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Bloomberg: OPEC Output Fell Most in 40 Years in March on M’East War

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OPEC Appoints Next Secretary General, Effective August 2022

The Organisation of Petroleum Exporting Countries (OPEC) crude oil production plunged by the most in at least four decades in March as conflict in the Middle East throttled exports from key members, according to a Bloomberg survey.

Output from OPEC collapsed by 7.56 million barrels a day or about 25 per cent to 22 million a day, the survey showed. The war between a US-Israeli alliance and OPEC member Iran has shuttered the Strait of Hormuz, forcing Saudi Arabia, the United Arab Emirates and Iraq to slash production.

The March slump is the largest for a single month in data compiled by Bloomberg extending back to 1989, though the organisation did cut more supply over a two-month span in 2020 when global fuel demand collapsed during the Covid-19 pandemic.

Such a drop would, at least in barrel terms, also surpass that of the 1973 Arab oil embargo, the report said. Markets experienced a “gross loss” of 5 million barrels a day between October and December of that year, according to Daniel Yergin’s history “The Prize: The Epic Quest for Oil, Money & Power,” though this earlier shock took place in a much smaller global market.

The supply losses have roiled crude prices, which hit a multi-year high of almost $120 a barrel in London last month, while soaring costs for products like jet fuel, diesel and petrol threaten pain for consumers.

Brent futures traded near $110 on Tuesday as the US attacked military targets across Iran’s Kharg Island and President Donald Trump threatened massive new bombardment unless Tehran accepts US terms.

Iraq, the OPEC member most reliant on the Strait of Hormuz, suffered the biggest decline, with production declining by 2.76 million barrels a day to 1.63 million a day, according to the survey.

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Iran’s military said over the weekend that “Brotherly Iraq is exempt from any restrictions” on transit via the vital sea corridor. Nonetheless, tanker-tracking shows there’s no indication yet of a rush to test that dispensation. Ship traffic through Hormuz is slowly recovering, but it remains at a trickle compared with prewar numbers.

Saudi Arabia and the UAE experienced the next-largest losses, though these were mitigated by their ability to partially divert exports on alternative oil pipelines that bypass the strait.

Saudi production dropped by 2.07 million barrels a day to 8.36 million a day, while the UAE’s fell by 1.44 million a day to 2.16 million, according to the survey. Even with the Kingdom’s ability to export via the Red Sea, tanker-tracking shows Saudi exports tumbled by roughly 50 per cent in March.

Russia, a leading member of a wider alliance known as OPEC+, has also experienced disruption following a wave of Ukrainian drone attacks on oil export terminals on the Baltic Sea. The key Baltic port of Ust-Luga resumed crude loadings this week, having stopped at the end of March.

Before the war, eight key OPEC+ nations had been in the process of restoring oil production halted several years earlier. On April 5, they agreed to a symbolic supply increase for May in order to continue the process, but warned that it will take a long time to restart oil facilities damaged during the fighting.

Bloomberg’s production survey is based on ship-tracking data, information from officials and estimates from consultants Rapidan Energy Group, FGE NexantECA, Kpler and Rystad Energy, the report added.

Energy

UNDC Assures on Readiness to Protect Oil, Gas Pipelines

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Pipeline contract

The Niger Delta Youths are primed to assume national responsibilities in critical areas of the economy by protecting vital oil and gas assets in the region.

The United Niger Delta Congress (UNDC) gave the assurance at a media briefing in Abuja, over the weekend, adding that the youths of Niger Delta were ready to work with the federal government in this regard.

The group maintained that youths in the region have shown that such responsibilities, including the security of pipelines, can be entrusted to them.

Speaking at the news conference, Niger Delta Youth activist, Mallam Julius Obi, said the Niger Delta is safer while the nation’s crude is flowing based on the fact that youths in the region are doing the job.

He said that being a youth should not be a disqualification from strategic national assignments but when matched with preparation and character, a national asset.

