September 2015

Russia is overhauling its approach to crafting the budget next year to safeguard reserves, highlighting the challenges it faces in steering the recession-hit economy through a downturn in oil prices.

In the first half of 2015, Saudi Arabia exported on average 4.4 million barrels per day (b/d) of crude oil to seven major trading partners in Asia, making up more than half of Saudi Arabia's total crude oil exports over that period. Even as global crude oil prices fell in 2014 and 2015, Saudi Arabia increased production and kept its export levels high, enabling it to maintain its market share in these countries. However, long-term trends within Saudi Arabia's energy sector may reduce its global crude oil market share.

Some of the largest U.S. shale oil producers have already begun slashing 2016 budgets, with some planning double-digit reductions starting next January, the latest sign low crude prices are forcing a radical adjustment in the industry.

Oil production from the Organization of the Petroleum Exporting Countries (OPEC) totaled 31.26 million barrels per day (b/d) in August, down 140,000 b/d from the July level of 31.4 million b/d as several member countries, including Saudi Arabia, trimmed output, according to a just-released Platts survey of OPEC and oil industry officials and analysts.

Together, these deals mean that Europe’s big energy companies want to return to business as usual with Russia, despite the continuing conflict in Ukraine and the EU’s continuing sanctions on Russia.

Low oil prices risk causing a lack of investment in conventional oil supply in non-OPEC countries, strengthening OPEC market power and creating additional uncertainty, the IEA's director for energy markets and security, Keisuke Sadamori, said Tuesday.

Britain's North Sea oil and gas sector has shed more than 5,000 jobs since late last year, the country's new Oil and Gas Authority said on Monday, putting an official figure on job losses resulting from a year-long decline in oil prices.

Energy companies have been hurt by the swoon in crude prices this year, but Canadian Oil Sands is among the worst performing. The company’s stock has lost almost 40% of its value so far this year, compared with a 22% decline in the Toronto Stock Exchange energy index.

Due to actual investments in production the volumes are still being added to the market, but the current cuts are starting to have an affect. In the next years the ongoing programs of investment shrinking - primarily from the transnational corporations - will certainly have their effect. As for now, the implementation of their long-term investment programs that started even before the current crisis has expressed in some production growth. But in 2014, the oil majors claimed to reduce the investment in production; in 2015, additional reductions by 10-20% and more were announced by such majors as BP, Shell, Chevron, Total. Overall cutback in global upstream investment was about $140 bln, and it is expected to reach $200-250 bln by 2016 year-end. Within 2-3 years, this will inevitably influence on the production and will have a long-term negative effect.

Oil declined for a second day after another Russian official ruled out cooperation on production cuts with OPEC, adding to signs that a global oversupply will persist.