Bearish Sentiment Takes Over Global Oil Markets

Bearish sentiment has well and truly taken over oil markets, with oil prices barely reacting to the OPEC+ decision to postpone its plan to boost production.

Usually, high-impact OPEC+ decisions trigger a notable reaction in the oil markets, but not this time. Sentiment has soured so much that the oil group’s decision to postpone the return of barrels they’ve cut in 2023 barely resonated at all, reinforcing fears that next year will see balances swinging heavily towards oversupply. As ICE Brent futures hover around $73 per barrel, oil prices are set to close this week at their lowest level since June 2023.

Citing worse-than-assumed economic data from China and the United States, eight members of OPEC+ that were scheduled to unwind their 2.2 million b/d of voluntary production cuts have agreed to delay their production hikes by two months, OilPrice.com reports.

According to Reuters, Kazakhstan’s Energy Ministry asked the shareholders of the supergiant Kashagan field to delay field maintenance planned for October to next year, citing gas shortages, negating the country’s OPEC+ compensation plan.

Oil tankers Kriti Samaria and Front Jaguar will load Libyan crude this week despite Haftar’s stated oil embargo in the African country, depleting remaining port stocks as production remains capped at around 600,000 b/d, half of Libya’s usual output.

Middle Eastern oil-producing giant Saudi Aramco and ADNOC are reportedly competing to buy Shell’s (LON:SHEL) service stations in South Africa as the UK-based energy major seeks to garner $1 billion from its African divestment program.

Norway’s government has asked its appeals court to lift injunctions against three oil and gas fields operated by Aker BP and Equinor (NYSE:EQNR), in place since January after a ruling found that the state failed to fully assess their climate impact.

After Colombia’s Petro government ended a diesel price subsidy that kept fuel prices stable for four years, protests have erupted across the country including attacks on pipelines, with state oil firm Ecopetrol (NYSE:EC) warning of oil output fallout.

India’s state-owned ONGC Videsh (NSE:ONGC) is seeking US regulatory approval to operate two new projects in Venezuela, citing a similar permission to Chevron (NYSE:CVX), to help it recover a pending dividend of more than $500 million.

Following the sixth FID of US oil major ExxonMobil (NYSE:XOM) in Guyana’s prolific Stabroek block, the Texas-based producer started appraisal drilling at its seventh oil project, the Hammerhead project that is believed to produce up to 190,000 b/d from 2029.

South Sudan’s output remains heavily curbed after the ongoing civil war in Sudan blocked its only pipeline route, prompting the country to invite China’s CNPC to develop an alternative pipeline to Djibouti via Ethiopia, avoiding its northern neighbour altogether.

Argentina’s state-run oil firm YPF (NYSE:YPF), up 45% in 2024 to date, is considering a sale of its lithium unit as part of a sweeping divestment drive that will see it streamline investment into the Vaca Muerta shale patch, only three years after its creation.

Europe’s leading carmakers Volkswagen and Volvo have corrected their EV strategies to the downside, with the former closing EV operations in Europe due to slower demand and the latter giving up on a strict mandate of producing only emissions-free cars by 2030.

The US Department of Energy authorized LNG developer New Fortress Energy (NASDAQ:NFE) to export LNG from its Altamira LNG offshore plant in Mexico to non-FTA countries, the first approval of its kind since he Biden administration halted the permitting process.

Venezuela’s oil and fuel exports in August rose to their highest in more than four years, hitting 885,000 b/d or 62% higher year-on-year, defying the reimposition of US sanctions as production from JVs with co-operated by Chevron and Repsol continue to edge higher.