OIL PRODUCTION & PRICES
BOE - Reeling from the worst oil-market rout in a generation, producers controlling about 60 percent of world supply came together last year determined to put an end to the global glut. Five months on, their historic deal to cut output has failed to drain inventories or sustain prices much above $50 a barrel after early gains brought U.S. competitors roaring back to life.
On Thursday, ministers from the Organization of Petroleum Exporting Countries and its allies meet in Vienna to decide whether to prolong their agreement. Major producers including Saudi Arabia, Russia and Iraq favor an extension for nine months and, while other options will be discussed, consensus is building around an agreement that runs through next March.
While OPEC has impressed the market with unprecedented levels of compliance since the cuts started in January, they'll be harder to maintain if the deal is extended. Supply may also increase from Libya and Nigeria, two OPEC countries exempt from the accord, which are making progress in tackling the political crises that slashed their output.
Following is the latest position of each OPEC country plus Russia. The respective shares of supply are based on April levels. Estimates for the price each member needs to balance its 2017 budget are from the International Monetary Fund unless stated otherwise.
Price needed: $64.70
Share of OPEC production: 3.3%
Algeria burned through cash during the oil-price rout to plug a budget deficit, and has counted on the supply deal to restore prices. Energy Minister Noureddine Boutarfa, whose shuttle diplomacy helped bring about the agreement last year, has said he backs a nine-month extension — as do most signatories to the deal. On Tuesday, he said "I think we have an agreement to do nine months."
Price needed: $83 (RBC Capital Markets)
Share of OPEC production: 5.2%
Angola will find output cuts hard to sustain in the second half as new projects boost flows, Bloomberg's Julian Lee writes. State explorer Sonangol canceled the sale of oil blocks this month as low crude prices make them untenable.
Price needed: $78 (RBC)
Share of OPEC production: 1.7%
Plunging prices for oil, Ecuador's biggest export, and a devastating earthquake in 2015 prompted the country's socialist government to pile on debt. President-elect Lenin Moreno campaigned on promises to boost spending further and will be counting on improved oil prices to avert a fiscal crisis. On Monday, the Oil Ministry said it would back an extension of production cuts.
Price needed: $61 (RBC)
Share of OPEC production: 0.63%
Gabon reentered OPEC in the middle of 2016 and has ambitious growth plans — to more than double current production of 200,000 barrels a day by 2020. Its agreed cut, of 9,000 barrels a day, represents about 4 percent of daily output. The group's smallest producer, Gabon depends on oil for about half state revenue.
Price needed: $51.30
Share of OPEC production: 11.8%
Iran was allowed to increase output under the OPEC deal as it recovered from international sanctions that crippled its energy industry. Since trade restrictions were eased in January 2016, production has climbed 34 percent, according to data compiled by Bloomberg. Output stabilized this year, gaining less than 1 percent. U.S. President Donald Trump has threatened to tear up the multiparty deal that lifted the sanctions, making Iran's future less certain. Oil Minister Bijan Namdar Zanganeh said Wednesday that an extension of nine months is acceptable.
Price needed: $54.30
Share of OPEC production: 13.8%
Iraq, which initially resisted a production target, has exceeded its 4.351 million-barrel-a-day limit in each month of the deal, according to data compiled by Bloomberg. Nevertheless, Oil Minister Jabbar Al-Luaibi backed a push from Saudi Arabia and Russia to prolong cuts for nine months, having previously favored just a six-month extension.
Price needed: $49.10
Share of OPEC production: 8.5%
While Kuwait supports the proposed nine-month extension, Oil Minister Issam Almarzooq has said that other durations will also be discussed. Along with its allies Saudi Arabia and the United Arab Emirates, Kuwait has traditionally shouldered much of the oil curbs. Almarzooq has dismissed the suggestion that deeper cuts could be made, saying they're not "necessary right now."
