This is a BIG DEAL

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Kurdish referendum roils Middle East. Kurdistan voted for independence in a highly-anticipated referendum on Monday, a move that has led to a spike in tensions with Baghdad and its neighbors. Oil prices hit 8-month highs on the same day. Turkey threatened to cut off the pipeline that carries Kurdish oil through its territories to the port in Ceyhan. Baghdad called for an international boycott on Kurdish oil in response to the vote, which it says is illegal. “If this boycott call proves successful, a good 500,000 fewer barrels of crude oil per day would reach the market,” Commerzbank said in a note.

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Permian to face growing pains. A new report from Wood Mackenzie predicts that the Permian Basin, the hottest shale play on the planet, will bump up against some constraints as the field has become too crowded. The supply of labor, equipment and drilling services has become strained, leading to cost inflation and delays. The EIA’s baseline assumption is that Permian production will rise from the current 2.6 million barrels per day up to 5 mb/d by 2025. But Wood Mackenzie argues that the basin will peak at 3.5 mb/d by 2021 without significant advancements in technology.

Permian has 60 to 70 billion barrels left. While WoodMac sees trouble ahead for the Permian, a separate study from IHS Markit estimates a massive volume of oil still remains in the Permian, and that the best days for the shale basin are ahead. The IHS study says that the Permian still has a gargantuan 60 to 70 billion barrels of technically recoverable oil reserves.

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BP: OPEC needs to extend cuts. A top BP executive said that OPEC will need to prolong its production cuts if the market is to rebalance. “Rebalancing is already on the way,” Janet Kong, Eastern Hemisphere Chief Executive Officer of integrated supply and trading at BP, told Bloomberg. But the group needs “definitely to cut beyond the first quarter” if inventories are to come back to average levels, she added. She argued that a return to $60 is possible next year, but only if OPEC extends the cuts.

U.S. oil exports to surge through 2022. U.S. crude exports will grow to a 5 percent market share by 2022, aided by a desire for low-sulfur crude from global refineries. An executive of Enterprise Partners LP told Reuters that he expects U.S. oil exports to jump from around 1 mb/d for much of this year to about 4 mb/d by 2022. Meanwhile, in the short-term, the differential between Brent and WTI has widened to its largest extent in two years at about $6.50 per barrel, a level that has many analysts predicting a coming surge in U.S. crude exports.

Iran: OPEC deal needs to include Libya and Nigeria. Iran’s oil minister Bijan Zanganeh said that compliance with the OPEC deal thus far “has been acceptable overall,” but he said that “some changes are needed,” according to SHANA, the Iranian oil ministry’s news agency. “Firstly, all members should commit 100 percent to the production cut agreement and secondly, the production level of Nigeria and Libya should be brought into consideration,” he said. For now, Nigeria and Libya are not included in the agreement, but there has been a growing chorus to limit their output.