Archives of “July 14, 2021” day

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Oil – OPEC Saudis & UAE rift – but even bigger cracks within the organization loom

  
Analysis, Crude

Check out this article from Platts, its an opinion piece and points to supply issues within OPEC.

  • plans by the OPEC+ group to lift production could run into many members’ practical limits on how much crude they are able to pump
  • Internal disruptions, political disputes, underinvestment and US sanctions have all contributed to many countries’ inability or unwillingness to drill new wells and invest in infrastructure to keep growing their crude flows.
Link to Platts is here, appears to be ungated and worth checking out.
Check out this article from Platts, its an opinion piece and points to supply issues within OPEC.

ICYMI – IEA says oil markets are set to tighten significantly unless OPEC standoff resolved

  
Analysis, Crude

Via its monthly report, released Tuesday, the International Energy Agency (IEA) said oil prices would be volatile until differences were resolved.

The differences boil down to the United Arab Emirates seeking an increase in outs output quota and Saudi Arabia say “No” (I’m simplifying).

IEA:

 

  • “The OPEC+ stalemate means that until a compromise can be reached, production quotas will remain at July’s levels. In that case, oil markets will tighten significantly as demand rebounds from last year’s COVID-induced plunge” 
  • “The possibility of a market share battle, even if remote, is hanging over markets, as is the potential for high fuel prices to stoke inflation and damage a fragile economic recovery”

 

Background to this is:

 

  • the glut of oil amassed during the pandemic has been cleared
  • demand is now set to rebound by strong 5.4mb/d
  • thus a deepening supply deficit, which can drive high prices
  • hopes of additional Iranian oil hitting the market appears distant still, the US and Iran are still at an impasse on sanction
  • growth in the US shale output is marginal at best

Fitch has affirmed the US rating at ‘AAA’ with a negative outlook

  
  Analysis

Fitch Ratings affirms the US’ Long-Term Foreign-Currency Issuer Default Rating (IDR) at ‘AAA’.

  • The Rating Outlook is Negative
The ratings agency cites (this from a much longer piece of guff), the U.S. sovereign rating supported by 
  • structural strength
  • include the size of the economy
  • high per capita income
  • and a dynamic business environment
U.S. benefits from 
  • issuing the U.S. dollar, the world’s preeminent reserve currency, and from the associated extraordinary financing flexibility
  • Fitch considers U.S. debt tolerance to be higher than that of other ‘AAA’ sovereigns.
Negative Outlook on the rating reflects ongoing risks to the public finances and debt trajectory
—
Fitch note that the US economy bounced back from the pandemic rapidly, helped along by stimulus & the vaccination rollout.
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