Saudi-Russia Price War Drives Rough Week for Oil
It has been a particularly tumultuous week throughout the oil and gas value chain. Here is a breakdown of the most-viewed articles on Rigzone during the period that had some connection to the downstream.
Given global oil market turbulence, the U.S. Department of Energy (DOE) decided to suspend a planned sale of crude oil from the national Strategic Petroleum Reserve (SPR). A DOE spokesperson explained that the sale had been intended to fund upgrades and maintenance at SPR facilities. However, the agency representative noted that now is a less-than-optimal time to sell up to 12 million barrels of SPR crude.
After Russia, Saudi Arabia and others in the OPEC+ alliance failed last Friday to extend production curbs to help stabilize the global oil market, oil prices plummeted Monday. One prominent market-watcher interviewed in this Bloomberg article said the fractured oil producers’ group “‘surprised the market by engaging in a price war to gain market share.’” In addition, the article points out that Goldman Sachs Group Inc. warned that prices could approach the $20-mark.
Texas is no stranger to the oil industry’s boom-and-bust cycle. In response to the latest price collapse, leaders of two of the state’s top oil and gas industry organizations offered their perspectives. The president of the Texas Independent Producers & Royalty Owners Association (TIPRO) expressed hope that Saudi Arabia and Russia will arrive at a near-term compromise to help stabilize the market. The TIPRO leader opined that the lack of an agreement magnifies the already significant challenges cash-constrained operating companies face. Meanwhile, the president of the Texas Oil & Gas Association (TXOGA) pointed out that “‘free market principles, science-based regulations and ingenuity’” would help Texas’ operators to pull through this latest downturn. An analyst cited in the article also predicted that oil prices will eventually rebound.
Shell is re-shaping its worldwide portfolio of oil refineries. In conjunction with that initiative, subsidiary Equilon Enterprises LLC, doing business as Shell Oil Products U.S., has decided to put a pair of U.S. refineries – one in Alabama and another in Washington State – on the market. The Mobile, Ala., refinery boasts approximately 90,000 barrels per day (bpd) of processing capacity. Meanwhile, the Puget Sound Refinery near Anacortes, Wash., can process roughly 149,000 bpd of crude. Shell also reported that it will continue to operate the facilities if the marketing process is unsuccessful.
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