Oil Daily | OPEC Considers Extending Cuts Amid Weak Demand; Namibia Finds Promising Offshore Oil

【Global Oil Supply and Demand】

OPEC is considering extending its production cuts until the end of Q1 2025 to stabilize prices amid weak demand and ample supply. Despite withholding 5.86 million barrels daily, traders remain unfazed due to weakened demand growth in China and expectations of peak oil demand approaching.

The U.S. has entered the winter heating season with natural gas inventories at their highest since 2016, despite less-than-average injections during the season. High inventories and mild winter previously led to low prices and reduced production, though domestic and international demand remains strong.

Gazprom's natural gas flows to China via the Power of Siberia pipeline have reached full capacity, with Russia betting on China's growing demand to offset the loss of European markets. Gazprom focuses on developing fields in eastern Russia and the Yamal peninsula, though potential pipeline expansion faces price negotiations with China.

Norway's government has scrapped a 2025 licensing round for deep sea minerals mining due to a deal with the SV party to pass the budget bill. The decision halts plans for Arctic exploration for critical minerals until at least 2026, though opposition parties' support for mining could alter future outcomes.

【Oil-Producing Countries Dynamics】

Iraq halted operations at the Basra refinery due to an overflow in fuel oil tanks, caused by a lack of buyers. Resumption depends on ships arriving to load fuel oil, managed by state oil marketer SOMO. This follows reports of Iraq's involvement in a fuel oil smuggling scheme benefiting Iran.

Saudi Arabia and Russia, among other major oil producers, blocked a UN-backed summit from agreeing on a treaty to limit plastic production. The talks, seen as essential to address plastics pollution, were adjourned without a deal. Petrochemicals, driving future oil demand, motivate resistance from oil-dependent nations.

【Latest Oil Policies】

Iraq has shifted from technical service contracts to a revenue-sharing scheme for foreign oil companies, offering 75% of revenue per barrel to operators. This move aims to attract more foreign investment by allowing companies to benefit from international oil price rallies and align with government production ambitions.

Panama will delist six UK-sanctioned ships, maintaining its registry's integrity. The maritime authority previously pledged penalties for vessels sanctioned by major entities. Meanwhile, Panama Canal authorities worked with U.S. LNG producers to accommodate increased demand following discussions on water level management.

【Industry News】

Namibia's offshore exploration has yielded promising results as Portugal's Galp drilled the Mopane-1A appraisal well, finding light oil and gas-condensate. The discovery contributes to Namibia's reputation as a hotspot for exploration, with major oil finds by companies like Shell and TotalEnergies in recent years.

【Company News】

Trafigura Group faces a trial in Switzerland over bribery allegations involving over $5 million in payments to an Angolan oil official. The company states its compliance measures met standards at the time. Recent losses in Mongolia due to internal fraud highlight the need for strengthened governance and controls.

【Others】

Azerbaijan's SOCAR began supplying natural gas to Slovakia's SPP, preparing for potential Russian supply halts via Ukraine. The EU warned of reduced Russian gas imports, with Turkey ready to boost EU exports through Azeri gas re-exports. Russia's willingness to supply Europe depends on transit agreements.