Could OPEC play second fiddle to US’s oil boom?

Could OPEC play second fiddle to US’s oil boom?

With America’s oil boom, OPEC is stuck in retreat as demonstrated in this June 11, 2019, post of CNN’s. The MENA mainstream media are shouting: Could OPEC play second fiddle to US’s oil boom? In any case, a new world order seems to be taking shape with respect to the world’s energy generation, production and trade.

In the meantime, here is CNN’s view on this seemingly fight between Shale and conventional fossil fuel type of commerce.

Could OPEC play second fiddle to US’s oil boom?

America’s oil boom will break more records this year. OPEC is stuck in retreat

By Matt EganCNN Business

New York (CNN Business) The epic American oil boom is just getting started. OPEC, on the other hand, is stuck on the sidelines. US oil production is on track to spike to a record 13.4 million barrels per day by the end of 2019, according to a recent report by energy research firm Rystad Energy. Texas alone is expected to soon top 5 million barrels per day in oil production — more than any OPEC member other than Saudi Arabia. Oil plunges back into bear market The surge in American barrels — led by the Permian Basin in West Texas — has offset oil blocked by US sanctions on Venezuela and Iran. But all of that US oil is also contributing to a supply glut that last week sent crude into another bear market. OPEC has been forced to scale back its output — a trend that could continue as the cartel tries to prop prices back up. “We continue to see the Permian representing the key driver of global oil supply growth for the next five years,” Goldman Sachs analyst Brian Singer wrote to clients on Monday.

US daily output could soon top 14 million

The shale oil revolution has made the United States the world’s leading producer, surpassing Saudi Arabia and Russia. The ferocity of the US shale oil revolution has caught analysts off guard several times over the past decade. Rystad Energy ramped up its year-end US output forecast by 200,000 to 13.4 million barrels per day. In May, the United States likely produced a record 12.5 million barrels of oil per day, the firm added. All but four million of those barrels were from shale oilfields. That growth is expected to continue. The United States is on track to end 2020 by producing 14.3 million barrels per day, Rystad projects. That’s slightly higher than the firm previously estimated and nearly triple 2008’s output. Of course, analysts could have to rein in those blockbuster forecasts if oil prices crash significantly further. That would force American frackers to preserve cash and pull back on production.

OPEC’s production hits five year low

OPEC remains in retreat as the cartel tries to balance the market by putting a floor beneath prices. OPEC’s oil production tumbled to 29.9 million barrels per day in May, the lowest level in more than five years, Rystad said. OPEC output is down 2.6 million per day since October 2018 — the month before oil prices crashed into the last bear market. Khalid al-Falih, Saudi Arabia’s energy minister, said on Friday that OPEC is close to a deal to extend its production cuts. Those cuts, which Saudi Arabia has borne the brunt of, are due to expire at the end of June. The stock market is ‘spoiled’ by rate cuts” We think that OPEC will at least maintain its output cuts, and maybe even deepen them at their next meeting,” Caroline Bain, chief commodities economist at Capital Economics, wrote in a note to clients on Monday. Rystad dimmed its projection for Saudi Arabia’s oil production from 10.6 million barrels per day to 10.3 million.

Venezuela, Iran under pressure

OPEC’s output could be further hurt by problems in some of its member countries. Iran’s oil exports have plunged because of US sanctions. The years-long collapse of Venezuela’s oil industry has been accelerated in recent months by US sanctions and sprawling blackouts in the South American nation. “There appears little prospect of a recovery in output from Iran or Venezuela any time soon,” Bain wrote. Violence is also threatening oil production in Libya and Nigeria. All told, Rystad Energy estimates 1.3 million barrels per day of oil production is at risk in those four OPEC nations. “Risks to short-term supply are undoubtedly still plentiful,” Rystad analyst Bjørnar Tonhaugen said in the report.

Will crude slide below $50?

