Energy Prospectus

Crude oil prices are volatile after Saudi Arabia, Bahrain, the UAE and Egypt break diplomatic ties with Qatar, accusing the country of backing terrorism activities
Market participants will be watching to see if OPEC member Qatar attempts to disrupt the oil production deal, but the country is not a major oil producer, accounting for ~2% of OPEC’s output and shipping 618K bbl/day in April.
However, Qatar is the world’s largest exporter of liquefied natural gas, last year shipping 77.2M tons of LNG, equivalent to one-third of global supply, and only Russia and Iran have more proven gas reserves.
The dispute has not caused a direct impact on the regional energy sector so far; gas supplies reportedly are continuing from Qatar through the 3.2B cf/day Dolphin pipeline, a joint venture uniting UAE state-run Mubadala, Total (NYSE:TOT) and Occidental Petroleum (NYSE:OXY).

Reaction to stuff like this usually fades after a few days, but it is a reminder of how fragile the Middle East region is. - Dan

With a production capacity of about 600,000 barrels per day (b/d), Qatar's crude oil output is one of OPEC's smallest.

A meeting between the two men who run Russia and Saudi Arabia's oil empires spoke volumes about the new relationship between the energy superpowers, as reported by Reuters on 6/1/2017. It was the first time that Rosneft (ROSN-NC) boss Igor Sechin and Saudi Aramco chief Amin Nasser had held a formal, scheduled meeting, going beyond the numerous times they had simply encountered each other at oil events around the world. Their conversation also broke new ground, according to two sources familiar with the talks in Dhahran last week who said the CEOs discussed possible ways of cooperating in Asia, such as Indonesia and India, as well as in other markets. The sources did not disclose further details, but any cooperation in Asia between Russia and Saudi Arabia - the world's two biggest oil exporters - would be unprecedented, Reuters reported.

Oil prices fell to a three-week low on 5/31/2017 on news that Libyan output was recovering from an oilfield technical issue, Reuters reported on 5/31/2017. Libya's oil production has risen to 827,000 b/d, climbing above a three-year peak of 800,000 b/d reached earlier this month, the National Oil Corporation said. Also portentously, U.S. output has climbed to more than 9.3 million b/d, the EIA reported.

On 6/2/2017 Reuters reported that Nigeria issued its first Forcados oil loading plan since 2016, putting the nation's June oil exports on track to hit their highest level in at least 15 months. The plan, if realized, would return loadings by Nigeria, normally West Africa's biggest oil exporter, to levels not seen since militant attacks in the oil-rich Niger Delta first shut down Forcados exports in early 2016. Last week OPEC, along with several other oil producing nations, agreed to extend output cuts of 1.8 million b/d, but it gave Nigeria, along with Libya, another exemption.