Oil Ministry Finalises Export Figures for March

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https://www.iraq-businessnews.com/2020/04/29/oil-ministry-finalises-export-figures-for-march-3/

 

Oil Ministry Finalises Export Figures for March

Iraq's Ministry of Oil has announced final oil exports for March of 105,118,523 barrels, giving an average for the month of 3.390 million barrels per day (bpd), essentially the same as the 3.391 million bpd exported in February.

These exports from the oilfields in central and southern Iraq amounted to 101,392,918 barrels, while exports from Kirkuk amounted to 3,287,439 barrels, and from Qayara 129,049 barrels. Exports to Jordan were 309,117 barrels.

Revenues for the month were $2.962 billion at an average price of $28.182 per barrel.

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https://oilprice.com/Energy/Crude-Oil/Fleet-Of-28-Saudi-Oil-Tankers-Could-Send-US-Oil-Prices-Crashing-In-May.html
 

Fleet Of 28 Saudi Oil Tankers Could Send U.S. Oil Prices Crashing In May

With the Covid-19 pandemic reducing global oil demand by devastating numbers, oil storages are filling quickly in the US, forcing producers to start shutting output in the country and creating a big tanker congestion on its coasts. A Rystad Energy analysis reveals that 28 tankers with Saudi oil, including 14 VLCCs and carrying a total of 43 million barrels, will arrive on the US Gulf and West coasts between 24 April and 24 May.

The Saudi fleet, with oil loaded at Ras Tanura, will join an existing congestion of 76 tankers that are currently waiting to unload in US ports. Most of these tankers are on the West Coast, where 34 tankers are waiting in line to offload about 25 million barrels of crude. In addition, about 31 tankers, carrying a similar load, are waiting for a slot to unload on the US Gulf Coast.

The tanker congestion has spiked in recent days because refiners are canceling or deferring their purchases, as they adjust utilization rates to match the steep fall in demand for road and jet fuels.

“The total volumes booked to arrive from Ras Tanura are four times higher than the previous four-week average of imports from Saudi Arabia. Given the current storage situation and the level of congestion on US coasts, we find it unlikely that all tankers will be able to unload upon arrival. The congestion at US ports has reached new highs,” says Paola Rodriguez-Masiu, Rystad Energy’s Senior Oil Markets analyst.

 

If all the Saudi tankers unload, the crude they carry will offset during May almost all of the production reductions from March levels, effectively maintaining the current high storage filling rates.

The limited storage is a growing concern in the oil market and among the key reasons why prices have taken a steep downturn in recent weeks, with US WTI crude even trading negative a few days ago.

Before the official stock build data for week 17 (ending on April 24), commercial crude stockpiles stood at 518.6 million barrels, nearly 9% above the five-year average for this time of year, and just 16.9 million barrels away from hitting the record level of 535.5 million barrels reached during the spring of 2017.

“While US refinery demand for crude has dropped over 3.0 million bpd during the last four-week period, the EIA reported that oil production has only decreased by 800,000 bpd. We expect it to drop by another 800,000 bpd in the following weeks. However, crude imports are forecasted to remain at around 5.8 million bpd during the next four weeks due to the Saudi cargos that are fast approaching US shores,“ Rodriguez-Masiu concludes.

US oil production is bracing for a steep decline in May and June as operators shut some of their producing wells due to storage constraints and oil price economics. The operator-communicated shut-ins alone (from six operators) are calculated to reach at least 300,000 barrels per day (bpd) in May and April, Rystad Energy has estimated.

Please note that total shut-ins only account for a portion of the US total production decline since March 2020 as the shut-in figure only includes production losses from producing wells that have been turned offline. It does not include production potentially lost from canceling drilling and completion plans.

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https://oilprice.com/Energy/Crude-Oil/US-Ban-On-Saudi-Oil-Could-Force-Riyadh-To-Reroute-40-Million-Barrels.html
 

U.S. Ban On Saudi Oil Could Force Riyadh To Reroute 40 Million Barrels

By Irina Slav - Apr 23, 2020, 9:00 AM CDT

Saudi Arabia may be forced to reroute tankers carrying some 40 million barrels of crude oil to the United States if President Trump goes through with a threat to ban imports, Reuters has reported, citing shipping data and unnamed sources.

