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Oil Markets Confused and Underwhelmed by OPEC+ Cuts

Oil markets were left both confused and underwhelmed by the OPEC+ decision to cut 2.2 million bpd in the first quarter of 2024, with oil prices falling toward a weekly loss.

Friday, December 1st, 2023

Oil markets welcomed the new OPEC+ deal that pledged 2.2 million b/d in voluntary cuts for the first quarter of 2024 in a very lukewarm manner, with Brent erasing all its earlier gains and dropping back to $81 per barrel. With even the most seasoned industry watchers starting to lose track of which country will be cutting what amount against which reference level, the production target confusion was aggravated by the fact that markets expected deeper cuts, going over and above what Saudi Arabia or Russia have already curbed from their output. 

OPEC+ Cuts Production Further. Members of the OPEC+ oil group agreed to voluntary production cuts totalling 2.2 million b/d for Q1 2024 as the group's de facto leader Saudi Arabia rolled over its current voluntary cut of 1 million b/d and Russia widened its pledge to 500,000 b/d. 

Brazil to Become Member of OPEC+ Family. South America's largest oil producer Brazil is set to officially become a member of OPEC+ from January 2024 even though it would not join the oil group's ongoing round of production cuts, seeing output soar to all-time highs in recent months. 

Gold to Hit All-Time Highs Soon. With market sentiment shifting back to a US hard landing in Q1 2024, prices of gold have been moving closer to their record high recorded in August 2020 at $2,063 per metric tonne and rallied more than 11% since October.

LME Reinvigorated by End of Nickel Trading Scandal. The London Metal Exchange won a legal case against hedge funds Elliott Associates and Jane Street Global Trading that demanded $472 million in compensation for canceled nickel trades worth billions of dollars, allowing LME to recoup some reputation. 

Oxy Might Be the Next M&A Champion. US oil major Occidental Petroleum (NYSE:OXY) is closing in on a deal with shale Permian company CrownRock with a bid of more than $10 billion, potentially outbidding ConocoPhillips and taking over some 86,000 net acres of shale patches in the Midland. 

Activist Investors Go After Phillips 66. Only 2 years after its spat with ExxonMobil, activist investor Elliott Investment took a $1 billion stake in US refiner Phillips 66 (NYSE: PSX) and is now demanding that the downstream firm revamp its board due to weaker performance that kept market share subdued.

Norwegian Major to Quit Nigeria. Norway's state-owned oil company Equinor (NYSE:EQNR) had agreed to sell its onshore Nigerian business, including the almost condensate-like Agbami field, to a local upstream firm Chappal Energies, ending 30 years of Norwegian presence in the African country.

India Demands Generators to Maximize Coal. India's government is prompting power generators across the country to add some 17 GW of coal-fuelled capacity to avert electricity outages amidst soaring demand for power,  up 10% year-on-year, also unfreezing 38 idled coal plant projects.

Iran Sets Ambitious 2024-2025 Targets. Iran's government is set to base its 2024-2025 budget on an oil price of $71 per barrel as well as crude and condensate exports of 1.35 million b/d, a notable downgrade compared to last year's $85 per barrel breakeven cost.

Referendum Raises the Specter of a Venezuela-Guyana War. Venezuela will carry out a referendum on its territorial dispute with Guyana over the contested oil-rich Essequibo territory on December 3, leading to a notable uptick in military activities in the wider region. 

TMX Sorts Out Tolling Issues. Canada's energy regulator CER approved preliminary interim tolls for the Trans Mountain Pipeline system, clearing the largest obstacle to commissioning now as shippers would need to commit to a $11.46 per barrel toll, to be signed under a 15-year pipeline deal.

Lithium Prices Might Still Fall Lower. Analysts are predicting even further pricing downside to lithium carbonate prices as surging supply has been outpacing the rise in demand, with a Reuters survey indicating the trough might be as low ¥80,000 per metric tonne ($11,300/mt) next year.

European Windfall Taxes Hurt Refiners. Poland's national oil company PKN Orlen (WSE:PKN) saw its shares plunge some 10% this week after the newly elected government introduced a windfall tax on revenues from natural gas production, expecting a revenue loss of $1.5-1.6 billion.

By Michael Kern for

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Michael Kern

Michael Kern is a newswriter and editor at and,  More