Oil’s new slump cuts across OPEC’s plan A
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
By Yawen Chen
LONDON, Sept 4 (Reuters Breakingviews) -Oil’s supply-demand seesaw just took a lurch down. Brent crude prices have dropped from $81 a barrel to $73 since last week, driven by weak economic data and an apparent resolution to a Libyan supply crisis. That creates a headache for Haitham al-Ghais, secretary-general of the Organization of the Petroleum Exporting Countries.
In varying degrees since 2016, OPEC countries have pumped much less than they could to prop up prices. Smaller members’ frustration with the bloc’s self-imposed cuts, including the voluntary 2.2 million barrels of daily production curbs on some members implemented in late 2023, explains why Angola quit the group in January. That’s pressuring OPEC to unwind some of the cuts, starting in October.
Until recently, this looked feasible without hitting prices. Iran-backed Houthi militants are ramping up attacks on Red Sea oil tankers to pressure Israel, raising the risk that tankers have to suck up more supply by rerouting round Africa for longer. Prior to an agreement on Tuesday, a dispute between Libya’s eastern and western power blocs over who governs the central bank – which controls oil revenues – threatened to remove 1.2 million barrels of domestic output from global production. And U.S. daily crude oil production of 13.2 million barrels in June means a key driver of output growth is 400,000 barrels less than some analysts assumed at the start of 2024.
It's possible the Libyan flashpoint still means less oil on the market: Goldman Sachs analysts had pencilled in 600,000 barrels a day of supply shock in September alone. And the combination of ageing fleets, Houthi rockets and Israel-Gaza tensions could spark wider regional conflict and less supply, including production from Iran if Washington steps up sanctions. Against all that, economic indicators – often the key driver of oil prices – look flaky.
Tuesday’s deteriorating U.S. manufacturing data could mean lower demand in one of the world’s biggest oil consumers. Meanwhile China’s property market is a key reason why national crude demand dropped to 16.6 million barrels a day in May, the lowest level since mid-2022. Overall refinery margins, the difference between crude and product prices, have fallen across the board. Along with rising global crude inventories, they imply future crude weakness.
With supply in markets like the U.S. and Guyana set to recover in 2025, Ghais should arguably rethink his October plans, or even ready fresh cuts. But that wouldn’t just enrage junior OPEC members. Saudi Arabia, the group’s biggest producer, needs oil prices of $96 a barrel to balance its budget, the International Monetary Fund reckons, and that assumes Riyadh holds crude output at 9.3 million barrels a day, rather than its current 9 million. Ditching plan A would put a lot of noses out of joint.
Follow @ywchen1 on X
CONTEXT NEWS
Libya’s Benghazi-based House of Representatives and the High State Council in Tripoli signed a joint statement after two days of talks hosted by the U.N. Support Mission in Libya, Reuters reported on Sept. 3.
The North African state’s eastern and western governments agreed to appoint a central bank governor and board of directors within 30 days, easing a standoff between rival political factions over control of national oil revenue. Libya's central bank is the sole legal repository for Libyan oil receipts, and it pays state salaries across the country.
The two chambers also agreed to extend consultations for five days, concluding on Sept. 9.
The standoff began when the head of the Presidency Council in Tripoli moved last month to oust veteran central bank Governor Sadiq al-Kabir and replace him with a rival board. This prompted the eastern government to declare a shutdown to all oil production, demanding Kabir's dismissal be halted.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+, is set to proceed with planned increases to oil output from October, Reuters reported on Aug. 30 citing six sources from the producer group. Eight OPEC+ members are scheduled to boost output by 180,000 barrels per day (bpd) in October as part of a plan to begin unwinding their most recent supply cuts of 2.2 million bpd while keeping other cuts in place until the end of 2025.
As of 0918 GMT on Sept. 4, Brent crude was trading at $73.6 per barrel, having fallen 4.9% on Sept. 3.
OPEC+ is discussing a delay in a planned output increase in October, Reuters reported on Sept. 4 citing three sources from the producer group.
Libya accounts for 4% of OPEC production https://reut.rs/4cMzSRC
Brent crude prices have lost all gains in 2024 https://reut.rs/3AQXGqg
Editing by George Hay and Streisand Neto
免責聲明: XM Group提供線上交易平台的登入和執行服務，允許個人查看和/或使用網站所提供的內容，但不進行任何更改或擴展其服務和訪問權限，並受以下條款與條例約束：（i）條款與條例；（ii）風險提示；（iii）完全免責聲明。網站內部所提供的所有資訊，僅限於一般資訊用途。請注意，我們所有的線上交易平台內容並不構成，也不被視為進入金融市場交易的邀約或邀請 。金融市場交易會對您的投資帶來重大風險。
所有缐上交易平台所發佈的資料，僅適用於教育/資訊類用途，不包含也不應被視爲適用於金融、投資稅或交易相關諮詢和建議，或是交易價格紀錄，或是任何金融商品或非應邀途徑的金融相關優惠的交易邀約或邀請。
本網站的所有XM和第三方所提供的内容，包括意見、新聞、研究、分析、價格其他資訊和第三方網站鏈接，皆爲‘按原狀’，並作爲一般市場評論所提供，而非投資建議。請理解和接受，所有被歸類為投資研究範圍的相關内容，並非爲了促進投資研究獨立性，而根據法律要求所編寫，而是被視爲符合營銷傳播相關法律與法規所編寫的内容。請確保您已詳讀並完全理解我們的非獨立投資研究提示和風險提示資訊，相關詳情請點擊 這裡查看。