There have been reports that Washington is discussing a ban on Saudi imports of crude oil or impose tariffs to stem the decline in U.S. oil prices. When President Trump first floated the idea of oil import tariffs, it was taken as a threat to large oil exporters to the U.S. such as Saudi Arabia to finally reach an output cut agreement with their partners in OPEC+. Now, the stakes are higher.

According to Reuters’ sources, Saudi Arabia had first tried to seek storage options for the oil now at sea. Many tanker owners, however, were unwilling to agree to such a change in plans as it would have meant stranding tankers, with the prospects of finding a buyer quickly grim.

Aramco “offers its larger customers with refineries in multiple regions of the world optionality to take their crude purchases from Aramco into the region,” the company told Reuters in a statement. “Changes in ship destinations are routine in the course of our business, particularly in a company of our scale.”

Meanwhile, the Wall Street Journal reported earlier this week that at least one in every ten Very Large Crude Carriers capable of holding up to 2 million barrels of oil is now serving as floating storage, with many of them full of unsold Saudi oil.

Last week, The Wall Street Journal reported that the volume of Saudi crude en route to the United States was seven times higher than the typical monthly intake of Saudi oil in 2019. These vessels, however, were loaded before OPEC+ struck the deal to cut 9.7 million bpd from its collective output beginning in May.

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https://oilprice.com/Energy/Crude-Oil/Ban-On-Saudi-Crude-Wont-Rescue-US-Oil-Industry.html
 

Ban On Saudi Crude Won’t Rescue U.S. Oil Industry

By Tsvetana Paraskova - Apr 22, 2020, 3:00 PM CDT

Even if the U.S. government will install an outright ban on Saudi oil, it won’t make much of a difference considering the huge demand destruction and filling storage tanks Desperate times call for desperate measures. After helping broker a new OPEC+ production cut deal which the oil market shrugged off, the Trump Administration is looking into various ways to help struggling U.S. oil producers and lift plunging WTI Crude prices.

One of the ideas that has been circulating for weeks, including via proposals from Republican Senators, is to have the U.S. Admiration stop the flow of crude oil from Saudi Arabia. The highest number of Saudi oil shipments in years are making their way to the United States this month, threatening to make an already dire situation in the U.S. oil industry even worse.

Asked if he would consider stopping Saudi oil shipments currently en route to the United States, U.S. President Donald Trump said on Monday, “we’ll look at it.”

Even if President Trump were to make a politically sensitive decision to defer, slap import tariffs on, or outright ban Saudi oil shipments, he will not save the U.S. oil industry and oil prices, considering the huge demand destruction and the fast-depleting available storage capacity.

The Saudi oil flows en route to the U.S. Gulf and West Coasts are not an insignificant amount—a total of 40 million barrels of Saudi oil on 20 supertankers are making their way to America with arrivals scheduled in May--according to Bloomberg tanker tracking estimates. While it’s not immediately clear who owns the oil on these very large crude carriers (VLCCs), more than half of those vessels, as per Bloomberg data, are either owned or chartered by the Saudi state oil shipping firm Bahri, which was understood in March to have hired multiple supertankers to carry all the extra oil that the Kingdom planned on exporting in April. 

Related: Oil Jumps After Trump Orders Navy To ‘’Shoot And Destroy’’ Iranian Gunboats
According to Bloomberg’s oil strategist Julian Lee, the fact that most of those tankers are currently operated by Bahri could suggest that at least some of the 40 million barrels of oil traveling to America may not have been sold at loading at Saudi oil terminals as per the Kingdom’s usual export process. If no American company owns the oil yet, it could be easier for the Administration to slap tariffs or ban its import, should President Trump decide to do so, Lee says. 

According to data from Lloyd’s List Intelligence, at least 18 supertankers – mostly chartered by Bahri – are carrying Saudi crude and are traveling to the U.S. Gulf Coast. 

But even in the unlikely event of the U.S. banning entry to all those 40 million barrels of crude oil, such a measure would be a drop in the ocean of unwanted crude in which the U.S. oil producers are drowning. 

While a Saudi fleet of 40 million barrels is traveling to the U.S., more than 20 million barrels of oil are idling on tankers offshore California, and most of them are serving as storage, according to Kpler data cited by Bloomberg. 

