Oil prices fell Friday as OPEC’s key producers cast doubt on the need to cut output, denting hopes of a deal to tackle a global supply glut.
Iranian Oil Minister Bijan Zanganeh on Friday said his country wanted its pre-sanctions share of the crude market.
His comments followed a warning by Saudi Energy Minister Khalid Al-Falih regarding the success of a gathering in Algeria next month on world output levels.
Around 1230 GMT, US benchmark West Texas Intermediate for delivery in October was down 18 cents at $47.15 a barrel.
“Comments from the Saudi energy minister quelled expectations of a production freeze, which rekindled concerns over the ongoing oversupply,” said Lukman Otunuga, research analyst at trading group FXTM.
Oil prices had rallied last week and entered a bull market — a 20-percent rise from recent lows — after OPEC and Russia announced plans to discuss the supply crisis, which has hammered the crude market for more than two years.
But prices have taken a beating this week on concerns about prospects for success at the September meeting in Algiers.
In an interview with Bloomberg News, Falih said: “I don’t believe that an intervention of significance is required. I certainly don’t advocate a cut.”
But he added that a “freeze (in output around current levels) signifies that everybody is content with where the market is today and they want it to be trending in that direction”.
A previous OPEC attempt to steady output collapsed in April largely because of Iran’s refusal to join talks, having just emerged from international sanctions and keen to maximise its oil revenues.
However, even if a deal is reached next month on the sidelines of an energy conference, there are doubts about the impact a production cap may have on an already oversupplied market.
“Most of the OPEC countries are sending a signal that they’re open to freezing production, but you have to remember that most of them are producing at peak levels,” BMI Research oil and gas analyst Peter Lee told AFP.
“Even if producers come to an agreement, the freeze is at a very high level.”
Lee added that he is “personally quite sceptical” about whether producers can come to an agreement in Algiers.
“It’s not just the matter of a production freeze or a cap, but there are geopolitical concerns involved too, especially when it comes to Iran and Saudi Arabia,” he said.
Communities in Delta State Shut OML30 Operates by Heritage Energy Operational Services Ltd
The OML30 operated by Heritage Energy Operational Services Limited in Delta State has been shut down by the host communities for failing to meet its obligations to the 112 host communities.
The host communities, led by its Management Committee/President Generals, had accused the company of gross indifference and failure in its obligations to the host communities despite several meetings and calls to ensure a peaceful resolution.
The station with a production capacity of 80,000 barrels per day and eight flow stations operates within the Ughelli area of Delta State.
The host communities specifically accused HEOSL of failure to pay the GMOU fund for the last two years despite mediation by the Delta State Government on May 18, 2020.
Also, the host communities accused HEOSL of ‘total stoppage of scholarship award and payment to host communities since 2016’.
The Chairman, Dr Harrison Oboghor and Secretary, Mr Ibuje Joseph that led the OML30 host communities explained to journalists on Monday that the host communities had resolved not to backpedal until all their demands were met.
Crude Oil Recovers from 4 Percent Decline as Joe Biden Wins
Oil Prices Recover from 4 Percent Decline as Joe Biden Wins
Crude oil prices rose with other financial markets on Monday following a 4 percent decline on Friday.
This was after Joe Biden, the former Vice-President and now the President-elect won the race to the White House.
Global benchmark oil, Brent crude oil, gained $1.06 or 2.7 percent to $40.51 per barrel on Monday while the U.S West Texas Intermediate crude oil gained $1.07 or 2.9 percent to $38.21 per barrel.
On Friday, Brent crude oil declined by 4 percent as global uncertainty surged amid unclear US election and a series of negative comments from President Trump. However, on Saturday when it became clear that Joe Biden has won, global financial markets rebounded in anticipation of additional stimulus given Biden’s position on economic growth and recovery.
“Trading this morning has a risk-on flavor, reflecting increasing confidence that Joe Biden will occupy the White House, but the Republican Party will retain control of the Senate,” Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“The outcome is ideal from a market point of view. Neither party controls the Congress, so both trade wars and higher taxes are largely off the agenda.”
The president-elect and his team are now working on mitigating the risk of COVID-19, grow the world’s largest economy by protecting small businesses and the middle class that is the backbone of the American economy.
“There will be some repercussions further down the road,” said OCBC’s economist Howie Lee, raising the possibility of lockdowns in the United States under Biden.
“Either you’re crimping energy demand or consumption behavior.”
Nigeria, Other OPEC Members Oil Revenue to Hit 18 Year Low in 2020
Revenue of OPEC Members to Drop to 18 Year Low in 2020
The United States Energy Information Administration (EIA) has predicted that the oil revenue of members of the Organisation of the Petroleum Exporting Countries (OPEC) will decline to 18-year low in 2020.
EIA said their combined oil export revenue will plunge to its lowest level since 2002. It proceeded to put a value to the projection by saying members of the oil cartel would earn around $323 billion in net oil export in 2020.
“If realised, this forecast revenue would be the lowest in 18 years. Lower crude oil prices and lower export volumes drive this expected decrease in export revenues,” it said.
The oil expert based its projection on weak global oil demand and low oil prices because of COVID-19.
It said this coupled with production cuts by OPEC members in recent months will impact net revenue of the cartel in 2020.
It said, “OPEC earned an estimated $595bn in net oil export revenues in 2019, less than half of the estimated record high of $1.2tn, which was earned in 2012.
“Continued declines in revenue in 2020 could be detrimental to member countries’ fiscal budgets, which rely heavily on revenues from oil sales to import goods, fund social programmes, and support public services.”
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