In a report despatched to Rigzone by the Skandinaviska Enskilda Banken AB (SEB) group on Tuesday morning, Bjarne Schieldrop, chief commodities analyst on the firm, stated “the Damocles Sword of OPEC+” is “hanging over U.S. shale oil producers”.
“OPEC+ determined yesterday [Monday] to stay with its plan – to carry manufacturing by 120,000 barrels per day each month for 18 months beginning April,” Schieldrop famous within the report.
“Time and again, it has pushed the beginning of the manufacturing improve additional into the longer term. It may do it but once more. That may depend upon circumstances of 1 – world oil demand development and two – non-OPEC+ provide development,” he added.
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Within the report, Schieldrop stated “all oil producers on the planet know that OPEC+ has … 5 to 6 million barrels per day of reserve capability at hand” and famous that the group “needs to return two to a few million barrels per day of this reserve to the market to get again to a extra regular reserve stage”.
“The now more and more standing menace of OPEC+ to extend manufacturing in ‘simply a few months’ is hanging over the world’s oil producers like a Damocles Sword. OPEC+ is actually saying: ‘produce rather more and we’ll do too, and you’re going to get a a lot cheaper price’,” Schieldrop famous.
The chief commodities analyst at SEB went on to state within the report that, “if U.S. shale oil producers launched into a powerful provide development path, heeding calls from Donald Trump for extra manufacturing and a decrease oil worth, then OPEC+ would haven’t any different selection than to carry manufacturing and let the oil worth fall”.
“Trump would get a decrease oil worth as he needs for, however he wouldn’t get greater U.S. oil manufacturing. U.S. shale oil producers would get a decrease oil worth, decrease earnings, and no greater manufacturing,” he added.
“U.S. oil manufacturing would possibly even fall within the face of a decrease oil worth with cheaper price and quantity hurting U.S. commerce stability in addition to producers,” he continued.
Schieldrop stated within the report that decrease taxes on U.S. oil producers may result in greater oil manufacturing however added that “no development equals plenty of income”.
“Trump may scale back taxes on U.S. oil manufacturing to decrease their marginal value by as much as $10 per barrel,” Schieldrop famous within the report.
“It could possibly be seen as a four-year time-limited choice to provide extra oil at a decrease value as such tax-measures could possibly be reversed by the subsequent president in 4 years. It could be very tempting for them to provide extra,” he added.
Rigzone has contacted OPEC, the American Petroleum Institute (API), the Worldwide Affiliation of Oil & Fuel Producers (IOGP), the Trump transition group, the White Home, and the U.S. Division of Vitality (DOE) for touch upon the SEB report. On the time of writing, not one of the above have responded to Rigzone’s request but.
A press release posted on OPEC’s web site on December 5 highlighted that OPEC+’s required manufacturing stage for 2025 and 2026 is 39.725 million barrels per day. That assertion identified that the required manufacturing stage for Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman “is earlier than making use of any further manufacturing changes”. It additionally famous that UAE required manufacturing has been elevated by 300,000 barrels per day and added that this improve might be phased in regularly beginning April 2025 till the top of September 2026.
A separate assertion posted on the OPEC website on the identical day revealed that Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman determined to increase further voluntary changes of 1.65 million barrels per day, that had been introduced in April 2023, till the top of December 2026.
That assertion additionally revealed that these international locations will lengthen further voluntary changes of two.2 million barrels per day, that had been introduced in November 2023, till the top of March 2025. These might be “regularly phased out on a month-to-month foundation till the top of September 2026”, that assertion highlighted. The assertion additionally famous that “this month-to-month improve might be paused or reversed topic to market circumstances”.
To contact the creator, electronic mail andreas.exarheas@rigzone.com
