Israel launches strikes on Iran: Update

Spanish Market: Crude oil
26/10/24

Adds details throughout

Israel launched what its military described as "precise strikes on military targets" in Iran early Saturday local time.

In a statement posted on the social media platform X, the Israel Defense Forces (IDF) said the strikes were in response to "months of continuous attacks" from Iran and its proxies in the region. Gaza-based militia group Hamas attacked Israel on 7 October 2023, prompting a year of fighting in Gaza and escalating tensions throughout the region.

"Our defensive and offensive capabilities are fully mobilized," the IDF said.

Shortly after 06:30 local time (03:30 GMT), the IDF said it had "concluded the Israeli response to Iran's attacks against Israel" which involved "targeted and precise strikes on military targets in Iran."

Israel dubbed the operation "Days of repentance".

Iran's defence forces confirmed the attacks early on Saturday, referring to them as "attempts by the Zionist regime to target some sites… in several places around Tehran and elsewhere in the country." It said the country's air defences "had responded to the attempts," without saying whether any of its sites had been hit.

Following the conclusion of the Israel strike, however, the defence forces confirmed that some "military centers in Tehran, Khuzestan and Ilam provinces" had been targeted by the strike.

"While the country's integrated air defence system successfully intercepted and countered this aggressive act, some sites did incur limited damage," the forces said.

Khuzestan province, in the west of the country and on the border with Iraq, is home to a significant portion of Iran's oil and gas production, which appears to have been spared in this exchange.

US president Joe Biden had been urging Israel in recent weeks not to target Iran's oil infrastructure, which would put 1.7mn b/d of Iranian crude exports at risk and could prompt Tehran to retaliate by attacking oil trade in the region.

Today's attack comes after Israeli prime minister Benjamin Netanyahu had vowed to take military action against Iran since Tehran conducted a large-scale ballistic missile attack on Israel at the start of October.

Iran's missile strike was in response to Israel's killing of Hassan Nasrallah, the leader of the Lebanese militia group Hezbollah, a number of other commanders in an airstrike in Beirut late last month, and the assassination of Hamas leader Ismail Haniyeh in Tehran in late July.

The Israeli military killed Haniyeh's successor, Yahya Sinwar, earlier this month.

Israel and Iran also engaged in tit-for-tat strikes in April.

Hamas and Hezbollah are part of the so-called Axis of Resistance, a group of regional militia groups that are backed by Iran.

Draw a line

Immediately after its 1 October strike on Israel, Iran stressed that it considered that particular exchange closed. And Iranian officials had since been warning Tel Aviv against any further attacks, or else they would face an even stronger response from Iran.

IDF spokesman Daniel Hagari today issued a similar warning to Tehran.

"If the regime in Iran were to make the mistake of beginning a new round of escalation, we will be obligated to respond," Hagari said. "Our message is clear: All those who threaten the state of Israel and seek to drag the region into wider escalation will pay a heavy price."

Iranian officials are yet to react formally to the overnight strikes, meaning it is as yet unclear how Iran may ultimately choose to respond.

Recent history suggests that any Iranian response, if there were to be one, would not be immediate. But the limited and targeted nature of Israel's response, with no reported casualties so far, could provide the off-ramp needed to avoid an all-out war at this particular time.

By David Ivanovich and Nader Itayim

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11/12/24

Opec trims oil demand growth forecasts again

London, 11 December (Argus) — Opec has revised down its global oil demand growth forecasts for 2024 and 2025 for a fifth time in a row. In its final Monthly Oil Market Report (MOMR) of the year, the producer group has cut its 2025 oil demand growth forecast by 90,000 b/d to 1.45mn b/d. This is entirely driven by a downgrade in its demand projection for the Middle East. From the start of this year right up until July, Opec had been forecasting global demand growth of 1.85mn b/d for next year. The group has also lowered its demand growth forecast for this year — by 210,000 b/d to 1.61mn b/d, mostly driven by reduced growth projections in the Middle East, India and the Americas. Up until July, Opec had been predicting that demand would increase by 2.25mn b/d this year. Opec's downward demand growth revisions slightly close the gap with other forecasters such as the IEA and EIA, which project much lower levels of consumption growth. The IEA sees oil demand growing by 920,000 b/d this year and by 990,000 b/d next year, while the EIA projects 890,000 b/d and 1.29mn b/d, respectively. On supply, Opec has kept its non-Opec+ liquids supply growth forecast for next year unchanged at 1.11mn b/d. But it has upgraded its estimate for this year by 50,000 b/d to 1.28mn b/d, underpinned by stronger-than-expected US production. Opec+ crude production — including Mexico — increased by 323,000 b/d to 40.665mn b/d in November, according to an average of secondary sources that includes Argus . The call on Opec+ crude remains 42.4mn b/d for this year and 42.7mn b/d for next year, according to the MOMR. Opec+ producers agreed earlier this month to delay a plan to start unwinding 2.2mn b/d of voluntary cuts by three months to April 2025 and to return the full amount over 18 months rather than a year. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Norway to end new international fossil fuel financing

