Showing posts from June 27, 2021

OPEC+ meeting on Monday: will the UAE get its way?

The JMMC, Joint Ministerial Monitoring Committee, meeting  of the OPEC+ that ended inconclusively on Friday has added yet another anxiety to the beleaguered oil sector, when it can least afford to take the additional burden upon itself. The issue has arisen from the fact that the UAE, United Arab Emirates, wants to change the baseline from which the cartel’s production cuts are calculated. The UAE has been arguing about that being very low – 3.17 million bpd for the Emirates; it wants it to be at 3.84 million bpd. Some of the members, most probably those at the highly influential end, do not appear to be agreeing with that. A deal could have been struck, if members agreed not to extend the production cuts that came in the aftermath of the pandemic beyond April, 2022. Since the members could not compromise on that either, there was no common agreement by Friday evening and the talks are going to resume on Monday; there is no guarantee that the issue will be resolved next week, t

Will the OPEC+ overcome baseline quota impasse amicably today?

  Oil price that rose steeply on Thursday, started stumbling on Friday coinciding with the delay in the OPEC+ final outcome. Although the members of the group put on a unified front, the sources close to the individual members cite disagreements among them as the cause for the delay. It goes without saying the amount of pressure that the OPEC+ has been put under by the consumers over the rising oil prices; it’s not something that is happening in normal times; the world is still in the middle of the once-in-century pandemic – technically; the price of crude oil is an important cogwheel in the engine of global growth. The members cannot afford to sweep the growing concerns of its customers under the carpet; nor can they let the price come down with a disproportional hike in the output. In these circumstances, in order to get the balance right, the policy makers of the cartel need the combination of Einsteinian wisdom and Gandhian patience. It is already in the public domain that

Oil price: EIA reports a substantial drop in US crude oil stocks

  The two main factors that have been dominating the crude oil markets this week are the uncertainty over the OPEC+ outcome today at the ministerial meeting of the block and the significant drop in the US crude oil inventories for the week ending June, 25. The JTC – Joint Technical Committee – meeting was held on June, 29, in which the market conditions and supply issues were discussed in depth, prior to the ministerial meeting, scheduled for today. There are reports of disagreements about an increase in the output, though; Russia along with its regional ally Kazakhstan, for instance, wants to increase the production, citing the fears of having high oil price in the long run; most of the OPEC+ members may be holding the same view as a come-back made by the US shale oil sector could place the price of oil back on a downward spiral. In addition, the price of crude oil has gone such way above the break-even point of Russian producers that Russia wants to cash in on the current boom;

Oil prices rise desptie the uncertainties surrounding the OPEC+ meeting

  The crude oil price is on the rise again and the markets hope that there will not be an over-supply in the event of OPEC+ deciding to increase the production in August – and in unison. The request made by the Russian oil minister for pushing back the meeting on the grounds of ‘ presidential commitments’ caused a minor stir among the analysts yesterday, in the absence of clear message from the meeting, of course. The American Petroleum Institute, API, meanwhile, made a forecast of yet another significant crude draw; if confirmed by the same data from the EIA, US Energy Information Administration, it is going to be the sixth successive draw of the US crude stocks in recent weeks. The reaction by the crude oil markets is mainly attributed to this encouraging news, when the uncertainty on many fronts loomed large at the beginning of the week. The outbreaks of the Delta variant of the Coronavirus did very little to calm down the anxieties of the markets. Since the pandemic is on

OPEC+ Meeting: output hike is very likely!

  Crude oil markets have been anxious ahead of the OPEC+ meeting, perhaps, anticipating an increase in output by the member nations. The natural inertia, given the current crude oil price, is to let it stay where it is by justifying it on the ground of covering past losses and getting the investment back on track. The statement attributed to Oman’s oil minister on the eve of the latest OPEC+ meeting reflects the mood of some of the members, if not all; not only does he say that the current price is fair, but also welcomes the re-entry of Iran into the markets, despite the talks on the JCPOA remaining in limbo. Of course, the price of crude oil has been rising last three weeks and the producers are cashing in on the fortune. At the same time, they want to sell as much as possible and make hay while the sun shines. Russia, along with some of its neighbours, for instance, holds this view, yet respects the collective outcome that stems from ministerial discussions. The recent forec

Oil Price: did the crude oil markets react to the US air strikes?

  The price of crude oil fell on Monday morning in the Asian markets, which may show cascading effect in the European markets too during the day. The early market reaction is not something expected; it is most probably a knee-jerk reaction to the air strikes carried out by the US in Iraq and Syria, targeting fighters of Iran-backed military group. This is the second time since President Joe Biden came to power that the US carried out limited air strikes in the region. On both occasions, the US attacks were in response to the drone and missile attacks by the fighters in question on the US bases in Iraq. The new US administration does not tend to retaliate immediately for such provocations; on the contrary, the US armed forces take time, analyse the targets and then carry out the attacks while minimizing the collateral damage; the choice of night hours is also an indication of minimizing the loss of civilian lives. The Asian markets reacted as if the attacks were going to continu

CCS: Carbon Capturing and Storage – major challenges remain unsolved

Ever since the lofty ambition of achieving net zero emission by 2050 came about, it has been gathering momentum at an impressive rate year-on-year in the realm of global politics. Since we are not left with many options to minimize the CO 2  emissions, unless we ditch the use of fossil fuels altogether, the attention is turned to capturing what is given out by industries and then storing, before burying deep underground. The concept, came to be known as the CCS, carbon capturing and storage, however, is much more complex than what superficially appears and is making very little economic sense at present, if it wants to attract investors. CO 2 capturing can take three distinct forms; they are, ·        Post-combustion ·        Pre-combustion ·        Oxyfuel In post-combustion method, carbon dioxide is removed from the gases that come out of the furnaces of fossil fuel. In pre-combustion, fuel is converted into a mixture of CO 2   and hydrogen. Oxyfuel method, meanwhi

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