OPEC and Allies Likely to Boost Oil Production
Saudi Energy Minister Khalid Al-Falih publicly stated OPEC and its allies are likely to gradually boost oil production during the second half of 2018. This marks the first time since the November 2016 production-cutting agreement began between OPEC and its allies, that production levels for cooperating countries may be pushed higher. The amount of the production increase will be made clearer as OPEC’s June meeting approaches. Global crude oil inventories moved significantly below their five-year average volumes in April, which had been a paramount focus of the OPEC production-cutting agreement and was used as justification for talks of production increases among OPEC and its allies.
The news from Saudi Arabia and Russia, pulled WTI crude oil back under $70.00 per barrel, closing over $3.00 per barrel lower at $67.88 on Friday. Wholesale diesel subsequently responded over the Memorial Day weekend, closing 5.4¢/gallon lower than Friday, at a national average price of 291.74¢/gallon.
More Emergency Bunker Surcharges
Container carriers Maersk, MSC and CMA CGM announced emergency bunker surcharges will go into effect to help these carriers cover rising fuel costs. The three carriers have set June 1st and July 1st dates for emergency bunker surcharges to take effect on their respective trade lanes. According to an article published by American Shipper, an announcement from Maersk Line on Friday said its emergency bunker surcharge (EBS) of $60 on 20-foot containers and $120 on 40-foot and 45-foot dry containers will go into effect June 1 on many trades, but July 1 on “regulated corridors” including lanes to and from the United States. Maersk said the EBS is “a necessary action to ensure a continued sustainable service to our customers.”
Bunker fuel prices have steadily increased since July 2017, putting pressure on carriers. Prices thus far into 2018 have been higher than anticipated for most carriers and are the highest fuel prices seen by the maritime shipping industry since 2014.
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An announcement from Maersk Line on Friday said its emergency bunker surcharge (EBS) of $60 on 20-foot containers and $120 on 40-foot and 45-foot dry containers will go into effect June 1 on many trades, but July 1 on “regulated corridors” including lanes to and from the United States.
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