THE MONTH IN BRIEF: Crude prices hit year‐lows, confusion over Qatar and President Trump upsets (more of) his opponents
| DOI | http://doi.org/10.1111/oet.12487 |
| Date | 01 July 2017 |
| Published date | 01 July 2017 |
THE MONTH IN BRIEF
Crude prices hit year-lows, confusion over Qatar and President Trump
upsets (more of) his opponents
Crude oil prices hit year-low levels on June 21 as Brent
prompt-month futures closed at $44.82/bbl and WTI
$42.53/bbl. e Brent price on that day marked a fall of
$5.81, or 11.5%, from the level on the rst of the month.
Not even the t hreat of a major c onfrontation involvin g
threeormoremembersofOPECinthePersianGulf(see
below) was enough to raise prices back to the modest
level seen at the start of the month. What most traders
sawwasariseinstocksandgrowingsuppliesfromthe
US, Libya, andNigeria. A brief rise in prices atthe end of
the monthhad little to do with market fundamentalsand
was mainly for technical reasons,such as short-covering.
Saudi Arabia, UAE, Bahrain, and Egypt severed diplo-
matic relations with Qatar over its growing ties with
Iran and what the Saudi’s called Qatar’s “support for
terrorism.” A range of sanctions banned ships calling at
Qatari ports fromthose of the other countries, threaten-
ing the co-loading of Qatari crude and rened products
with those of Saudi Arabia, UAE, and Bahrain. ere
was also an implied threat to Qatari vessels using the
Suez Canal. As the month progressed, it became clear
that the sanctions were not being f ully implemented and
there was even talk of their being relaxed in future. e
situation, however,remained far from clear.
OPEC began to consider further cuts to production
as Iran announced it was speeding-up the development
of its Khesht oilel d, while production rose from Libya
and Nigeria, as well as from Kazakhstan, which had
promised to cut produc tion in support of OPEC . Nige-
ria meanwhile was warned by some OPEC members that
it would be asked to forego its exemption from OPEC’s
production cuts i f its output continued to rise. Equator ial
Guinea said OPEC should encourage more African oil
producers to join. South Sudan revealed it was consid-
ering membership of the cartel and Indonesia asked
to reactivate its membership, suspended in November
when it declined to take part in OPEC’s production cuts.
SaudiArabiawasexpectedtotakeamoreactiverolein
OPEC’sattemptstomanageoilproductioninpursuitof
higher oil prices with the appointment of Muhammad
bin Salman as the kingdom’s Crown-Prince. Saudi Ara-
bia and Russia agreed to co-operate in a range of energy
projects in one another’s countries. Strikes in Tunisia
shut nearly half of Tunisia’s 45,000bpd oil production.
US President, Donald Trump, waded into further
controversy when he announced the US would pul l out
of the 2015 Paris Agreement on climatechange, prompt-
ing several politicians to say they would press for new
limits at the individual state level on the production of
fossil fuels. Propo sals from the White House to open-up
parts of the Arctic National Wildlife Refuge attracted
further protests. e Dakota Access Pipeline, another
controversial projec t, began operations fol lowing an
earlier declaration by President Trump to expedite the
opening of the stalled project. e US Senate passed a
bill to impose further sanctions on Russia’s energy sector.
Iraq announced plans to increase its renery capac-
ity by 0.9-1.5mn bpd of which about 1 mn bpd would
be in the form of new reneries and the remainder
extensions or repairs to existing plants. Rosne signed
a number of agreements with the Kurdistan Regional
Government (KRG) covering possible investments in
Kurd istan by t he Russ ian rm . e KRG ann ounce d that
it would hold a non-binding plebiscite on independence
from Iraq. Baghdad said co-operation with the KRG
would continue and announced that 20,000bpd of Iraqi
crude would be processed in a Kurdish renery.In India,
BCPL, HPCL, and IOC formed a joint-ventureto build a
1.2 mn bpd renery at Ratnagiri, in Maharashtra, ont he
country’s west coast.
© 2017 John Wiley& Sons Ltd
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