To earn the maximum amount of points, I recommend responding in a 275 word response. You can use your own experience to reflect how the articles relate to the chapter from the book and copy terms from the book. However, whenever you copy something exactly word by word, make sure you put parenthesis for example, “words”.
Describe the Strengths, Weaknesses, Opportunities, and Threats for OPEC. Prepare your response as a summary and include data uncovered from reading the textbook, articles, and personal experience.
OPEC’s Barkindo stresses importance of oil market stability and investment (Chapter 9)
Jan. 27, 2021 By Myra P. Saefong
The Organization of the Petroleum Exporting Countries and allies, together known as OPEC+, will continue to assess the oil market on a month to month basis and take necessary action to ensure stability in the market, OPEC Secretary General Mohammad Barkindo said on Wednesday. “We will continue to take a month by month approach to assessing market conditions and stand ready to take any necessary actions through the Declaration of Cooperation partners,” he said in prepared remarks to the S&P Global Platts Americas Petroleum and Energy Virtual Conference (Links to an external site.) on Wednesday, referring to the OPEC+ agreement to curb output. In his remarks, he stressed the importance of making sure that there will be enough energy to meet demand in the long term.
The world will continue to need more energy in the decades ahead, said Barkindo, pointing out that looking longer term to 2045, the global economy is expected to more than double in size. “The basic challenge is simple,” he said. “How can we ensure that there is enough energy supply to meet expected future energy growth, and how can this growth be achieved in a sustainable way — balancing the needs of people in relation to their social welfare, the economy and the environment?”
It’s “vital that the required investments are made in all energies to ensure stable and continuous supplies and to help reduce and, ultimately, eliminate emissions,” he said. At the same time, he also emphasized that “we do not deny the existence of climate change,” and the science and statistics say that the “we need to reduce emissions and use energy more efficiently.” “We do not deny the existence of climate change.” — Mohammad Barkindo, OPEC secretary general
Renewable energy sources are “coming of age, with wind and solar expanding quickly but even by 2045, are only estimated to make up just over 20% of the global energy mix,” he said. Oil and natural gas will still supply over 50% of the world’s energy needs by 2045, he added, with oil at around 27% and gas at 25%. On Wednesday (Links to an external site.), prices for both West Texas Intermediate crude CLH21, -0.34% (Links to an external site.), the U.S. benchmark, and Brent crude BRNH21, -0.43% (Links to an external site.), the global benchmark, stood close to the levels they traded at before the COVID-19 pandemic wreaked havoc on the global economy.
March WTI crude settled at $52.85 a barrel, up 24 cents, or 0.5%, while March Brent crude edged down by 10 cents, or 0.2%, to $55.81 a barrel. There are no reputable outlooks projecting that “renewables will come anywhere close to overtaking oil and gas in the decades ahead, said Barkindo. He also welcomed the Biden administration’s decision to rejoin the Paris climate agreement and said that “the energy transition and the global conversation around it would be incomplete without the United States at the head of the multilateral table.”
Meanwhile, the global economic recovery has been “fragile and uncertainties remain,” said Barkindo. Renewed lockdowns serve as a “harsh reminder of how delicate the situation remains. Nonetheless, we are cautious optimistic for the global economic rebound in 2021.” “More broadly, energy market stability will be vital to the energy transition stability,” he said.
https://www.marketwatch.com/story/opecs-barkindo-stresses-importance-of-oil-market-stability-and-investment-11611771728
OPEC+ Compliance With Oil Production Pact Drops To 99%
By Tsvetana Paraskova (Links to an external site.) – Jan 21, 2021, 5:30 PM CST
The producers part of the OPEC+ alliance complied with the oil output cuts at 99 percent in December 2020, down from 101 percent compliance in November, sources at the OPEC+ group told Reuters (Links to an external site.) on Thursday.
The technical and ministerial panels of the alliance will meet in early February to discuss compliance and the state of the oil market, and the final number on OPEC+ compliance for December could slightly change before that, one of the sources in the group told Reuters.