Despite all this, analysts aren’t predicting a spike in oil prices. If anything, forecasters are bracing for more pressure on prices, due in part to robust US production. Brent, which has tumbled about 15% since late April to $63 a barrel, should finish the year at around $60 a barrel, according to Capital Economics. The US economy is about to break a record. These 11 charts show why US oil prices, trading at about $54 a barrel, are down nearly 19% since late April. Recent selling has been driven by a spike in oil inventories that suggest demand for crude is deteriorating. Goldman Sachs said that a reversal in the oil demand metrics will be required to prevent US oil prices from sinking below the $50-$60 range.”Our real concern is over demand weakness,” consulting firm Facts Global Energy wrote in a report on Monday. “Have we entered an era where demand will keep falling and we have a lot more oil on our hands than expected?”

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Fossil Fuel Complicity as No Longer Hidden

Fossil Fuel Complicity as No Longer Hidden

­CleanTechnica Fossil Fuels elaborated on the more and more overwhelming tendency of eying Fossil Fuel complicity as no longer hidden in America’s investments institutions. as well as elsewhere in the world. Here it is.

Fossil Fuel Complicity No Longer Hidden Behind ‘Fiduciary Duty’

May 7th, 2019 by Carolyn Fortuna 

They’re not giving up. Yes, several attempts were defeated to persuade the Massachusetts municipal and county retirement systems to remove fossil fuel investments from their portfolios. But the Massachusetts Legislature is still considering measures that open up possibilities for divestment. To do otherwise, they argue, is to engage in fossil fuel complicity.

And they’re not alone. All over the US, organizations are pushing for divestments within institutions and municipalities. Led by FossilFree.org, individuals and advocacy groups are raising the discourse around the necessity to stop and ban all new oil, coal, and gas projects bypassing local resolutions to divest and by building community resistance.

fossil fuel complicity

Divestment has been a tool used to promote social change since at least the 1970s, when anti-apartheid activists urged institutions to move their investment dollars away from companies that did business with South Africa. Fossil fuel divestment has been gaining momentum in recent years, with more than 1,000 institutions pledging to remove $8.55 trillion from investments in the fossil fuel sector.

fossil fuel complicity

Fiduciary Duty is Now a Companion Argument to Social & Environmental Reasons to Divest

In 2017, Somerville, Massachusetts’ governing board agreed to move $9.2 million — 4.5% of the total invested funds — out of fossil fuel investments. The regulatory body that oversees public pension systems rejected the move, however, with reasons ranging from procedural to breach of fiduciary duty. The Massachusetts Public Employee Retirement Administration Commission (PERAC) claimed Somerville was failing to put the financial needs of its beneficiaries ahead of social and environmental causes. PERAC oversees 104 public pension plans across the state, with about $86 billion in total assets.

However, 2 counterarguments quickly made that position untenable.

  1. Demand for fossil fuels is likely to drop as much of the global economy shifts to renewable energy.
  2. Increased storm frequency due to climate change can cause supply chain disruption and infrastructure damage for oil companies.

“From the fiduciary perspective, there are a lot of questions as to the economic health of the fossil fuel sector moving forward,” Alex Nosnik, a member of the Somerville board, said. “Risk, certainly in concert with the environmental and social issues, was driving our decision to move forward.”

Ultimately, after lots of divestment advocates worked alongside sympathetic legislators to craft a local option bill that would authorize any municipal or county retirement system to divest from fossil fuels should they so choose. Standalone bills have been filed in the House and Senate; similar language has also been included in a wide-ranging clean energy bill pending in the Senate.

Several of the state’s environmental groups have come out in favour of these measures, including the Massachusetts chapter of the Sierra Club, the Green Energy Consumers Alliance, and the Climate Action Business Association.

“We have to stop putting money into fossil fuels,” said Deb Pasternak, director of Sierra Club Massachusetts. “We need to take our money and direct it toward the renewable energy economy.”

Read more on CleanTechnica.

Energy giants spent $1bn on climate lobbying

Energy giants spent $1bn on climate lobbying

Polluters, as all those big energy producers (Big Oils, OPEC members and non members alike) are labelled, appeared to be ‘undermining’ UN climate Paris agreement. In effect, Oil, Gas and Coal world giants are exploiting a lack of conflict-of-interest protection at UN climate talks to push for continued fossil fuel use despite its contribution to catastrophic climate change through expensive lobbying campaigns because as it happens these oil, gas and coal giants could stand to waste trillions in a moderate world climate change. Patrick Galey elaborates on Phys.org.

