Crude Oil: Saudi Arabia might demand Iran cutback if OPEC is to extend deal. Speculation about whether or not OPEC will extend its production cut deal for another six months will be one of the most significant variables affecting oil prices in the short run. S&P Global Platts reports that Saudi Arabia might only agree to an extension if Iran agrees to cut its production, something that it did not have to do as part of the initial deal. Iran agreed to a cap on production slightly higher than its October baseline for the January to June period, but Saudi Arabia is growing tired of taking on the bulk of the sacrifice for the market adjustment and might stipulate that other countries make a larger sacrifice if the deal is to be extended through the end of the year.
Libyan oil production back up to 700,000 bpd.Libya offered oil bulls a glimmer of hope in early March when it lost nearly 100,000 bpd in production because of fighting between competing factions over the country’s largest oil export terminals. However, production is back up to 700,000 bpd and Libya’s National Oil Company (NOC) has hopes of making much larger gains this year. "We are working very hard to reach 800,000 barrels by the end of April 2017, and, God willing, we will reach 1.1 million barrels next August," NOC Chairman Mustafa Sanalla said in a statement. If Libya adds another 400,000 bpd by August, it will be hugely bearish for oil prices. The markets are not taking into account this supply potential, and it could blindside investors.
Eni makes Mexican oil discovery. Italian oil giant Eni (E-NY) announced a “meaningful” discovery in Mexican waters this week, the first well drilled by a private international company. The discovery is a boost to Mexican’s energy reform, which began years ago and is starting to bear fruit. It will also likely spark more interest in Mexico’s next auction in June for deepwater offshore acreage. |
