Opec cuts oil demand growth forecast again

: Crude oil, Oil products
22/11/14

Opec has made another cut to its global oil demand growth forecast, trimming around 100,000 b/d from its projections for both 2022 and 2023.

This year's growth is now pegged at 2.55mn b/d, compared with a previous forecast for 2.64mn b/d. The downgrade is underpinned by the extension of China's zero-Covid restrictions and "some economic challenges in OECD Europe that have weighed on oil demand", Opec said today in its latest Monthly Oil Market Report (MOMR).

The Chinese government last week again reinforced the need to stick with its zero-Covid policy, although it urged more targeted restrictions.

Opec expects global oil demand next year to be supported by the containment of Covid-19 in China and by geopolitical improvements, but it has cut its growth forecast regardless, to 2.24mn b/d from 2.34mn b/d in last month's MOMR. Non-OECD economies account for 1.9mn b/d of the growth in 2023, led by China and India. In the OECD, Opec forecasts US oil demand to climb above pre-pandemic levels next year, but projects consumption in OECD Europe and Asia-Pacific to remain below 2019 levels.

Opec has cut its 2022 forecast for oil supply growth from non-Opec producers by 30,000 b/d to 1.9mn b/d, with upwards revisions for Russia and Latin America more than offset by downgrades elsewhere, notably in Azerbaijan, Kazakhstan and in Europe where extended maintenance in the North Sea reduced output in the third quarter.

"It should be noted, however, that considerable uncertainty remains with regard to Russia's liquids output in [the fourth quarter of 2022]," Opec said.

Non-Opec supply is projected to increase by 1.54mn b/d in 2023, which is 20,000 b/d higher than last month's forecast. Opec sees the US, Norway, Brazil, Canada, Kazakhstan and Guyana as the main growth drivers, and it expects production to decline in Russia and Mexico. The major uncertainties weighing over non-Opec supply next year are US shale output potential and how the geopolitical situation develops in eastern Europe, "particularly the looming EU sanctions on Russian oil imports", Opec said.

Taking into account the supply and demand revisions, Opec has reduced the call on its own members' crude by 100,000 b/d for this year to 28.6mn b/d, and by 200,000 b/d for 2023 to 29.3mn b/d. Opec crude output was 29.74mn b/d in October, according to Argus' estimate.

Based on a review of global oil inventory levels, Opec estimates oil supply outpaced demand by an average 300,000 b/d in the January-September period of this year.

By James Keates

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24/11/08

Hungary’s Mol cuts forecast for 2024 refinery runs

Budapest, 8 November (Argus) — Hungarian integrated oil firm Mol has revised down its 2024 forecast for crude runs at its two landlocked refineries after a "turnaround-heavy" third quarter, it said today. The company expects to refine around 11.5mn t of crude combined at the 161,000 b/d Szazhalombatta plant in Hungary and the 115,000 b/d Bratislava complex in Slovakia this year, down from its previous guidance of about 12mn t. The two refineries processed 8.25mn t of crude in January-September, down from 9.09mn t a year earlier. Their combined crude throughput was down by 11pc on the year at 2.81mn t in the third quarter. Mol carried out scheduled maintenance at Szazhalombatta between 26 July and 19 September and expects to complete maintenance work on petrochemical units at Bratislava in the first half of November. Crude intake at Mol's third refinery, the 90,000 b/d Rijeka plant on Croatia's Adriatic coast, rose by 2.6pc on the year to 802,000t in the third quarter and was largely unchanged year-on-year at 1.26mn t in January-September. The company's crude throughput forecast only includes the Hungarian and Slovakian refineries. Mol cut the share of imported crude in its overall slate to 3.35mn t, or 93pc, in the third quarter from 3.8mn t, or 97pc, a year earlier, while it almost doubled intake from its own crude production to 255,000t in July-September from 129,000t in the same period last year. Szazhalombatta and Bratislava mostly process Russian crude received through the Druzhba pipeline system under an EU oil ban waiver, while Rijeka mainly takes non-Russian seaborne crude. The profitability of Mol's refining business was hit by a 71pc year-on-year fall in its refinery margin indicator — calculated based on the Dated Brent crude benchmark — to just $3.70/bl in July-September. Its oil product sales fell by 4.2pc from a year earlier to 4.88mn t in the third quarter. This included 1.52mn t of products Mol had to buy from third parties to complement its own output and satisfy demand, a significant rise from 1.25mn t of third-party oil products it sold a year earlier. The firm's upstream oil and gas production rose by 11pc on the year to 96,100 b/d of oil equivalent (boe/d) in the July-September quarter. It has raised its full-year forecast to about 92,000-94,000 boe/d from previous guidance of around 90,000 boe/d. Mol's profit fell to 111.5bn forint ($295mn) in the third quarter from Ft175.8bn a year earlier. By Béla Fincziczki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US extends oil service firms' Venezuela waiver

