King Salman Sends Message to Bouteflika

A soldier patrols in front of the OPEC headquarters in Vienna

Kuwait- Prime Minister of the Republic of Algeria Ahmed Ouyahia received a message sent by Custodian of the Two Holy Mosques King Salman bin Abdulaziz Al Saud to President Abdelaziz Bouteflika of the People’s Democratic Republic of Algeria. It was conveyed by Minister of Energy, Industry and Mineral Resources Khalid al-Falih who was received in Algiers.

Falih reviewed with the Prime Minister areas of cooperation and joint work between the two countries, including cooperation in the efforts to rebalance the oil markets.

He and his accompanying delegation also met with Algerian Minister of Energy Mustapha Qaitouni. During the meeting, they discussed the latest developments in the world oil markets – the two countries stressed the need for adhering to oil production cuts.

They also discussed preparations related to the scheduled meeting between OPEC and non-OPEC producing countries in November in Vienna, as well as possible ways to make the meeting a success and emphasize trust in producers’ efforts.

Further, reliable sources revealed to Asharq Al-Awsat that Falih will visit three oil producing countries besides Algeria.

Last month, Falih visited Kazakhstan and discussed with his UAE and Kazakhstan counterparts the possibility of keeping the extension of oil output cut deal an option to be discussed in the upcoming meeting in November.

UAE Energy Minister Suhail bin Mohammed al-Mazroui said on Wednesday he was hopeful that the meeting will help re-balance the market in 2018. OPEC Secretariat will present a couple of suggestions to be evaluated under the framework of reaching balance in the market.

Oil Edges Higher on Gains as Geopolitical Threats Intensify in Kirkuk, Iran

Oil

London – As a number of geopolitical problems unfold, oil prices maintained gains on Tuesday, while Goldman Sachs said oil production from Iraq’s Kurdistan region was likely to be jeopardized by the standoff with Iraq.

Despite the fears of the Kurdistan region referendum affecting oil output, the banking company said the conflict between the United States and Iran remains a bigger long-term threat to global supplies.

Brent crude futures LCOc1 gained 6 cents, or 0.1 percent, to settle at $57.88 per barrel, while US crude CLc1 gained 1 cent to settle at $51.88. Both contracts traded up nearly 1 percent and down over 1 percent during the day.

“In the case of Iran, there are likely no immediate impacts on oil flows and there remains high uncertainty on potential reintroduction of US secondary sanctions. If they are, we expect that several hundred thousand barrels of Iranian exports would be immediately at risk,” analysts at Goldman Sachs said in a research note published Tuesday.

“In the case of Kurdistan, the 500,000 barrel-per-day (bpd) Kirkuk oil field cluster is at risk with initial reports that 350,000 bpd has shut in, although this remains unclear,” Goldman analysts said.

On the other hand, Iraqi Oil Minister Jabar al-Luaibi announced plans to construct a new refinery in the oil-producing region of Kirkuk, which has become the scene of open conflict between Baghdad and the Kurdistan Regional Government.

The Iraqi government also plans to increase oil production from the region to more than a million barrels per day, with a foreign oil company to be contracted to implement the plan, according to the minister.

More so, Russia’s TASS news agency had cited Russian Energy Minister Alexander Novak on Tuesday as saying that Russian oil companies may continue working in Iraq despite continued tension there.

Iraq is second-largest oil producer at the Organization of the Petroleum Exporting Countries.

After a strong rally in the previous session, geopolitical tensions edged oil prices higher on Tuesday morning. Brent crude rose 0.6 percent to $58.16 a barrel while US oil futures hovered near the $52 level in lunchtime trade.

OPEC: Higher Demand Forecast for Oil, Points to Tighter Markets in 2018

The Organization of the Petroleum Exporting Countries predicted higher demand for its oil in 2018 on Wednesday and said its production-cutting deal with rival producers was getting rid of a glut, pointing to a tighter market that could move into a deficit next year.

In a monthly report, OPEC said the world would need 33.06 million barrels per day (bpd) of its crude next year, up 230,000 bpd from its previous forecast.

“With the market moving into the winter season, distillate fuel supplies are notably tight, representing a change from the excess supplies seen in the last two years,” OPEC said.

“OPEC and key non-OPEC oil producers continue to successfully drain the oil market of excess barrels.”
The report illustrates growing confidence among OPEC officials that its supply cut is working.

In a deal aimed at clearing the glut, OPEC is curbing output by about 1.2 million bpd, while Russia and other non-OPEC producers are cutting half as much, until March 2018.

According to Reuters, the 14-country producer group said its oil output in September, as assessed by secondary sources, came in below the 2018 demand forecast, even though production climbed by about 89,000 bpd to 32.75 million bpd.

