Crude drops as trade war rumbles on and output swells

An oil terminal in Novorossiysk, Russia. Oil prices fell by 2 percent on Tuesday, weighed down by rising OPEC and Russian oil output. (Reuters)
Updated 04 September 2019

Crude drops as trade war rumbles on and output swells

LONDON: Oil prices fell by 2 percent on Tuesday, weighed down by rising OPEC and Russian oil output as well as the protracted US-China trade dispute that has dragged on the global economy. US crude was down $1.26 at $53.84 a barrel while Brent crude was down 96 cents at $57.70 in
afternoon trade.

The US this week imposed 15 percent tariffs on Chinese goods and China began to impose new duties on a $75 billion target list in a trade war that has rumbled on for more than a year. Though the trade conflict has intensified, US President Donald Trump said both sides would meet for talks this month.

Meanwhile, South Korea’s economy expanded less than expected in the second quarter, with exports revised down in the face of the US-China dispute, central bank data showed on Tuesday.

FASTFACT

Russian oil production in August rose to 11.294 million barrels per day (bpd) hitting its highest since March.

A move on Sunday by Argentina to impose capital controls also cast a spotlight on emerging market risks. “Oil will struggle to make substantial headway topside this week with no progress on trade talks or meetings even, soft data from Asia and a possible cracking of OPEC’s resolve to control production,” said Jeffrey Halley, senior market analyst at OANDA.

Output OPEC rose in August for the first month this year as higher supply from Iraq and Nigeria outweighed restraint by Saudi Arabia and losses caused by US sanctions on Iran. Russian oil production in August rose to 11.294 million barrels per day (bpd), topping the rate cap pledged by Moscow in a pact with other producers and hitting its highest since March, data showed on Monday.

“What’s bad for the outlook for global growth is bad for oil at the moment and only big draws in inventories can delay that drift lower,” said Greg McKenna, strategist at McKenna Macro.


Libya’s NOC says production to rise as it seeks to revive oil industry

Updated 22 September 2020

Libya’s NOC says production to rise as it seeks to revive oil industry

  • Libya produced around 1.2 million bpd – over 1 percent of global production – before the blockade
  • Libya’s return to the oil market is sustainable

LONDON: Libya’s National Oil Company said it expected oil production to rise to 260,000 barrels per day (bpd) next week, as the OPEC member looks to revive its oil industry, crippled by a blockade since January.
Oil prices fell around 5 percent on Monday, partly due to the potential return of Libyan barrels to a market that’s already grappling with the prospect of collapsing demand from rising coronavirus cases.
Libya produced around 1.2 million bpd — over 1 percent of global production — before the blockade, which slashed the OPEC member’s output to around 100,000 bpd.
NOC, in a statement late on Monday, said it is preparing to resume exports from “secure ports” with oil tankers expected to begin arriving from Wednesday to load crude in storage over the next 72 hours.
As an initial step, exports are set to resume from the Marsa El Hariga and Brega oil terminals, it said.
The Marlin Shikoku tanker is making its way to Hariga where it is expected to load a cargo for trader Unipec, according to shipping data and traders.
Eastern Libyan commander Khalifa Haftar said last week his forces would lift their eight-month blockade of oil exports.
NOC insists it will only resume oil operations at facilities devoid of military presence.
Nearly a decade after rebel fighters backed by NATO air strikes overthrew dictator Muammar Qaddafi, Libya remains in chaos, with no central government.
The unrest has battered its oil industry, slashing production capacity down from 1.6 million bpd.
Goldman Sachs said Libya’s return should not derail the oil market’s recovery, with an upside risk to production likely to be offset by higher compliance with production cuts from other OPEC members.
“We see both logistical and political risks to a fast and sustainable increase in production,” the bank said. It expects a 400,000 bpd increase in Libyan production by December.
The Organization of the Petroleum Exporting Countries and allies led by Russia, are closely watching the Libya situation, waiting to see if this time Libya’s return to the oil market is sustainable, sources told Reuters.