Price needed: $71.30
Share of OPEC production: 1.7%
The OPEC nation with Africa's largest crude reserves saw production crippled by civil war, but as the renewal decision nears, it's been ratcheting up output. Libya is now pumping at the highest level in more than two years after restarting its biggest oil field, Sharara, and El Feel, also known as Elephant. Together with Nigeria, Libya is exempt from the curbs.
Price needed: $127 (RBC)
Share of OPEC production: 5%
Nigeria, exempt from the cuts, has focused since January on reaching a negotiated settlement to end militant attacks on the country's oil infrastructure so it can restore production. The 200,000-barrel-a-day Forcados pipeline is said to be fixed after a year-long disruption. That alone may be enough to undermine efforts to clear a glut — the pipeline equates to about 17 percent of the OPEC cutback.
Price needed: $52.90
Share of OPEC production: 1.9%
More dependent on natural gas than on oil, Qatar enjoys among the world's highest per-capita GDPs. But its commitment to cut crude production combined with continued fiscal austerity is likely to slow growth this year, according to Bloomberg Intelligence Economist Mark Bohlund. It would gain from an agreement that boosts prices.
Price needed: $83.80
Share of OPEC production: 31.2%
OPEC's strong compliance has often been attributable to the Saudis cutting more than they promised, making up for laggards like Iraq and the U.A.E. While bearing the heaviest burden, the Kingdom has still gained from the deal. Oil revenue more than doubled in the first quarter, helping to narrow a budget deficit and allowing the government to reinstate the perks and bonuses to its citizens that it controversially withdrew last year. But maintaining production cuts will prove harder in the second half: Saudi Arabia typically boosts output in summer to meet local demand for air conditioning; keeping a cap on output would mean foregoing exports.
UNITED ARAB EMIRATES
Price needed: $67
Share of OPEC production: 9.1%
The Saudi ally exceeded its quota in the first months of the deal, but has promised to compensate as it cuts production to carry out maintenance through May. Energy Minister Suhail Al Mazrouei has said the country would support an extension and is open to discussing a six- or nine-month agreement.
Price needed: $216 (RBC)
Share of OPEC production: 6.2%
Perhaps more than any other OPEC nation, Venezuela needs an extension. It gets almost all its export revenue from oil, and the price collapse three years ago left the economy reeling. The country reduced output more than any other OPEC member in the last year and production is likely to keep falling — not because it's adhering to the supply deal but because foreign operators have fled and it doesn't have the cash to keep fields working. Oil Minister Nelson Martinez supports the proposal to extend cuts for nine more months.
Price needed: $40 (Figure used to calculate country's 2017-2019 budget)
Continued backing from the world's biggest energy producer is vital to the continuation of the deal, and the Kremlin has gained handsomely so far from its cooperation. The rally in prices boosted budget revenue from oil and natural gas above 500 billion rubles ($8.9 billion) in February for the first time in almost two years, Finance Ministry data show. However, oil companies such as Rosneft PJSC will find restraining output more painful going forward as planned projects must be put on hold. Energy Minister Alexander Novak said he supports a nine-month extension, possibly with an option for another three months.
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REUTERS - Brent crude futures LCOc1 were down 72 cents at $61.49 per barrel at 1020 GMT, having fallen by 1.5 percent on Tuesday, its largest one-day drop in a month. U.S. West Texas Intermediate (WTI) crude CLc1 was at $55.12 per barrel, down 58 cents.
BLOOMBERG - Prices dropped during the session as the International Energy Agency said the recent recovery in oil prices, coupled with milder-than-normal winter weather, is slowing demand growth. The worsening outlook for consumption dampened some of the enthusiasm that OPEC and its allies will extend supply curbs.
Global energy needs rise more slowly than in the past but still expand by 30% between today and 2040. This is the equivalent of adding another China and India to today’s global demand.
Product exports have grown significantly over the past several years and are expected to continue to grow as Russian refineries add capacity to produce more high-quality products.