Earlier this month, tanker tracking firm Petro-Logistics estimated that OPEC+ group’s compliance with the oil production cuts fell to 75 percent (Links to an external site.) in December 2020—one of the lowest levels since the pact was enacted in May 2020.
According to Petro-Logistics’ estimates (Links to an external site.), even the leader of OPEC and the world’s top oil exporter, Saudi Arabia, saw its compliance decline by 10 percentage points to 92 percent last month.
The ten OPEC members part of the OPEC+ pact complied at 82 percent with the production cuts in December, with compliance slipping by 10 percent month over month, Petro-Logistics said on Twitter last week. The nine non-OPEC producers in the pact had an even lower compliance rate. At 64 percent in December, their compliance had dropped by 8 percent month on month, according to the tanker-tracking firm.
Crude production from OPEC alone, according to the cartel’s Monthly Oil Market Report (Links to an external site.) published last week, averaged 25.36 million barrels per day (bpd) in December 2020, rising by 280,000 bpd compared to November.
Oil production in Libya, which is exempt from the OPEC+ cuts, increased to 1.22 million bpd, according to OPEC’s secondary sources. Libyan crude oil production jumped by 136,000 bpd in December compared to November, as the North African producer continued to surprise market analysts with its quick ramp-up of production from less than 100,000 bpd in September when the eight-month blockade on its oil export terminals was lifted. Production in Iraq increased by 76,000 bpd to 3.848 million bpd, even though OPEC’s second-largest producer has pledged time and again to cut more output to compensate for its lack of compliance in the early months of the OPEC+ deal.
By Tsvetana Paraskova for Oilprice.com
The Organization of the Petroleum Exporting Countries (OPEC)
The Organization of the Petroleum Exporting Countries (OPEC) is an international cartel made up of Iraq, Equador, Iran, Kuwait, Libya, Angola, Algeria, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela. The Vienna-based organization has maintained its headquarters there since 1965, hosting regular meetings between the oil ministers of its member states.
The principle aim of the organization, according to its Statute, is the determination of the best means for safeguarding their interests, individually and collectively; devising ways and means of ensuring the stabilization of prices in international oil markets with a view to eliminating harmful and unnecessary fluctuations; giving due regard at all times to the interests of the producing nations and to the necessity of securing a steady income to the producing countries; an efficient, economic and regular supply of petroleum to consuming nations, and a fair return on their capital to those investing in the petroleum industry.
OPEC nations account for 80% of the world’s oil reserves, and, in 2014, 40% of the world’s oil production, affording them considerable control over the global market. The next largest group of producers, members of the OECD and the Post-Soviet states produce 23.8% and 14.8%, respectively, of the world’s total oil production.
Venezuela was the first country to move towards the establishment of OPEC by approaching Iran, Iraq, Kuwait and Saudi Arabia in 1949, suggesting that they exchange views and explore avenues for regular and closer communications between them. In September 1960, the governments of Iraq, Iran, Kuwait, Saudi Arabia and Venezuela met in Baghdad to discuss the reduction in price of crude oil produced by their respective countries. As a result, OPEC was founded to unify and coordinate members’ petroleum policies.
Original OPEC members include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela. Between 1960 and 1975, the organization expanded to include Qatar (1961), Indonesia (1962), Libya (1962), the United Arab Emirates (1967), Algeria (1969), and Nigeria (1971). Ecuador and Gabon were members of OPEC, but Ecuador withdrew on December 31st, 1992 because they were unwilling or unable to pay a $2 million dollar membership fee and felt that they needed to produce more oil than they were allowed to under the OPEC quota. Similar concerns prompted Gabon to follow suit in January 1995.However, Ecuador decided to rejoin OPEC in 2007. Angola joined on the first day of 2007.
Indonesia reconsidered its membership and left the organization because it became a net importer and was unable to meet its production quota. The United States was a member during its formal occupation of Iraq via the Coalition Provisional Authority. Iraq remains a member of OPEC, though Iraqi production has not been a part of any OPEC quota agreements since March 1998. Indicating that OPEC is not averse to further expansion, Mohammed Barkindo, OPEC’s Secretary General, recently asked Sudan and Brazil to join.
