The OPEC+ spat is likely to be resolved ‘sooner rather than later,’ energy analyst says

Published

3 years ago

July 12, 2021

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OPEC and its allies left the oil market hanging on Monday when they indefinitely postponed talks to resolve a disagreement over production curbs.

Crude prices first surged to six-year highs, then retreated, and uncertainty continues to hang over future OPEC+ policy.

But at least one energy analyst expects a breakthrough to come soon.

“I think it’s highly likely [that] it’s going to resolve itself,” said Stephen Schork, a principal advisor at energy analysis company The Schork Group.

OPEC is the strongest it has been in years, and they would not want to “upset the applecart,” he told “Street Signs Asia” on Thursday.

Conflict in OPEC

The energy alliance met last week to discuss output policy, but the UAE unexpectedly blocked proposals to increase supply and extend the remaining production cuts to the end of 2022, instead of April 2022 as previously agreed.

Suhail Al Mazrouei, UAE’s energy minister, told CNBC on Sunday that it “wasn’t a good deal” because the output cuts were measured against a baseline of 2018 production levels.

The country has increased its production capacity, but cannot pump more oil while the OPEC agreement remains in place. It wants this baseline to be revised.

An OPEC sign hangs outside the OPEC Secretariat in Vienna, Austria, on Nov. 29, 2017.

Akos Stiller | Bloomberg | Getty Images

Russia is reportedly attempting to negotiate a resolution.

Neil Beveridge, a senior oil analyst at Bernstein, said OPEC policy has been focused on controlling supply to manage prices.

But the UAE sees that peak oil demand is “staring OPEC in the face” and is considering chasing market share instead of high energy prices, he told “Capital Connection” on Thursday, and that’s why it wants to be given a higher quota.

$50 oil versus $100 oil

Observers say two scenarios are possible if OPEC doesn’t reach a new deal. The first is that of a price collapse.

Beveridge noted that OPEC is sitting on nearly 6 million barrels of spare capacity now. If countries decide to increase supply and go for market share, the downside could be “significant,” he said.

“We can see oil prices certainly drop back below $50 again … pretty quickly, if that [happens],” he said.

Why mess around with, potentially, a price war?

Stephen Schork

The Schork Group

The second scenario is one where countries continue to produce oil according to the quotas that were previously agreed on. Oil prices would spike, possibly as high as $100 per barrel, with demand outpacing supply.

OPEC probably doesn’t want to rock the boat in either direction, according to Schork.

“They are in a very nice position at this point,” he said. “Why mess around with, potentially, a price war?”

On the other hand, too-high oil prices are not ideal. “The higher we go, you’ll start to hear the political winds turn against them, especially here in the United States,” he added.

Resolution?

Schork said he believes the UAE will be allowed to increase production, and the country will stick to their quota.

“They just want a bigger share of OPEC’s prize,” he said.

Bernstein’s Beveridge, however, said there is a risk that other OPEC+ members will want to raise their production quotas.

“That could lead to a whole unravelling of the OPEC agreement that we have … and that would certainly point to very significant downside [for] prices,” he said.

The deal only works if everyone is committed to it, he said, but noted that there has been “very good compliance” from OPEC members over the last 12 months.

In the long term, Schork said the oil-producing alliance would benefit from the energy transition.

“As western oil companies trip over themselves in the years ahead — and they’re already doing it now — to decarbonize, OPEC’s share of the global oil market is going to continue to grow,” he said, adding that oil demand is likely to increase until the end of the decade.

“It behooves all players on the OPEC side to play nicely, so yes I do think we’ll see a resolution to the situation sooner rather than later,” he said.

— CNBC’s Sam Meredith, Weizhen Tan and Dan Murphy contributed to this report

Environment

Polestar 2 lease price drops to $299 a month thanks to new $10k discount

Published

2 hours ago

May 8, 2024

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Polestar 2 lease price drops to 9 a month thanks to new k discount

Thanks to the $10,000 Polestar Clean Vehicle Incentive introduced last week, 2024 Polestar 2 lease prices are now over $120 a month cheaper.

CarsDirect reports that through May 31, the 2024 Polestar 2 Long Range Dual Motor can be leased for $299 for 27 months with $3,299 due at signing.

The auto research portal says that’s a $50 drop in the monthly payment with $2,050 less required at signing. As a result, the effective cost fell $126, from $547 per month to $421 before taxes & fees.

The Polestar 2 Dual Motor – list price $55,300 – is a much better deal to lease than the Single Motor model – list price $49,900 – because amazingly, they have the same lease price. That’s basically a free upgrade to the Dual Motor model.

The Polestar 2 first made its debut in 2019 as the automaker’s first fully electric car. It launched in mid-2020 and the milestone 150,000th car rolled off the assembly line in August 2023.

The Polestar 2 is expected to be phased out in 2027, and company says the Polestar 7 will succeed it.

Click here to find a local dealer that may have the Polestar 2 in stock. –affiliate*

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Environment

When will Tesla cars be capable of unsupervised full self-driving (SAE Level 5)?

Published

4 hours ago

May 8, 2024

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Environment

Elon Musk outlines upcoming Tesla Full Self-Driving updates

Published

6 hours ago

May 8, 2024

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Elon Musk outlines upcoming Tesla Full Self-Driving updates

Tesla Full Self-Driving Beta 10.69 barrier

Elon Musk has given an update with an outline for Tesla’s upcoming Full Self-Driving (FSD) software updates.

With FSD v12 and the upcoming launch of Tesla’s dedicated Robotaxi, there’s a lot of excitement around Tesla’s self-driving effort.

Musk is again in the too-familiar position of predicting that the automaker is close to releasing a true self-driving system, but the path to get there is still far from clear.

Now the CEO is providing some new comments on the upcoming release schedule for FSD:

“12.4 has almost completely retrained models. The final touches are for comfort, as it sometimes accelerates or brakes too fast for most people’s taste.”

Tesla FSD drivers are currently on 12.3.6 and the .4 update is expected to be a bigger step change, which Musk appears to confirm by saying that Tesla “completely retrained” the models.

The CEO recently said that Tesla is no longer constrained by training compute power after bringing more capacity online, giving the FSD team more opportunities to retrain neural nets with increasingly cleaner data.

Musk then continued about Tesla’s upcoming updates:

12.5 and 12.6 are in various stages of testing. We’re getting into rare, complex situations, for example: going down a narrow, one-way road, encountering a road closure and having to reverse out to find a new route. That closure also needs to be communicated to the rest of the fleet, so you don’t get a whole bunch of Teslas stuck down a road.

There’s no timeline for these upcoming updates beyond the fact that they are currently in internal testing, but Musk did say that v12.4 could come to the Tesla fleet as soon next week.

Electrek’s Take

Again, I’ve been impressed with v12.3.3-4. I’ve just got v12.3.6, but I haven’t had time to test it yet. I plan to do that this weekend. Also, I’ve been saying that if I start seeing decent improvements with the upcoming updates, I think I’ll start to see a clearer path to Tesla finally delivering on its promise – or at least a level 4 self-driving system.

However, as usual, when talking about FSD and especially when praising the system, I think it’s important to remind everyone that the keyword in ‘Supervised Full Self-Driving’ is ‘Supervised.’ Drivers need to remain attentive at all times and ready to take control.

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