Oil Daily | Libya Resumes Oil Production, Iraq-Kurdish Crude Dispute, US Inventories Rise

【Oil-Producing Countries Dynamics】

Libya is preparing its first oil and gas exploration bid round since the civil war began in 2011, intending to offer onshore and offshore blocks by late 2024 or early 2025. Oil production, impacted by recent conflicts, resumed in early October, reaching 1.3 million barrels per day. BP and Eni have resumed operations in Libya.

Following a dispute over control, Iraq will start delivering Kurdish crude oil to the state-owned oil company, initially paying Erbil $16 per barrel. This follows a suspension of Kurdish oil exports due to a disagreement with Turkey and a ruling by the International Chamber of Commerce. Ongoing issues between Baghdad and Erbil continue to affect operations.

The Iraqi central government will resume crude deliveries from Kurdistan, paying an interim $16 per barrel to Erbil, amid a dispute over oil export rights with Turkey. The International Chamber of Commerce ruled in favor of Iraq, impacting operations in Kurdistan. The region was previously a significant oil producer prior to export suspensions.

Iran's crude oil to China is priced at its smallest discount to Brent in five years, after supply concerns due to potential Israeli retaliation. Iranian oil tankers temporarily moved from Kharg Island, raising prices. Iranian oil, typically cheaper for China's refiners, now sees narrower discounts, potentially affecting refining rates.

Chevron is investing in offshore blocks in Angola and Nigeria, focusing on under-explored areas with significant resource potential. Despite recent declines in production due to asset sales, Chevron sees opportunities in these regions. The company has added exploration blocks and discovered oil in Nigeria's Western Niger Delta.

【Latest Oil Policies】

The Iraqi central government will resume crude deliveries from Kurdistan, paying an interim $16 per barrel to Erbil, amid a dispute over oil export rights with Turkey. The International Chamber of Commerce ruled in favor of Iraq, impacting operations in Kurdistan. The region was previously a significant oil producer prior to export suspensions.

【Industry News】

Crude oil inventories in the United States rose by 3.132 million barrels for the week ending November 1, according to the American Petroleum Institute. The Strategic Petroleum Reserve increased by 1.4 million barrels, while gasoline and distillate inventories fell. Cushing inventories rose by 1.724 million barrels.

Oil companies, including BP, Chevron, Equinor, and Shell, are evacuating personnel in anticipation of Tropical Storm Rafael, which could disrupt up to 4.9 million barrels of oil production daily in the Gulf. Rafael is the 17th named storm this Atlantic hurricane season, adding complexity to market conditions.

Traders and investors traded record-high numbers of options and futures contracts in October, driven by oil market volatility and geopolitical risks. The Intercontinental Exchange and CME Group reported record average daily volumes of energy contracts, with significant activity in Brent Crude and gasoil futures and options.

Soaring crude futures prices on the Shanghai International Energy Exchange have prompted traders to deliver large volumes of Middle Eastern crude to the Chinese exchange. This arbitrage opportunity has led to what could be the highest delivery volumes of 2024, with global traders delivering significant quantities to the INE.

【Company News】

Shell is transforming its Rheinland refinery in Germany, shifting focus from crude processing to producing high-grade lubricants. This strategic move aligns with Europe's clean energy goals, as Shell aims to produce 300,000 tons of base oil annually. Shell's plan includes adjustments to maintain Germany’s energy supply during the transition.

Marathon Petroleum beat third-quarter earnings expectations despite declining refining margins. The company's net income was $622 million, significantly lower than last year's, but exceeded analyst estimates. Marathon maintained stable crude capacity utilization and approved a $5 billion share repurchase authorization, demonstrating strong capital return commitments.

【Others】

Orsted raised its full-year earnings forecast, driven by its offshore wind projects. The company expects higher profits from wind farm projects like Hornsea 3, fueling long-term growth. Orsted's offshore sites benefited from increased wind speeds and prices, and its U.S. projects are progressing according to updated plans, despite some construction risks.