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Hello Power Up readers,
Oil markets were on edge to start the week after key members of the OPEC+ producer alliance held a weekend meeting where they decided to sharply increase production quotas by an aggregate 548,000 barrels per day in August. But nerves quickly settled and crude prices rose to over $70 a barrel as investors realised that OPEC’s bark was probably worse than its bite. More on this here.
Here are the highlights of today’s newsletter: |
Thank you to the many readers who took part in our newsletter survey. Your input is invaluable. I would still love to get your thoughts and comments, so don’t hesitate to contact me at ron.bousso@thomsonreuters.com of follow me on LinkedIn.
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Following the latest announced output hike, OPEC+ is set to increase its production quota by an aggregate 2.5 million bpd between April and September. But this is unlikely to lead to a dramatic change in the group’s output, as most members are already producing at or above those levels.
But, importantly, this move puts Saudi Arabia, the group’s de-facto leader, in the pole position to regain market share today while also solidifying its dominance over the long term.
On the same topic, ROI Asia Commodities Columnist Clyde Russell wrote that even though OPEC+ has said the output increase was due to “healthy market fundamentals,” the reality may not be quite so rosy, with tepid demand growth seen in major energy consumers such as China, the world's top oil importer. |
U.S. President Donald Trump's signature budget bill slashed funding for refilling U.S. emergency oil reserves, violating his previous vow to fill them "right to the top". But does the United States actually need to fill up its vast Strategic Petroleum Reserve?
The answer is probably no, given the seismic changes the country's energy sector has undergone in recent years.
The American SPR is the world's largest emergency oil storage, able to hold 714 million barrels, or the equivalent of 35 days of U.S. oil consumption, when full. But it contained only 403 million barrels of crude oil as of July 4, according to government data, which is far below the record level of 727 million barrels reached in 2010.
The United States, the world's top oil consumer, became a net exporter of crude and refined products in October 2019 for the first time since at least 1973. This means it is much less dependent on imports, making SPR far less important. Yet reserves can still play a critical role in times of domestic and international crisis. Read my column to find out more. |
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ROI Global Energy Transition Columnist Gavin Maguire delved into Turkey’s power market, one of the world’s fastest growing, where a rapid expansion of solar power threatens growth in demand for natural gas. Read more here
America's largest power grid is under strain as data centers and AI chatbots consume power faster than new plants can be built, writes Reuters correspondent Laila Kearney. Read more here
Finally, the recovery in global jet fuel demand is set to slow and stall below pre-pandemic levels this year and next as the Chinese reduce travel abroad, stringent U.S. immigration policies deter some tourists, and aircraft fleets become more fuel-efficient, write Seher Dareen and Trixie Yap. Read more here
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