Politics, geopolitics and conflict
This week’s rumors that OPEC could suspend Russia from its production quota agreement were probably just a test of the waters. These rumors were compounded by the media’s confusing use of the term “suspended.” On Tuesday, anonymous OPEC delegates suggested to the media that the group could suspend Russia. On Wednesday, the OPEC + Joint Technical Committee said it had not discussed suspending Russia’s quota. Some argued that the term “suspended” when referring to OPEC should be replaced by the word “exempt.” Using this interpretation, the report – by anonymous delegates – indicated that the group was considering giving Russia a pass to limit its production in accordance with the current agreement. The move could be seen as OPEC trying to make room for the group to increase production more than expected, but the group needs no justification for doing so, with or without Russia. After all, the world’s oil consumers have asked OPEC for just that: more oil. In the end, Thursday’s OPEC meeting concluded without any revocation of Russia’s production limits.
OPEC + agreed on Thursday to advance its planned production increase for September and distribute it between July and August. The result is that instead of marking an increase of 423,000 bpd in July, the pact announced an increase of 648,000 bpd in July and another 648,000 in August. In fact, advancing represents …
Politics, geopolitics and conflict
This week’s rumors that OPEC could suspend Russia from its production quota agreement were probably just a test of the waters. These rumors were compounded by the media’s confusing use of the term “suspended.” On Tuesday, anonymous OPEC delegates suggested to the media that the group could suspend Russia. On Wednesday, the OPEC + Joint Technical Committee said it had not discussed suspending Russia’s quota. Some argued that the term “suspended” when referring to OPEC should be replaced by the word “exempt.” Using this interpretation, the report – by anonymous delegates – indicated that the group was considering giving Russia a pass to limit its production in accordance with the current agreement. The move could be seen as OPEC trying to make room for the group to increase production more than expected, but the group needs no justification for doing so, with or without Russia. After all, the world’s oil consumers have asked OPEC for just that: more oil. In the end, Thursday’s OPEC meeting concluded without any revocation of Russia’s production limits.
OPEC + agreed on Thursday to advance its production increase scheduled for September and distribute it between July and August. The result is that instead of marking an increase of 423,000 bpd in July, the pact announced an increase of 648,000 bpd in July and another 648,000 in August. In fact, moving forward represents a real increase of 50,000 bpd from now until September, and this only if OPEC + can increase faster than it has been able to so far, which is doubtful. Expect compliance to decline in July due to the large increase in the quota, although Saudi Arabia and the United Arab Emirates are expected to increase at a faster rate than their peers. Oil prices fell due to rumors that there would be a larger increase, but the official announcement gave stability to the market and prices rebounded, backed by the EU ban on importing Russian oil.
Russia cut off gas to Shell under a contract it was supplying Germany on Wednesday, following measures to cut off gas in both Denmark and the Netherlands for its refusal to pay in rubles.
You can sanction Russian crude in the West, but that does not mean that crude products made with Russian crude are identifiable and punishable. The United States may have banned imports of Russian crude oil, but that doesn’t mean it won’t buy refined products made, at least in part, with Russian crude oil from countries that are willing to buy it at a discount. India’s Reliance, for example, has tripled its crude oil purchases. Refined products made in India could reach anywhere, even in the EU and the US
Cold War rhetoric is reaching a new high following Washington’s decision to launch a rocket launcher in Kyiv, prompting the Kremlin to warn of a “direct confrontation” between the US and Russia as the Kremlin tightens its grip. from the Donbas region of Ukraine.
The UN has said Iran now has enough uranium to produce a nuclear weapon, as tensions rise at various power-fighting sites, from Iraq to Yemen. Earlier this week, Iran-backed groups launched an attack on Iraq, targeting the Al-Assad military base, which houses U.S. forces, just days after the US seized. of Iranian oil off the coast of Greece. Iran responded by seizing two Greek ships, prompting Greece to warn of the safety of ships in the Strait of Hormuz, a key oil shipping route that Iran has threatened before. As nuclear talks stall, riots are spreading to Iran, reminiscent of the 2019 deadly riots.
Offers, mergers and acquisitions
A proposed merger between London-listed Tullow and British competitor Capricorn Energy would cause Tullow to acquire Capricorn in a total deal of $ 827 million. Tullow’s shareholders would own 53% of the combined group, if the deal is approved.
Also this week, Australian Woodside Energy has completed its full stock merger with BHP’s oil and gas unit.
Discovery and development
As for the discovery, in the Norwegian Sea, ConocoPhillips has just delineated the Slagugle oil discovery, reducing its previous estimates to between 12 and 32 million cubic meters of standard recoverable oil equivalent. New preliminary estimates indicated between 6 and 13 million Sm3.
Regulatory Monitor
The big news in the regulatory field this week is the extraordinary taxes on oil and gas companies. First, Hungarian populist leader Viktor Orban imposed a tax on “additional profits” on companies in all sectors, including energy. This was followed by the UK’s extraordinary tax on oil and gas companies, which affected North Sea operators. Then, on Thursday, a senior White House economic adviser said the administration was considering a similar tax for oil and gas companies in the United States, ignoring what he acknowledged could have a negative impact on supply. as oil prices rise.