10/12/24

Norway to end new international fossil fuel financing

London, 10 December (Argus) — Norway will from January no longer provide public finance for new unabated international fossil fuel projects, in line with a commitment it made in December last year. Norway's export credit agency, Eksfin, provides most of the country's financing for overseas fossil fuel projects. Eksfin provided between 8.78bn Norwegian kroner and 10.98bn NKr ($786mn- 983mn) over July 2021-June 2023 for fossil fuel projects, civil society organisation Oil Change International found. Norway signed the Clean Energy Transition Partnership (CETP) at the UN Cop 28 climate summit in 2023. The CETP aims to shift international public finance "from the unabated fossil fuel energy sector to the clean energy transition". The CETP, which now has 41 signatories, was launched at Cop 26 in 2021, with an initial 39 signatories including most G7 nations and several development banks. Signatories commit to ending new direct public support for overseas unabated fossil fuel projects within a year of joining. Abatement, under the CETP, refers to "a high level of emissions reductions" through operational carbon capture technology or "other effective technologies". It does not count offsets or credits. Australia, which also signed the CETP at Cop 28, said last week that it would no longer finance overseas fossil fuel projects. "Norway is also working to introduce common regulations for financing fossil energy within the international main agreement for state export financing in the OECD", the Norwegian government said today. Norway's policy "helps increase momentum" for an OECD deal that could end $41bn/yr in oil and gas export financing, Oil Change said. Countries are involved in "final negotiations" on the deal today, Oil Change added. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Opec+ crude output rises in November