*wikipedia
OPEC Quotas and Production in thousands of barrels per day
Country
Quota (7/1/05)
Production (1/07)
Capacity
Algeria
894
1,360
1,430
Angola
1,900
1,700
1,700
Ecuador
520
500
500
Iran
4,110
3,700
3,750
Iraq
N/A
1481
N/A
Kuwait
2,247
2,500
2,600
Libya
1,500
1,650
1,700
Nigeria
2,306
2,250
2,250
Qatar
726
810
850
Saudi Arabia
10,099
8,800
10,500
United Arab Emirates
2,444
2,500
2,600
Venezuela
3,225
2,340
2,450
Total
29,971
29,591
30,330
Updated Feb 6, 2011 Source USDE
Fresh oil and gas find in Brazil
Further oil and gas supplies have been discovered off the south-eastern coast of Brazil, boosting the shares of state energy firm Petrobras. The emergence of a new reserve in the Espirito Santo field comes a month after a reserve of up to eight billion barrels was found nearby. No figures have been put on the size of the latest discovery although Petrobras said it offered “high potential”. It believes Brazil could become one of the world’s top 10 oil producers.
Precious commodity Brazil currently has proven oil reserves of 14 billion barrels, more than half of which have been discovered in the past five years. Ministers believe a succession of recent finds could enable Brazil to eventually match the oil output of powerhouses such as Venezuela and Saudi Arabia. “The discovery confirms the Espirito Santo Basin’s high potential for gas and light oil, which is expected to result in increased recoverable volumes from the area,” Petrobras – which holds a 65% stake in the firm exploring the basin – said. Light oil is much prized because it is generally of a high quality and cheaper to refine. Petrobras shares rose more than 4% on the Sao Paulo Stock Exchange in response.
Published: 12/07/2007
OPEC invites Brazil to join group
Iran has invited Brazil to join oil producers’ cartel Opec, Brazil’s energy and mines minister has said.
The moves comes after Brazil recently announced finding major sources of offshore oil, prompting significant international attention. Brazil is considering the invite. Its National Energy Policy Council has the final word on whether it wants to join. While oil prices have fallen from record levels, many analysts say the longer trend remains high prices. As a member of the oil producers’ organisation, Iran can suggest the membership of another country.
Untapped oil In April, the head of Brazil’s National Petroleum Agency said an oil field offshore from Rio de Janeiro’s coast could contain 33 billion barrels. That finding came after state-owned Petrobras said the offshore Tupi field was estimated to hold between five billion and eight billion barrels of untapped light oil.
The discoveries could turn Brazil into a major oil exporter, say analysts. Slower economic growth has dented demand for oil, pushing prices down to around $110 a barrel from above $147 per barrel reached in July.
Published: 09/04/2008
Brazil declines OPEC invitation
Brazil has turned down an invitation to join the oil producers’ cartel, Opec, according to the country’s energy minister, Edison Lobao.
He told a local TV station that Brazil had been formally invited to join Opec by Iran two weeks ago. However, he said that Brazil had declined the offer, saying his country has “other priorities”. Brazil says the recent discovery of massive offshore oil fields could turn the country into a major oil exporter.
Untapped oil Mr Lobao said that the invitation had come from Iran’s ambassador to Brazil, Mohsen Shaterzadeh. Although Brazil will not be taking up the ambassador’s invitation, Mr Lobao did not rule out joining Opec at some point in the future. In April, the head of Brazil’s National Petroleum Agency said an oil field offshore from Rio de Janeiro’s coast could contain 33 billion barrels. That finding came after state-owned Petrobras said the offshore Tupi field was estimated to hold between five billion and eight billion barrels of untapped light oil. Published: 09/05/2008
OPEC ‘no longer in control’ of oil prices. By Matt Egan (Links to an external site.) May 18, 2017
For decades, OPEC’s sway on oil prices was unparalleled. But the cartel’s immense influence has been dealt a huge blow by the dramatic boom in US shale. “Saudi Arabia and OPEC are no longer in control,” Douglas Rachlin, managing director at Neuberger Berman’s Rachlin Group, said on Wednesday at the SALT Conference in Las Vegas. The emergence of US shale as a key global player that can pump even during low oil prices means OPEC can no longer “manipulate prices,” Rachlin said. “The shale revolution has changed a lot of things.” In a display of how much the pendulum has swung, OPEC sent a plea to the US earlier this month to stop pumping so much oil. The plea came after a flood of supply from US shale producers, especially in the Permian Basin of Texas and New Mexico, threw a wrench in OPEC’s ability to stabilize oil prices. “The reality is that the US is now…the swing producer,” Michael Hintze, the billionaire founder of hedge fund CQS, said at SALT. Hintze pointed to the prolific production out of the Permian Basin, which benefits from unique geology that allows multiple layers of rock to be fracked at the same time. The Permian has also capitalized on technological advances that makes it cheaper to drill for oil.
