Saudi Arabia and Russia push for three-month extension. Saudi Arabia and Russia have hinted that they would be open to extending the coordinated production cuts for another 3 months after the expected expiration date in March, pushing the deal through the end of June 2018. “There are concerns that if OPEC and non-OPEC producers exit the market in March, traders will react quite negatively to it and behave as if the market is in a free fall,” one senior Saudi oil official told the WSJ. “This also ensures that producers won’t pump full tilt and push prices down,” he said. Still, even if the deal is extended for another 3 months, the group has not coherently sketched out an exit strategy.
Libyan oil fields shut down. Three large Libyan oil fields have been shut down because of a confrontation with militants. One group shut down a pipeline leading to the Sharara field, Libya’s largest. The nearly 300,000-bpd field has been shuttered for a week. Two other fields – the El Feel and Hamada – have also been disrupted. Data is murky right now, and the fields could restart at any moment, but after exceeding 1 million barrels per day recently, Libya’s output is likely been reduced by about 350,000 bpd.
U.S. issues new round of sanctions on Venezuela. The U.S. government slapped new sanctions on Venezuela on August 25, aimed at preventing Venezuela from tapping U.S. debt markets, a major escalation from Washington. The first phase of sanctions targeted individuals, but these new measures prohibits U.S. institutions from trading new bonds with the government of Venezuela or state-owned oil company PDVSA, a move intended to choke off the regime’s finances. Crucially, however, the U.S. exempted Citgo, PDVSA’s U.S.-based subsidiary. Citgo has refining and retail gasoline operations in the U.S.