Energy giants spent $1bn on climate lobbying, PR since Paris: watchdog

By Patrick Galey
The five biggest publicly listed oil and gas majors made profits of $55 billion in 2018
The five biggest publicly listed oil and gas majors made profits of $55 billion in 2018

The five largest publicly listed oil and gas majors have spent $1 billion since the 2015 Paris climate deal on public relations or lobbying that is “overwhelmingly in conflict” with the landmark accord’s goals, a watchdog said Friday.

Despite outwardly committing to support the Paris agreement and its aim to limit global temperature rises, ExxonMobil, Shell, Chevron, BP and Total spend a total of $200 million a year on efforts “to operate and expand fossil fuel operations,” according to InfluenceMap, a pro-transparency monitor.

Two of the companies—Shell and Chevron—said they rejected the watchdog’s findings.

“The fossil fuel sector has ramped up a quite strategic programme of influencing the climate agenda,” InfluenceMap Executive Director Dylan Tanner told AFP.

“It’s a continuum of activity from their lobby trade groups attacking the details of regulations, controlling them all the way up, to controlling the way the media thinks about the oil majors and climate.”

The report comes as oil and gas giants are under increasing pressure from shareholders to come clean over how greener lawmaking will impact their business models.

As planet-warming greenhouse gas emissions hit their highest levels in human history in 2018, the five companies wracked up total profits of $55 billion.

At the same time, the International Panel on Climate Change—composed of the world’s leading climate scientists—issued a call for a radical drawdown in fossil fuel use in order to hit the 1.5C (2.7 Fahrenheit) cap laid out in the Paris accord.

InfluenceMap looked at accounts, lobbying registers and communications releases since 2015, and alleged a large gap between the climate commitments companies make and the action they take.

It said all five engaged in lobbying and “narrative capture” through direct contact with lawmakers and officials, spending millions on climate branding, and by employing trade associations to represent the sector’s interests in policy discussions.

“The research reveals a trend of carefully devised campaigns of positive messaging combined with negative policy lobbying on climate change,” it said.

It added that of the more than $110 billion the five had earmarked for capital investment in 2019, just $3.6bn was given over to low-carbon schemes.

Oil companies and climate change
Forecast combined capital spending in 2019 by the major oil companies – BP, Total, Shell, Chervron, ExxonMobil – on oil and gas and low carbon projects and spending on lobbying and branding.

The report came one day after the European Parliament was urged to strip ExxonMobil lobbyists of their access, after the US giant failed to attend a hearing where expert witnesses said the oil giant has knowingly misled the public over climate change.

“How can we accept that companies spending hundreds of millions on lobbying against the EU’s goal of reaching the Paris agreement are still granted privileged access to decision makers?” said Pascoe Sabido, Corporate Europe Observatory’s climate policy researcher, who was not involved in the InfluenceMap report.

The report said Exxon alone spent $56 million a year on “climate branding” and $41 million annually on lobbying efforts.

In 2017 the company’s shareholders voted to push it to disclose what tougher emissions policies in the wake of Paris would mean for its portfolio.

US donations

With the exception of France’s Total, each oil major had largely focused climate lobbying expenditure in the US, the report said.

Chevron alone has spent more than $28 million in US political donations since 1990, according to the report.

AFP contacted all five oil and gas companies mentioned in the report for comment.

“We disagree with the assertion that Chevron has engaged in ‘climate-related branding and lobbying’ that is ‘overwhelmingly in conflict’ with the Paris Agreement,” said a Chevron spokesman.

“We are taking action to address potential climate change risks to our business and investing in technology and low carbon business opportunities that could reduce greenhouse gas emissions.”

A spokeswoman for Shell—which the report said spends $49 million annually on climate lobbying—said it “firmly rejected” the findings.

“We are very clear about our support for the Paris Agreement, and the steps that we are taking to help meet society’s needs for more and cleaner energy,” they told AFP.

BP, ExxonMobil and Total did not provide comment to AFP.

Explore further: Money talks when trying to influence climate change legislation

Read more at: https://phys.org/news/2019-03-energy-giants-spent-1bn-climate.html#jCp

Fossil-fuel Executives are Mass Murderers

Fossil-fuel Executives are Mass Murderers

It isn’t hyperbole to say that fossil-fuel executives are mass murderers. We should put them on trial for crimes against humanity.

