OPEC Secretary General Mohammed Sanusi Barkindo (L), Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman (C) and Russian Energy Minister Alexander Novak (R) attend an Opec-JMMC meeting in the UAE capital Abu Dhabi on September 12, 2019.
KARIM SAHIB | AFP via Getty Images
LONDON — Oil producer group OPEC has been plunged into crisis, with bitter infighting between Saudi Arabia and the United Arab Emirates raising questions about the future of the energy alliance.
OPEC and non-OPEC partners, a group of some of the world’s most powerful oil producers, abruptly abandoned plans to reconvene on Monday after last week’s meetings unexpectedly failed to broker a deal on oil production policy. The group did not set a new date to resume talks.
It means no agreement has been reached on a possible increase in crude production beyond the end of July, leaving oil markets in a state of limbo just as global fuel demand recovers from the ongoing coronavirus pandemic.
“OPEC+ has been thrown its most serious crisis since last year’s ill-fated price war between Saudi Arabia and Russia,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said in a research note.
“Back-channel talks reportedly are continuing, but questions about UAE’s commitment to remaining in OPEC will likely grow in the coming days.”
The UAE-Saudi dispute appeared to be about more than oil policy, Croft said, with Abu Dhabi “seemingly intent on stepping outside Saudi Arabia’s shadow and charting its own course in global affairs.”
The pandemic held them together and now the post pandemic is breaking them apart.
John Kilduff
Founding partner at Again Capital
OPEC+, which is dominated by Middle East crude producers, agreed to implement massive crude production cuts in 2020 in an effort to support oil prices when the coronavirus pandemic coincided with a historic fuel demand shock.
Led by Saudi Arabia, a close ally of the UAE, OPEC+ has met monthly to decide on production policy.
OPEC solidarity ‘dissolved’
The disarray comes after OPEC+ on Friday voted on a proposal to increase oil production by roughly 2 million barrels per day between August and the end of the year in 400,000 barrels per day monthly installments. It also proposed to extend the remaining output cuts to the end of 2022.
“No agreement was reached and as we stand now the OPEC+ alliance, if it is still the right word to describe the group, will produce at the July level for the rest of the year,” Tamas Varga, oil analyst at PVM Oil Associates, said in a research note.
“The [non-] outcome of the meeting re-writes the supply-demand landscape for the near and potentially for the distant future,” he added.
The rare public stand-off between the UAE and Saudi Arabia saw energy ministers from both countries engaging in a media blitz over the weekend to outline their respective positions.
“For us, it wasn’t a good deal,” UAE Minister of Energy and Infrastructure Suhail Al Mazrouei told CNBC’s Hadley Gamble on Sunday. He added that while the country was willing to support a short-term increase in oil supply, it wants better terms through 2022.
Speaking to the Saudi-owned Al Arabiya television channel on Sunday, Saudi Arabia’s Energy Minister Abdulaziz bin Salman called for “compromise and rationality” in order to reach a deal on Monday, Reuters reported.
Separately, a White House spokesperson reportedly said on Monday that President Joe Biden’s administration was pushing for a “compromise solution.” The U.S. is not a member of OPEC (which stands for the Organization of Petroleum Exporting Countries) but it has been closely monitoring the latest round of talks given their potential impact on crude markets into next year.
The OPEC logo pictured ahead of an informal meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) in Algiers, Algeria.
Ramzi Boudina | Reuters
Responding to the news that the OPEC+ meeting had been adjourned without a deal on Monday, John Kilduff, a founding partner at Again Capital, said: “The Opec solidarity dissolved today.”
“The pandemic held them together and now the post pandemic is breaking them apart. The UAE is sticking to their guns on wanting their baseline raised. They want to be able to produce more,” he told CNBC via email.
“Now the fun starts as to who breaks away,” Kilduff said, noting the UAE could be the “first domino” to fall.
OPEC was not immediately available to respond to a request for comment when contacted by CNBC on Tuesday.
Oil prices climb to multi-year highs
The news pushed oil prices to their highest level in nearly three years. International benchmark Brent crude futures traded at $77.65 a barrel on Tuesday morning, up 0.6% for the session, while U.S. West Texas Intermediate futures stood at $76.62, around 2% higher.
Oil prices rallied more than 45% in the first half of the year, supported by the rollout of Covid-19 vaccines, a gradual easing of lockdown measures and massive production cuts from OPEC+.
Samuel Burman, assistant commodities economist at Capital Economics, said OPEC producers were likely to increase oil production above quota next month as member states “seek to take advantage” of higher oil prices.
In addition to a rift between the UAE and Saudi Arabia, he said Abu Dhabi was probably “somewhat irritated” that Russia hadn’t been complying with OPEC’s production quotas.
Burman said non-OPEC leader Russia hadn’t introduced any compensatory cuts at all and was currently overproducing by around 100,000 barrels per day. “We think that this spat involving the UAE increases the chances that the entire agreement falls apart which would clearly pose a downside risk to our near-term price forecasts.”
Volkswagen is advertising its 2024 ID.4 Standard at $999 down, $149/month for 24 months. That’s an average monthly lease cost of just $184/month plus tax and license, making it the cheapest of all January EV lease offers we’ve found.