In a further sign that the supply excess is easing, OPEC said inventories in developed economies declined by 24.7 million barrels in August to 2.996 billion barrels, 171 million barrels above the five-year average.

OPEC and its allies want to bring stocks down to the five-year average and are discussing extending their supply restraint.

Saudi-Russian Talks on Oil Output Agreement ahead of OPEC Meeting

OPEC

Moscow — Saudi Arabia hopes to reach an agreement with Russia on what to do when a global oil output deal expires in March, before an OPEC meeting in November, Saudi Energy Minister Khalid al-Falih said in Moscow on Friday.

“I am looking forward to reaching consensus working with you in the next few weeks before we have the November 30 meeting and bring our colleagues from around the world…,” Falih told his counterpart Russia’s Energy Minister Alexander Novak.

“As satisfied as we are with the progress made, I think you agree that our job is not done and there are still uncertainties and headwinds on global oil markets and we have to keep our eyes clearly on the road and our hands on the wheels,” he added.

The Russian Energy Ministry said on Friday that Falih and Novak have signed a programme for cooperation between their two countries in the energy sector, Reuters reported.

The current global oil output cut deal between OPEC and some non-OPEC nations expires at the end of March 2018. Russia and Saudi Arabia are among the leading oil producers in the deal.

Saudi-Russian Scenario to Extend OPEC Agreement till End of 2018

Saudi Arabian Energy Minister Khalid al-Falih attends a meeting of the 4th OPEC-Non-OPEC Ministerial Monitoring Committee in St. Petersburg, Russia July 24, 2017.

Kuwait- Russia and Saudi Arabia’s remarks Thursday have revived oil markets and hopes of another year of trying to rebalance the oil market after the Kingdom showed its support for the Russian proposal to extend the current global agreement between oil-producers until the end of 2018.

Oil rose above $56 a barrel on Thursday, supported by expectations Saudi Arabia and non-OPEC member Russia would extend the curbs, but prices are still half their mid-2014 levels.

Saudi Energy Minister Khalid al-Falih was speaking in a television interview a day after Russian President Vladimir Putin said the supply reduction deal that is due to expire in March could run to the end of next year.

“In the kingdom, we have to keep all options open, President Putin agreed with us on this and expressed his readiness to extend until the end of 2018 if this is agreed, and if this is the best option,” Falih told Al Arabiya television.

Saudi Arabia and Russia helped secure a deal between the Organization of the Petroleum Exporting Countries (OPEC) and 10 rival suppliers to cut output until the end of March 2018 in an effort to reduce a glut.

Falih said he welcomed the “flexibility” shown by Russia on the issue and added the Saudi government aimed to “be flexible in leading the producing countries in and outside of OPEC to a consensus that takes the market to where we want it to be.”

Bloomberg quoted last month sources as saying that OPEC and non-OPEC producers and countries are studying the extension of the agreement for at least three months, and it is expected to extend for six months or until the end of the year.

Falih, who is also Aramco’s chairman, said on Thursday that the IPO would happen in the second half of 2018, adding that the listing would be used as a “catalyst” for opening up the Saudi economy.

“Work is ongoing to list Saudi Aramco in 2018,” Aramco’s Chief Executive Amin Nasser said at an energy forum in Moscow.

We will be looking at evaluating investors as we continue to make progress related to timing and location.”

Nasser said the Saudi government would decide on the listing venue and that there were no current talks with Russian companies on them taking part in the IPO.

The plan to float around 5 percent of Aramco in an initial public offering (IPO) is a centerpiece of Vision 2030, a wide-ranging reform plan to diversify the Saudi economy beyond oil which is being championed by Saudi Crown Prince Mohammed bin Salman.

The Saudi Crown Prince said that the IPO, which could be the world’s biggest, will value Aramco at a minimum of $2 trillion and could raise as much as $100 billion.

When talking about Shale oil, Falih said inventories were still falling despite the fact that climbing US shale production has kept a lid on price gains.

“Shale coming in and happening again in 2018 doesn’t bother me at all. The market can absorb it,” Falih said, speaking alongside Russian Energy Minister Alexander Novak on a panel at an energy forum in Moscow.

“We have seen a steady reduction in inventories. We see as we enter the fourth quarter that supply is less than demand and inventories are declining around the world,” Falih said.

Novak said he was satisfied with oil prices and Moscow would welcome other producers joining the deal to curb output.

Saudi Arabia, Russia to Set Up $1 Billion Energy Fund- Novak

Russian Energy Minister Alexander Novak speaks during a news conference of the 4th OPEC-Non-OPEC Ministerial Monitoring Committee in St. Petersburg

London- Russian Energy Minister Alexander Novak said that Saudi Arabia and Russia will establish a new energy investment fund worth USD1 billion, noting that final touches would be put during the visit of Custodian of the Two Holy Mosques King Salman bin Abdulaziz to Moscow this week.

