Oil prices are set for a second consecutive weekly gain but the upside remains limited due to continued economic concerns.
Friday, July 7th, 2023
Oil prices are set to end the week with a slight gain after the market eventually priced in Saudi Arabia’s production cut extension into August as well as another steeper-than-expected US crude inventory drop, pushing ICE Brent closer to the $77 per barrel mark. The upside remains limited, however, as the prospect of another US interest rate hike becomes part of mainstream expectations, with the Fed minutes released this week confirming increases are still on the agenda.
Saudi Arabia Sings Praise of OPEC+. Speaking at the OPEC seminar held in Vienna, Saudi energy minister Prince Abdulaziz bin Salman said OPEC+ still has tools in their kit to flexibly manage supply and bemoaned the market’s reaction to production cuts, arguing it was “too big for people to comprehend”.
US Navy Averts Capture of Two Tankers. The US Navy said it prevented Iran from seizing two commercial tankers, TRF Moss and Richmond Voyager, in the Gulf of Oman this week, using its guided-missile destroyer USS McFaul to fend off the confrontation with Iranian naval vessels.
China’s Export Controls Roil Rare Metals Markets. China announced it would introduce export restrictions on gallium and germanium products, both used in computer chips and military equipment, seen as retaliation for the US curbs on sales of sensitive technologies to China.
Vietnam LNG Supply Pits US and Russian Exporters. Vietnam’s energy company PetroVietnam (VNM:GAS) said it is in separate talks with US oil major ExxonMobil (NYSE:XOM) and Russia’s Novatek on LNG cooperation, seeking to sign a long-term supply deal for its 13 new gas-fired power plants.
Singapore’s Power Problems Persist. One month after the government of Singapore introduced price caps on power prices, the country is still struggling to attract new players to its volatile power market with hardly a dozen generation companies remaining in the market.
Egypt Doubles Down on Gas Exploration. According to Egypt’s oil minister Tarek El Molla, the North African country has just launched its $1.8 billion drilling program in the Mediterranean Sea and the Nile Delta, expecting 35 exploration wells in 2 years, led by ENI (BIT:ENI) and Chevron (NYSE:CVX).
Venezuelan Oil Production Fails to Impress. In a blow to recently anointed oil minister Pedro Tellechea, Venezuela’s oil production recorded one of its first month-on-month declines in 2023, with June production coming in at 806,300 b/d, down more than 30,000 b/d compared to May.
Libya On the Brink of Conflict Again. The leader of Libya’s rival Benghazi government, Field Marshal Khalifa Haftar, has threatened to block oil production and exports if the internationally recognized authorities in Tripoli fail to distribute oil revenues in a more equitable way.
Oil Majors Eye Creation of Chemicals Giant. ADNOC, the national oil company of the United Arab Emirates is in talks with Austria’s OMV (VIE:OMV) to create a petrochemical giant from Borealis and Borouge, in which both have interests, with the valuation of the new entity exceeding $30 billion.
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Russia Warns of Ukraine Gas Litigation Fallout. The head of Gazprom threatened sanctions against Ukraine’s Naftogaz, saying the Ukrainian company’s legal action against Russia in the US to get a $5 billion compensation for assets in Crimea might lead to a halt in transited volumes to Europe.
China Just Can’t Keep Stop Signing LNG Deals. Less than a month after the last term LNG deal announcement coming from China, Mexico’s LNG developer Mexico Pacific signed a 20-year deal to supply Zhejiang Energy with an undisclosed volume of gas coming from its Saguaro Energia project, starting in 2027.
OPEC Looks for New Members. According to OPEC secretary general Haitham al Ghais, OPEC has recently held consultations with four countries looking to potentially join the oil group, believed to be Azerbaijan, Brunei, Mexico, and Malaysia.
UK Puts Coal Plants on Standby Amidst Summer Heat. As temperatures will rise across the United Kingdom over the weekend, the country’s power operator National Grid has paid a coal-fired power plant to remain on standby while ordering offshore wind farms to reduce output, ensuring grid stability.
Nigeria’s Scrapped Subsidy Sends into a Tailspin. Nigeria’s consumption of gasoline plummeted by a whopping 28% since President Bola Tinubu scrapped a costly fuel subsidy that cost the government $5 billion every year, simultaneously bringing down black markets for smuggled fuel in Cameroon and Togo.
By Michael Kern for Oilprice.com
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