In recent days, OPEC has sought to calm nervous investors. Saudi Arabia and Russia sent oil prices rising after pledging to do “whatever it takes” to support markets (Links to an external site.), including an extension of production cuts until March 2018. Still, Hintze said Saudi Arabia “cannot be the swing producer any longer because of its fiscal situation.” The country has sought to break its dependence on the oil industry by launching Vision 2030, an ambitious program to reduce the country’s dependence on oil and diversify its economy. “Hopefully by 2030, I wouldn’t care if the oil price is zero,” Saudi finance minister Mohammed Al Jadaan told CNNMoney’s John Defterios this week. (Links to an external site.) “The reality is who is left and who can push the global production curve around? It’s the US,” said Hintze. Another factor that the oil industry has going for it is President Trump. “The administration has been incredibly supportive,” Rachlin said, pointing to former ExxonMobil CEO Rex Tillerson becoming secretary of state and former Texas governor Rick Perry becoming energy secretary. “We have friends in high places today. I feel really good,” Rachlin said. However, Rachlin acknowledged that Trump’s recent troubles (Links to an external site.) could change the political environment. “If this administration doesn’t turn out too well, we may be facing Elizabeth Warren, and then I think there’ll be a lot of problems for a lot of people,” he said.
OPEC to U.S.: Please don’t pump so much oil!
By Ivana Kottasová. May 11, 2017
OPEC said that one producer in particular is to blame: The U.S., where shale producers (Links to an external site.) have continued to ramp up their drilling despite lower crude prices.
The increased production has undermined OPEC’s efforts to keep prices between $50 and $60 per barrel. OPEC and allied producers agreed in November to slash production, a move designed to rid global markets of excess supply. For a while, the strategy appeared to be working, with prices drifting north of $54 earlier this year. Now, the magic appears to be wearing off. OPEC said that one producer in particular is to blame: The U.S., where shale producers (Links to an external site.) have continued to ramp up their drilling despite lower crude prices. The increased production has undermined OPEC’s efforts to keep prices between $50 and $60 per barrel.
OPEC and allied producers agreed in November to slash production, a move designed to rid global markets of excess supply. For a while, the strategy appeared to be working, with prices drifting north of $54 earlier this year. Now, the magic appears to be wearing off. The cartel has responded to the sharp decline in prices by suggesting that the agreement could be extended far beyond its original mid-year deadline.
But that won’t help OPEC solve its American problem. The U.S. did not join its agreement, and the number of rigs in operation there has doubled over the past year. “I think [OPEC] are now acutely aware that they don’t have the kind of influence they used to have 10 years ago, and that shale is now the swing producer in the market,” Tom Pugh, commodities economist at Capital Economics, said last week. The cartel has in the past fought fiercely for its market share. Starting in 2014, it pumped relentlessly in order to squeeze higher cost American producers. The strategy pushed prices well below $30 per barrel and forced many U.S. producers to scale back in 2015 and 2016. But it had a disastrous effect on the government budgets of OPEC members, forcing them to implement austerity measures (Links to an external site.).
It also forced U.S. producers to become more efficient, and they can now withstand much lower prices than just a few years ago. Analysts at UBS estimate that U.S. producers can now make money as long as prices remain above $40 per barrel, down from $65 in early 2014.
