OPEC vs US Shale – Oil Glut
Stored oil around the world is at its lowest level in more than three years. The main cause is the OPEC cuts. The glut of stored oil that kept prices down, is almost gone. As the inventories decrease rapidly and if there is no cushion to avoid shortages, we will see prices increase. Discussions about OPEC countries opening production to grow inventories have been absent. Earlier last week, OPEC expressed that it plans to keep oil exports below 7 mmbd. Saudi Arabia’s energy minister states that he is happy with where the market is and OPEC will not allow another oil glut to form. He also mentioned that he does not want to see oil prices rise to “unreasonable levels.” OPEC production cuts are not the only factor in lowering inventories. OPEC sees oil demand jumping to 30,000 barrels a day in 2018.
On the other side of the equation, we have the US shale production boom. In March, OPEC’s total crude output declined by 201,000 barrels a day, whereas the world’s total oil supply rose 180,000 barrels a day. The surge was mainly attributed to the U.S., covering 94% of non-OPEC production. This confirms that OPEC’s market share is on the decline.
Shipping Regulators Reach Deal to Cut Carbon Emissions
Last Friday, the shipping industry made a historic step towards sustainability and cleaner air. A deal was made among International Maritime Organizatino (IMO) members and plans to cut greenhouse gas (GHG) emissions in half by 2050. The deal was compromised between countries and groups such as the E.U., China, and other Asia and Pacific nations who pushed for reductions as much as 70% and the U.S., Argentina, Brazil, and Saudi Arabia who pushed for lower targets. Shipping contributes about 3% of the total annual carbon dioxide (CO2), but expected to rise as global trade grows. The deal will be revisited in 2023 and 2028, giving opportunities to revise and strengthen the targets.
In Other News
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