Despite the decision of the Organisation of Petroleum Exporting Countries (OPEC) to cut output by 200,000-700,000 barrels per day to achieve price recovery, oil prices fell yesterday after the gains recorded on Wednesday.
This was just as Royal Dutch Shell on Thursday in Rio de Janeiro, Brazil, launched its “#makethefuture” programme, where it unveiled six new technologies from different youth entrepreneurs around the world to provide sustainable and cleaner energy than conventional energy sources.
OPEC agreed on Wednesday to implement modest oil output cuts in the first such deal since 2008, with the group’s leader Saudi Arabia softening its stance on arch-rival, Iran, amid mounting pressure from low oil prices.
Under the deal, OPEC would reduce output to a range of 32.5 million barrels per day to 33 million barrels per day from the current estimates of 33.24 million bpd.
The Wall Street Journal reported that OPEC’s surprise proposal prompted the largest gains in crude prices since April on Wednesday, but the rally ran out of steam as investors wondered if the cartel’s members would stand by an agreement.
Concerns have also been raised over how much sway the cartel now has over a market still brimming with crude from around the world.
The group reached an understanding at a meeting Wednesday in Algeria that there was a need to scale back production.
However, analysts also argued that the scope of the reduction—between 200,000 and 700,000 barrels a day—was inadequate to arrest the supply growth and bring balance back to the supply-demand dynamics.
OPEC members will wait until the next official meeting in November to complete the details, including the quota for individual producers.
But despite the agreement, Brent crude, the global oil benchmark, yesterday fell 0.8 per cent to $48.85 a barrel, while West Texas Intermediate futures were trading down 0.5 per cent at $46.85 a barrel.
Meanwhile, Royal Dutch Shell Plc’s “#makethefuture” programme launched in Brazil yesterday was targeted at bringing bright energy ideas into action to benefit local communities around the world, and also highlighted the need for greater global collaboration to create more energy to meet the world’s growing population.
The six new energy solutions include: Pavegen, which converts kinetic energy generated by footsteps into electricity; and Capture Mobility, which converts human and vehicular traffic into electricity.
The Pavegen solution has been deployed in Nigeria where Shell built Africa’s first human and solar-powered football pitch at the Federal College of Education, Akoka, Lagos.
Others include GravityLight, which generates electricity from falling objects; Insolar, which provides communities easy access to solar energy; MotionECO, which turns waste cooking oil into energy; and Bio-bean, which converts waste coffee into energy.
Speaking at the launch of the programme, Shell’s Global Head of Integrated Brand Communications, Malena Cutuli, identified the lack of access to cleaner energy as one of the greatest challenges facing the world.
She advocated the need for donors and sponsors to support entrepreneurs around the world to develop ideas and power of innovative options for communities to access cleaner energy.
“We want to improve our lives, our communities, and our countries, and we are constantly developing new technologies and methods to do so. But we thereby face a global problem: the more we reach for a brighter future, the more energy we consume along the way.
“Our current access to energy is neither enough to satisfy our growing energy needs, nor is it sustainable. The ways in which it is being provided now contribute to climate change, as well as costing the planet valuable resources. We need more and cleaner energy. But we can’t do it alone,” she explained.
She further stated that the “#makethefuture” campaign was the company’s call for collaboration to create smart energy solutions that would generate more and cleaner energy across the world.
“It is a privilege to see how ideas are transformed into realities,” she added.
“Working together, we are turning gravity into light, coffee into energy, cooking oil into fuel, footsteps and roofs into power sources, and roadside turbulence into electricity.
“Communities in Brazil, Kenya, China, United States and UK will experience, first hand, the benefits of these new sources of energy. And we will all see how a different future is possible, a future that is in our hands to create,” Cutuli said.
Also speaking, Shell Brazil’s External Relations Manager, Glauco Paiva, described Brazil as the world’s leader in the oil and gas business of exploration and production (E&P), adding that Brazil would host Shell’s Eco Marathon competition where any technology that consumes less energy would emerge the winner.
In an apparent justification of Shell’s investment in the project in the face of the slump in oil prices, Paiva noted that the energy need of the world’s population of seven billion would continue to grow, thereby providing justification for investment in renewables.
Six artistes selected across the world, including Nigeria’s award-winning Yemi Alade, Brazil’s Luan Santana and British singer, dancer, actress and song writer, Pixie Lott, performed at the event to promote cleaner energy solutions.
In his remark, the founder of Paven and British entrepreneur, Laurence Kembell-Cook, stated that his idea harnesses kinetic energy generated by footsteps to generate electricity.
According to him, before he built Africa’s first human and solar powered football pitch at the Federal College of Education, Akoka, Lagos in Nigeria, Shell and football icon, Pele, had helped Pavegen to launch the world’s first people-powered football pitch in Morro da Mineira, a favela in Rio de Janeiro, adding that the technology had been deployed in various high-football locations around the world.
A Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Loud Blast Heard in Dhahran, Saudi Arabia’s Largest Crude Oil Production Site
Two residents from the eastern city of Dhahran, Saudi Arabia, on Sunday said they heard a loud blast, but they are yet to know the cause, according to a Reuters report.
Saudi’s Eastern province is home to the kingdom’s largest crude oil production and export facilities of Saudi Aramco.
A blast in any of the facilities in that region could hurt global oil supplies and bolster oil prices above $70 per barrel in the first half of the year.
One of the residents said the explosion took place around 8:30 pm Saudi time while the other resident claimed the time was around 8:00 pm.
However, Saudi authorities are yet to confirm or respond to the story.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
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