- spare capacity is limited
- However, spare capacity is primarily in the hands of the Saudis UBS assess this at 70% of spare capacity)
- add that, with 70% of spare capacity, attack is a reminder that large disruptions in Saudi Arabia mean the ‘reaction function’ of OPEC to cover any supply disruptions is limited
Unclassified images, the classified ones have not been released
Comments from GS’ Energy Research & Senior Commodity Strategist
- Brent oil up $3 to $5 if the shutdown time is less than a week
- Up $5 to $14 if the shutdown is longer, 2 to 6 weeks
- If the shut down of production is more than 6 weeks price to over $75, shale oil production gets a big boost
OPEC+ releases its statement after today’s meeting
- Compliance reached 136% in August
- Non-compliant countries have pledged to achieve 100% compliance
Comment by Saudi oil minister, Prince Abdulaziz
- OPEC+ must maintain high degree of cohesion
- Every country should comply with oil output cuts
- Will share our course of action for the future after today’s meeting
A snippet from ANZ’s latest on oil,
- replacement of Saudi Arabia’s Energy Minister, Khalid Al-Falih, with Prince Abdulaziz al Salman … We don’t see the move as a prelude to significant change
- As OPEC and its allied producers (such as Russia) meet in Abu Dhabi, they face unprecedented uncertainty.
- … tension between the US and Iran/Venezuela continues to impact the market.
- trade tensions are now also weighing on manufacturing activity
- Global vehicle sales, a key determinant of gasoline demand are on track to fall 6% in 2019
- PMIs remain weak across the world
- We have subsequently reduced our forecast oil demand growth to 1mb/d this year (from 1.2mb/d)
- Even so, we see sizeable stock drawdowns in Q4. With crude oil well below Saudi Arabia’s target of USD80/bbl, we feel they have no choice but to continue the current production cut agreement to help support current prices. However, the ability to push prices higher looks limited.
This just reaffirms expectations heading into this week’s meeting
A similar message to what we heard from Oman earlier in the session. As such, don’t expect any major announcements – though there may be rumoured headlines to slip through – to follow after the OPEC+ JMMC meeting this Thursday.
Sanctions in play and WTI up $2.21 to $56.15