“We are calling on the federal government to note that Nigeria is full of young men and women who are prepared, disciplined and ready to carry out national responsibilities.

“We urge the federal government to keep opening the doors of strategic national service to young Nigerians who have earned trust the only way it can be earned, by delivery,” Obi said.

READ ALSO: JUST IN: Ex-Delta Governor Emmanuel Uduaghan Is Dead

The group commended President Bola Tinubu for sustaining the security reforms in the oil and gas industry and the the National Security Adviser (NSA), Mallam Nuhu Ribadu, for coordinating the protection of the nation’s pipelines, and the management of NNPCL for providing the enabling environment.

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Ambakederimo Questions NNPC Over Crude Oil Sales, Upfront Payments

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Joseph Ambakederimo, convener of the South-South Reawakening Group, has questioned the accountability of Nigeria’s crude oil forward sales, demanding clarification on the volume of crude lifted, outstanding balances and the use of upfront payments.

Speaking during an interview on Arise TV on Sunday, Ambakederimo expressed concern over the monitoring of crude oil transactions, questioning who was responsible for tracking deliveries and providing feedback on the arrangements.

“We don’t even know who is monitoring and giving us the feedback of the barrels of crude that have been lifted on forward sales basis,” he said.

SEE MORE: South-South Group Opposes Coastal Road Alignment With East-West Road

He challenged the Nigerian National Petroleum Company Limited (NNPC) to provide details of the transactions, including the quantity of crude already lifted, the outstanding balance and whether the agreed deliveries had been completed.

“Today, can we get this from NNPC? How much have they lifted? What is the balance remaining? Have they been completed?” he asked.

Ambakederimo also questioned how the money collected upfront under the arrangements had been spent, demanding an explanation of its use.

“That money that was collected upfront, what was the use of the money? Can you justify it?” he asked.

He argued that Nigeria should make better use of its natural resources to accelerate infrastructure development and improve living conditions.

Citing land reclamation projects in the United Arab Emirates, Ambakederimo said Nigeria could explore similar opportunities to create additional land for residential and other developments.

He recalled seeing a signpost while travelling from Dubai to Abu Dhabi describing a project to reclaim land from the sea, using the example to highlight the development possibilities he believes Nigeria could explore.

The South-South Reawakening Group convener also argued that Nigeria could reclaim land in suitable areas, provided environmental concerns were properly managed.

He called for the country to translate its natural resource wealth into infrastructure and improved living conditions, stressing the need for greater accountability in crude oil transactions.

 

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IEA Puts UAE’s Oil Output at 5.3mbpd for September

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Oil output from the United Arab Emirates (UAE) rose to record levels in September, underscoring its resilience even amidst the Middle East crises and liberation from OPEC+ limits.

The International Energy Agency (IEA) issued the data in its monthly report, adding that Abu Dhabi raised total oil production, including condensates, by 400,000 bpd to 5.3 MMbpd.

According to the IEA, the UAE bolstered crude output to more than 4.4 MMbpd, nearing its maximum capacity, which surpasses the previous highs for total oil in August, and crude oil in June.

READ ALSO: Africa’s Energy Security Conversations Pull Industry Executives Together

The UAE has been one of the most successful among regional producers in restoring flows through the Strait of Hormuz, by drawing on a fleet of tankers to discreetly shuttle cargoes through the chokepoint and then transfer them onto other vessels. In addition, the country’s decision to leave the Organization of the Petroleum Exporting Countries (OPEC) as of May has freed it from the group’s output caps, a source of frustration for years.

Its gains contributed to a wider recovery in flows from Gulf producers, which reached more than 75% of pre-war levels in September, led by Saudi Arabia, according to the Paris-based IEA.

Still, it’s unclear how far the regional rebound has withstood a new wave of Iranian attacks on tankers transiting Hormuz, and escalating hostilities carried out by the Houthi rebel faction in Yemen.

The UAE depleted its observable above-ground inventories at a record pace of more than 270,000 bpd in September, drawing them to an all-time low, according to the IEA.

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