This step falls under both parties’ efforts to increase cooperation, given that they are among the biggest oil producers. “In principle, the talk revolves around earmarking $1bn just for energy projects and I as an energy minister am pleased by this because we are focusing on developing our cooperation not just within the framework of OPEC or even outside OPEC, but also developing cooperation in the fields of oil, gas, power and renewable energy,” Novak told the Dubai-based Al Arabiya news channel on Monday.

Russia and Saudi Arabia are leading efforts to trim global oil production by 1.8 million barrels of oil per day through a six-month agreement that ended in June and which was extended to the end of next March to help prop up oil prices and reduce the glut in the market.

Novak also said a number of Russian companies are exploring various aspects of cooperation with Saudi Arabia.

Gazprom Neft, the oil arm of Russian gas giant Gazprom, and other companies are expected to sign agreements with their Saudi counterparts, he added.

Russian energy companies are also exploring the possibility of working with Saudi Aramco, the world’s biggest oil producer, in the oil services field in the kingdom. Russian companies and in particular Rosneft, the country’s biggest oil producer, are also interested in oil trading cooperation.

OPEC Oil Output Edges Higher in September

OPEC

London – OPEC oil output has risen this month by 50,000 barrels per day (bpd), a Reuters survey found, as Iraqi exports increased and production edged higher in Libya, one of the producers exempt from a supply-cutting deal.

OPEC’s adherence to its pledged supply curbs slipped to 86 percent from August’s 89 percent, the survey found. Top exporter Saudi Arabia continued to shoulder a larger portion of OPEC’s total cut by pumping below its target.

The gain in Iraqi supplies shows that political tension over the Kurdish region’s independence referendum has not affected its exports. Concern that these could be at risk has helped support oil, which this week reached almost $60 a barrel, the highest in more than two years.

“No rapid solution to the crisis can be expected, which should continue to lend support to the oil price,” said Carsten Fritsch, an analyst at Commerzbank in Frankfurt.

As part of a deal with Russia and other non-members, the Organization of the Petroleum Exporting Countries is reducing output by about 1.2 million bpd from Jan. 1, 2017 until March next year.

The survey also found no sizeable further gain in output in Nigeria or Libya, which are exempt from the cut. Extra Libyan and Nigerian production had helped lift output to a 2017 high in July, adding to OPEC’s task in trying to curb excess supply.

Libya pumped an extra 50,000 bpd this month as the Sharara oilfield reopened after a pipeline blockade. But output remains volatile and, on average in September, below levels of more than 1 million bpd seen earlier this year.

Nigerian output slipped by 30,000 bpd. Royal Dutch Shell’s Nigerian venture declared force majeure on exports of Bonny Light crude due to the shutdown of an export pipeline.

Iraqi production has risen by 40,000 bpd owing to higher exports from the autonomous Kurdish region, tanker data showed. Exports from the country’s southern terminals were largely flat, according to tanker data and industry sources.

Top exporter Saudi Arabia added 20,000 bpd to supply, with exports rising and crude use at domestic power plants declining seasonally, according to sources in the survey to Reuters.

Iran, allowed a small increase in the OPEC deal, also boosted supply by 20,000 bpd.

Among countries with lower output, Angola exported fewer cargoes than in August, as did Venezuela, the survey found.

OPEC last year announced a production target of 32.50 million bpd, based on low figures for Libya and Nigeria. The target includes Indonesia, which has since left OPEC, and does not include Equatorial Guinea, the latest country to join.

According to the survey, output in September has averaged 32.72 million bpd, about 970,000 bpd above the target adjusted to remove Indonesia and not including Equatorial Guinea.

With Equatorial Guinea added, production in September totaled 32.86 million bpd, up 50,000 bpd from August.

The Reuters survey is based on shipping data provided by external sources, Thomson Reuters flows data, and information provided by sources at oil companies, OPEC and consulting firms.

OPEC Daily Basket Price almost Hits $56 Per Barrel

The price of OPEC basket of fourteen crudes stood at US$55.59 a barrel on Thursday, compared with $56.07 the previous day, according to OPEC Secretariat calculations, WAM reported.

The OPEC Reference Basket of Crudes is made up of the following: Murban (UAE), Saharan Blend (Algeria), Girassol (Angola), Oriente (Ecuador), Zafiro (Equatorial Guinea), Rabi Light (Gabon), Iran Heavy (Iran), Basra Light (Iraq), Kuwait Export (Kuwait), Es Sider (Libya), Bonny Light (Nigeria), Qatar Marine (Qatar), Arab Light (Saudi Arabia), and Merey (Venezuela).