24/11/07

US extends oil service firms' Venezuela waiver

Washington, 7 November (Argus) — The outgoing administration of US president Joe Biden extended authorization for oilfield services companies Halliburton, SLB, Baker Hughes and Weatherford to continue working in Venezuela until 9 May 2025. The waiver allows the service companies to pay their staff and maintain limited operations, but it prevents them from drilling new wells or otherwise contributing to state-owned PdV's production and exports. The Biden administration reimposed sanctions on Venezuela's oil sector in April, after a six-month reprieve. The sole exemption is a waiver for Chevron allowing it to import oil into the US from its joint venture with state-owned PdV. US crude imports from Venezuela averaged 212,000 b/d in January-August, US Energy Information Administration data show. Chevron's Venezuela output has stood at about 200,000 b/d. Neither president-elect Donald Trump nor his campaign addressed the Venezuela sanctions regime or indicated if they would change it. Republicans in Congress ahead of the election called for the Chevron exemption to be revoked. The Biden administration separately extended a prohibition for holders of $3.4bn in PdV 2020 bonds guaranteed by 50.1pc in US refiner Citgo's holding company to exercise their claim, this time until 7 March 2025. The PdV bondholders in theory hold a superior claim to Citgo Holding — a legal entity that directly owns Citgo and, in turn, is owned by Citgo parent company PdVH. A federal court in Delaware recently oversaw an auction of PdVH shares that yielded a $7.3bn bid from a company backed by investors including Elliott Investment Management. Legal wrangling over the bids and the distribution of auction proceeds is likely to keep Citgo ownership unresolved in the near term. By Haik Gugarats Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Mexican peso plummets on Trump win

24/11/06

Mexican peso plummets on Trump win

Mexico City, 6 November (Argus) — The Mexican peso fell sharply against the US dollar as markets priced in potential retaliation against Mexico following former president's Donald Trump's victory in the US presidential election. "A Republican Senate majority and potential House win raise the chances of Trump's radical reforms, which could hurt Mexico's economic dynamism," said a financial analyst from Mexican bank Monex in a note today. The peso initially dropped around 3pc to Ps20.71/$1 early today, hitting a two-year low before recovering to Ps20.20/$1 by midday. The peso may weaken further, as Mexico is vulnerable to tariff hikes amid strained relations over issues like immigration and the opioid crisis, according to a desk report from a major Mexican bank. Trump repeatedly threatened tariffs on Mexico during his presidential campaign, most recently pledging a 25pc tariff on all Mexican imports unless President Claudia Sheinbaum's administration launches a severe crackdown on Mexico's drug cartels, which ship fentanyl and other drugs across the border to the US. Recent constitutional amendments in Mexico, including judicial reforms and proposed eliminations of independent regulators, may also add downward pressure on the peso, according to the report. "The government's goal to direct private-sector involvement could limit market forces," it noted. Mexico's state-owned oil company Pemex typically offsets peso depreciation due to its dollar-denominated oil export revenues, which help cover increased import costs. "Pemex's exports and domestic sales are tied to international hydrocarbon prices, providing a natural hedge," the company stated in its most recent report. Still, analysts warn that Pemex's focus on domestic refining over crude exports could erode this hedge, leaving it more exposed to foreign exchange swings on USD-denominated debt. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop 29 finance talks need leadership after Trump win