We haven’t seen a great lease deal like this on a five-passenger electric SUV since last April, when Toyota slashed the average lease cost of its bZ4X XLE down to $191/month for 2023 model and $227/month for a 2024 model. In-stock bZ4X inventories were depleted in a few weeks, and dealers subsequently started to hike their asking prices as they collected deposits for ordered and in-transit vehicles. It stands to reason that the same phenomena could occur with this incredible ID.4 lease offer, so act quickly if you’re intrigued by this deal.
Equipped with a 62kWh battery and a single motor that drives the rear wheels, the ID.4 in Standard trim (MSRP $41,160) can travel 206 miles on a full charge and achieve 60mph from standstill in 7.3 seconds. Consumers that require more range or performance can opt for an array of higher trim levels, ranging from the ID.4 Pro RWD (291 miles, 0-60mph in 6.1 seconds, MSRP $46,300) to the top-of-the-line fully-equipped ID.4. Pro S AWD (263 miles, 0-60mph in 4.6 seconds, MSRP $55,300).
For those that prefer to buy rather than lease, Volkswagen is running a $10,500 Retail Customer Bonus Cash incentive on the ID.4 which means that the ID.4 Standard can be bought for just $30,660.
As far as dealer offers, a quick survey of a few VW dealers shows that VW of Thousand Oaks in southern California, VW of West Islip in New York and King VW in Maryland have dealer discounts of about $2000 that should stack on top of manufacturer incentives to lower the monthly cost of a lease or reduce the final price on a purchase.
Hamburger Hochbahn AG operates the city of Hamburg’s bus system, and they’ve just placed an order with Daimler Buses for 350 fully electric Mercedes-Benz eCitaro buses to be delivered to the northern German city for use as zero-emission public transport.
Hamburger Hochbahn AG becomes the latest bus operator to put in a major order with Daimler – as I type this, fully 95 examples of the Mercedes-Benz eCitaro electric buse have already been deployed on the streets of Hamburg through Vhh.mobility, with both Mercedes and Vhh.mobility calling the bus fleet’s arrival a major step towards CO2-neutral local transport.
“I am very pleased that, together with vhh.mobility, we can make a significant contribution to emission-free local transport in the Hamburg metropolitan region,” says Till Oberwörder, CEO of Daimler Buses. “Our battery-electric eCitaro city bus offers an excellent overall package: The modern, long-range electric drive ensures that passengers reach their destinations quietly and locally CO2-neutrally. Advanced assistance systems also increase safety in all road traffic conditions.”
When discussing their order, Hamburger Hochbahn AG representatives said they were particularly impressed by the low total cost of ownership (TCO) and the ease of maintenance offered by the Mercedes eCitaro electric bus over its service life.
Electric equipment from XCMG can now be ordered with interchangeable battery swap tech, enabling heavy trucks and construction equipment to swap out their BYD-developed, 400 kWh battery packs in just three minutes, and top-off as quickly as diesel.
And we’re not just talking about off-highway and heavy equipment – the XCMG’s swappable BYD batteries are making their way to on-road trucks as well … but we’ll get to that.
XCMG ZNK95 electric autonomous haul truck
XCMG showed off its latest electric equipment at last month’s Bauma China show, including an updated version of its of its 85-ton autonomous electric mining truck. Known as the ZNK95 (above), the truck features a fully cab-less design – meaning there isn’t even a place for an operator to sit, let alone operate. That’s too bad, too, because what operator wouldn’t want to experience a dedicated permanent magnet synchronous electric drive system capable of putting out 800 kW (1070 hp) and 22,000 Nm (16,200 lb-ft) of torque?
But autonomous solutions aren’t about hp and torque – they’re about keeping operators out of extreme and dangerouns environments. To that end, XCMG says its new HDEVs are fully capable of operating in high-altitude, extremely cold environments with temperatures as low as -40°C (a temp. that most diesels wouldn’t be able to start at, let alone run).
Even in those extreme climates, the XCMG gets the job done with an autonomous driving system that integrates a number of multiple cutting-edge technologies that combine environmental perception, decision-making and planning, vehicle control, and communication into a single dashboard that can be monitored by the fleet manager.
The system can even diagnose faults on individual vehicles and bring them back to service before they break down in the field – a huge potential problem if a truck or dozer gets caught underground!
The ZNK95 has already been deployed at a large, open-pit mine in Inner-Mongolia, China, that has adopted a comprehensive unmanned and electrified construction solution from XCMG Machinery for its latest “green” mining operation. The company says the mine will emit 149,000 fewer tons of harmful carbon emissions than it would with diesel haul trucks annually by the time its full order of ZNK95s is delivered in 2026.
But wait, there’s more …
If you needed a reminder that China is light-years ahead of the US when it comes to electrification tech (and, yes, I know light-years measure distance and not time – grow up), you should know that XCMG’s swappable battery tech, which features 400 kWh packs using BYD blade-style battery cells packed at a facility that’s run as a JV between XCMG and BYD, is such a non-event in a country that’s seen millions of swaps that it didn’t even merit a press release at Bauma.
In fact, the only reason I know about it at all was because I follow Etrucks New Zealand, an XCMG dealer, on LinkedIn, and he was talking it up.
“XCMG are by far the dominant EV exhibitor at Bauma Shanghai. Here a truck crane solution to swap construction machine batteries,” said Ross Linton, owner and President of Etrucks New Zealand. “Here a truck crane solution to swap construction machine batteries.”