Latest news with #productioncuts
Bloomberg
10-07-2025
- Business
- Bloomberg
Struyven: OPEC Production Cuts Always Seemed Temporary
CC-Transcript 00:00You were inside the seminar yesterday and I guess you had lots of conversations with people about the long term dynamics within also short term. Did you walk away with a better understanding of why Opec+ have accelerated the put back of all of these barrels to the market? Yes. So this conference is very insightful because quite unique concentration of policymakers, executives, analysts, journalists like yourself getting together and exchanging thoughts on this fascinating market. In my view, OPEC's voluntary production cuts were always meant to be temporary, opaque, always signaled that it had the flexibility to bring barrels back to the market when it would judged that there is room. And so far in history in the summer, the market reaction suggests that there has been room for being barrels back to the market more broadly. I would contextualize the decision to raise production in a broader context where OPEC is aiming to normalize market share, normalized spare capacity, and also to further improve cohesion with the group. And we have seen improvements in compliance with the production cuts as well. Yeah. So do you think that they are set to unwind, completely, fully unwind the voluntary cuts with the last quip in August that sort of brings all of that 2.2 million barrels per day, 1% to an end. Yes, that's our expectation that you get another 0.55 million barrels per day increase, at least in the quarter at four for next next month. And then you would have fully reversed the 2.2 million barrels. Okay. But there's also another 1.66 million barrels per day voluntary cuts. Do you think attention then shifts to that or are they going to bide their time and wait and see what happens? I think attention will shift to that to the next round or base case remains that they will be done raising production once the $2.2 million today, sort of second quarter funding round of cuts is unwound. But it will depend on the balance. It will depend on the inventory levels. And we forecast a surplus for both this year and next. And that's why, you know, we think the we will soon be done raising production, but it will ultimately depend on the data. How big of a surplus do you see? Because that seems to be also the swing factor in terms of decision making. And I've seen so many different estimates about how demand is going to pan out by the end of this year. Some people have it at 500,000 barrels a day. You speak to the likes of Aramco, KPC, they're talking about 1.2, 1.3 million barrels a day. Where do you see it? Yes, I think there is a lot of agreement here that Western oil markets are quite tight with low inventory levels in the US, very low diesel energy levels. That's why diesel margins have spiked. But there is a lot of debate about next year and about demand. We actually think that the market so far this year has has been in a surplus. We have seen builds of around 1 million barrels per day. That's essentially also our forecast for the surplus. This for this year, for next year with one and a half million barrels per day. What's really fascinating is that the builds have been concentrated outside of the West from pricing centers with very low inventories, for instance, in the US in Cushing, but increases in inventories on water and also in Asia, for instance, in China. So the big question is if we are right and that you're going to stay in a surplus where supply exceeds demand, are you going to see a more equally spread price even? That's a base case and that's why we look for for moderate declines in oil prices. But if the inventory levels remain very low in the West, you could see a bullish scenario where prices stay around current levels at firmer levels than our base. Do you see any upside surprises coming through on the demand side? Because again, if you look at the macro taking a step back, I would say more recently you're getting better activity indicators coming through from the US and perhaps other sides of the world as well. Other parts of the world. Yes. So our base case has demand growing This year by 600 came in. We have flagged some some upside risk to that estimate. We're seeing some beats in China where now gas for demand is up for an activity on a year over year basis. European demand also seems to be coming in a little bit stronger. And then in the Middle East with a very hot summer, AC demand is also also very strong. So moderate upside risk due to demand. That said, I find it hard to imagine demand growing by more than, say, 1.2, 1.3 million barrels per day, an environment where China demand is just structurally, you know, not growing at the very spectacular base. It used to be part of it. Yeah. Let me ask you about the geopolitical premium that was briefly priced in. So the oil curve around the 12 day war. Have people just forgotten about that now? I mean, do you get a sense that perhaps people may want to still hedge for the possibility of things flaring up again, or has the episode just come and gone and the market has moved on? Yeah. Did you ever think of Extreme has come down pretty quickly? We think it's worth groaning. Maybe three, three or four, $4. I don't think it's completely off people's radar screen. We had some attacks by duties in the in the Red Sea. We had some of the headlines about Iran's nuclear nuclear program last week. So I think it's still top of mind, but of course, much less so than a few weeks ago. And I think the reason why this risk premium as it has evaporated so, so quickly is that we have seen several major geopolitical shocks in the last few years. We actually know. Full supply. Supply? Physical impact. Look, while I have you with us, I really do want to ask you also about the copper tariffs that the Trump administration has announced this week, Obviously being a big driver for market action, specifically in copper as well. How do you see things panning out from here onwards? And what is the outlook for for copper markets that you follow? Yeah, So President Trump has announced a 50% tariff on US copper imports affected from from August. We have been recommending to our clients to go along. US copper prices versus international copper prices. If you look at that price differential, it's now pricing in a roughly 30% tariff or base case is 50%. We really do think that the Trump administration is very focused on boosting supply of copper, which is a very important, critical mineral also for the defense industry. The second most widely used metal from the by the Defense Department. And so we think that that pricing, that 30% tariff pricing has room room to increase. What if there's an exemption, say, for Chile or one of the other large trade partners of the US? That's a great question and that's why we think sort of the market perhaps should be pricing a 40% tariff also because there is some room for exemptions. Yeah. At the same time, the steel and alley tariffs are also at 50%. And copper is a very critical mineral. And more broadly, I think the US wants to become dominant in most commodities. It's already energy dominance, but very reliant on the rest of the world for metals. Metals are becoming more and more critical for the economy, for the defense sector, for the for the industrial sector. And so we really do think that President Trump is very focused on boosting production of copper in the U.S..
