Industry Trends ///
Defying market expectations for the second time in less than a month, the group agreed to add more than 2 million barrels a day to global oil supplies from May to July. That will return about a quarter of the crude they are still withholding after making deep cuts a year ago in response to the pandemic.
The $2.25 trillion, eight-year proposal is a follow-up to the $1.9 trillion economic relief bill passed earlier this month. To cover the costs, Biden wants to raise corporate taxes to 28% from 21%. The plan also seeks a minimum tax on profits U.S. corporations earn overseas, increasing the rate to 21% from roughly 13%.
The coalition led by Saudi Arabia was widely criticized three weeks ago when it rebuffed calls to revive some of the crude production halted during the pandemic. As OPEC prepares for another decision on oil output, the producers believe their defiantly cautious approach is paying off.
Beijing plans to invest in Iran while buying oil from the Islamic Republic, further straining its relationship with the U.S. which has already been frayed by China’s imports of covertly-shipped Iranian crude.
On March 29th, when Abu Dhabi begins selling futures contracts for its oil and then shipping the barrels from Fujairah, it will mark an aggressive shift by the emirate. It hopes to change the way nearly one-fifth of the world’s crude is priced.
The backlog of drilled but uncompleted shale wells called DUCs is rapidly shrinking as oil prices rise, signaling that producers are ready to put drilling crews back to work as the industry rebounds from its pandemic-driven downturn.
While the Suez blockage is complicating trade, a long-term realignment of global crude flows has seen westbound shipments from Persian Gulf producers fall, limiting the impact on oil prices.
President Joe Biden’s Jan. 27 executive order entitled Tackling the Climate Crisis at Home and Abroad violates federal law by sidestepping honest debate on whether the “speculative” benefits of the plan outweigh the financial cost to states, Wyoming said in a complaint filed Wednesday in federal court. A similar suit was filed separately by more than a dozen states led by Louisiana.
Leslie Beyer, Energy Workforce & Technology Council; Kurt Abraham, World Oil
Serving as CEO of the Energy Workforce & Technology Council, formed from a merger of PESA and AESC, Leslie Beyer says the new association is strongly positioned to advocate for member companies on a host of workforce, regulatory and technological issues.
The oil demand recovery in Europe, a region that accounts for about 15% of global consumption, looks set to take a fresh hit as the continent struggles to deal with another wave of coronavirus cases that could curb summer travel plans.
Chief executives of some of the largest U.S. oil companies promised to collaborate with the Biden administration in its campaign against climate change during a meeting Monday with White House National Climate Adviser Gina McCarthy.
U.S. President Joe Biden has vowed to end the conflict in Yemen, ceasing sales of offensive weapons to Saudi Arabia, removing the Houthis’ terrorist designation to facilitate the delivery of humanitarian aid, and pushing for a negotiated settlement.
With the “Evolution of the Upstream Business Model” panel, CERAWeek explored the significant variations in the ways major oil and gas firms are approaching the changing landscape of the energy transition.
The alliance gathers on Thursday and is expected to loosen the taps after prices got off to their best ever start to a year. But it’s unclear how robustly the group will act, with the Saudi Arabian energy minister calling for producers to remain “extremely cautious.”
The situation could worsen as Big Oil makes another round of deep spending cuts, leaving consequences both for the oil market, which needs more supply from the OPEC cartel in the coming years, and the economic stability of a region that’s dependent on petroleum revenue.
With the need for more oil supply evident, traders expect the OPEC+ coalition, led by Saudi Arabia and Russia, will agree to increase crude production when it meets on March 4, reversing some of the output cuts made last year. But it’s unclear if the group will act vigorously enough.
“I’m still a strong believer that demand is going to come back strong, both on airlines and also driving around the world once we get herd immunity,” Pioneer Natural Resources CEO Scott Sheffield said on a conference call Feb. 24.
Key players in the oil market have been talking up the rising prices in the coming months, with some even floating the prospect of $100 crude in the next year or two as the global economy recovers from the pandemic.
After four years of bruising trade battles with Donald Trump, the Biden administration already has canceled a permit for TC Energy Corp.’s Keystone XL oil pipeline and threatened new “Buy American” provisions for government procurement contracts.
Hayal Ahmadzada, Socar’s chief trading officer, said the glut of excess oil stocks that built up in 2020 in response to the pandemic will be fully drawn down by the summer. At the same time, soaring prices for steel used in pipes, wells and fittings as well as the high cost of capital for producers will crimp a meaningful supply response by an already hobbled industry even as demand returns.