In an effort to prop up prices, OPEC started reducing output by about 1.2 million bpd on Jan. 1 in its first supply cut since 2008. Nigeria and Libya were exempted from the curbs.

A September survey published by Reuters indicated output from the 13 OPEC members originally part of the deal rose by 60,000 bpd from August. Supply from the 11 members with production targets under the
original accord increased by 40,000 bpd.

Compared with the levels from which they agreed to cut, in most cases their October 2016
production, the 11 members have reduced output by 998,000 bpd of the pledged 1.164 million bpd.
That equates to 86 percent compliance, down from 89 percent in August.

August’s total was revised down by 20,000 bpd after a change to the Libyan estimate.

Oil prices Rise Ahead of OPEC Meeting on Supply Cut Extension

OPEC

Oil prices were at rise on Friday, as traders waited to see whether major oil- producing countries planned to meet in Vienna would extend production cuts to reduce the global crude glut.

International benchmark Brent crude futures were at $56.51 a barrel at 0644 GMT, up 0.14 percent from their last close. While US West Texas Intermediate (WTI) crude futures were up 0.24 percent, at $50.67 per barrel.

Ministers from the Organisation of the Petroleum Exporting Countries, Russia and other producers are set to meet on Friday to consider extending an agreement to reduce output by about 1.8 million barrels per day (bpd).

Goldman Sachs said that talks over extending cuts are “noteworthy but premature.”

“We believe it is unlikely that committee will recommend extension of cuts this week,” Sachs added.

Michael McCarthy, chief market strategist at CMC Markets in Sydney, predicted there will be “strong rhetoric but whether or not they will be able to boost oil prices from current high levels is another question”.

“The market is still split as to whether the meeting will bring fresh supply cuts to the table,” ANZ bank said in a note.

“With US stockpiles remaining elevated, a firm signal about lower supply is likely needed for price momentum to remain positive.”

OPEC and some non-OPEC producers including Russia first agreed in November last year to cut their output by around 1.8 million barrels per day (bpd) to clear global oversupply and support prices, Reuters reported.

The oil cartel extended their supply cuts until the end of March.

The Energy Information Administration (EIA) reported on Wednesday that US crude production reached 9.51 million bpd in the week ended Sept.15, up from 8.78 million bpd a week ago.

Oil prices surged more than 15 per cent over the last three months as global oil supply tightened.

Kuwait, Venezuela Deny Existence of a ‘Current Agreement’ to Extend Oil Cut

Kuwait- Each of Kuwait and Venezuela confirmed that the Organization of the Petroleum Exporting Countries (OPEC) is not nearly close to extending the current cut in production agreement, saying onlookers are trying to introduce the idea into the market.

Kuwait Oil Minister Essam al-Marzouq holds a press conference with Venezuelan Oil Minister Eulogio Del Pino in Kuwait city on Wednesday.

Oil Minister Marzouq said OPEC could hold an extraordinary meeting in mid-March if it did not reach a decision on extending oil production cuts when it meets in November.

The two ministers explained that they are against speculation in the market and false broadcasts are core to negatively affecting price rates at the moment.

OPEC and other major producers, including Russia, agreed at the end of last year to cut oil production by 1.8 million bpd to support rebalancing the market. In May they agreed to extend the agreement until March 2018.

The Venezuelan oil minister said that every time ministers hold any meetings, speculators try to create an environment that suggests there is “confirmation” of a decision to extend the agreement.

Ministers were aiming for oil prices to be at $60 or more a barrel when they first agreed last year to cut output, but crude is trading at $10 less than what they had expected, Del Pino said.

Kuwait and Venezuela are both on the joint ministerial monitoring committee, known as the JMMC, that reviews compliance with the agreed cuts. The committee will meet on Sept. 22 in Vienna, and Marzouq and Del Pino said there will be no serious discussions of an extension then.

“The JMMC meeting next week is to review the agreement and not take any decision,” Del Pino said. “Speculators are trying to create an environment that we will be taking a decision next week.”

Marzouq said the committee is currently considering six scenarios and may discuss a recommendation to ease production targets for countries that aren’t complying fully with the cuts accord. Ecuador announced in July that it won’t be able to meet its target because it needs to boost its revenue.

Nigeria, which together with Libya is exempt from OPEC’s cuts deal due to internal strife, has agreed to join the agreement if it reaches and sustains crude production at 1.8 million barrels day, Kuwait’s Marzouq said.

Nigeria’s oil minister has assured that he will attend the next JMMC meeting, while Libya will send a senior official, probably the head of its national oil company, Marzouq said.