It’s Time to Try Fossil-Fuel Executives for Crimes Against Humanity

By Kate Aronoff


Then–US secretary of State Rex Tillerson, the former head of ExxonMobil, looks on during a Senate Foreign Relations Committee hearing on October 30, 2017 in Washington DC. Drew Angerer / Getty

The fossil-fuel industry is lawyering up.

To date, nine cities have sued the fossil industry for climate damages. California fisherman are going after oil companies for their role in warming the Pacific Ocean, a process that soaks the Dungeness crabs they harvest with a dangerous neurotoxin. Former acting New York state attorney general Barbara Underwood has opened an investigation into whether ExxonMobil has misled its shareholders about the risks it faces from climate change, a push current Attorney General Leticia James has said she is eager to keep up. Massachusetts attorney general Maura Healey opened an earlier investigation into whether Exxon defrauded the public by spreading disinformation about climate change, which various courts — including the Supreme Court — have refused to block despite the company’s pleas. And in Juliana vs. U.S., young people have filed suit against the government for violating their constitutional rights by pursuing policies that intensify global warming, hitting the dense ties between Big Oil and the state.

These are welcome attempts to hold the industry responsible for its role in warming our earth. It’s time, however, to take this series of legal proceedings to the next level: we should try fossil-fuel executives for crimes against humanity.

Guilty Beyond a Reasonable Doubt

Just one hundred fossil fuel producers — including privately held and state-owned companies — have been responsible for 71 percent of the greenhouse gas emissions released since 1988, emissions that have already killed at least tens of thousands of people through climate-fueled disasters worldwide.

Green New Deal advocates have been right to focus on the myriad ways that decarbonization can improve the lives of working-class Americans. But an important complement to that is holding those most responsible for the crisis fully accountable. It’s the right thing to do, and it makes clear to fossil-fuel executives that they could face consequences beyond vanishing profits.

More immediately, a push to try fossil-fuel executives for crimes against humanity could channel some much-needed populist rage at the climate’s 1 percent, and render them persona non grata in respectable society — let alone Congress or the UN, where they today enjoy broad access. Making people like Exxon CEO Darren Woods or Shell CEO Ben van Beurden well known and widely reviled would put names and faces to a problem too often discussed in the abstract. The climate fight has clear villains. It’s long past time to name and shame them.

Left unchecked, the death toll of climate change could easily creep up into the hundreds of millions, according to the Intergovernmental Panel on Climate Change (IPCC), in turn unleashing chaos and suffering that’s simply impossible to project. An independent report commissioned by twenty governments in 2012 found that climate impacts are already causing an estimated four hundred thousand deaths per year.

Counting a wider range of casualties attributed to burning fossil fuels — air pollution, indoor smoke, occupational hazards, and skin cancer — that figure jumps to nearly 5 million a year. By 2030, annual climate and carbon-related deaths are expected to reach nearly 6 million. That’s the rough equivalent of one Holocaust every year, which in just a few short years could surpass the total number of people killed in World War II. All caused by the fossil-fuel industry.

Knowing full well the deadly consequences of continued drilling, the individuals at the helm of fossil-fuel companies each day choose to seek out new reserves to burn as quickly as possible to keep their shareholders happy. They use every possible tool — and they have many — to sabotage regulatory action.

That we need to instead strip fossil fuels from the global economy isn’t up for debate. Without the increasingly distant-seeming deployment of speculative, so-called negative emissions technologies, coal usage will have to decline by 97 percent, oil by 87 percent, and gas by 74 percent by 2050 for us to have a halfway decent shot at keeping warming below 1.5 degrees celsius. That’s what it will take to avert pervasive, catastrophic climate impacts that will destabilize the very foundations of society. (Keeping warming to a more dangerous 2.0 degrees celsius will require decarbonization that’s almost as abrupt.)

recent report by Oil Change International detailing the climate costs of continued drilling lays the problem out in simple terms: either we embark on a managed decline of the fossil-fuel industry, or we face economic and ecological ruin. Simply put, the business model of the fossil-fuel industry is incompatible with the continued existence of anything we might recognize as human civilization.

