China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
OIL: status update
2020-04-06 • Updated
Long story short
After the failed meeting of OPEC+ on March 5, which essentially fell apart on that day, WTI oil plunged to the range of $25 per barrel and recently touched $20. So far, that mark has served as a bottom point for the black gold in the context of the price war, decimated global demand and an increasing oversupply. Recently, however, the US President Donald Trump called on Saudi Arabia and Russia to come to an agreement and announced an expected (or rather hoped for) 10 to 15mnl bpd slash of the global oil supply. That immediately pushed the oil price up to the current level $27 per barrel. No real action has ensued, however. The situation is left hanging in the air – as well as the oil price is.
So where is everyone
Everyone is at home, waiting for the US to step in, basically. That is hardly an exaggeration if even Bloomberg says the following:
Facts are as following: last week, Donald Trump gave another press conference where he informed that Russia and Saudi Arabia were reportedly one step away from striking a deal to cut the specified 10-15mln bpd (“or even more”, as per the US President). Later on, we received information that the OPEC+ telephonic/remote meeting was planned for this Monday. A while later, it was announced that this meeting is rescheduled to Thursday, with no exact figures or promises from either Russia or Saudi Arabia. Therefore, on the surface, the picture is that both countries are ready to make a deal and willing to negotiate, but only with the participation of the US specifying how much of American oil supply will be cut. And the latter, as Bloomberg rightly pointed out, doesn’t seem to be moving forward.
Observers, however, inform that Russia and Saudi Arabia, as eventually OPEC+, do not really need US participation to make a deal. The questionable idea is whether the two countries were really planning to keep the oil price at $20 to drive the US shale oil industry out of business. In reality, even $50 per barrel was not enough for the US shale to make it to the next level so there is no need to have it at $20. In fact, the disastrously low oil price pushing small American oil businesses into oblivion just leaves more room for giants like Exxon to take over their remainders once they die and expand it back and even beyond, but with a firmer grip. That’s why a theory of Russia/Saudi Arabia pressing on the oil price to press on the US shale is likely just a theory. Why are we here then? Probably, we will never know for sure, unless Donald Trump, Vladimir Putin, or Mohammed bin Salman express their will to share with us their private conversations. We are yet to see, though, if the deal gets sealed this Thursday.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
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