Brent goes above $60, OPEC talks‐up prices, and Iraq retakes Kirkuk

• Date: 01 November 2017
• Published date: 01 November 2017
• DOI: http://doi.org/10.1111/oet.12535

THE MONTH IN BRIEF

Brent goes above $60, OPEC talks-up prices, and Iraq retakes Kirkuk

Brent prompt-month futures settled above $60 on

October 27 for the rst time since June 2015, having

been as low as $55.79/bbl earlier in the month. e rally

began in the rst week as Saudi Arabia’s King Salman

begananocialvisittoRussia,givingrisetorumors

that further production cuts by OPEC and itsallies were

on the cards. Further support for crude pr ices came

when the Saudi Crown Prince, Muhammad bin Salman,

publicly backed an extension of the production deal

beyond its expiry on March 31 next year, though Russia’s

Energy Minister, Alexander Novak, tried to dampen

expectations by declaring that it was too early to make

any decision.

ere was more support for crude prices when Iraq

announcedthatithadregainedcontrolofKirkuk

province from Kurdish Peshme rga forces that had

occupied part of it since 2014, when a number of oil-

elds there were taken over by the Kurdistan Regiona l

Government (KRG). e Iraqi government said it

now controlled all the oilelds that belonged to the

state-owned Nort h Oil Company, estimated to b e capa-

ble of producing 400,000 bpd. Tensions between the

KRG and Baghdad increased following September 25’s

plebiscite in Kurdistan which produced a majority in

favor of independence. Iraq depends on the KRG to

export crude by pipeline from Kirkuk to the Turkish

port of Ceyhan. es e have had to transit Kurdistan

since 2013 when Iraq’s direct pipeline link with Turkey

was destroyed by Islamic State. Following the retaking

of Kirkuk, the Iraqi government revealed its intention

to restore the direct link and increase it in capacity.

Libya announced that it was producing 1 mn bpd, a

rise of 0.1 mn bpd since September, and was planning to

reach 1.25mn bpd by the end of the year, although con-

tinuing unrest and unrepaired damage to both oilelds

and infrastructure will make it dicult to achieve this,

according to sources in the National Oil Corporation.

Venezuela continued to struggle to produce oil, with a

reported fall of 50,000 bpd between August and Septem-

ber to 1.9 mn bpd. Reneries belonging to Petroleos de

Venezuela (PDVSA) were forced to cut runs in October

asaresult,forcingthestateoilcompanytoincreaseits

imports of rene d products. Several produc t sellers now

require pre-payment for cargoes becaus e of PDVSA’s

parlous nancial state.

President Donald Trump refused to certify that Iran

had complied with the deal on nuclear fuel enrichment

that ended US and EU sanctions against Iran in January

2016, raising the specter of renewed US sanctions on

trade, investment and access to nance, though it is

up to the US Congress to make the nal decision. e

US meanwhile decided to li s anctions against Sudan

that were impo sed because of US conce rns over Sudan’s

human rights record in Darfur, causin g it to ban US

rms from involvementin oil and gas there. e Chinese

Communist Party’s 19th Congress agreed to introduce

measures designed to increase the role of natural gas in

the country’s energy balance, principally at the expense

of coal. Shell agreed to buy NewMotion, a Dutch com-

pany operating charging points for electric vehicles. EU

ocials failed to agree new proposals to reform its Emis-

sions Trading System, which crit ics charge favors coal

too much.

Glencore agreed to buy a maj ority shareholding in

Chevron’s downstream business in South Africa and

Botswana, giving the Swiss commodity trader its rst

renery in the form of Chevron’s 110,000bpd Cape

Town unit. Nigeria’s Petroleum Ministry said that the

country’srstprivatelyownedrenery,DangoteIndus-

tries’ 650,000 bpd plant in Lagos, would be commis-

sioned by about the rst quarter of 2020. Ecuador

revived plans for a 300,000 bpd coastal renery.

© 2017 John Wiley& Sons Ltd