10/12/24

Opec+ crude output rises in November

London, 10 December (Argus) — Opec+ members subject to targets increased their collective crude output by 150,000 b/d in November, marking the alliance's first monthly production rise since March, Argus estimates. Although output increased to 33.55mn b/d last month, it was still 3.97mn b/d below the level the group was producing at when it announced the first of its current round of cuts in October 2022. It was also 300,000 b/d below the group's collective production target for the month. November's increase was mainly driven by Kazakhstan, where output was boosted by the restart of the 400,000 b/d Kashagan project following maintenance in October. Kazakh production rose by 220,000 b/d to 1.56mn b/d last month, leaving the country 90,000 b/d above its official production target. Kazakhstan has been one of the group's biggest overproducers this year, alongside Iraq and Russia. It has repeatedly pledged to compensate for exceeding its targets but has so far largely failed to deliver. Iraq — the group's largest overproducer — has made progress in recent months in reducing its production. Its output in November was again 20,000 b/d below its target at 3.98mn b/d, the same as in October. But it will need further reductions if it is to fully compensate for past overproduction. Compliance with output targets is a key measure of group discipline and crucial to the success of Opec+ production policy. Argus calculates that eight members of the coalition have produced above their targets on average between January and October of this year. Opec+ producers agreed earlier this month to push back a plan to start unwinding 2.2mn b/d of voluntary cuts by three months to April 2025 and agreed to return the full amount over 18 months rather than a year. Last month's production increase by the entire group — including quota-exempt Iran, Libya and Venezuela — was 350,000 b/d, with total output at 39.03mn b/d. This was mainly driven by Libya, which increased its output by 160,000 b/d to 1.24mn b/d as it continued to ramp up after emerging from a partial oil blockade in early October. Iran's output rebounded by 60,000 b/d to 3.36mn b/d. By Aydin Calik Opec+ crude production mn b/d Nov Oct* Nov target† ± target Opec 9 21.12 21.18 21.23 -0.11 Non-Opec 9 12.43 12.22 12.62 -0.19 Total 33.55 33.40 33.85 -0.30 *revised †includes additional cuts where applicable Opec wellhead production mn b/d Nov Oct* Nov target† ± target Saudi Arabia 8.93 8.95 8.98 -0.05 Iraq 3.98 3.98 4.00 -0.02 Kuwait 2.40 2.43 2.41 -0.01 UAE 2.97 2.93 2.91 0.06 Algeria 0.91 0.91 0.91 0.00 Nigeria 1.40 1.42 1.50 -0.10 Congo (Brazzaville) 0.25 0.27 0.28 -0.03 Gabon 0.22 0.23 0.17 0.05 Equatorial Guinea 0.06 0.06 0.07 -0.01 Opec 9 21.12 21.18 21.23 -0.11 Iran 3.36 3.30 na na Libya 1.24 1.08 na na Venezuela 0.88 0.90 na na Total Opec 12^ 26.60 26.46 na na *revised †includes additional cuts where applicable ^Iran, Libya and Venezuela are exempt from production targets Non-Opec crude production mn b/d Nov Oct* Nov target† ± target Russia 8.97 8.97 8.98 -0.01 Oman 0.76 0.76 0.76 0.00 Azerbaijan 0.48 0.48 0.55 -0.07 Kazakhstan 1.56 1.34 1.47 0.09 Malaysia 0.33 0.33 0.40 -0.07 Bahrain 0.17 0.18 0.20 -0.03 Brunei 0.08 0.08 0.08 0.00 Sudan 0.02 0.02 0.06 -0.04 South Sudan 0.06 0.06 0.12 -0.06 Total non-Opec 12.43 12.22 12.62 -0.19 *revised †includes additional cuts where applicable Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Assad’s ouster removes key outlet for Iran’s crude

10/12/24

Assad’s ouster removes key outlet for Iran’s crude

Dubai, 10 December (Argus) — The removal of Syrian president Bashar al-Assad from power over the weekend has not only dealt a major blow to Iran and its designs for the Levant region, but it has also eliminated a critically important outlet for Tehran's sanctions-hit oil. Long considered Iran's top Arab ally, Assad enjoyed significant military and economic support from Tehran over the past decade, as Iran saw him as the focal point for its regional influence. Syria also provided the main supply routes to Lebanon's Hezbollah militia, the crown jewel in Iran's so-called ‘Axis of Resistance'. Part of Iran's assistance was in the form of shipments of crude and refined oil products to help Assad's regime meet fuel demand in the areas under its control. Once a 600,000 b/d-plus producer, Syria's crude output has been on the decline over the past three decades. Just before the start of the civil war in 2011, production had already slipped below 400,000 b/d. Today, it is less than 100,000 b/d, and only around 16,000 b/d of that comes from fields in areas under the former government's control. This left Assad's regime — itself restricted by western sanctions — critically short of crude to feed its two refineries in Banias and Homs, even though both have been operating below capacity because of damage sustained during the civil war. Iran helped plug the gap by sending crude and products to the 140,000 b/d Banias refinery on Syria's Mediterranean coast on an ad hoc basis. Iranian crude exports to Syria averaged around 55,000 b/d in January-November this year, down from 80,000 b/d in 2023 and 72,000 b/d in 2022, according to data from trade analytics firm Kpler. Vortexa puts shipments higher at 60,000-70,000 b/d so far this year and 90,000 b/d in 2023. Iran has also been sending around 10,000-20,000 b/d of refined products to Syria in recent years, according to consultancy FGE. Wait and see Iran's oil exports to Syria have mostly been in the form of grants to support the Assad regime. The government's collapse could put an end to these flows for the time being, while Tehran takes a wait-and-see approach to what comes next in Syria. The first sign of that came over the weekend when the Iran-flagged Lotus , which left Kharg Island on 11 November destined for Banias, reversed course just as it was about to enter the Suez Canal. The tanker is now headed back through the Red Sea without specifying a destination. Although supplies to Syria make up a very small share of Iran's overall 1.6mn-1.8mn b/d of crude exports, Tehran may not want to lose it as an outlet for good, given the difficulties of finding a replacement while sanctions remain in place. "The flow will stop, at least for the time being," said Iman Nasseri, managing director for the Middle East at FGE. "But Iran will want to continue supplying this oil to Syria, or else it may be forced to cut production by anywhere between 50,000-100,000 b/d if it is unable to ultimately place those barrels in China." Argus estimates Iran produced around 3.33mn b/d in September-November. Alternatively, Iran could opt to build the volumes it holds offshore in floating storage. "We usually see the same tankers shuttling between Iran and Syria," according to Vortexa's senior oil analyst Armen Azizian. "If that trade subsides, we could see some of these tankers unemployed or put into floating storage, which would rise, at least in the short-term," he said. Lotus is one of these tankers, having made the trip to Syria and back five times in 2023, and twice so far in 2024. The crude cargo it is carrying now "could be returned to Iran and put into onshore tanks or go into floating storage off Iran," Azizian said. By Nader Itayim Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Shale M&A to pick up pace in 2025 after hitting pause