24/11/06

Cop 29 finance talks need leadership after Trump win

Edinburgh, 6 November (Argus) — Donald Trump's US presidential election victory will likely affect finance negotiations during the UN Cop 29 climate summit starting next week, but the US can still play a role while other developed countries step up to the plate, according to observers. Key negotiations at Cop on a new finance goal for developing nations, the so-called NCQG, could be "severely undermined" by Trump's victory, as the prospect of Washington withdrawing from the Paris Agreement may discourage other countries from engaging with US officials, non-profit IISD's policy adviser Natalie Jones told Argus . Trump pulled the US out of the Paris Agreement during his last term in office, calling it "horrendously unfair", and he has signalled he will do so again. "This could potentially weaken ambitions" at Cop 29, but it is unlikely to derail negotiations, Jones said. Observers agree that the US can still play a role in talks on the new finance goal, a key topic at this year's summit. Parties to the Paris deal will seek to agree on a new finance goal for developing nations, following on from the current $100bn/yr target, which is broadly recognised as inadequate. "The Biden administration still has a critical window to support vulnerable nations' calls to mobilise climate finance and deliver a strong climate target," civil society organisation Oil Change International's US campaign manager Collin Rees told Argus . The Biden administration's delegation, which will still take part in Cop 29, will not change position at this stage, according to Jones. And the US could continue to show some leadership, she said, adding that Washington likely intends to release its 2035 Nationally Determined Contribution (NDC) early. Countries' new climate plans must be submitted to the UN climate body the UNFCCC by February 2025, but the US could release its NDC at Cop 29 before Trump takes power early next year, she said. "President Biden must do everything he can in the final weeks of his term to protect our climate and communities," including on fossil fuels, Rees said. The prospect of Trump pulling the US out of the Paris accord could cause initial anxiety at Cop 29, Climate Action Network executive director Tasneem Essop said. But "the world's majority recognises that climate action does not hinge on who is in power in the US". "As we saw before and will see again, other countries will step up if the US reneges on their responsibilities and stands back," Essop said. Trump's victory might also present the EU with an opportunity to strengthen its leadership among other developed countries, according to Jones. "It is really on the EU and other countries to step up now," she said. This is a view echoed by German Green lawmaker Michael Bloss, a member of the European Parliament's delegation at Cop 29. "Europe needs to become the adult in the room," Bloss told Argus . The EU cannot rely on the US anymore and must become a global climate leader to ensure success at Cop 29, he said. Meanwhile, Oil Change's Rees stressed that the NCQG is a collective goal. "Other major economies must now step forward to fill the gaps, much as they would have needed to in any scenario given how the US has long refused to pay its fair share," he said. By Caroline Varin and Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Iran sounds alarm on gasoline shortage

24/11/06

Iran sounds alarm on gasoline shortage

Dubai, 6 November (Argus) — The new Iranian government has sounded the alarm on an emerging gasoline shortage that looks set to get worse unless new policies are introduced to clamp down on runaway demand growth. Presenting a draft budget for the Iranian year starting on 20 March 2025, Iran's President Masoud Pezeshkian criticised the existing gasoline rationing system, calling it one of the major hurdles for the proposed bill. Iran has, since 2007, allowed citizens to buy base levels of gasoline at subsidised prices and any additional at a higher price. But the system failed to cap demand and imports sufficiently. In the proposed budget the government has signalled plans to ease shortages, but increasing prices is not on the agenda. A cut to subsidies in 2019 sparked nation-wide protests . "Today the cost of [producing] gasoline — which includes refining costs, transportation costs, and gas station maintenance costs — is about 8000 tomans (80,000 rials)," Pezeshkian said. But consumers only pay 7.5pc of the actual price of gasoline, according to Iran's oil ministry. Iran's gasoline consumption has reached a record high of around 750,000 b/d in the first seven months of the Iranian year that began on 20 March, according to the ministry. Domestic refinery capacity of 670,000 b/d has been unable to satisfy this. To bridge the gap Iran has turned to imports, which has not been easy for the heavily sanctioned country that buys the fuel at market prices. "Around 90 trillion tomans [$1.3bn at the free market rate] was spent to import gasoline this year, which could be increased to 130 trillion tomans [$1.9bn] next year if the [demand growth] trend continues," Pezeshkian warned. Supply-side response If Tehran is unwilling to raise pump prices it will have to add more supply. Work in underway to bringing online an additional fourth train at the Persian Gulf Star (PGS) condensate splitter, and on a 60,000 b/d splitter that made up just one part of the now shelved Siraf project. Consultancy FGE expects these projects to be commissioned by the end of 2025 or early 2026 and "potentially close the gap." The newly-appointed head of state-owned refining company NIORDC, Mohammad Sadegh Azimifar, said using CNG-powered vehicles could reduce the need for more gasoline production. "There are good legal capacities in the country for the development of CNG, including the approval of the energy optimization fund," he said. But CNG has lower mileage and energy content, and CNG filling stations are beset with long queues. "If you have a CNG car, you can only drive it for a day and one will have to wait in long queues to get it refilled, only for it to last for another day", said FGE's Middle East managing director Iman Nasseri. Iran has sufficient reserves of natural gas and LPG, but both of these failed to emerge as a good alternative fuel, he said. The Pezeshkian administration has repeated calls to increase use of public transport and modernise the country's vehicle fleet. But metros and buses are being utilised at maximum capacity and private vehicles are a favourable option in a country with the second-most discounted fuel prices in the world, Nasseri said. Iran is yet to tackle rampant fuel smuggling, with market sources indicating gasoline continues to be illegally shipped to neighbouring countries like Pakistan, Afghanistan and Kazakhstan. Earlier this week, authorities seized around 220,000l of smuggled fuel in several warehouses in Mashhad. While the administration strongly rebukes subsidies, with new vice president Mohammad Reza Aref calling them "unreasonable", they continue to look at solutions that does not include any increase in retail prices, in fear of a repeat of the 2019 protests. But with a lack of infrastructure to capitalize on CNG and limitations in public transportation system, the government may have no choice but to reconsider. By Rithika Krishna Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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