Surprise OPEC+ output cut sends oil prices soaring

The surprise announcement of OPEC+ that the oil group would collectively cut production by 1.6 million b/d from May until December 2023 sent oil prices soaring, with the Monday trading session seeing the largest intraday increase since a previous OPEC+ production curb deal back in October 2022. With no major macroeconomic stories to tarnish the optimism of the bulls, a sustained oil price rally is looking increasingly likely.

Setting oil prices ablaze, leading OPEC+ oil producers agreed on Sunday to cut production targets by a further 1.6 million b/d from May 2023 until the year-end, extending overall curbs to 3.66 million b/d or almost 4% of global crude demand.

Iraq Reaches Deal with Kurds. After almost two weeks of halted exports, exports of Kurdish oil from the Turkish port of Ceyhan will resume in a couple of days after the Iraqi federal government and the Kurdish regional authorities agreed on a revenue-sharing mechanism to be controlled by Baghdad.

In the week preceding the OPEC+ cuts, hedge funds and money managers bought 61 million barrels in the six key futures and options contracts, with most of the buying coming from the closure of previous short positions (-48 million barrels).

The third deadly incident to strike Indonesia’s oil industry in March after a fuel terminal fire and a tanker blast earlier this month, an explosion at Pertamina’s Dumai refinery on the island of Sumatra has seriously injured nine people.

With French strikes still ongoing, the UK trade union Unite announced the first strike of its North Sea contract workers starting April 5 as it demands better pay and work conditions, impacting output at platforms operated by Shell (LON:SHEL), Harbour Energy (LON:HBR), and APA (NASDAQ:APA).

Global trading and mining firm Glencore (LON:GLEN) offered $22.5 billion for Canadian copper and zinc miner Teck Resources (NYSE:TECK), a 20% premium to the company’s stock price, although the latter rejected the unsolicited offer.

Concurrently with OPEC+’s attempts to establish a price floor for oil, China’s top producers of lithium carbonate have reportedly agreed on a floor price of 250,000 per tonne (36,000/mt) to slow the plunge in the price of the transition metal.

As feed gas nominations to the Freeport LNG liquefaction plant rose to 1.9 Bcf per day lately, utilizing more than 75% of pipeline capacity to the terminal, the US’ second-largest LNG export facility seems to be back to running at nameplate capacity.

The $6.6 billion Mountain Valley Pipeline (NYSE:ETRN) that is set to deliver shale gas from West Virginia to Virginia has suffered another setback after a US Court of Appeals vacated its water permits in West Virginia, making its H2 2023 startup almost impossible.

The Russian government allowed LNG company Novatek (MCX:NVTK) to transfer $1.2 billion to UK-based energy major Shell (LON:SHEL) for its 27.5% stake in the Sakhalin-2 gas project, several months after the firm was transformed into a Russian legal entity.

The UN’s International Seabed Authority will start accepting offers this summer from mining companies that want to tap into the resource potential of seabeds, looking for polymetallic nodules that contain cobalt, copper, or nickel.

German insurance companies Allianz (ETR:ALV) and Munich Re (XET:MUV) have renewed cover for the damaged Nord Stream 1 pipeline that was blown up last September, potentially hinting it might be repaired once geopolitical conditions are conducive.

As Venezuela’s new oil minister Pedro Tellechea continues the ongoing corruption probe into PDVSA, crude exports have bounced back to 774,420 barrels per day in March, the highest monthly figure since last August, mostly going to China.