OPEC in “Produce as Much as You Can” Mode
Earlier this week, Saudi Arabia announced that the Organization of Petroleum Exporting Countries (OPEC) is in “produce as much as you can mode” to make up for supply losses ahead of US sanctions on Iran. This comes just four weeks after the cartel said they are comfortable with Brent crude prices reaching $80 per barrel (bbl) and just days after OPEC announced they will not produce more oil due to projected oil demand decreases in 2019. As Iran’s crude oil output continues to decline, OPEC will start to produce more to meet demand. Saudi Arabia already boosted crude production to 10.7 million barrels per day (mmbd), which is near an all-time high. The Saudi Arabian energy minister said the country can increase output by 1 to 2 mmbd more and it would take three months to reach 12 mmbd.
Other OPEC oil producers are also following suit. Iraq’s Oil Minister, Thamir Ghadhban, pledges to pump more oil. Iraq is the 2nd largest oil producer in OPEC behind Saudi Arabia. In September, Iraq produced 4.67 mmbd and currently are producing a record of 4.78 mmbd, according to Bloomberg. Libya’s Oil Supremo also intends to increase oil output as he believes oil production could reach 1.6 mmbd next year, up from 1.25 mmbd currently.
Third Quarter Freight Spending
In the latest quarterly US Freight Index from US Bank, freight spend in Q3 2018 rose 13.5 percent from Q3 2017, while during the same time period shipping volume decreased 1.1 percent from last year. Spend rose despite lower volumes due to rising linehaul rates in a tight trucking market. Despite strong year-over-year growth, freight spend slowed compared to the previous quarter. Freight costs declined 1.2 percent from the second quarter to third quarter and freight volume decreased 5.2 percent in the same timeframe. This is attributed to storm damage during hurricane season and rising tariff concerns among looming trade issues with China.
In Other News
Natural gas-powered Class 8 truck sales have fallen off almost 30% compared to last year’s numbers. That’s the word from an ACT Research in a new quarterly report that details market activity for natural gas-powered trucks through August of this year. The report notes that natural gas-powered Class 8 truck sales rose 13% in 2017 but have slid by 28% so far this year.
As pipeline bottlenecks crimp the U.S. shale boom, some companies are racing to address the next potential constraint on American oil output: the terminals to export crude to foreign markets. Oil exports have been a key release valve for U.S. producers in the three years since Congress lifted a longtime ban on overseas crude sales.
As the sun reaches its crest over Oman’s sandy landscape, temperatures soar past the point at which it can melt a road. The searing heat triggers sensors that roughnecks extracting natural gas from a BP well are wearing across their chests.
JOC: Low-Sulfur Fuel to Dominate Ocean Container Contracting
For beneficial cargo owners (BCOs) beginning the process of negotiating annual ocean carrier contracts, the worldwide cap on sulfur content in bunker fuel set to take effect on Jan. 1, 2020, is looming as the largest issue they will face in getting these agreements in place.
Iraq is fast becoming a global oil powerhouse, gaining stature in OPEC after it surpassed Canada this year as the world’s fourth-biggest producer. But the war-ravaged country has little to show for its feat.
U.S. steel producers, which prevailed in their push for the Trump administration to impose tariffs on imported steel and aluminum, have also proved equally effective—and far more effective than many other industries—at avoiding tariffs they don’t want.
Chancellor Angela Merkel has offered government support to efforts to open up Germany to U.S. gas, a key concession to President Trump as he tries to loosen Russia’s grip on Europe’s largest energy market.
Endeavor Energy Resources LP is exploring a sale that could value the Texas-based privately held oil producer at more than $10 billion, a source familiar with the matter said on Tuesday. Also see, Endeavor Energy Resources Explores Potential Sale.
Malicious computer code used in a cyberattack against a petrochemical plant in Saudi Arabia has been linked by U.S. researchers to a research institute owned by the Russian government.
