Browsing: Crude oil in Africa

Only last December, the OPEC (and partners) coalition agreed to chop oil output by 1.7 million bpd, and in turn, Saudi Arabia agreed to cut its output by 400,000 bpd. However, Moscow is now backing away from more cuts in production because reducing production would give breathing room to the already suffering US producers. 

The US remains unmoved. It refuses to lower output despite the falling oil prices that have seen Washington suffer a minus US$4 in oil futures. Meanwhile, the Kremlin’s response has been to flood the market with even more oil output to push prices down.

While US oil producers have previously proved to be rather resilient to low prices, managing to counterbalance prices as low as US$30 per barrel in the past (see details below), they may not fare so well this time around. 

The shale producers were already suffering over the last year as Moscow waged …

Brent crude oil’s return to a $40/b handle has so far proved to be short-lived. During the past week the oil market has continued to move higher in the belief that the OPEC+ group of producers would extend a deal to curb production. Thereby continuing their support for the market while demand slowly recover.

Saudi Arabia and Russia, the leaders of the group, have preliminary agreed on a one-month extension of existing OPEC+ cuts. The problem, however, is once again what to do with countries that fail to deliver the promised cuts. Moscow, usually a laggard in previous deals, has almost reached its target of 8.5 million barrels/day. That has left the group in a stronger position to demand compliance from others.

Once again the focus has returned to Iraq and Nigeria, OPEC’s notorious cheaters, who for years now have failed to deliver fully on any of the previous …