At least one in ten VLCCs around the world is being used as floating storage, Saudi oil officials told the Wall Street Journal this week. Many of those supertankers are loaded with unsold Saudi crude—a sign that the Saudi pledge from early March to flood the world with oil is backfiring in a spectacular way as no one in America needs more oil right now. 

Related: Saudi Supertankers Stranded As Oil Price War Backfires

“Demand for gasoline remained anemic at 5.08 million barrels per day, while GasBuddy demand figures put the loss around 55-70% by state as millions are staying at home and some now without work. Refineries also pulled back, utilizing just 69.1% of their capacity at a time of year they’re typically north of 90-95%,” according to GasBuddy.

“It’s possible that if current conditions continue, Cushing storage tanks could reach capacity by mid-May,” Wood Mackenzie analysts said on Tuesday, commenting on Monday’s crash in WTI Crude May futures which slipped into negative territory for the first time.  

The April pain in the oil market could continue in May as storage will continue to shrink while voluntary cuts from OPEC+ (starting on May 1) and forced shut-ins across the U.S. shale patch can’t come fast enough to offset the massive demand losses.  

The glut could, however, force the hand of oil producers in free markets, such as the U.S. and Canada, to curtail more production, faster.  

“Production cuts and shut-ins could remove as much as 17 MMb/d of supply from the market this spring,” said Jim Burkhard, vice president and head of oil markets at IHS Markit.     

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https://oilprice.com/Energy/Crude-Oil/Morgan-Stanley-Oil-Demand-Wont-Return-To-Normal-Until-End-2021.html
 

Morgan Stanley: Oil Demand Won’t Return To ‘Normal’ Until End-2021

By Tsvetana Paraskova - Apr 29, 2020, 11:00 AM CDT

Oil demand around the world will not return to the pre-virus levels of 2019 until the fourth quarter of 2021, as countries will be slowly emerging from the lockdowns and the economic recession, according to Morgan Stanley.

In addition, the post-coronavirus world could see some lasting structural changes in consumer behavior, Martijn Rats, head of oil research at Morgan Stanley, told Reuters.  

“The demand recovery will be somewhat muted, and we could see some structural changes to people’s behaviour,” Rats told reporters.

Analysts argue that oil demand is not set to stage a quick V-shaped recovery as restrictions and lockdowns will be eased gradually, while many economies will be in recession this year.

According to Morgan Stanley, WTI Crude prices are set to stabilize in 2021 at levels around $40 per barrel, and Brent Crude prices could be around $45 per barrel.  

According to the International Energy Agency’s (IEA) latest monthly report for April 2020, the demand loss due to the coronavirus pandemic could result in a stock build of 12 million barrels per day (bpd) in the first half 2020, despite the OPEC+ decision to cut collective production by 9.7 million bpd in May and June. The historic OPEC+ production cut deal may have prevented a total disaster in the oil market, but it will be unable to stave off the impending global oil inventory build that is threatening to fill all the available storage in the world over the next few weeks, the IEA said in the middle of April. 

According to Goldman Sachs, the oil market is set to test the limits of the global storage capacity within three to four weeks. As much as 20 percent of the world’s oil production needs to be shut in so that supply and demand could balance in the short term, Goldman Sachs said in a note this week carried by Bloomberg.

 

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Someone's not playing nice.

Edited April 29, 2020 by usndiver

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https://www.reuters.com/article/us-iraq-oil/iraq-oil-exports-at-3-44-million-bpd-revenues-more-than-halve-in-april-statement-idUSKBN22D5SD?rpc=401&
 

Iraq oil exports at 3.44 million bpd, revenues more than halve in April: statement

 

FILE PHOTO: A worker sprays disinfectant as a preventive measure against coronavirus, at Nahr Bin Umar oil field, north of Basra, Iraq March 15, 2020. REUTERS/Essam Al-Sudani

BAGHDAD (Reuters) - Iraq’s total oil exports for April averaged 3.438 million barrels per day (bpd) and oil revenue more than halved to $1.42 billion, a statement from the oil ministry said on Friday. 

The average price per barrel of oil in April was $13.8. 

Iraq’s revenue from oil, its main source of income, had already reduced in March to $2.98 billion. 

OPEC’s second-largest producer of crude faces an economic crisis over falling oil prices and an agreement to cut production by more than 1 million bpd, effective this month. 