Saudi Arabia gave the strongest indication yet that it’s trying to stop oil prices from rising further, saying that OPEC and allies are in a “produce as much as you can mode” to assure customers that they can meet demand and remove any uncertainties about looming shortages. Also see, Oil falls by $2 after Saudi Arabia reassures market on supply.
A Trump administration threat to pull out of a global mail system over its discounted shipping rates from China could spur a change in those rates as early as April, the head of the United Nations agency that oversees the system said.
It would only take 3 months to get to 12 mb/d. Saudi Arabia has long maintained that it can produce 12 mb/d, implying spare capacity of around 1.3 mb/d at this point. Saudi Aramco’s CEO Amin Nasser said on Monday that it would only take 3 months to ramp up to that production rate.
Union Pacific Corp. UNP +0.31% plans to lay off about 500 employees before the end of the year, the first of several rounds of job cuts as the railroad implements a new operating plan to turn around its performance. Also see, Union Pacific will cut 500 jobs as part of railroading shift.
Saudi Arabia’s Crown Prince Mohammed bin Salman said Wednesday that journalist Jamal Khashoggi’s killing was a “hideous incident” and pledged to cooperate with Turkish authorities, as his kingdom struggles with a global backlash over the alleged assassination.
Saudi Arabia and other oil-dependent economies have no choice but to diversify their economies as the challenges they face will deepen even if oil prices remain elevated, a report by a top energy body said Wednesday.
The state of New York sued Exxon Mobil Corp. on Wednesday, accusing the oil giant of misleading investors about the risks that climate-change regulations pose to its business. New York’s attorney general says company misled shareholders by playing down risks of climate-change regulations
Libya expects to pump as much crude by the end of next year as it did before the 2011 revolt against former strongman Moammar Al Qaddafi. The country plans to refurbish its pipeline network and raise output at some fields to reach a target of 1.6 million b/d. The North African nation currently pumps 1.25 million b/d, he said in the eastern city of Benghazi.
OPEC signaled it could cut output in 2019 due to concerns about rising oil inventories and economic uncertainty, lurching away from a pledge made just days ago to pump flat out.
Southern California Gas Co., on Wednesday launched a “try before you buy” program that gives qualified fleet owners an opportunity to try out the latest in heavy-duty natural gas truck technology by hauling loads with a 12-liter near-zero emissions truck for up to two weeks.
China is cutting some of its oil trade with Iran after vowing for months to resist U.S. sanctions on the exports, providing Washington with an unexpected boost to its efforts to isolate the Islamic Republic. Also see, China Tells State-Owned Giants to Halt Iran Oil Buying.
Iraq will increase oil output and work with other OPEC nations to assure “fair” prices for buyers and producers, according to the nation’s new Oil Minister Thamir Ghadhban.
Critics want Union Pacific Corp. to fast-track its turnaround plan. The largest freight railroad in North America is taking heat from analysts who question its commitment to precision-scheduled railroading, the streamlined operations playbook established by the late railroad executive Hunter Harrison.
Freight spending increased by double digits in the third quarter compared to the same period in 2017 despite lower freight shipment volumes. However, freight spending slowed slightly in the third quarter compared to the second quarter of 2018, under the weight of a moderating U.S. economy, storm damage from Hurricane Florence, and early impacts of rising tariffs in a growing trade war, the bank said.
Tennessee Tech said some of the conclusions of its study of glider kit emissions were not accurate, and in fact that the data does not support its earlier statements that the remanufactured engines used in glider kits performed as well as OEM engines certified under EPA emissions standards.
Cash-strapped state-run oil companies in Mexico and Venezuela have begun diverting crude historically processed for domestic use and sending it to U.S. refiners now facing transportation constraints to secure similar grades from Canada.
The Canadian federal government announced which provinces and territories submitted carbon pricing plans that comply with Ottawa’s pan-Canadian Framework and those who would face either a full or partial imposition of the ‘backstop’ pricing plan.