PEC+ to consider 137,000 bpd oil output increase for April, sources say
OPEC+ will likely consider raising its oil output by 137,000 barrels per day for April to end a three-month pause in production increases, three sources with knowledge of OPEC+ thinking said, as the group prepares for peak summer demand and tensions between the U.S. and OPEC member Iran boost prices. The resumption would allow OPEC leader Saudi Arabia and fellow members, such as the UAE, to regain market share at a time other OPEC+ members, such as Russia and Iran, contend with Western sanctions and Kazakh output is recovering from a series of setbacks. Eight OPEC+ producers – Saudi Arabia, Russia, the United Arab Emirates, Kazakhstan, Kuwait, Iraq, Algeria and Oman – meet on March.
Oil Prices Set for Weekly Decline as Risk Premium Eases
Crude oil prices were on course for their first weekly decline in four weeks as the United States and Iran signaled they were willing to continue negotiating instead of escalating to a hot war. At the time of writing, Brent crude was trading at $71 per barrel, with West Texas Intermediate at $65.56 per barrel, after three weeks of gains. Brent crude has gained more than $3 per barrel over the past four weeks, and WTI is also up by some $3 per barrel. “Traders are in wait-and-see mode heading into the weekend with Iran tensions mounting on one hand, and the OPEC+ meeting on Sunday with a likely production hike on the other hand,” Sparta Commodities analyst June Goh said, as quoted by Reuters. The latest round of talks between the United States and Iran took place on Thursday, concluding without a deal but with “significant progress” and plans to meet again soon—likely as soon as next week, according to the mediator in the Geneva negotiations, Omani Foreign Minister Badr Albusaidi. The Saudi Gazette reported, however, that Iran’s government had said before the talks had ended that it planned to continue its uranium enrichment program and disagreed with the suggestion of moving that program abroad. Before the outcome of the Thursday talks was made public, ING commodity strategists said in a note that “A constructive resolution would likely prompt the market to gradually unwind as much as a $10/bbl risk premium, which we believe is currently priced in. If talks break down, the upside risk remains, but the market may hold off on a full reaction until the scale of potential US action against Iran becomes clearer.” U.S. President Donald Trump has given Iran until the end of next week to agree to a nuclear deal, threatening military action if the deadline is not met by the Iranian side.
Trump Administration Reopens Door to Offshore Oil Leasing in California
Federal regulators have officially reopened a door California politicians have spent years trying to weld shut. The Bureau of Ocean Energy Management on Thursday announced it will prepare a programmatic environmental impact statement for potential oil and gas lease sales in the Northern, Central, and Southern California program areas, launching the first formal step required under NEPA. Translation: California’s offshore leasing conversation is no longer theoretical. The notice covers roughly 11,876 lease blocks spanning about 65 million acres of the Pacific Outer Continental Shelf. The proposal stems from the draft 11th National OCS Leasing Program, which contemplates one sale in Northern California, two in Central California, and three in Southern California. The BOEM says the purpose is to provide access to blocks that may contain economically recoverable oil and gas. Acting Director Matt Giacona framed the move in pocketbook terms, citing California’s energy affordability crunch and national energy security goals. For the industry, the immediate impact is procedural. This is scoping, not spudding. Even under an aggressive timeline, any lease sale would be years away from first oil. California’s offshore output today is a rounding error compared to the Gulf of Mexico. But strategically, it matters. California currently imports the majority of its crude oil from Iraq, Saudi Arabia, Ecuador, and Brazil. If even a part of this offshore acreage proves viable, it could marginally offset imports and stabilize in-state refinery supply. It is unlikely, however, to move global benchmarks. It would not flip the U.S. export balance. But it could reduce dependence on long-haul foreign barrels feeding West Coast refiners. The BOEM is also weighing alternatives, including a no-sale option and a narrower sale limited to areas near existing Southern California infrastructure. Opposition from Sacramento is fierce and litigation is a near certainty. Still, the signal to markets is that federal energy policy is tilting toward supply. Whether California’s coastline actually sees new rigs is another story entirely.