OPEC+ needs to offset large May-July oversupply

An oil tanker is being loaded at Saudi Aramco's Ras Tanura oil refinery and oil terminal in Saudi Arabia May 21, 2018. (REUTERS)
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Updated 22 August 2020

OPEC+ needs to offset large May-July oversupply

  • A longer second wave of the pandemic could lead to a further fall in oil demand of 11.2 million barrels per day

MOSCOW: Some members of the Opec+ group of oil producing nations would need to slash output by an extra 1.15m barrels of oil per day, on average, for the months of August and September, in addition to the agreed cut of 7.7mbpd, to make up for their oversupply between May and July, an internal report seen by Reuters shows.

That oversupply above OPEC+ agreed targets ought to be compensated for in August and September, the report said.
OPEC+ sources said if additional cuts were spread over more than one month, the daily reduction would be smaller than 2.31 million barrels.
OPEC+ — which includes members of the Organization of the Petroleum Exporting Countries and other producers including Russia — stepped up their joint output cuts to a record 9.7 million bpd in May before tapering them to 7.7 million bpd this month.
In April the impact of the coronavirus pandemic on air and road travel and other areas of the global economy sent benchmark oil prices below $16 a barrel.
The continuing spread of the virus is now threatening oil demand recovery forecasts.
The OPEC+ report showed the monthly oversupply totals of May, June and July were added to produce the 2.31 million bpd total, which was not the average daily overproduction for the period.
“Real monthly overproduction over the period was much smaller,” one OPEC+ source said.
“In May it was about 1.3 million bpd, in June 0.5 million bpd and July 0.5 million bpd,” a second source said.
That adds up to a total of 70 million barrels, or enough to load 70 large Suezmax tankers.

HIGHLIGHTS

• Cumulative May-July oversupply 2.31 million bpd.

• Iraq, Nigeria, Russia, Kazakhstan worst offenders.

• Virus spread threatening oil demand recovery.

The report shows OPEC+ expects oil demand in 2020 to fall by 9.1 million bpd, 100,000 bpd more than in its previous forecast, before rising by 7 million bpd in 2021.
However, it presents an alternative scenario in which a more-prolonged second wave of infections hits Europe, the US, India and China in the second half of the year.
Under this scenario, demand is forecast to fall by 11.2 million bpd in 2020, sending OECD commercial oil inventories in the fourth quarter to 233 million barrels above the latest 5-year average, the report showed.
Stocks would stand at 250 million barrels above the latest 5-year average in 2021.
Data shows that among OPEC members Iraq and Nigeria were the least compliant and even the UAE, which made additional voluntary cuts in June, overproduced by around 50,000 bpd over the May-July period.
Among non-OPEC participants, Russia and Kazakhstan overproduced by a cumulative 280,000 bpd and 190,000 bpd, respectively, over the three months.


Dubai’s Al-Habtoor Group to open representative office in Israel

Updated 20 September 2020

Dubai’s Al-Habtoor Group to open representative office in Israel

  • Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US
  • The tycoon revealed his plans to open a representative office in Israel

DUBAI: Dubai’s Al-Habtoor Group (AHG) plans to open a representative office in Israel its chairman said, following an historic peace deal signed last week between the UAE and Israel to normalize relations.

Khalaf Ahmad Al-Habtoor, who is AHG founding chairman, welcomed Ampa Group’s co-owner, chairman and CEO Shlomi Fogel at the hospitality conglomerate’s Dubai headquarters. Ampa Group deals in real estate, finance and industry. 

Al-Habtoor and Fogel both welcomed the landmark agreement that was signed on Sept. 15 in the US. 

The UAE and Bahrain signed the Abraham Accords in a ceremony overseen by US President Donald Trump. The two Gulf countries join Egypt and Jordan as the only Arab nations to have full relations with Israel.

“I have been looking forward to this day for a very long time,” Al-Habtoor said. “I have always believed that Emiratis and Israelis have a lot in common. Both peoples are business-oriented and have relied on human talent and ambition more than their countries’ natural resources to build robust, innovative economies. The opportunities that this deal will present are great for both sides. I am confident this will open up new doors and lead to stronger economies, and closer cultural ties between the peoples.”

The tycoon revealed his plans to open a representative office in Israel and said that there was a lot of interest in collaboration.

“We have received a large number of inquiries for collaboration in several fields, ranging from AI and technology, to agriculture, hospitality and trading. The possibilities are endless for both sides in our diversified fields and new ones, and we want to be present to grasp them.”

He previously disclosed that AHG had started talks with Israeli domestic carrier Israir Airlines to open direct commercial flights, “and we are preparing to reveal a few collaborations in the coming days.”

Fogel said that peace would be cemented through successful business collaboration and trade. “Together with our Emirati counterparts we will show the way to live in peace to the rest of the world,” he added.

Fogel was accompanied at the meeting by Ampa Group executives, including Erez Katz and Saar Bracha.

AHG was represented at the meeting by Mohammed Al-Habtoor, Ahmad Al-Habtoor, Maan Halabi, Sanjeev Agarwala and other members of senior management.