OIL MARKET UNCERTAINTY
PLATTS - With a critical meeting in Algiers fast approaching, a fractured OPEC and its allies are still searching for consensus on how members with spare output capacity can equitably distribute the extra barrels they intend to pump without upsetting those unable to produce more.
The Saudi and Russian energy ministers met over the weekend to align their positions, while delegates on a six-country technical committee are scheduled to hold a conference call Monday to mull various proposals.
Meanwhile, Iran's OPEC governor accused Saudi Arabia and Russia of being in cahoots with the US to undermine other OPEC members and destabilize the oil market.
The posturing comes ahead of Sunday's summit of the OPEC/non-OPEC monitoring committee in the Algerian capital, which reportedly will be attended by ministers from almost the entire the 24-country producer coalition.
There, the group aims to reveal a production policy that can calm market fears of tight supplies in the months ahead, while remaining nimble enough to prevent a glut if global demand proves softer than expected.
The coalition on June 23 agreed to raise output by 1 million b/d, but left unsettled how that will be allocated, with Iran insisting that members stick to individual quotas and Saudi Arabia saying the deal involves a collective production ceiling.
"As things stand, the overriding theme across the oil market is one of uncertainty," said Stephen Brannock, an analyst with brokerage PVM Oil Associates. "Market players are bracing for the full impact of US sanctions on Iran's export capabilities and the full extent of Venezuela's downward spiral. Add in a sprinkling of downside risks on the demand side of the oil equation and you have all the ingredients for price fireworks."
1.4 million b/d of Iranian oil supplies to leave the market by November, when the US sanctions go into force.
Venezuela, which pumped 1.22 million b/d in August could see output fall to 1 million b/d in 2019. Politically unstable Libya also presents a supply risk.
Meanwhile, decline on the demand is a negligible impact from the US-China trade dispute, though OPEC has projected a contraction of some 350,000 b/d in global consumption in a worst-case scenario of ratcheting tariffs.
IRAN DECRIES SAUDI-RUSSIAN TIES
Amid that backdrop and with front-month Brent crude futures briefly topping $80/b last week, Saudi energy minister Khalid al-Falih and Russian counterpart Alexander Novak said Sunday they remained committed to "ensuring the adequacy of oil supplies, especially considering market uncertainties on the horizon."
"They also reaffirmed their continued commitment to promptly and appropriately respond to market developments, working with their partners," the ministries said in a joint statement.
Both countries have already boosted their output, by some 800,000 b/d combined since May, and Falih and Novak said they will continue working towards institutionalizing a long-term partnership between OPEC and the 10 non-OPEC countries in the coalition.
The comments came just days after the ministers held separate meetings with US Energy Secretary Rick Perry, who on Friday praised the cooperation between Russia and Saudi Arabia in managing the oil market. US President Donald Trump has pressured OPEC -- Saudi Arabia, in particular -- not to let prices rise too high, as he prepares to reimpose sanctions on Iran.
Iran's OPEC Governor Hossein Kazempour Ardebili said Sunday that Saudi Arabia and its close ally the UAE, which holds the rotating OPEC presidency this year, have turned the organization into a "tool for the US."
"There is no doubt that [Saudi Arabia, Russia and the US] are all against Iran," Kazempour said in an interview with Iran's oil ministry news service Shana. "OPEC's responsibility is balancing the market. ... Every single barrel and their schedules should be discussed by OPEC members."
His comments largely echo his interview with Platts on Wednesday, when he blamed Trump for "bullying" the oil market for the benefit of US, Saudi and Russian producers.
Iranian officials have threatened to block all oil exports from the Persian Gulf region if Saudi Arabia and other OPEC members infringe on Iran's sanctions-crimped market share, though they have been vague on how they would achieve such a move.
Iranian oil minister Bijan Zanganeh plans to attend the Algiers meeting to state his country's case and plead for OPEC unity, setting up what could be difficult talks. At a June meeting of the OPEC/non-OPEC monitoring committee in Vienna, Zanganeh abruptly walked out, calling the proceedings a farce, before later agreeing to the 1 million b/d supply increase plan.
"The US bullying behavior undoubtedly will not end with Iran and Venezuela," Kazempour said. "Silence is not the answer."
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TP - With fast growing demand and expanding gas receiving capacity in Pakistan, the South Asian nation is expected to source more liquefied natural gas (LNG) from Qatar, said the country’s visiting Finance Minister Asad Umar.
REUTERS - Qatar Petroleum (QP) is looking to invest at least $20 billion in the United States over the coming few years, its chief executive told Reuters, after the Gulf Arab state unexpectedly quit OPEC this month.
U.S. FRB - U.S. industrial production rose 0.6 percent in November after moving down 0.2 percent in October; the index for October was previously reported to have edged up 0.1 percent. In November, manufacturing production was unchanged, the output of mining increased 1.7 percent, and the index for utilities gained 3.3 percent.
BHGE - U.S. Rig Count is down 4 rigs from last week to 1,071, with oil rigs down 4 to 873 and gas rigs unchanged at 198. Canada Rig Count is down 12 rigs from last week to 174, with oil rigs down 7 to 95 and gas rigs down 5 to 79.