OPEC pleased as prices rise and stocks fall, Venezuela suffers and Brazil puts refineries on sale

• Published date: 01 May 2018
• DOI: http://doi.org/10.1111/oet.12568
• Date: 01 May 2018

THE MONTH IN BRIEF

OPEC pleased as prices rise and stocks fall, Venezuela suffers

and Brazil puts refineries on sale

Crude oil prices traded near 3-year highs during April on

Middle East tensions and falling stock levels, taking Brent

prompt-month futures as high as $75.17/bbl on the 30th.

WTI made rather less spectacular upward progress, leading

to its widest discount against Brent since late-2014, at $6.60/

bbl. Cold weather on both sides of the Atlantic Basin

boosted the price of gasoil. OPEC ministers reported their

satisfaction at the rise in prices but a few were sufficiently

alarmed to reassure oil importing countries that crude was

not about to go up to $100. President Trump weighed-in

with a comment that OPEC and its allies were artificially fix-

ing prices.

President Trump’s views featured prominently in discus-

sions over the outlook for oil production in Iran and Venezu-

ela. The possibility of US sanctions on Iran produced a

switch away from Iranian imports in some Asian countries

to crude from countries considered to be more secure

sources of future supplies. The prospect of further US sanc-

tions on Venezuela did nothing to ease its financial plight as

payments to foreign oil producers fell, along with Venezue-

lan output. Some US refiners meanwhile reduced their

imports of Venezuelan crude, taking more from the Persian

Gulf and Canada instead. The United States announced fur-

ther sanctions on Russia that included the head of Gazprom,

indicating possible subsequent US measures against the

company itself. In a further Russian move to increase ties to

Middle Eastern countries, Rosneft said it would open a pet-

rochemical research center in Qatar.

The Canadian government offered unspecified financial

aid to Kinder Morgan after the company said it would stop

work on a 590 000 bpd expansion of its 300 000 bpd Trans

Mountain pipeline from Alberta to British Columbia follow-

ing strong opposition from environmental groups. Members

of Alberta’s legislature indicated their displeasure by sup-

porting a bill to restrict exports of refined products to British

Columbia. The US Environmental Protection Agency (EPA)

began the process of removing fuel economy standards for

vehicles for the period from 2022 to 2025 that were intro-

duced under President Obama. California said it would keep

its own stricter standards. The EPA said it would set a

national standard for greenhouse gas emissions. The EU

Commission said that the EU should reduce the import of

fossil fuels in order to reduce its reliance on Russia. India

agreed to the building of a 20 000 bpd pipeline to supply

gasoil to Bangladesh. Kuwait said it would increase its

tanker fleet by 32, to 60 vessels.

Saudi Arabia announced large new downstream projects

at home and abroad. Saudi Aramco and Total agreed to a $5

bn petrochemical complex to go with their 400 000 bpd

refinery in Jubail, and the Saudi state oil firm said it would

build a 1.2 mn bpd refinery in Maharashtra in conjunction

with India’s state-owned refinery sector, with completion

scheduled for 2025. Kuwait announced a proposed 1.1 mn

bpd increase in domestic refining capacity to 2 mn bpd and

said that Kuwait Petroleum International was looking to

obtain a stake in a refining venture in India. Uganda’s gov-

ernment sanctioned the building of a 30 000 bpd refinery in

Hoima to process local crude. In Brazil, Petrobras said it

would sell 60% shareholdings in 4 of its refineries.

How to cite this article: OPEC pleased as prices rise

and stocks fall, Venezuela suffers and Brazil puts

refineries on sale. Oil and Energy Trends. 2018;43:7.

https://doi.org/10.1111/oet.12568

DOI: 10.1111/oet.12568

Oil and Energy Trends. 2018;43:7–8. wileyonlinelibrary.com/journal/oet © 2018 John Wiley & Sons Ltd 7