Zawya
07-07-2025
- Business
- Zawya
Kuwait supports global oil market stability
KUWAIT -- Minister of Oil Tareq Al-Roumi reaffirmed on Saturday Kuwait's full support for OPEC+ efforts aimed at enhancing the stability of international oil markets. Al-Roumi headed the Kuwaiti delegation participating in the meeting of the eight OPEC+ countries, held via video conference on July 5, 2025, Ministry of Oil said in a statement. The meeting of the eight OPEC+ countries involved in voluntary production cuts, agreeing to increase output by 548,000 barrels per day starting in August 2025, statement added. The delegation also included Kuwait's Governor at OPEC Mohammed Al-Shatti, and the country's National Representative to OPEC, Sheikh Abdullah Sabah Salem Al-Homoud Al-Sabah. All KUNA right are reserved © 2022. Provided by SyndiGate Media Inc. (
France 24
05-07-2025
- Business
- France 24
Eight OPEC+ alliance members move toward output hike at meeting
The wider OPEC+ group -- comprising the 12-nation Organization of the Petroleum Exporting Countries (OPEC) and its allies -- began output cuts in 2022 in a bid to prop up prices. But in a policy shift, eight alliance members spearheaded by Saudi Arabia surprised markets by announcing they would significantly raise production from May, sending oil prices plummeting. Oil prices have been hovering around a low $65-$70 per barrel. Representatives of Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman will take part in Saturday's meeting, expected to be held by video. Analysts expect the so-called "Voluntary Eight" (V8) nations to decide on another output increase of 411,000 barrels per day (bpd) -- the same target approved for May, June and July. The group has placed an "increased focus on regaining market shares over price stability," said Saxo Bank analyst Ole Hansen. Enforcing quotas The group will likely justify its decision by officially referring to "low inventories and solid demand as reasons for the faster unwind of the production cuts", UBS analyst Giovanni Staunovo told AFP. But the failure of some OPEC member countries, such as Kazakhstan and Iraq, to stick to their output quotas, is "a factor supporting the decision", he added. By approving another output hike, heavyweight Saudi Arabia might seek to up pressure on members for not keeping to agreed quotas via slashing expected oil profits due to lower prices. According to Jorge Leon, an analyst at Rystad Energy, an output hike of 411,000 bpd will translate into "around 250,000 or 300,000" actual barrels. An estimate by Bloomberg showed that the alliance's production increased by only 200,000 bpd in May, despite doubling the quotas. No effect from Israel-Iran war Analysts expect no major effect on current oil prices, as another output hike is widely anticipated. The meeting comes after a 12-day conflict between Iran and Israel, which briefly sent prices above $80 a barrel amid concerns over a possible closing of the strategic Strait of Hormuz, a chokepoint for about one-fifth of the world's oil supply. As fears of a wider Middle East conflict have eased, and given there "were no supply disruptions so far", the war is "unlikely to impact the decision" of the alliance, Staunovo added. The Israel-Iran conflict "if anything supports a continued rapid production increase in the unlikely event Iran's ability to produce and export get disrupted," Hansen told AFP. © 2025 AFP
Wall Street Journal
03-07-2025
- Business
- Wall Street Journal
Oil Falls on Worries Over OPEC+ Likely Unwinding Production Cuts
0008 GMT — Oil edges lower in the early Asian session amid worries over further scaling back of output cuts by OPEC+. The group seems poised to unwind production quotas by another roughly 400,000 barrels a day in August, when it meets on July 6, Citi Research's Francesco Martoccia says in a research report. Recent sharp swings in oil prices suggest financial positioning should have returned to neutral levels. This may provide scope for a limited and brief selloff on OPEC+ headlines of another 411,000 barrels-per-day quota unwind, the strategist adds. Front-month WTI crude oil futures are down 0.2% at $67.31/bbl; front-month Brent crude oil futures are 0.2% lower at $68.96/bbl. (
Bloomberg
25-06-2025
- Business
- Bloomberg
Russia Is Open to New Output Hike If OPEC+ Decides It's Needed
Russia is open to another output hike at the next OPEC+ meeting if the alliance deems such an increase to be necessary, according to a person familiar with the nation's position. Moscow's partnership with OPEC+ is very important and Russia will seek a solution that's acceptable for the whole group at the meeting on July 6, the person said on condition of anonymity as the deliberations are not public. The eight OPEC+ members involved in the talks, which have been rolling back their production cuts in monthly increments, may consider another hike for August, the person said.
