WTI below $75.
US Oil Major Eyes Permian Divestment. Seeking to focus on higher-growth assets, top US producer ExxonMobil (NYSE:XOM) is reportedly looking to sell some $1 billion worth of non-core assets in the Permian Basin, offering 14 asset groups of which 8 are currently operated by Exxon.
Libya’s Oil Output Falls as Fields Get Shut. More than half of Libya’s crude production, some 700,000 b/d, was offline by the end of this week after the eastern Benghazi government halted production at key fields such as Sharara, Sarir, Abu Attifel, and Amal and blocked most export terminals in the country.
US Midstream Giant Gets Even Bigger. US pipeline operator ONEOK (NYSE:OKE) said it would buy midstream assets across the country worth $5.9 billion from Global Infrastructure Partners, less than a year after it purchased Magellan Midstream for $19 billion, boosting its standing in the Permian.
Baghdad Calls For Kurdish Compliance. The federal Iraqi government has presented an ultimatum to Kurdistan’s Regional Government to reduce its crude production after market reports indicated output in the region is as high as 350,000 b/d, undermining Iraq’s commitments under the OPEC+ compensation plan.
Golden Pass LNG Asks for 3-Year Extension. The 18 mtpa Golden Pass LNG project, jointly developed by ExxonMobil (NYSE:XOM) and QatarEnergy, asked for a regulatory extension until November 2029 after its contractor Zachry Industrial filed for bankruptcy after a row over $2.4 billion in cost overruns.
Shell Seeks to Curb Exploration Spending. According to Reuters, UK-based energy major Shell (LON:SHEL) is considering cutting oil and gas exploration and development workforce by 20% after curbing investment in renewables and low-carbon businesses, eyeing cost reductions of $2-3 billion.
Red Sea Insurance Surges on Sinking Tanker. After Houthis attacked the Greek-flagged Sounion tanker in the Red Sea last week, still leaking into the sea, the cost of additional war risk insurance for ships sailing through the Red Sea more than doubled to 1% of the vessel’s value from 0.4% before the attack.
China Maximizes Summer Coal Production. Despite much more robust hydro and solar generation this year, China has boosted its coal production to all-time highs as its July output reached 390 million tonnes, seeking to avoid blackouts at a period of peak air conditioning demand.
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Baltimore Sues Shale Producers over Alleged Fixing. The city of Baltimore sued US shale oil producers Occidental, Hess, Pioneer, Diamondback, and others for conspiring to lower production and boost petroleum product prices even if most are not refiners, mostly stemming from the FTC’s Pioneer probe.
UK Will Not Defend Future Oil Projects. The UK government stated it would not defend its largest upcoming oil projects Rosebank and Jackdaw after Greenpeace won a Supreme Court case, seeking to overturn their development approvals on the grounds that emission impacts were not assessed properly.
Qatar Mulls Taking Over a German Refinery. Qatar is in talks with the German government over possibly purchasing Russian state oil firm Rosneft’s 54.17% stake in the Schwedt refinery that feeds the capital city Berlin, after Berlin put the assets under a government trusteeship two years ago.
White House Finalizes Solar Expansion Plan. The Biden administration said it had finalized a plan to accelerate the development of solar energy on 31 million acres in federal lands in 11 western states, eyeing high solar radiation and low conflicts with wildlife and plant habitats.
Drought Hinders European Navigation Again. Dry weather across Germany has led to low water levels in the River Rhine, preventing cargo vessels from sailing fully loaded and boosting freight rates as drought surcharges kicked in, but the impact is not expected to be as substantial as in 2022-2023.
By Michael Kern for Oilprice.com
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