Barring a major course correction, that business model — and more specifically, the executives who have designed and executed it — will be responsible for untold suffering within many of our lifetimes, with the youngest and poorest among us bearing a disproportionate burden, along with people of color and residents of the Global South.

As recent research and reporting have documented, some of the world’s biggest polluters have known for decades about the deadly threat of global warming and the role their products play in fueling it. Some companies began research into climate change as early as the 1950s. These days, none can claim not to know the mortal danger posed by their ongoing extraction.

Literally a Crime Against Humanity

Technically speaking, what fossil-fuel companies do isn’t genocide. Low-lying islands and communities around the world are and will continue to be the worst hit by climate impacts.

Still, the case against the fossil-fuel industry is not that their executives are targeting specific “national, ethnical, racial, or religious” groups for annihilation, per the Rome Statute, which enumerates the various types of human rights abuses that can be heard before the International Criminal Court. Rather, the fossil industry’s behavior constitutes a Crime Against Humanity in the classical sense: “a widespread or systematic attack directed against any civilian population, with knowledge of the attack,” including murder and extermination. Unlike genocide, the UN clarifies, in the case of crimes against humanity,

it is not necessary to prove that there is an overall specific intent. It suffices for there to be a simple intent to commit any of the acts listed…The perpetrator must also act with knowledge of the attack against the civilian population and that his/her action is part of that attack.

Fossil-fuel executives may not have intended to destroy the world as we know it. And climate change may not look like the kinds of attacks we’re used to. But they’ve known what their industry is doing to the planet for a long time, and the effects are likely to be still more brutal if the causes are allowed to continue.

Read more in the original document.

2018 Divestment Year in Review

2018 Divestment Year in Review

From school children to individuals, companies, and corporations, the global fossil fuel divestment movement has challenged the right of the fossil fuel industry to damage the environment. By divesting from fossil fuels, we are requiring polluters to take responsibility for their products and hitting them where it hurts the most — their stock values and investor dividends. In this “CleanTechnica 2018 Divestment Year in Review,” we’ll be looking at the progress that the people-powered grassroots movement has accomplished toward shifting small and large investments away from fossil fuels and into a greener, low-carbon economy.

This #CleanTechnica Report post dated December 27th, 2018 by Carolyn Fortuna gives us a pertinent picture of worldwide trends that will no doubt amplify further in the future.

Divestment Year in Review 2018

Over 1000 institutions with managed investments worth almost $8 trillion have committed to divest from fossil fuels. Fund managers and fiduciaries are increasingly aware of the risks of climate breakdown and deciding of their own accord to divest from morally unsound and financially risky industries.

Standout 2018 Divestments

Momentum for divestment has only accelerated: pledges span 37 countries with over 65% of commitments coming from outside the US. The divestment sources now include major capital cities, mainstream banks and insurance companies, massive pension funds, faith groups, cultural, health, and educational institutions — all of which serve billions of people. 350.org outlines how 2018 trends about divestment have pointed to:

  • the exponential rate of growth in the number of institutions and total funds divested from fossil fuels companies
  • the global breakdown of divestments including numerous commitments on every continent
  • politically significant commitments such as those of the sovereign wealth funds of Ireland, Norway, and city divestments of Cape Town and New York
  • the sector breakdown of divestment actions, which demonstrates the moral leadership of the faith sector on the issue of divestment

The latest commitments propelling the campaign to over 1000 institutions that have divested include:

  • AG2R la mondiale (US$114 billions)
  • Australian Vision Super Fund (US$9 billion)
  • Brandeis University (US$997 million)

Want a full list of divestment commitments? Click here.

Recent Global Decisions that Affect Fossil Fuel Portfolios

The Paris Agreement set out aims to limit the global mean temperature increase ‘well below’ 2 °C. That goal will diminish global carbon budgets for the 21st century in order to reduce CO2 emissions. Logically, as a result, a considerable share of fossil fuels will remain underground that might have otherwise been extracted and sold at tremendous profits.