09/12/24

Shale M&A to pick up pace in 2025 after hitting pause

New York, 9 December (Argus) — A slowdown in shale deals in recent months is set to be reversed next year, helped in part by speculation that oil and gas mergers will have an easier time getting anti-trust approval under president-elect Donald Trump. The $12bn in upstream deals recorded in the third quarter was the lowest tally since the first three months of 2023, just before a record-breaking streak that reshaped the shale landscape and was dominated by blockbuster transactions involving ExxonMobil and Chevron. While buyers have been focused on winning approval from a zealous regulator and pushing deals over the finish line, attention is turning to the billions of dollars of unwanted assets they are likely to want to offload, with companies from ExxonMobil to Occidental Petroleum already active on this front. "You do one of these mega-mergers and now you have to pay for it," law firm Hogan Lovells partner Niki Roberts says. "You pay for it by selling off all the stuff you didn't really want to begin with." One potential upside from the Trump administration may be less attention from the Federal Trade Commission, which has paid closer scrutiny to oil deals in recent months as it cracks down on anti-competitive behaviour. Tie-ups have been delayed while the regulator has sought more details, and two high-profile oil executives were barred from the boards of their acquirers as a condition of approving deals. "The antitrust regulators have been viewed by particularly the traditional oil and gas industry of late as not being friendly to that industry," law firm Sidley global leader of energy, transport and infrastructure Cliff Vrielink says. "You're going to see less resistance to consolidation and you're going to see more people pursuing those opportunities." Oil market volatility has hampered mergers and acquisitions in the past, but observers say price swings are less of a factor these days. And more deals are needed to help companies boost their inventory of drilling locations for as long as cash flow remains king and growing through the drillbit is challenged. Lower interest rates, controlled inflation and regulatory reforms all point to a "robust" M&A market, Sidley partner Stephen Boone says. The majority of deal-making has been focused on oil in recent years, but natural gas is "having a bit of a moment", aided by the surge in demand from a boom in energy-hungry US data centres that are developing and supporting artificial intelligence, Boone says. Privates on parade Private equity is also making a gradual comeback, with teams looking to deploy fresh capital in oil and gas. Quantum Capital Group raised over $10bn in October and EnCap Investments has reloaded with about $6.4bn. "We are just now getting back to pre-pandemic levels of commitment," Boone says. "That bodes towards probably more private equity involvement in the oil and gas space." Fierce competition to get a foothold in the prized Permian basin of west Texas and southeastern New Mexico has sent valuations soaring, and prompted some would-be buyers to look further afield to plays such as the Uinta in Utah and North Dakota's Bakken. "The Permian stays of interest to many because of its consistent returns, but the Permian is a crowded place right now, and so I do think we'll see development of other basins," Roberts says. "But it's all going to depend on price." Close to $300bn in upstream deals were signed in the US over the past two years and this has whittled down the list of remaining targets. But the largest producers may not be done when it comes to seeking out potential acquisitions. "We don't stop looking," ConocoPhillips vice-president and treasurer Konnie Haynes-Welsh told the Rice Energy Finance Summit on 15 November. "We're always looking to be opportunistic." By Stephen Cunningham Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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