Reporting by John Davison, additional reporting by Hesham Abdul Khalek in Cairo

 

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https://www.cfr.org/blog/between-rock-and-hard-place-iraqs-pledge-cut-oil-production
 

Between a Rock and a Hard Place: Iraq’s Pledge to Cut Oil Production

Iraq faces an uphill battle in meeting its obligations to the historic production cut agreement reached by the Organization of Petroleum Exporting Countries (OPEC) and other major producers such as Russia. The production cuts are due to begin today. Not only is Baghdad mired in deep economic and political crises that show little signs of abating but Iraq’s complex service agreements with international oil companies (IOCs) operating its southern fields means that the Gulf producer would actually have to pay more money to the foreign firms working in its oil sector in excess of existing service fees if it demands the IOCs rein in output to help Iraq meet its targeted quotas. The supplemental fees, which could be millions of dollars, are stipulated in the oil field service contracts that Iraq holds with foreign oil companies that have been assisting with its oil production capacity expansion program over the last several years. The payments structure for Iraq’s service contracts means that output cuts put an added financial strain on the ability of OPEC’s second largest oil producer to comply fully with its pledged one million b/d plus output reductions in the coming months.  

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https://oilprice.com/Energy/Energy-General/The-Oil-Nations-On-The-Brink-Of-Collapse.html
 

The Oil Nations On The Brink Of Collapse

By Editorial Dept - May 01, 2020, 12:00 PM CDT

Global upheaval is likely to result from the oil price crash, upending the current fragile balance of power because key oil-producing countries, including Iraq and Nigeria, can’t buy their way out of this crisis with near-zero-interest loans like the Saudis and Americans can. 

Even with Brent at $25 (indeed, even when it fell below $20), the Saudis were throwing around cash at all kinds of investments, including COVID-sinking cruise lines. The American shale patch can bail itself out if it wishes to, even amid desperate talk of looming bankruptcies. But in Nigeria, where oil comprises about 9% of GDP and 90% of exports, and with a break-even price of around $57 a barrel (with a fiscal breakeven of around $100), the economy is in serious trouble. If the economy is in trouble, the government is in even bigger trouble. Roughly 20 million people are unemployed, and that is now expected to climb another 25%. It’s enough to bring down a government, with the only lifeline now a $3.4-billion IMF emergency loan just approved. But making matters worse is the fact that no one even wants to touch Nigerian oil right now because there isn’t enough demand for it--even at $10 a barrel. And it’s competing with overproduced U.S. crude (light and low in sulfur). 

In Iraq, the fragility will translate into a boon for the Islamic State first and foremost, while Iran and the United States grapple for control in this proxy war setting. Massive political and social…

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https://www.shafaaq.com/en/economy/the-iraqi-negotiating-team-for-opec-accused-of-working-with-foreign-parties/
 

The Iraqi negotiating team for "OPEC" accused of working with foreign parties

 

2020/05/02 05:28:19

Shafaq News / The member of the Parliamentary Oil and Energy Committee, Uday Awad accused on Saturday the Iraqi government negotiating team for "OPEC" organization of working for foreign parties.

"Iraq’s oil policy was a floundering political policy and had a negative and significant impact on Iraq since the government of Adel Abdul Mahdi, with the presence of the Minister of Oil Thamer Al-Ghadban and the presence of young people who have no experience in SOMO,,” Awad told Shafaq News.

"That is why we find the many, large and dangerous failures in this file. as Iraqi negotiating team, which includes the Minister of Oil and SOMO, was working for foreign parties, so certainly any decision taken by it is not in the interest of Iraq," stressing that "Iraq reducing its production by 23%, is not a solution , this It will deepen the economic crisis in the country. "

Reuters, citing sources, said that the oil sector in Iraq will face difficulties to reduce production at a record rate of one million barrels per day (bpd), or 23%, as of May current year, within the framework of OPEC agreement with Russia and other producers, and that Baghdad has not yet reached an agreement with international oil companies on the places of cuts .

The Iraqi Oil Ministry announced on Friday the export of 3.438 million barrels per day last April, with financial revenues of 1.423 billion dollars.

Thus, exports recorded an increase from 3.390 million bpd in March, but revenues recorded a sharp decline from about $ 3 billion in March and about 5 billion in February.