Oil Daily | OPEC Output Drops, Libya Opens Bidding, Russia's Urals Crude Hits $50 Amid Market Turmoil

【Oil-Producing Countries Dynamics】

Mexico is considering expanding domestic fracking to reduce its high dependence on U.S. natural gas imports amid tense trade relations. Discussions with private companies about shale gas production are in early stages, with possible reconsideration from the Mexican government despite opposition from President Claudia Sheinbaum’s leftwing party.

South Korea seeks to increase LNG imports to address trade deficits with the U.S. and reduce tariffs, after being classified as an "abuser" due to its trade surplus. The focus is on boosting imports rather than cutting exports to convince the U.S. to drop higher tariffs imposed on South Korean goods.

A Reuters survey showed a drop in March OPEC oil output, driven by Nigeria, Iran, and Venezuela. Venezuela faces new tariffs, impacting exports, while Nigeria reduced supply to its new refinery. Despite sanctions, Iran's February output was at a six-year high. Venezuelan oil trade persists despite tariffs.

Libya offers production sharing agreements in its first oil and gas bid round in 18 years, with exploration blocks attracting foreign interest. Libya, exempt from OPEC quotas due to conflict, aims to boost oil production amid relative stability. BP and Eni have resumed operations after avoiding Libya during its civil war.

Russia's Urals crude price nears $50 per barrel amid a global oil market rout, exacerbated by U.S. tariffs and OPEC's production increase. The Kremlin monitors the turbulent situation, pledging to mitigate economic fallout. Oil and gas sales are crucial for Russia’s budget, with March revenues down 17% year-on-year.

【Latest Oil Policies】

Energy Secretary Chris Wright's Middle East tour, including Saudi Arabia, Qatar, and UAE, focuses on ensuring global hydrocarbon supply from non-sanctioned countries and securing investments. The visit precedes potential U.S.-Iran talks, with ongoing tariff impacts and OPEC's production increase affecting oil prices.

【Industry News】

Petrobras refuses to cut diesel prices despite government requests amid global trade uncertainties. The company plans a $111 billion investment over five years, mainly for exploration and production, reflecting Brazil's effort to exploit hydrocarbon resources. Spending for 2025 was revised down from earlier projections.

Diamondback Energy's president demands clarity from the U.S. administration on balancing tariffs with plans to increase shale output. Shale producers face volatility and uncertainty, with significant acquisitions undertaken amid perceived beneficial federal oil policies. Tariffs and OPEC strategies pose potential market destabilization threats.

【Company News】

Shell forecasts decreased LNG production in Q1 2025 due to cyclones and maintenance in Australia, with trading results in line with Q4 2024. Refinery and chemicals plant utilization are expected to rise. ExxonMobil anticipates higher Q1 earnings due to oil and gas prices, reflecting market developments.

【Others】

Citi cuts Brent Crude forecast to $60 per barrel following U.S. tariff announcements, predicting slow economic growth. Despite oil price declines, Citi advises against buying the dip and highlights potential outperformers like gold and U.S. natural gas. Other banks have also reduced oil price forecasts.