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Oil Daily | Kazakhstan Commits to OPEC Production Cuts, Morgan Stanley Lowers Oil Price Forecasts

AInvestSaturday, Aug 24, 2024 8:00 am ET
1min read
【Oil-Producing Countries Dynamics】

Kazakhstan announced a significant update to its oil production compensation plan to OPEC, reflecting its commitment despite past failures to meet OPEC quotas. The updated plan aims to align production with agreed targets and includes compensating for previous overproduction. Kazakhstan faces scrutiny from OPEC for exceeding limits alongside Iran and Russia.

Kazakhstan's Agency for the Protection and Development of Competition proposed adjustments to market controls and increased maximum prices for petroleum products to enhance market stability. The Energy Ministry plans to reduce production levels through September 2025 to address excess volumes produced earlier, aiming for compliance with global oil market challenges.

Kazakhstan's production cap of 1.468 million bpd was exceeded by about 70,000 bpd in June and July. The revised compensation plan submitted to OPEC aims to reduce cumulative production by nearly 700,000 bpd, highlighting Kazakhstan's efforts to maintain its standing within the OPEC alliance.

【Industry News】

Morgan Stanley revised its oil price forecasts downward, anticipating increased supply from OPEC and non-OPEC producers amid weakening global demand. The firm expects a tight crude oil market through the third quarter, stabilizing in the fourth quarter and potentially moving into a surplus by 2025, with a gradual decline in prices.

Morgan Stanley's revised oil demand growth estimate for 2024 is now 1.1 million bpd, down from 1.2 million bpd, influenced by slower production growth from non-OPEC countries. Despite this, the overall supply-demand balance has tightened marginally for the remainder of the year, reflecting cautious market sentiment.

China's economic slowdown and increased adoption of LNG-powered trucks and electric vehicles have contributed to Morgan Stanley's lower demand growth estimate. The firm notes that while current market conditions are tight, expectations of future supply increases and demand softening are influencing market participants' cautious approach.

【Company News】

Norway's state-controlled energy giant Equinor abandoned plans to invest in Vietnam's offshore wind sector due to political turbulence and regulatory challenges. This marks the first time Equinor exited an offshore wind project, contrasting its previous exits from fossil fuel projects to focus on renewables and low-carbon systems.

Vietnam's green energy ambitions face setbacks as regulatory reforms and political instability discourage investors. The government's push to assign offshore wind projects to state-owned companies is opposed by investors, citing the domestic sector's insufficient capacity to meet the country's goal of installing 6 GW of offshore wind capacity by 2030.
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