COP24 (the informal name for the 24th Conference of the Parties to the United Nations Framework Convention on Climate Change) met in December, 2018 in Poland to work out and adopt a package of decisions ensuring the full implementation of the Paris Agreement, in accordance with the decisions adopted in Paris (COP21) and in Marrakesh (CMA1.1) as well as to support the implementation of national commitments.

On December 12, May Boeve, executive director of 350.org, seemed uncertain that diplomats to the COP24 would find common ground.

“When this movement started in 2012, we aimed to catalyse a truly global shift in public attitudes to the fossil fuel industry, and people’s willingness to challenge the institutions that financially support it. While diplomats at the UN climate talks are having a hard time making progress, our movement has changed how society perceives the role of fossil fuel corporations and is actively keeping fossil fuels in the ground.”

A short paper published in Nature also outlines concurrent challenges in delaying the recommendations in the Paris agreement until 2030 while complying with the 2° C target:

  • higher CO2 prices
  • a strong drop in fossil fuel prices because of the rapid reduction in demand
  • stranded assets of fossil fuel-based infrastructure
  • a strong acceleration in the required ramp-up of low-carbon technologies

By December 15, however, an all-night bargaining session concluded with a plan to reach the Paris Agreement’s goals to curb global warming, according to the New York Times. Diplomats from nearly 200 countries reached consensus on a detailed set of rules which will, ultimately, require every country in the world to follow a uniform set of standards for measuring its planet-warming emissions and tracking its climate policies. Here is the big picture of that accord.

  • Countries must accelerate plans to cut emissions ahead of another round of talks in 2020.
  • Richer countries must delineate the kinds of aid they intend to offer to help poorer nations install more clean energy or build resilience against natural disasters.
  • Countries that are struggling to meet their emissions goals can follow a new process to get back on track.

The accord should intensify the divestment effect as climate policy ambition increases and the policy implementation dates come closer.

Why Companies and Individuals are Divesting

While the divestment trend is expanding exponentially, two responses to a climate policy suggest a lag between climate action announcements and action implementations of policies to reduce CO2 emissions.

  • The “green paradox” hypothesizes that near-term CO2 emissions will rise above the ‘well below’ 2 °C baseline as fossil fuel owners frontload supply from their endowments. They’ll do so to evade the negative consequences of future fossil fuel price drops due to planned climate policies.
  • The “divestment effect” argues that near-term CO2 emissions will decrease below the baseline as investors avoid fossil fuel-based infrastructures with high emission intensities, high capital costs, and long technical lifetimes that could become stranded.

The moral argument: Countries around the world can emit up to 565 more gigatons of carbon dioxide and stay below 2°C of warming, but anything more than that level prescribes catastrophe. The authors of the landmark report by the UN Intergovernmental Panel on Climate Change (IPCC), written by the world’s leading climate scientists, have warned there are only a dozen years for global warming to be kept to a maximum of 1.5 C. Beyond that point, even half a degree will significantly worsen the risks of drought, floods, extreme heat, and poverty for hundreds of millions of people.

Burning the fossil fuel reserves that corporations now have would result in emitting 2,795 gigatons of carbon dioxide, according to GoFossilFree — 5 times the safe amount. Fossil fuel companies are planning to burn it all — unless we rise up to stop them with climate action policies and divestment.

Financial incentives: Fossil fuel reserves are defined as economically and technically recoverable sources of crude oil, natural gas, and thermal coal. Using analytics to maintain a persistent view on an investment portfolio, many capital investment groups are suggesting that their clients turn to Fossil Free indices, which outperformed many 2018 benchmarks that contained fossil fuels. Despite being among the top 500 wealthiest corporations, the energy sector (coal, oil, and gas) performance lagged behind the market for the last 5 years plus. The S&P 500 Fossil Fuel Free Index is designed to measure the performance of companies in the S&P 500 that do not own fossil fuel reserves.

Read more in the above mentioned #CleanTechnica Report.

Eight factors determining the price of oil

Eight factors determining the price of oil

As put by Kimberly Amadeo in her article on The Behind-the-Scenes Role of Commodities Traders,  Oil prices are controlled by traders who bid on oil futures contracts in the commodities market. That’s why oil prices change daily. It all depends on how trading went that day.

