Mexico Stands Strong Against OPEC+ Cut, Prices UnchangedBy Peter Appleby | Thu, 04/16/2020 - 19:46
After an eventful weekend of OPEC+ talks, Mexico and the global oil and gas market attempted to return to a relative normal situation despite the ongoing health crisis. Oil prices struggled to get going and storage levels are close to being reached. For all this week’s action, read on.
OPEC+ Cuts Production with Mexico Getting a Win
Last weekend, Mexico became an unlikely focal point of world media as Minister of Energy Rocío Nahle doubled-down on her refusal to slash Mexico’s production by the 400Mb/d requested by OPEC+ nations. On Sunday, Minister Nahle’s blunt refusal saw the group assent to her 100Mb/d cut offer, paving the way for the formal agreement of the group’s 9.7MMb/d output reduction.
Oil’s Environmental Intentions in Doubt?
The plausibility of the green commitments made by some of the world’s largest oil and gas operators is being questioned following the devastation that the COVID-19 pandemic and oil price war has brought on industry players. Will operators push ahead with their zero emissions plans or must shareholders be pandered to and oil production pushed up as soon as feasibly possible?
IEA Warns Storage Will Soon be Full
With the OPEC+ reduction agreement yet to go into function and oil prices still being depressed, IEA’s April report offered worrying news about the state of the world’s oil storage. Though the mid and long-term outlook is rosier, the short-term poses problems as the stock build-up of 1H2020 “threatens to overwhelm the logistics of the oil industry.”
Latin American Oil Industry Struggles
Latin American nations have not been spared from the oil price collapse. Venezuela, Colombia and Ecuador all rely heavily on income from oil and their economies and suffering. Read about it here.
Fitch Downgrades Mexico. Is PEMEX to Blame?
Fitch Ratings downgraded Mexico’s rating from BBB to BBB-, one step away from junk status. Among the reasons highlighted was PEMEX’s US$105 billion debt, which is saddling the country’s economy with a heavy burden.