Other entities can only affect the traders’ bidding decisions. These influencers include the U.S. government and the Organization of Petroleum Exporting Countries. They don’t control the prices because traders actually set them in the markets.

The oil futures contracts are agreements to buy or sell oil at a specific date in the future for an agreed-upon price. They are executed on the floor of a commodity exchange by traders who are registered with the Commodities Futures Trading Commission (CFTC). Commodities have been traded for more than 100 years. The CFTC has regulated them since the 1920s in the US and by equivalent institutions in every developed and / or developing country.  It is also function of the following:

The eight factors determining the price of oil

According to the September monthly report of the International Energy Agency (IEA), in August 2018, for the first time, the bar of 100 million barrels produced per day was crossed. World oil consumption represented 97.4 million barrels per day (MBJ) in 2017 (including 57 MBJ by non-OPEC countries), equivalent to 1,127 barrels or 179,000 liters per second. Also, despite the commitments of the Paris Agreement (COP21) of December 2015 (entered into force in November 2016), global awareness for the climate does not seem to reach the oil sector. A list of eight reasons that determine the current course.

  • The first reason, as noted in international reports would be a recovery of growth for 2018, but with a slowdown forecast for 2019 and 2020. Many international experts, as well as international institutions such as the IMF and the World Bank, foresee a possible global crisis horizon 2020/2025 in case of acceleration of protectionist measures between the US and Europe, as well as between the US and China.  Moreover, the latest report of the IEA of October 2018 warns the countries dependent on the oil revenues, due to a change in the trajectory of growth based on a new configuration of the global energy demand (Energy efficiency, renewable energies, hydrogen inlet horizon 2030 all based on the Knowledge economy) that will impact the demand for traditional hydrocarbons.
  • The second reason is respect for the quota of each member of the OPEC as decided upon in December 2016 in Vienna with notably Saudi Arabia representing 33% of OPEC’s. It is worth noting that OPEC in its entirety represents 33% of global marketing, even though the current tensions between Iran and Saudi Arabia can lead to a disagreement between unsatisfied OPEC’s members.
  • The third reason is the agreement between OPEC’s Saudi Arabia and non-OPEC Russia; these two countries producing each more than 10 million barrels per day. Moreover, any different decisions from these two countries would impact the price of hydrocarbons downwards.
  • The fourth reason is the political situation in Saudi Arabia, the world not seeing yet evident in the action of the kingdom’s Crown prince, with the fear of internal political tensions, but above all the sale of 5% shares of the country’s largest company ARAMCO, to maintain its shares at a high level; sale that has been postponed.
  • The fifth reason is the tension in Kurdistan (this area producing about 500,000 barrels/day), declining Venezuelan production, socio-political tensions in Libya and Nigeria.
  • The sixth reason is the American president’s speech on the US having second thoughts on the agreement on Iran nuclear deal; with sanctions beginning to be applied on November 5th, 2018. This would certainly be mitigated by the European position that decided to set up a barter system to circumvent the transactions in Dollars, and the Chinese market or the Iranians can get paid in Yuan.
  • The seventh reason is the weakness of the Dollar in relation to the Euro.
  • The eighth reason is the decline or rise of US stocks, while not forgetting the Chinese stocks.

In the short term, the above eight reasons may influence the price of oil either upward or downward, with some factors being more predominant than others.  The Minister of Energy of Saudi Arabia reported on October 30th, 2018, under American pressure to raise its oil production to 12 million barrels per day against 10.7 million currently, to fill in for the Iranian production and in this case, it will be followed by Russia that does not want to lose market share.  In this hypothesis, the price of Brent should, except for a significant global crisis where the prize could fall below 60 Dollars, fluctuate between 65 and 75 Dollars, 70 Dollars a barrel, being the price of equilibrium in order not to penalise either the consumer countries or the producing ones.  The oil price went lower than $60 mainly as consequent to the massive entry of U.S. shale oil and gas with a production exceeding 10 million barrels/day.

In August 2018, according to the US Energy Information Agency (EIA), the US has even turned into the world’s leading producer of oil, in front of Russia and Saudi Arabia, with 10.9 million barrels per day and this production should even exceed 11.5 million barrels per day in 2019.